The New Mexico Public Regulation Commission has unanimously approved a $22 million revenue increase for PNM Resources’ gas utility, with the business rate increase to take effect immediately. The utility serves about 450,000 residential and business natural gas customers in the state. The commission’s final order accepts a compromise agreement negotiated in December by the company, commission staff and the industrial customer group. All parties to the rate proceeding have indicated they would not appeal the order. The settlement provides for a $20 million increase in gas rates and a $2 million increase in other service fees and charges. The new rates offer the company the opportunity to earn a 10.25% return on equity in its gas utility operations. Assuming normal weather, the company estimates that two-thirds of the rate increase will be realized in 2004 earnings. Because of concerns regarding the impact of higher rates during the current winter heating season, the negotiated settlement postpones the start of the residential portion of the rate increase until April 2004, while business customers will see an immediate rate hike. The residential customers will account for about 82% of the total rate increase on an annualized basis, with the remaining 18% from business customers.

Mission Resources Corp. said last week that it has entered into an agreement to acquire an approximately 80% operating working interest in the Jalmat Field in Lea County, NM. The deal with an undisclosed party, will cost Mission $26.7 million in cash. As a result of the transaction, the Houston-based independent said it expects to book net proved reserves of approximately 25 Bcfe. The field is located in the Permian Basin, a region known for its long life fields and one of Mission’s core areas. Net production from these properties is approximately 4.8 MMcfe/d. Mission noted that the gas produced from the Jalmat Field has a very high heating content and is processed in a nearby third party plant to yield significant volumes of natural gas liquids. “This acquisition reflects our strategy of shifting our production mix towards gas, increasing our percentage of operated properties, and driving down unit operating costs,” said Robert L. Cavnar, Mission’s CEO. “We have identified a number of enhancement opportunities beyond the producing component. After closing this transaction, we will implement a program of drilling, recompleting and upgrading production facilities to further enhance value.” To fund the acquisition, Mission said it will utilize proceeds from its previously disclosed divestitures and a minor amount from cash on hand. The company added that it expects the transaction to close in the next several weeks. The exploration and production company operates in the Permian Basin, along the Texas and Louisiana Gulf Coast and in the Gulf of Mexico.

In addition to moving around some of its executives and appointing a few new ones (see related brief), Richmond, VA-based Dominion also has separated two operating functions overseen by its Dominion Energy operating unit. Under the new organizational structure, the former Dominion Energy operating unit is divided into two separate business segments — Dominion Generation and Dominion Energy. Dominion Generation will manage the company’s portfolio of more than 24,000 MW of generation. Dominion Energy will manage the company’s electric transmission, marketing and natural gas pipeline and storage businesses. This change was effective Jan. 1. “We’re seeking to place our top talent and energy in positions where they can maximize their contribution to shareholder value. As a matter of ongoing policy, we also seek to streamline our organizational structure. The personnel and organizational changes announced today advance these goals,” CEO Thos. E. Capps said.

The Houston-based Oil & Gas Asset Clearinghouse sold more than $70 million in properties at a two-day hybrid auction in December. The Clearinghouse offered more than 490 lots, and about 600 registered bidders competed. Internet bidders accounted for 34% of the total registered bidders and purchased 30% of the lots offered. The highest property purchased by an Internet bidder sold for $1.725 million. The hybrid auction process allowed Internet bidders to compete simultaneously against live floor bidders. The next hybrid auction will be held Feb. 4 at the George R. Brown Convention Center in Houston, in conjunction with the North American Prospect Expo (NAPE). For more information, visit the web site at www.ogclearinghouse.com.

Contract drilling provider, Rowan Companies Inc., posted fourth quarter 2003 net income of $4.4 million, or $0.05 per share, on revenues of $195.8 million, compared to a net loss of $2.8 million, or $0.03 per share, on revenues of $146.8 million in the fourth quarter of 2002. However, for full-year 2003, Rowan incurred a net loss of $7.8 million, or $0.08 per share, compared to net income of $86.3 million, or $0.90 per share in 2002. The company noted that prior year results included net proceeds from the settlement of the Gorilla V contract dispute, which increased net income by approximately $102 million, or $1.07 per share. Excluding that special item, the company’s 2002 results would have been a net loss of approximately $16 million, or $0.17 per share. Rowan’s offshore rig utilization was 92% during the fourth quarter of 2003, versus 94% in the third quarter and 88% in the year-earlier period. For the fourth quarter, the company’s average Gulf of Mexico day rate of $42,400 increased by $3,300, or 9%, from the third quarter and by $6,900, or 19%, from the year-earlier period. “We are optimistic that 2004 will continue this trend and are confident that Rowan rigs will continue to lead deep-shelf drilling efforts in the ever-tightening Gulf of Mexico market,” said CEO Danny McNease. “Our optimism is supported by recent reports of declining domestic natural gas production and increased estimates of deep-shelf gas reserves. With continuing high oil and natural gas prices, drilling activity should increase. A recent survey of independent operators indicated that 2004 exploration and production activities will exceed 2003 levels by nearly 25%.”

AmerenUE received its first delivery rate increase in more than three years and only its third bump since 1987. The Missouri Public Service Commission (MPSC) on Jan. 13 approved a settlement authorizing the new natural gas delivery rates, which will increase the utility’s operating revenues by $13 million annually. A typical residential customer who heats with natural gas will see an average monthly increase of about $6.55 or 10.2%. The increase will not take effect until Feb. 15. AmerenUE’s investments in gas infrastructure improvements between July 1, 2003, and Dec. 31, 2006, will total at least $15 million. In addition, the company will contribute $155,000 per year to continue funding a weatherization program developed in collaboration with the MPSC Staff, the Office of Public Counsel and the Missouri Department of Natural Resources. The company will also provide $100,000 in annual funding for a pilot program offering weatherization services and rate relief to low-income customers in the Missouri counties of Stoddard and Scott. Based on the recommendation of the Missouri Department of Natural Resources, AmerenUE will also provide $55,000 per year to fund an energy efficient equipment program. AmerenUE serves more than 111,000 natural gas customers in Missouri. Ameren Corp. serves a total of 1.7 million electric customers and 500,000 natural gas customers in a 49,000-square-mile area of Illinois and Missouri.

Lewis Energy Group, headquartered in San Antonio, on Wednesday was the sole bidder to produce natural gas in Mexico’s Burgos Basin for Petroleos Mexicanos (Pemex). Lewis estimated it would invest about $340 million over 20 years to produce 40 MMcf/d. The bid is to produce gas from Burgos’ Olmos block, which is located along the Texas border. Olmos is the seventh block tendered by Pemex under its new multiple service contracts (MSCs), which allow outside contractors to manage gas leases for the nationally run Pemex. Under the MSC program, Pemex owns the gas produced and pays set prices for the services. Sergio Guaso, who runs the MSC program for Pemex, said he was “confident” about the Lewis proposal, “because they know the area; they have the technology and the expertise.” Work on four blocks tendered by Pemex late last year already is underway, according to Pemex. Two other blocks received no bids. Pemex plans to reissue tenders for the Corindon-Pandura and Ricos blocks as soon as February. The four blocks tendered have investment commitments of $4 billion to produce 400 MMcf/d.

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