NGI Staff Reports

Fourteen consecutive months of declining drilling rigutilization came to an end in July, according to Global Marine’smost recent SCORE report, or Summary of Current Offshore RigEconomics. And the Gulf of Mexico appears to be leading theturnaround.

The Kansas City Board of Trade (KCBT) had an estimated volumefor the first time this month yesterday, but the Board’s managementis not concerned about the overall lack of trading. The KCBT hasrecognized the problem and is in discussions with its customers onhow it can bring its trading floor more to life, a spokespersonsaid, but others openly wonder if there will be a gas pit at theKCBT much longer.

In response to a recent court ruling, the Michigan PublicService Commission (PSC) issued a decision this week affirming itsauthority to carry out its 1998 electricity restructuring orders ona voluntary basis with participating utilities.

FERC Chairman James J. Hoecker has named Susan G Pollonais ashis advisor on gas and oil issues, replacing Patricia W. Jagtiani,who has accepted a position with the Natural Gas SupplyAssociation. Pollonais has served as a public utility specialist inthe Office of Pipeline Regulations Division of Litigation since1997. From 1993 to 1997 she was a gas regulatory consultant andproject manager for Northern States Power.

Chesapeake Energy Corp. of Oklahoma City, OK, fully exercised ona cash-less basis the common stock purchase warrant issued to itfrom Gothic Energy Corp. in March 1998 and had thereby acquired2,394,125 shares of Gothic common stock. Chesapeake now owns about13% of Gothic’s common stock. The warrant for 2,439,246 shares hadbeen issued to Chesapeake as part of a transaction involving theacquisition by Chesapeake of shares of Gothic’s senior redeemablepreferred stock, a 50% interest in Gothic’s Arkoma basin gas andoil properties and a 50% interest in substantially all of Gothic’sundeveloped acreage. The shares were issued pursuant to thecash-less exercise provisions of the warrant that permittedChesapeake to surrender the right to exercise the warrant inexchange for a number of shares (45,121) of Gothic common stock.

Tuesday’s trading appeared to bear out one Daily GPI source’spredictions Monday of generally stagnant pricing for the rest ofthis week. Eastern numbers formed almost a mirror image of theprevious day’s pattern. Instead of being flat to a little higher,they were flat to a little lower. And prices in the West, which hadbeen busy recovering lost weekend ground Monday, joined inTuesday’s overall flat-to-lower trend with the exception of smallgains at the PG&E citygate and a couple of Rockies locations.

After etching a $2.66 low early yesterday, the futures marketmoved higher on continued speculative buying pressure and bullishconcerns over today’s release of fresh storage data. The Septembercontract finished at $2.708, up 0.8 cents on the day.

The $2.5 billion acquisition of Poco Petroleums Ltd. of Calgarywould give Houston-based Burlington Resources Inc. (BR) a Canadianpresence and make the gas-focused company the third largest holderof gas reserves in North America. BR already ranks first among U.S.independent producers in terms of proved U.S. reserves. Late Mondaythe companies announced the stock and debt deal.

Sempra Energy Trading entered into a one-year, $30-$35 milliongas management contract with California’s Department of GeneralServices (DGS) yesterday. Under the terms of the contract, SempraEnergy Trading will provide natural gas management for a total of117 state government buildings including San FranciscoInternational Airport.