New Orleans-based Energy Partners Ltd. (EPL), which has been trying to avoid a takeover by Australian-based Woodside Petroleum Ltd. subsidiary ATS Inc., lowered its 3Q2006 production guidance, citing equipment delays and mechanical issues at its South Timbalier and Eugene Island leases. The mechanical and equipment issues have been resolved, and EPL expected output to reach about 30,000 boe/d earlier this month. EPL last month rejected the ATS takeover offer of about $883 million, or $23/share (see NGI, Sept. 18). The ATS offer has been extended to Oct. 20. ATS also is seeking to remove EPL’s board, and it is soliciting proxies from shareholders to vote against EPL’s proposed $2.2 billion acquisition of Lafayette, LA-based Stone Energy Corp. (see NGI, June 26).
Houston-based independent Plains Exploration & Production Co. (PXP) raised its capital spending estimate for 2006 to $610 million from $526 million, and said most of the additional funding will target the deepwater Gulf of Mexico (GOM). In a 3Q2006 interim update, PXP said asset sales will reduce 4Q2006 production volumes to 54,000-60,000 boe/d, down from a prior estimate of 63,000 boe/d. PXP agreed in August to sell some of its noncore assets in California and Texas to Occidental Petroleum Corp. for $865 million in cash (see NGI, Aug. 14). PXP also expects to complete the sale of some of its deepwater GOM assets to Norwegian-based Statoil ASA in early November, which would affect 4Q2006 results. Statoil agreed to pay PXP $700 million to acquire the working interests in two discoveries and one deepwater project (see NGI, Sept. 25). The agreement with Statoil will allow PXP to accelerate the early stage development of its remaining prospects in the Miocene trend in the deepwater GOM.
One of the first ex-energy traders to be indicted for taking part in a scheme to manipulate natural gas prices by reporting false information to industry publications was sentenced Thursday to two years in prison. Former El Paso Corp. energy trader Todd Geiger was arrested in December 2002, and he pleaded guilty a year later to reporting inaccurate information under the Commodity Exchange Act to Platts Inside FERC’s Gas Market Report (see NGI, Dec. 15, 2003; Dec. 9, 2002). Geiger had faced up to five years in prison and a fine of up to $500,000. However, his sentencing was delayed several times while he cooperated with federal authorities in their investigation into other ex-energy traders. In a joint motion, both the prosecution and Geiger’s defense team requested the reduced sentence. Geiger was sentenced in Houston by U.S. District Judge Nancy Atlas. She placed him on probation for two years after he is released from prison, but she imposed no fines.
The Bureau of Land Management (BLM) said it is seeking public comment on an environmental assessment analyzing the potential impacts of the ExxonMobil Piceance Development Project, which is about 15 miles west of Meeker, CO. ExxonMobil proposes expanding its natural gas drilling activities and related infrastructure in the 28,800-acre project area, including the addition of a 150 MMcf/d gas treating facility to handle production from 120 new multi-well pads. The existing gas fields in the area have been in continuous operation since the 1950s. The EA analyzes the potential impacts of drilling up to 1,080 new wells from 120 new multi-well pads, as well as a new gas plant, new pipelines and other associated infrastructure. The White River Field Office will host a public open house meeting from 6 p.m. to 8 p.m. Oct. 18 in Meeker to share information on the proposed project and alternatives. BLM will accept public comment on the environmental assessment through Nov. 3. For more information visit the BLM’s White River Field Office website at www.co.blm.gov/wrra or contact Carol Hollowed at (970) 878-3800.
Crosstex Energy LP said it purchased the amine-treating business of Cardinal Gas Solutions LP for an undisclosed sum. The acquisition adds 12 dew point control plants and eight amine-treating plants to Crosstex’s plant portfolio. The company now has 168 amine-treating plants and 37 dew point control plants in service.
Dallas-based EXCO Resources Inc., which went public earlier this year, has completed its acquisition of Winchester Energy Co. Ltd. and its affiliated entities from Progress Energy Inc. for $1.16 billion. The purchase, announced in July (see Daily GPI, July 25), gives EXCO about 400 Bcfe in proved natural gas reserves, bringing its total proved reserves to 1.3 Tcfe. The purchase also included 330 Bcfe in probable and possible reserves in East Texas and North Louisiana and current production of 75 MMcfe/d from 588 producing wells in the Cotton Valley, Hosston and Travis Peak trends. In addition, it included about 775 drilling locations, 106,000 net acres of leasehold, six gathering systems with 300 miles of pipe and a 54-mile, 16-inch diameter transmission line with throughput of 115 MMcf/d, 35% of which is company owned.
For those looking for a detailed econometric analysis of the relationship between crude oil and natural gas prices, the Energy Information Administration (EIA) released a new 43-page analysis by EIA’s Jose A. Villar and Frederick L. Joutz of George Washington University. The report identifies a “significant stable relationship” between Henry Hub gas prices and West Texas Intermediate crude oil prices from 1989 through 2005. Oil prices are found to influence the long-run development of natural gas prices, but are not influenced by them. The dynamics of a “cointegrating relationship” between the two suggest a “one-month temporary shock to the WTI of 20% has a 5% contemporaneous impact on natural gas prices, but is dissipated to 2% in two months. A permanent shock of 20% in the WTI leads to a 16% increase in the Henry Hub price one year out all else equal.” For a copy of the report, go to https://www.eia.doe.gov/.
Calgary-based Pengrowth Energy Trust and cross-town Esprit Energy Trust have completed their business combination, after more than 99% of the unitholders voted to approve the deal. Esprit was spun off from the former Canadian 88 Energy Corp. in 2004 (see Daily GPI, Sept. 6, 2004). Pengrowth, which is one of the largest energy trusts in Canada, said it expects 4Q2006 production will average about 81,000 boe/d. The combined trust has total proved plus probable (3P) reserves of 300 million boe, weighted 51% to natural gas, with a reserve life of 10.6 years. The combined trust has a total of 683,000 net acres of undeveloped lands and development potential, including enhanced oil recovery in its focus area around Swan Hills, Judy Creek and Carson Creek, extensive shallow gas opportunities and coalbed methane resource development.
Tulsa-based Unit Corp. said subsidiary Unit Petroleum Co. is acquiring privately held Brighton Energy LLC for $67 million in cash. The acquisition includes about 27 Bcfe of proved reserves and 6 MMcfe/d of current production. The reserves are 78% natural gas and 67% proved developed. Most of the acquired reserves are located in the Anadarko and Gulf Coast basins of Oklahoma, Texas and Louisiana, with additional reserves in Arkansas, Kansas, Montana, North Dakota and Wyoming. Unit subsidiary Superior Pipeline Co. LLC also has completed its acquisition of privately held Berkshire Energy LLC for $21.7 million. Berkshire’s assets include a natural gas processing plant, gathering system with 15 miles of pipeline, three field compressors and two plant compressors. Current plant capacity is 15,000 Mcf/d, and it has system inlet volume of about 7,000 Mcf/d.
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