Defunct hedge fund Amaranth Advisors LLC, which last year lost more than $6 billion in bad bets on the natural gas market, agreed to pay $716,819 to settle charges with the Securities and Exchange Commission (SEC) that it sold securities short in offerings and covered its positions by buying securities in the offerings, the SEC said last week. The penalty amount breaks down to $150,000 for a civil penalty, $507,627 in disgorgement and $59,192 in prejudgment interest. Amaranth, which is based in Greenwich, CT, neither admitted nor denied the charges. “In connection with five follow-on offerings conducted between November 2004 and February 2005, Amaranth sold securities short during the five business days before the pricing of those offerings and then covered the short positions with securities purchased in the offerings (‘offering shares’),” the SEC said. “These transactions violated Rule 105 of Regulation M, and resulted in funds advised by Amaranth making profits of $507,627.” Companies with shares involved in the Amaranth transactions are Coeur D’Alene Mines Corp., Catapult Communications Corp., Cleco Corp., MEMC Electronic Materials Inc. and American Superconductor Corp. Amaranth told investors that the penalty is unrelated to its natural gas trading activities. Amaranth’s bad bets in the natural gas market first came to light in September (see NGI, Sept. 25).

DCP Midstream Partners LP completed the acquisition of certain natural gas gathering and compression assets in Oklahoma from Anadarko Petroleum Corp. for $180.3 million in cash, subject to customary adjustments. The assets have historically gathered approximately 25 MMcf/d of production in Grady, Garvin and McClain counties in Oklahoma and delivered the gas to a third party for processing. The gathering system consists of approximately 225 miles of pipeline and 9,500 hp of compression. The assets will be operated by the owner of the partnership’s general partner, DCP Midstream LLC (formerly Duke Energy Field Services LLC). “In closing this transaction, we continue to successfully execute upon two of our primary growth objectives, delivering value to our unitholders and increasing the combined midstream footprint of the partnership and DCP Midstream,” said CEO Mark Borer. “These assets are located near existing assets owned by our parent and therefore provide future opportunities to participate in growth projects together.” The partnership will finance the transaction with a combination of debt and equity. The contracts related to these assets are percentage of proceeds arrangements, where the partnership’s revenues correlate directly with the price of the natural gas and natural gas liquids sold after processing. The partnership intends to execute fixed-price swaps for the period from June 2007 through Dec. 31, 2013 to hedge a significant portion of the commodity exposure relative to these assets.

Puget Energy and its principal utility subsidiary, Puget Sound Energy (PSE), expanded senior leadership. Eric Markell becomes executive vice president and CFO; Bertrand Valdman becomes executive vice president and COO; and Kimberly Harris becomes executive vice president and chief resource officer (CRO). Markell joined the company in 2002, Valdman in 2003 and Harris in 1999. “Their new assignments will broaden and focus the management expertise of our entire leadership team. This realignment adds more focus to our efforts to continue to improve our gas and electric [utility] service, to our development of a full range of energy and energy efficiency resources, and to improving our financial ability to deliver on our region’s expectations,” said CEO Stephen Reynolds. Puget’s PSE utility is the state of Washington’s oldest and largest private-sector utility, serving 1 million electric and 718,000 natural gas customers in 11 counties — primarily in western Washington.

At the Midyear Issues Summit in Point Clear, AL, the chairman of the Interstate Oil and Gas Compact Commission (IOGCC) said the group’s 30 member states and seven associate member states will continue to push for federal funding to plug orphaned wells in the states. Commission Chair John Hoeven, governor of North Dakota, said the IOGCC remains committed to environmental protection, and in particular the abandoned wells. “There are believed to be tens of thousands of orphan wells in this country,” said Hoeven. “Many of these wells are very shallow and pose no risk to the environment. However, there are others that are unplugged or inadequately plugged and are a genuine threat to the environment and safety. We have focused on these problem wells and are working with Congress on federal funding for a permanent fix.” The IOGCC also renewed a memorandum of understanding (MOU) with the Environmental Protection Agency (EPA). The MOU was created in 2002 to improve regulatory cooperation among the states and the EPA, to promote protection of the environment in a cost-effective manner, to minimize regulatory duplication between the state and national levels of government and to increase efficiency and communication.

GE Energy Financial Services has partnered with two operators to acquire $154 million in oil and natural gas reserves in western Oklahoma and the Austin Chalk trend of East Texas. In partnership with Bays Exploration Inc., the GE unit paid $79 million for a package of reserves in western Oklahoma. In addition, Energy Financial Services plans to invest up to $60 million for the development of the reserves. In the second transaction, the GE unit partnered with Southern Bay Energy, a subsidiary of GeoResources Inc., to acquire $75 million worth of assets in the Austin Chalk trend. GE plans to invest an additional $27 million to develop these properties. An affiliate of GE Energy Financial Services holds limited partnership interests in the two separate partnerships, with Bays Exploration and an affiliate of Southern Bay Energy serving as general partners and operators of the two entities. Bays Exploration is a subsidiary of Bays Enterprises Inc., an exploration and production company with offices in Oklahoma City and Boerne, TX. Houston-based GeoResources and its subsidiaries and affiliates own and operate properties in the Gulf Coast, Permian Basin, Rocky Mountains and Williston Basin.

Houston-based Linn Energy LLC will spend $90.5 million to purchase some oil and natural gas properties in the Texas Panhandle that add more than 36,00 gross acres and 300 producing wells to its existing assets in the region. The seller was not disclosed. Net proven reserves of the properties total 7 MMboe. The assets are located mostly in Hutchinson, Moore, Carson and Potter counties in Texas. In December, Linn made its initial foray into the Panhandle, paying $415 million to acquire some assets from a privately held Texas-based producer (see NGI, Dec. 18, 2006). The acquisition is expected to close by the end of June, and it will be financed with borrowings under the partnership’s existing credit facility. In addition, Linn expects the acquisition to provide an increase in the borrowing base under its credit facility to $765 million from $725 million. The acquisition is expected to be immediately accretive to distributable cash flow per unit.

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