In an interim report, Chevron Corp. said its 2Q2007 results will gain on higher upstream commodity prices, stronger refining margins and the sale of its interest in Dynegy Inc. Partially offsetting earnings will be net charges related to debt redemption and other corporate items. Based on data from the first two months of 2Q2007 (April and May), Chevron said U.S. oil-equivalent production increased an estimated 1% sequentially from 1Q2007. Oil-equivalent growth follows restoration of Gulf of Mexico volumes following third-party pipeline disruptions. However, the higher output was partially offset by scheduled maintenance and other downtime. U.S. oil-equivalent production reached 755,000 boe/d in the first two months of the quarter, compared with 768,000 boe/d for the entire 2Q2006. U.S. natural gas output reached 1,714 MMcf/d in the first two months, compared with 1,832 MMcf/d for the entire 2Q2006. For the entire 2Q2007, Chevron said U.S. natural gas realizations were up 16 cents/Mcf, but bidweek pricing was mixed. Henry Hub gas prices averaged $7.56/Mcf for the entire 2Q2007, compared with $6.81 in 2Q2006. Rocky Mountain gas prices averaged $3.72/Mcf for the entire quarter, down from $5.26 in 2Q2006. Chevron is scheduled to report its quarterly results on July 27.

San Antonio-based Abraxas Energy Partners LP will launch an initial public offering to secure funding for its South and West Texas drilling programs. The timing and financial details were not disclosed. The master limited partnership was created in May by independent Abraxas Petroleum Corp., which targets conventional reservoirs and emerging resource plays in the Permian Basin of West Texas, onshore along the Texas Gulf Coast and in the southern Powder River Basin of eastern Wyoming. Abraxas initially contributed its Texas assets to the partnership, and it owns about 47%. Institutional investors own the remaining 53%. West Texas exploration is focused on two core areas: the Delaware Basin in Ward, Reeves and Pecos counties, TX; and along the Eastern Shelf in Scurry, Mitchell and Coke counties, TX. The South Texas operations are concentrated in three areas: Edwards (DeWitt and Lavaca counties), Portilla (San Patricio) and Wilcox (Goliad). In June, Abraxas Petroleum CEO Bob Watson said the company would target the Delaware Basin “and several high-impact exploratory projects on internally generated prospects in the Wilcox formation of South Texas” through the rest of this year.

Houston-based Linn Energy LLC, which is acquiring Dominion Resources Inc.’s Midcontinent oil and natural gas assets for $2.05 billion (see NGI, July 9), has signed hedging contracts that include a commitment for price swaps once the Dominion deal closes. The hedging contracts cover 40 Bcf of gas and 800,000 bbl of oil for 2008 through 2012, or five years, with weighted average swap and put prices of $8.50/Mcf for gas and $73.50/bbl for oil. In addition, the contracts cover 7.8 Bcf of gas and 157,000 bbl of oil for the fourth quarter, with weighted average swaps and put prices of $8.54/Mcf for gas and $73.78/bbl for oil.

ConocoPhillps has approved a share buyback of up to $15 billion through the end of 2008. The program includes $2 billion in stock repurchases under a previously announced $4 billion buyback. Based on its current commodity price and operational outlook, the Houston-based producer plans to repurchase $2-3 billion in stock in both the third and fourth quarters. It also plans to pay a 41-cent quarterly dividend on Sept. 4 to shareholders of record on July 31.

FERC last week approved Northern Natural Gas Co.‘s proposal to increase the certificated storage capacity of its Redfield Storage Field in Dallas County, IA, by 2.1 Bcf to 124.10 Bcf. The withdrawal rate of the facility will remain the same — 460 MMcf/d. Northern Natural sees this as an interim step for this summer, pending approval of a related request to expand Redfield’s capacity by 8 Bcf.

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