Houston’s Burlington Resources said last week that a tax benefitreinstated by the Federal Energy Regulatory Commission in Septemberwill raise the independent’s earnings in the third quarter by 14cents, beating analysts’ expectations.

First Call analysts’ forecasts have predicted the company’sthird quarter profit at 70 cents, without the tax benefit, butBurlington is confident the per-share earnings will be between 87cents and 92 cents. The benefit, said Burlington, would raisequarterly earnings by 14 cents a share, which would put thirdquarter profit between 73 cents and 78 cents per share.

The tax relief came from FERC’s decision Sept. 25 to reinstatethe certification process for qualifying wells under Section 29 ofthe Internal Revenue Code. Because of the tax change, Burlingtonsaid it would realize about $30 million in cumulative tax benefitsrelated to 1999 production.

Even before the tax benefit was reinstated by FERC, Burlingtonhad said its third quarter profits would beat analysts’expectations because of the run-up in oil and gas prices. Inmid-September, Burlington predicted 3Qprofit between 70 and 75cents a share. The company posted earnings of 23 cents a dilutedshare for the same period a year ago.

Burlington also expects to produce between 1,830 and 1,850MMcf/d of natural gas and 72,000 and 74,000 b/d of oil during thethird quarter. Those volumes would actually be down from what theywere in the second quarter.

In mid-September, Credit Suisse First Boston cut its investmentrating on Burlington to “buy” from “strong buy” because it said thecompany had set a 12-month target of $45, and had lowered itsearnings per share expectations from $2.76 from $1.60. “Continuedshare repurchases and debt reduction improve returns, but not asmeaningfully as a strong reinvestment program,” said CSFB.

Carolyn Davis, Houston

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