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Industry Briefs

Industry Briefs

Enron Energy Services inked another commodity management agreement yesterday with Rich Products Corp. for 11 years. Under the $130 million-plus agreement, the Enron Corp. subsidiary will manage electricity and natural gas services. Enron said the agreement covers Rich Products' 18 major facilities in Wisconsin, New York, Tennessee, California, Ohio, Massachusetts, Illinois, Virginia, New Jersey, Georgia and Texas. Along with supplying electricity and natural gas, Enron will offer ongoing billing services for all of the facilities. "Our partnership with Enron allows us access to a reliable and economical supply of electricity and natural gas," said Mike Bingham, Rich's executive vice president, operations. "Ultimately, it's about delivering increasing value to our customers." Rich Products is one of the U.S.'s largest family-owned food companies, with annual sales of $1.4 billion, and more than 7,000 employees. Regional offices are located in 53 countries, and specialize in bakery and dessert products and field technical support services.

DukeSolutions entered into an agreement with the Bank of America yesterday to take over its energy management functions on 4,800 properties. The five-year contract will allow the nation's largest bank to focus on its customers and core business, while DukeSolutions lowers the company's annual energy costs. DukeSolutions will provide energy supply information management to the bank's numerous properties to help reduce the approximate $110 million in annual energy costs.

AES Corp. joined the growing number of companies to post solid growth in the second quarter. AES's net income for the second quarter was $111 million, a 56% increase over the $71 million dollars posted last year for the same time period. Earnings per share were 25 cents, 7 cents above earnings in the second quarter last year. Revenues rose 140%, from $640 million, to $1.5 billion. AES also announced yesterday that AES Power Direct has come to an agreement to purchase Titan Energy for $5 million (see Daily GPI, July 26). Titan Energy, a Toronto-based energy retail company, currently serves natural gas to 135,000 residential and small commercial customers in California, Virginia, Maryland, Pennsylvania and Ohio.

Continuing the upside explosion of earnings, Questar Corp. reported net income up 14% in the second quarter on the strength of a 92% increase in earnings from oil and gas E&P. The company reported net income of $26.2 million versus $23.1 million in 2Q 1999. Questar E&P increased net income to $9.6 million in the 2000 quarter from $5 million a year ealier It's average natural gas sales price rose 28% to $2.48/Mcf, while production was 15% higher at 17.7 Bcf. Oil and natural gas liquids prices were 45% higher at $19.76 per barrel in the current year quarter.

Boosted by its high-flying Internet site, Enron Corp. reported yesterday that its second-quarter earnings rose 30% to $289 million, with revenue from EnronOnline, the company's eight-month-old energy and commodity Internet trading site, rising 92%. The site has handled transactions valued at more than $100 billion, adding $6 billion to revenue in the first half, and is already considered the largest Internet energy trader in the world. Net income rose to $289 million, or 34 cents, from $222 million, or 27 cents, while revenue rose 75% to $16.89 billion from $9.67 billion a year ago. Enron had been expected to make 32 cents a share, based on analysts polled by First Call/Thomson Financial. Enron's businesses reported its earnings as Wholesale Energy Operations and Services, Retail Energy Services, Transportation and Distribution and Broadband Services. The wholesale group increased 23% in the second quarter to $437 million. Retail energy reported IBIT of $24 million compared to a $26 million loss in the same period of 1999. The transportation group, which includes the gas pipeline group and Portland General Electric, reported earnings of $139 million compared with $128 million. The only loss was in broadband services, which reported a loss of $8 million on revenue of $151 million.

El Paso Merchant Energy Co., a business unit of El Paso Energy Corp., is expanding its commercial platform in the electric power industry with the formation of EP Power Finance LLC. It primarily will focus on power and power-related opportunities in the North American energy marketplace. The new unit will provide subordinated debt and structured financial products to developers and acquirers of merchant power generation assets. The group will offer debt capital with a higher risk/return profile for transactions that range from greenfield development projects to the acquisition of multi-asset generation portfolios. For information on the unit, visit El Paso Energy's web site at www.epenergy.com.

Texaco has begun commercial production of oil and natural gas from its Petronius project in the Gulf of Mexico. The Petronius platform was completed in early May. Texaco is the operator, and Texaco and Marathon each have a 50% working interest. The project is located in 1,754 feet of water in Viosca Knoll Block 786, about 130 miles southeast of New Orleans. Current production from two pre-drilled wells is 8,700 b/d and 6 MMcf/d, and will be increasing as production ramp-up continues. An additional three pre-drilled wells will be brought on production over the next three months with rates going to 40,000 b/d and 35 MMcf/d by October 2000. More wells will be drilled and brought on-line through the remainder of this year and into 2001, leading to peak production rates of 50,000 b/d and 70 MMcf/d.

Santa Fe Snyder Corp. of Houston said last week that an exploration well in Howard County, TX, Sellers 119 #1, has been successful, and will extend the company's Lost Peak area there. The well targeted Cisco Canyon sandstones now being exploited in the Signal Peak field six miles northwest of the well. The Sellers well encountered 115 of gross pay sand with productive gas shows over a 200-foot interval. Santa Fe has 80,000 gross acres (60,000 net) under lease in the play, and through the end of this year, expects to drill an additional 15 development and three exploratory wells. Santa Fe plans to develop the field on 160-acre spacing, with portions of the field on 80-acre spacing. Current plans for 2001 call for drilling up to 50 wells there. Gross operated production from the Signal Peak field is now 25 MMcf/d and 1,300 b/d of oil. Cost of finding and development for the area has averaged $.80 per MMcfe, with operating costs of $.30 per MMcfe.

Texaco announced commercial production from the Petronius project located in the Gulf of Mexico, 130 miles southeast of New Orleans. Installation of the Petronius platform was completed in early May. Texaco and its partner, Marathon, each have a 50% working interest and Texaco is operator. Petronius project, located in 1,754 feet of water in Viosca Knoll Block 786, began production of oil and gas on July 9 at 8,700 b/d of oil and 6 MMcf/d of gas and will be increasing production through three other wells over the next three months, leading to rates of 40,000 b/d of oil and 35 MMcf/d of gas by October. Additional wells will be drilled and brought on line through the remainder of 2000 and 2001, leading to peak production rates of 50,000 b/d of oil and 70 MMcf/d of gas. "Petronius is an important part of our growth plan for the deepwater Gulf of Mexico, which is a focus area of our worldwide upstream strategy," said Robert A. Solberg, president of Texaco Worldwide Upstream Commercial Development. "Texaco worked with Marathon and numerous contractors, most of which are Louisiana-based, to move this $500 million project on a fast-track construction schedule, positioning Petronius to play an important role in helping us achieve our production growth targets."

Elizabethtown Gas Company, the New Jersey division of NUI Corp., filed a request with the New Jersey Board of Public Utilities for an increase in its Gas Adjustment Clause (GAC) of $46.7 million, or approximately an 18 percent overall increase in customers' bills. The company said the increase "reflects the higher supply costs that Elizabethtown Gas, like other natural gas utilities throughout the nation, is experiencing." If the board approves the increase, the company's GAC charge would rise from $12.36 per therm to $26.65 a therm. The average non-heating residential customer would pay $3.57 more on a 25 therm gas bill. For a typical residential heating customer, the average monthly bill would rise $14.29 for 100 therms. Elizabethtown Gas has requested the increase to take effect on Oct. 1.

A Baltimore City circuit court granted a two-week stay of Baltimore Gas and Electric's (BG&E) customer-choice plan for electric customers in central Maryland. This is "a temporary setback for 1.1 million [BG&E} customers," said Christian H. Poindexter, chairman and CEO of Constellation Energy Group, BG&E's parent. "While we are disappointed that an interim stay has been put into effect for two weeks," he noted, "we are encouraged that Judge [Albert J.] Matricciani did so in such a limited fashion." The stay was sought by the Mid-Atlantic Power Supply Association, a New Jersey-based group representing out-of-state retail marketers. The association is challenging the Maryland's Public Service Commissions November 1998 settlement order that outlined how customer choice is to be implemented in Maryland. The case was remanded to the Baltimore circuit court after an appellate courtrescinded a prior stay last week.

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