In a first quarter interim report for 2003, ChevronTexaco Corp. (CVX) reported its U.S. oil and gas production was up 5% over the final quarter of 2002, and said U.S. upstream annual earnings may rise $50 million this year on every $0.10/Mcf rise in natural gas realizations. In the first two months, CVX noted that its gas realizations increased $1.33/Mcf. However, CVX also warned in the interim report that it expects to record a series of changes for the first quarter of between $30 million to $50 million because of asset impairment in its downstream segment globally, as well as charges of between $200 million to $225 million for its “other” segment, which includes Dynegy Inc. CVX still controls 26% of Dynegy’s shares, which have fallen dramatically in the past year. The San Ramon, CA-based major also expects first quarter pension expenses will be about $40 million higher than those in the fourth quarter of 2002, with expenses spread across all segments of the company. The fourth quarter pension expenses were not detailed by CVX, but for all of 2002, they were about $368 million, according to a CVX Form 10-K filed with the Securities and Exchange Commission. Another charge of $200 million to $250 million will be taken as CVX adjusts its accounting system to conform with new financial standards, the company said.

Despite its other troubles, Reliant Resources Inc. (RRI) increased its after-tax operations for 2000 through 2002 by $17 million after miscalculating hedge ineffectiveness in 2001 and 2002 and eliminating four previously disclosed natural gas swap transactions from 2000 and 2001 that should not have been recorded. For 2000, RRI reported a $13 million increase, or 6%, to $223 million, compared with its previous report. Net income for 2001 as restated will be $563 million, or $2.03 a share, a 1% gain that added $6 million compared with the previous report. For 2001, RRI reported a loss before a cumulative effect of accounting changes, of $263 million, or 91 cents a share, reflecting a $2 million increase in the net loss for restatement and other accounting adjustments. RRI recognized a $482 million charge in the final quarter of 2002 after selling its European operations.

The Public Utilities Commission of Ohio (PUCO) has approved interim gas cost recovery (GCR) rates for Columbia Gas of Ohio, Dominion East Ohio and Cincinnati Gas & Electric (CG&E). The rates are for the pass-through gas commodity portion of retail customer bills and reflect the cost of gas each quarter. Columbia’s interim GCR rate is $8.7063/Mcf for the month of April 2003. Dominion’s interim GCR rate is $7.052/Mcf for the month of April 2003, and CG&E’s interim GCR rate is $6.605/Mcf for the months of April and May 2003. The GCR enables the utility to correct for any over or under-collections of natural gas costs in previous periods. The PUCO audits the utility companies to ensure that no profit or loss is made on the price charged to consumers for natural gas and that the utilities strive to purchase reliable and economic gas supplies. Ohio’s natural gas utilities earn their profits through the distribution of gas. The interim rates approved by the commission reduce the likelihood of a large future adjustment for any over- or under-recovery of gas costs resulting from the companies’ initially filed GCR rates. In December and January, the filed quarterly GCR rates were $7.5774/Mcf for Columbia, $6.006/Mcf for Dominion and $5.988/Mcf for CG&E. For more information, visit the PUCO web site at www.PUCO.ohio.gov.

CMS Energy said last Tuesday that it has received approval from a consortium of banks to extend the maturity date of a revolving credit facility from March 31 to the earlier of June 30, 2003 or the closing date of the sale of CMS Panhandle Companies. In late December (see Daily GPI, Dec. 24, 2002), Southern Union Co. and AIG HighStar Capital LP reached a definitive deal to buy CMS Energy’s Panhandle natural gas pipelines and liquefied natural gas (LNG) facilities for an estimated $1.83 billion. CMS Energy noted that its credit facility had an original obligation of $295.8 million, of which $172 million has been paid down.

In its first financial report since going public, Dallas-based Crosstex Energy LP reported positive annual and quarterly financial results and progress on its growth track, which has included several recent pipeline and processing plant acquisitions. Fourth quarter 2002 net income was $0.5 million compared to a net loss of $6.6 million for the same quarter in 2001, which was negatively impacted by a $5.7 million charge associated with the Enron bankruptcy. Gross margins were $8.7 million for the fourth quarter of 2002, compared to $8.1 million in the fourth quarter of 2001. For the year, gross margins were $32.7 million compared to $24.2 million, and net income was $2 million compared to a net loss in 2001 of $3.9 million. Distributable cash flow for 2002 was $11.8 million compared to $3.1 million in 2001. In 2002, pipeline throughput increased 25% to 392,608 MMBtu/d, gas processed increased 41% to 85,581 MMBtu/d and treating plants in operation increased to 35 from 30. “We integrated several key acquisitions, giving us better coverage of the Texas Gulf Coast area and expansion into the Florida market,” said CEO Barry E. Davis. “Since our IPO, we have acquired two new assets that will be significant contributors to our future. We continue to see growth opportunities in the midstream sector.” The company recently formed a joint venture to build a new gathering system to gather Barnett Shale natural gas production in Denton County, TX. It also started selling natural gas to Florida markets after making connections to portions of the Florida Gas Transmission system that it purchased in June 2002. Crosstex also recently completed the acquisition of the remaining 50% interest in the Will O Mills treating plant in Val Verde County, TX.

El Paso Corp. said it has already completed or entered into more than 50% of the company’s targeted $3.4 billion asset sales goal for 2003. In just these first three months, El Paso has totaled over $1.7 billion in signed or completed asset sales. The company recently sold its asphalt business, its stake in the ECK Generating project, its remaining share of the Alliance Pipeline and its oil and gas assets in Drumheller, AB. The asset sales support El Paso’s previously announced 2003 five-point business plan, which includes exiting non-core businesses quickly but prudently, and strengthening and simplifying the balance sheet while maximizing liquidity. El Paso received $63 million for the asphalt business. The company also sold its 17.8% interest in the ECK Generating project and affiliated businesses to a Swiss energy company. Located near Prague, Czech Republic, the project is a 343 MW power generating station that provides approximately 3% of the country’s total electricity demand. Financial terms were not disclosed. El Paso also completed the sale of its remaining 2.1% equity interest in Alliance to affiliates of Enbridge Inc. and Fort Chicago Energy Partners L.P. for $24.4 million. Fort Chicago and Enbridge had already acquired the majority of El Paso’s interests in the pipe and all of El Paso’s interest in the Aux Sable natural gas liquids plant and Alliance Canada Marketing in November 2002. El Paso also closed the sale of its Drumheller area oil and natural gas assets, production facilities, gas plants and undeveloped lands to Canadian Superior Energy Inc. for $36.1 million.

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