Stone Energy said it has entered into gas put contracts with three separate counterparties covering 90,000 MMBtu/d of its 2004 Gulf Coast Basin production. The contracts set a 2004 floor price on the production of $3.50/MMBtu. Monthly payments are scheduled to be made by the counterparty if Nymex prices fall below the floor price. But Stone is able to fully participate in commodity prices above the floor price. The cost of the contracts, which totaled $2.4 million, will be amortized through earnings as the contracts settle. Previously, the company was unhedged for its 2004 natural gas production from the Gulf Coast Basin. The company continues to evaluate additional cost-effective hedging opportunities for its 2004 oil and natural gas production.

KeySpan Corp. subsidiary KeySpan Energy Development completed the sale of its 24.5% interest in Phoenix Natural Gas to East Surrey Holdings for $96 million. Phoenix is a gas distribution company based in Belfast, Northern Ireland. East Surrey, which had owned 24.5% of Phoenix Natural Gas, has also purchased the 51% interest of the other shareholder, BG Group, a global energy company based in the United Kingdom. The sale of KeySpan’s interest and BG Group’s interest occurred simultaneously, making East Surrey Holdings the 100% owner of Phoenix Natural Gas. KeySpan originally purchased its interest in Phoenix in February 1997. Since then, the business has expanded from a single customer to more than 64,000.

Calgary-based AltaGas Services Inc. on Thursday entered into a purchase and sale agreement with Gibson Energy Ltd. to acquire Gibson’s interests in two natural gas processing systems, Rainbow Lake and Mica Pouce Coupe, for approximately C$17 million. The Rainbow Lake gathering and processing system, located near the town of Rainbow Lake in northwestern Alberta, includes a 100% interest in a 40 MMcf/d sour natural gas processing facility with throughput of approximately 28 MMcf/d and includes 130 kilometers of gathering pipelines. AltaGas said the facility is supported by extensive land dedications in an area with strong producer activity. AltaGas will also have 40.78% ownership in the Mica Pouce Coupe sweet gas processing facility. The Mica Pouce Coupe acquisition is expected to close in early January subject to rights of first refusal by the owner partners, while the Rainbow Lake acquisition is expected to close before the end of December, 2003.

Calgary-based Imperial Oil Resources, ExxonMobil Canada and Chevron Canada Resources have acquired the exploration rights for eight deepwater parcels offshore Newfoundland. The Canada-Newfoundland Offshore Petroleum Board awarded several exploration licenses for offshore areas in a region known as the Orphan Basin. The companies were awarded exploration licenses for the parcels after proposing exploration spending of C$673 million, with Imperial and ExxonMobil Canada 25% stakeholders and Chevron Canada a 50% stakeholder.

Denver-based Westport Resources Corp. has completed its acquisition of oil and natural gas assets in South Texas from privately held United Resources for $350 million. The acquisition increases Westport’s total proved reserves by approximately 211 Bcfe, of which 97% are natural gas. About 60% of the added proved reserves are classified as proved developed, and Westport has identified more than 100 Bcfe of probable and possible potential and an exploratory prospect inventory comprised of 48,000 gross (25,000 net) undeveloped acres. The acquired properties produced approximately 27 Bcfe in 2003 and Westport expects to increase production more than 10% during the next twelve months. The properties have an average lease operating cost of approximately 50 cents/Mcfe and a reserve to production ratio of approximately eight years based upon estimated 2003 production.

Kinder Morgan Inc. (KMI) expects 2004 earnings to be 12% higher than this year, while its master limited partnership, Kinder Morgan Energy Partners LP (KMP), should see growth of at least 8%. KMI management pegs 2004 earnings at $3.67/share, up from 2003 consensus earnings estimates of $3.29. The forecast includes contributions from assets now owned by KMI and don’t include any acquisitions. KMI’s expected cash flow in 2004, defined as pretax income, was estimated at approximately $570 million. Meanwhile, KMP management expects to declare cash distributions of $2.84/unit in 2004, which would be 8% higher than this year’s distributions of $2.63. However, CEO Rich Kinder noted that KMP’s earnings may be even higher in the new year. Kinder explained that the 2004 budgets will be the standard by which KMI and KMP measure their performance next year and will be the target for determining employee bonuses. “It is important to note that although we are optimistic about our chances for making accretive acquisitions in 2004, we have not included any benefits from unidentified acquisitions in our base budgets.” The CEO said the company remained “committed to transparency, and we will continue to review and explain any variances to the budgets during our quarterly earnings calls.” Detailed budgets for both KMI and KMP will be published and discussed during the company’s annual analyst meeting Jan. 24 in Houston.

A new rule for oil and gas production in federal offshore waters now provides rights-of-use and easement, allowing companies easier access to areas adjacent to their leases, according to the Minerals Management Service (MMS). According to the MMS, complex operations in deep waters have created situations where companies have requested use of several square miles for purposes related to a lease or a pipeline. The final rule requires lessees to pay a rental fee when they obtain an easement, and it also increases the amount pipeline right-of-way holders pay. The rule also establishes fees on a per-acre basis. When a company requires use of an area for a platform in connection with a pipeline or requires use of an off-lease area for purposes related to the operation of the lease, the company may obtain use of the area. Without this change in the regulations, there is no charge for a right-of-use and easement and the charge for an area associated with a pipeline right-of-way is a flat fee. The rule includes a yearly rental of $5 per acre affected in water depths less than 200 meters and $7.50 per acre per year in deeper water. A minimum annual rental will be charged based on 90 acres. The minimum rental is $450/year in water less than 200 meters deep and $675/year in deeper water. For more information on the final rules, visit the web site at www.mms.gov.

Scana Energy has obtained a definitive agreement to acquire Energy America LLC‘s 50,000 customers in the Georgia for an undisclosed amount. With this transaction, Scana’s total customer base will increase to more than 450,000 in Georgia, which represents about 30% of the 1.5 million customers in the state’s natural gas market. Energy America, Centrica’s Stamford, CT-based retail marketer, announced in October that it would exit the Georgia market. Besides its 360,000-plus unregulated customers in Georgia, Scana’s regulated division also serves more than 43,000 low-income and high credit risk customers there. The transaction, subject to regulatory approval, is expected to close by March. George Devlin, general manager of the Scana Corp. subsidiary, said he expects a smooth, uninterrupted transition for all Energy America customers once the transaction is finalized.

After its first attempt collapsed in October, Harken Energy Corp. said last week that it has sold the majority of its oil and gas properties located in the Panhandle region of Texas for approximately $7 million in cash. Harken had said that it considered the Panhandle assets as non-core assets since the majority of Harken’s domestic reserves and production are located along the Gulf coast regions of Texas and Louisiana. Harken’s Gulf coast assets are primarily natural gas. With the proceeds from the sale, Harken said it repaid all outstanding bank debt, which came to about $4 million. In October, Harken announced that its previously announced agreement for the sale of the properties had been terminated by both parties. That transaction was expected to close on Nov. 5. Harken enlisted Petrie Parkman as a financial advisor to help in the divestment of the assets.

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