Kinder Morgan Inc. (KMI) reported a 17% year-over-year hike in earnings in the third quarter, driven by strong performance from its general partner, Kinder Morgan Energy Partners LP (KMP), as well as another solid quarter from its fee-based assets. Earnings per share beat the Street by a penny, at 77 cents in the third quarter, up from 66 cents in 3Q02, on net income of $95.6 million, up from $80.4 million a year ago. Cash flow was $130 million in the quarter, and appears to be consistent with KMI’s revised full-year forecast of $530 million. KMI’s original budget was $470 million. KMI’s interest in its master limited partnership contributed $100.3 million of pre-tax earnings, a 14% increase from 3Q02’s $87.9 million. KMP, which also released its quarterly earnings on Wednesday, reported a 10% increase in net income of $174.2 million, or 49 cents per unit, versus net income of $158.2 million, or 50 cents, in 3Q02. Wall Street had forecast KMP’s earnings to average 50 cents for the quarter. At KMI’s Natural Gas Pipeline Company of America (NGPL), earnings rose 4%, to $92.2 million from $88.7 million a year ago. The CEO attributed NGPL’s growth on its ability to successfully re-contract its firm transportation and storage capacity. He added that only 14% of NGPL’s long-haul capacity is scheduled to expire in 2004. TransColorado’s earnings, meanwhile, were up slightly from last year, to $4.9 million versus $4.8 million recorded by KMI for its 50% interest in the same period a year ago.

Driven by net-back growth in its deepwater Gulf of Mexico (GOM) operations, Calgary-based independent Nexen Inc. reported a year-over-year 3% increase in third quarter production. Worldwide, Nexen’s production after royalties was 188 MMboe/d, up from a year earlier but lower than its second quarter number of 195 MMboe/d. In the United States, production after royalties was 48 MMboe/d, and in Canada, the company’s quarterly production was 56 MMboe/d. Overall, natural gas averaged 299 MMcf/d, or 249 MMcf/d after royalties. U.S. production sequentially was affected by a 37-day shut-in of 25 MMcf/d at Eugene Island 295 in the GOM, when permanent production facilities were installed to replace temporary ones that were put in following Hurricane Lili last year. Nexen is forecasting it will grow its production more than 5% this year, with an average rate of nearly 190,000 boe/d after royalties. Cash flow is expected to reach about C$1.8 billion, or C$14 a share, assuming oil prices after US$27/bbl and gas prices average US$4.50/Mcf.

Peoples Energy expects fiscal 2003 earnings to outshine 2002 results, but it also expects them to fall within the lower end of the previously stated range of $2.85-2.95 per share. The company added that it will report fiscal 2003 earnings on Oct. 31. “As we close the books on fiscal 2003, earnings per share will certainly exceed the original targets we provided a year ago of $2.70-2.80 per share and will show significant improvement over 2002 results,” said Thomas M. Patrick, Peoples Energy CEO. “In addition, our common stock dividend was increased to $2.12 per share, and we further strengthened our balance sheet during the past fiscal year. Looking ahead to fiscal 2004 predictions, the Chicago-based company said earnings are expected to be in the range of $2.70-2.85 per share. The company said that its target range for the coming year was based upon continued operating income growth from the company’s diversified energy businesses, ongoing cost control measures, a return to normal weather, higher pension expense, and higher average shares outstanding. The company said it expects to scale back capital expenditures from about $200 million in fiscal 2003 to about $150 million in fiscal 2004.

Houston-based driller Rowan Companies Inc. reported its third quarter offshore rig utilization rate was 94%, compared with 88% in the second quarter and 93% in 3Q02. Day rates increased 25% from the second quarter and were up 17% from the same period a year ago. Land rig utilization was 72% in the quarter, versus 76% in 3Q02. Chairman Bob Palmer said he was pleased that the company had returned to profitability after a net loss last year, but said the company was disappointed with its quarterly performance. “Unanticipated downtime in our Gulf of Mexico fleet hindered our drilling operations and our manufacturing and aviation financial results were less than we anticipated.” Longer term, however, Rowan expects its foreign drilling markets “will continue to attract competitive rigs, further tightening the Gulf of Mexico jack-up market. We are witnessing increasing opportunities abroad for our own harsh environment equipment. We expect that our average Gulf of Mexico jack-up day rates, which increased by 10% in the third quarter, will continue improving during the fourth quarter, and our fleet utilization will again increase. Of course, our optimism is based upon oil and natural gas prices sufficiently high enough to encourage exploration and development drilling by our customers.”

In a private placement, Dynegy Inc. has closed an announced $300 million offering of the aggregate principal amount of additional second priority senior secured notes, which were issued by subsidiary Dynegy Holdings Inc. Net proceeds from the offering, along with existing cash on hand, were used by the Houston-based company to repay $194 million in its remaining outstanding balance under a Term B loan; retire $170 million of a capital lease obligation associated with its CoGen Lyondell generation facility; and to pay some of the transaction fees and expenses.

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