The United States District Court for the Western District ofOklahoma dismissed the securities litigation filed in late 1997against Chesapeake Energy and its officers and directors and ruledin their favor. The litigation, which originally consisted of 12lawsuits but which was consolidated into one class action suit in1998, charged that Chesapeake had misstated or omitted factsconcerning its activities in the Louisiana Austin Chalk Trend fromJan. 25, 1996 through June 25, 1997. The shareholder suits allegedthat they had been mislead by Chesapeake into thinking that thecompany expected to operate successfully in the entire Austin Chalkarea, including the area outside Masters Creek, resulting in aninflated share price. Shareholders said rather than disclosingunsuccessful drilling results in the outer Masters Creek area,company insiders disposed of nearly 200,000 company shares with amarket value of about $2.2 million. In June 1997, Chesapeakeannounced it expected to take a full-cost write-down of itsinvestment in areas of Louisiana outside of Masters Creek totaling$150 million to $200 million. Following that, Chesapeake’s stockprice plummeted. In dismissing the plaintiffs’ amended complaint onMarch 3, the Court found that throughout the alleged class period,Chesapeake had disclosed to its investors the “precise risks”associated with its investments and activities in the LouisianaTrend. The court also determined that the plaintiffs had providedno factual support for their allegations of misstatements oromissions by Chesapeake.

In outlining his company’s strategy for this year, Union PacificResource’s CEO George Lindahl III said it will continue to focus ononshore North America plays. The company, he said, has budgeted$750 million for capital spending in 2000, including $100 millionfor property purchases. This budget should enable UPR to stabilizeproduction volumes by the middle of the year and increase volumesin the second half, while replacing over 100 percent of producedreserves. UPR also intends to continue the trend of increaseddrilling activity. Twenty-five rigs are now running in the U.S.,compared to 11 at this time last year and 17 at the end of 1999.Drilling in Canada has also picked up, with 11 rigs running today,compared to 13 in March of 1999 and four at year-end. Lindahlfocused on three specific areas that will be vital for thecompany’s growth: the Frontier play in southeast Wyoming’s GreenRiver Basin, South Louisiana’s Etouffee discovery and the Kluawells in British Columbia. “Our exploration activity in Wyoming,south Louisiana and British Columbia shows that we are making goodon our strategy, which is to find and produce natural gasopportunities onshore North America,” Lindahl said. “Our rig countshould continue to increase during the year. Development drillingis one of our strengths and we are hard at it onshore NorthAmerica, in the Gulf of Mexico and in Latin America..We believethat we are off to a good start to delivering value in 2000.”

Wisconsin Energy and WICOR announced they received notificationfrom the Federal Trade Commission that it has closed itsinvestigation into the proposed acquisition of WICOR by WisconsinEnergy. Both companies are moving ahead to complete regulatoryreviews and currently expect to complete the transaction on April26. Wisconsin Energy and WICOR announced the proposed transactionon June 28, 1999. Wisconsin Energy is a Milwaukee-based holdingcompany with subsidiaries in utility and non-utility businesses.Its principal subsidiaries are Wisconsin Electric, Edison SaultElectric, Wisvest, Wispark and Minergy. Wisconsin Electric provideselectric, gas and steam service to about 2.4 million people. WICORis a Milwaukee-based, diversified holding company operating sixsubsidiaries in two industries: energy services and pumpmanufacturing. The subsidiaries are Wisconsin Gas, WICOR Energy,FieldTech, Sta-Rite Industries, SHURflo Pump Manufacturing andHypro Corp.

Williams and Utilicorp United announced a four-year gas supplycontract between Williams Gas Pipeline-Central and a 600 MW powerplant in Cass County, MO, that is 50% owned by Utlicorp. Nofinancial terms were disclosed. Williams said gas is expected toflow in time for the testing phase of the plant in the early summerof 2001. The contract calls for 42,000 Dth/d of firm year-roundservice. There also was a provision to increase that total to86,000 Dth/d during summer service to meet the growing needs ofwestern Missouri. The Aries power plant is expected to use 35,000Dth/d. The start-up date for the facility, which is jointly ownedby Utilicorp and Calpine, is in the third or fourth quarter of2001. In order to meet the agreement with Utilicorp, Williams saidit will have to construct a 1.5-mile, 24-inch pipeline near itsOttawa compressor station in Franklin County, KS. It will also haveto upgrade two 1,350 hp compressors to 2,000 hp and add a 1,590 hpturbine at its Peculiar compressor station in Cass County, MO. Thecompany has already filed at FERC for the construction of thesefacilities.

Northeast Utilities and Yankee Gas parent Yankee Energy System,Inc. have completed their merger nine months after the deal wasannounced. The Securities and Exchange Commission, which hadordered the break up of the two companies a decade earlier approvedthe recombination Jan. 31 based on a much more lax application ofthe Public Utility Holding Company Act. After approving the deallast fall, YES shareholders decided whether to receive $45/share incash or in NU stock. NU will issue over 11 million shares to YESshareholders. In addition, YES shareholders who receive NU shares,as opposed to cash, will be eligible to receive NU’s dividend of 10cents per share, payable on March 31 to NU shareholders of recordas of March 6. In the transaction, NU will pay $478 million for allof YES common equity and will assume about $200 million in debt.The Connecticut Department of Public Utility Control issued itsfinal approval Dec. 29. The companies have identified potentialsavings of at least $10 million over the next five years. NortheastUtilities is New England’s biggest electric utility and Yankee Gasis Connecticut’s biggest gas distribution company.

Sempra Energy’s San Diego Gas and Electric utility unit hasannounced a two-phase auction to sell its remaining 11 purchasepower contracts, which cost the utility nearly $500 million lastyear. The contracts include nine above-market qualifying facility(QF) deals totaling 207 MW; the other two contracts cover another175 MW. Most of the contracts are long-term, with the longestrunning until mid-2025. They represent power generated in Oregon,Arizona and New Mexico, as well as the local San Diego area. In thetwo-phase auction, the first phase will allow nonbinding pricebids, accompanied by the bidders’ financial standing andcreditworthiness. SDG&E has retained Morgan Stanley Dean Witterto evaluate the Phase 1 bids and select participants for Phase 2.Phase 1 bids are due March 28; binding bids for Phase 2 will be dueMay 9.

Kinder Morgan announced the sale of Orcom Solutions to LivewireUtilities LLC for an undisclosed sum. Orcom was a wholly ownedsubsidiary of en*able, a 50-50 joint venture between KMI andPacifiCorp Group Holdings, Inc. Orcom is an application serviceprovider of billing and customer care services to the utility andenergy industry. “The sale of our interest in Orcom is consistentwith our ‘back to basics’ strategy to focus on the operation of ourcore businesses and completes the process of exiting en*able andrelated activities,” said Richard D. Kinder, chairman and CEO ofKinder Morgan. “This transaction is another step in the executionof our gameplan to divest our non-core assets, which we expect tocomplete in the first quarter of this year.” The series ofdivestitures follows Kinder Morgan’s $654 million merger with KNEnergy last July (see Daily GPI, July 12).

Exelon Capital Partners, the energy services and marketing armof PECO Energy, and Orion Ltd., an international energy networkmanagement company, announced a partnership last week. The newcompany, called CIC Global, LLC, is an international technologycompany focused on providing real time energy and bill paymentinformation to residential and small commercial/industrialcustomers. CIC Global plans to reveal its products in Philadelphialater this year. The partnership’s main goal is to give customersmore control over their energy use and payment options. Using thebilling and payment systems of Orion and the communication systemsof Exelon, CIC Global said it will provide reliable two-waycommunication to the customer’s electricity meter and open newchannels for access to information and services.

Sparked by demand to simplify the billing procedures in itsderegulated electricity and gas industries, the New York StatePublic Service Commission (NYPSC) approved a recommendation lastweek allowing customers who choose an alternative supplier theoption to receive a single, combined bill for each utility service.Under the new billing structure, the customer can choose if thebill for gas or electric service is issued by the utility or theenergy services company (ESCO) chosen by the customer. Previously,the commission allowed the availability of a two bill arrangementunder which the utility company would bill for electric or gasdelivery services and the ESCO would bill for the electricity ornatural gas and any other services provided. While several singlebill options were voluntarily developed by some of the utilities,the commission’s action will ensure the availability of a uniform,single-bill option statewide, the commission said. The single billrequirements will apply to the 10 major gas and electric utilitiesin the state. It is anticipated that the new tariffs will takeeffect in October of this year.

TXU of Dallas sold substantially all of the assets of its gasprocessing subsidiary in Texas, TXU Processing Co. (TXUP), toCantera Resources Inc. for $105 million. TXUP (previously known asEnserch Processing Inc.) has 162 full-time employees, now bound forCantera, and owns and operates nine gas processing plants suppliedby more than 1,800 miles of company-controlled gathering lines withinstalled gathering compression of more than 34,500 horsepower. TXUsaid TXUP does not align with its core businesses. The gasprocessing business was part of Enserch, which was merged with TXU,called Texas Utilities at the time. Spokesperson Sandy Smith saidit was decided last summer that TXUP would be sold. “We areconfident that this sale represents the best prospects for TXUP andits staff, and that TXUP will be a valued addition for CanteraResources,” said TXU President David Biegler. The deal is expectedto close in the second quarter. Cantera, headquartered in Denver,was recently organized by Grew W. Sales and Keith R. Finger, theformer CEO and CFO, respectively, of Highlands Gas Corp. andMountain Gas Resources. Morgan Stanley Dean Witter Private Equityis the company’s principal investor.

The Electric Power Research Institute (EPRI ) said it hascreated a new program that focuses on Internet security issues asthey impact the energy industry in response to a series of recenthacker incidents, which brought e-business to a halt on severalhigh profile websites. There is a growing concern that similarintrusions could interrupt the critical interdependent systems thatsupport the global energy infrastructure. “Our immediate focus ison the vulnerabilities of the electronic systems that monitor andoperate our business systems and provide critical communicationswithin and outside the energy business,” said Charlie Siebenthal,manager of EPRI’s Enterprise Infrastructure Security (EIS) program.”In the long term, the EIS program will shift its emphasis to thedesign and management of electronic security activities that willaugment a company’s existing physical security programs.” Theprogram will consist of a series of workshops covering broadprogram issues, in-depth electronic security technical issues, andlegal issues. Participation is open to any company actively engagedin the production, transportation, distribution, or sale of energy.The first EIS workshop will be held April 26-28, 2000 in Orlando,FL. Details are posted on the program website,https://eis.epri.com/. For additional information on the EIS programplease contact Susan Marsland (650/855-2946) or atsmarslan@epri.com.

Kinder Morgan Energy Partners, L.P. has purchased all of ShellCO2 Co. by acquiring a 78% limited partner interest and a 2%general partner interest from affiliates of Shell Exploration &Production. KMP already owns a 20% limited partner interest. Thetransaction price is $185.5 million, and closing is expected tooccur within the next few weeks. Shell CO2 is the largesttransporter and marketer of carbon dioxide in the United States,currently delivering 400 MMcf/d. Carbon dioxide (CO2) flooding is aproven technology for increasing the production of oil reserves.

Morgan Stanley Dean Witter Private Equity, Goldman Sachs andWarburg Pincus Ventures invested $35 million in NetworkOil Inc., aglobal Internet marketplace for petroleum equipment and services.It is the company’s second round of fund raising. The first roundraised $12.5 million from investors exclusively engaged in the oilindustry. “During our evaluation of NetworkOil, we recognized acombination of strengths, including management’s energy-industryexpertise and the company’s customer-focused business model.NetworkOil is rapidly signing both buyers and sellers, which webelieve is the key to quickly building a liquid and neutralmarketplace,” commented Michael Hoffman, managing director ofMorgan Stanley Dean Witter Private Equity. Houston-basedNetworkOil’s electronic exchange provides a secure, neutral forumfor conducting a variety of transactions, including requests forbid, auctions and reverse auctions. For more information seehttps://www.networkoil.com. “We believe that NetworkOil ispositioned to succeed in streamlining oil-and-gas procurement,benefiting both buyers and sellers,” said Randy Blumenthal,managing director of Goldman Sachs. “The company is the first-moverin the category and is backed by a significant number of oil andgas companies with aggregate capital spending in excess of $8.5billion.”

Con Edison Energy (CEE), a wholly owned subsidiary ofConsolidated Edison has won a contract to supply 20% of wholesalepower required for Western Massachusetts Electric Co.’s (WMECO)standard distribution service. Under the terms of the one-yearcontract, CEE will also be responsible for supplying the capacityand ancillary services associated with the energy delivery. “We areexcited about the opportunity to use our wholesale tradingexpertise to meet the needs of WMECO’s customers as well ascapitalizing on our generation assets located in WesternMassachusetts,” said Charles Weliky, Con Edison Energy COO. ConEdison Energy purchased 290 MW of fossil and hydroelectricgenerating assets auctioned by WMECO in 1999. The assets arelocated in Western Massachusetts and include the West SpringfieldStation and an on-site combustion turbine, the Doreen Street andWoodland Road combustion turbine sites and five hydroelectricsites. These facilities established Con Edison Energy’s foothold inNew England, and will provide a mix of intermediate and peakingcapacity as well as “Green Power” energy derived from renewablehydroelectric resources.

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