Houston-based Kimball Trading and Kimball Trading Canada ofCalgary, two of the Kimball Companies, last week filed for Chapter11 bankruptcy protection in Houston. The move caused marketrepercussions last Thursday, the day after the filing, as Kimballhalted gas flows to customers. The bankruptcy filings do notinvolve the related Kimball Resources or the other KimballCompanies.

Kimball seeks to combine the two filings. The Kimball TradingCo. filing lists 40 creditors, the largest being Howard/AvistaEnergy, owed nearly $7.24 million; Aquila Energy Marketing, nearly$4.54 million; Carthage Energy Services, about $3.44 million;PG&ampE Energy Trading Gas-Corp., about $3.2 million; and CoralEnergy Resources, about $2.9 million. The filing lists debtstotaling more than $35.33 million and assets of $43.96 million,more than $39 million of which is accounts receivable.

The Kimball Trading Canada filing lists 10 creditors, thelargest being Duke Energy Marketing, nearly $1.39 million; ProGasUSA, $461,949; PG&ampE Energy Trading, $92,744; Kimball employeeTrevor Dillabough, $60,000; and Black Hills Energy Resources,$59,652. The filing lists debts totaling nearly $2.08 million andassets of $1.83 million, nearly all accounts receivable.

Kimball Trading is a significant player in Dawn, ON, andMichigan markets and was described by one trader as an “extremelybig wholesaler” with physical trading volumes in the hundreds ofMMcf/d. The trader said the bankruptcy filing has disruptedMichigan markets. “That’s why we’re such big buyers at the Michigancitygate today. This could rival the significance of the GasMarkfailure of several years ago. I think we’re at the top of theirlist of creditors.”

Clearly, Kimball’s stumble could snag some of its businesspartners, particularly the smaller ones, a trader noted. “It cancertainly drag another company under. This is especially the caseif you were a smaller company — without a major parent company tobail you out — and you’re out a large amount of money for over ayear because of their bankruptcy then it is pretty much certaindoom.”

There also were reports of much confusion at MichCon andConsumers Power Thursday because Kimball had cut off gas flows.

“Kimball was selling us Transco Station 65 baseload [for March]at an index price of $1.63,” a marketer said. He had to replace thegas Thursday at $1.87, “which made us quite happy, of course,” hesaid sarcastically.

Two sources told NGI they did not deal with Kimball because thecompany refused to post letters of credit. A Midcontinent marketersaid his firm ceased business with Kimball about two years agobecause his credit risk department recommended it; “I guess thatwas a good call by our credit guys.” A Calgary trader reportedhearing that one of Kimball’s main problems was putting a lot ofgas into storage in Michigan last year without hedging it. “Nowthey’re pulling it out at much lower prices than they paid for it,”she added.

Calls to Kimball were referred to a company representative whodid not return several calls.

Joe Fisher and Roger Tanner, Houston; Firas Barazi

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