Williams has completed the sale of three straddle plants in southern Alberta to Inter Pipeline Fund of Calgary for C$715 million (US$536 million). The sale includes Williams’ 100% ownership interest in the Cochrane and Empress II plants, and Williams’ 50% ownership interest in the Empress V facility. The sale does not include Williams’ olefins business that extracts natural gas liquids and olefins from oil sands refining near Fort McMurray, AB. The liquids are then fractionated into various products at a Williams facility near Redwater, AB. In addition to the proceeds from the sale, the transaction will release approximately $30 million in U.S. funds of letters of credit and prepayments back to Williams by the end of the year. Williams expects to record an estimated pre-tax gain of $190 million in U.S. funds on the sale, which will be reported in discontinued operations in its third quarter financial results.

Successful drilling programs in East Texas, the Arkoma Basin and the River Ridge discovery in New Mexico helped Southwestern Energy Co. grow its natural gas and oil production 25% in the second quarter. The Houston-based independent reported its production reached 12.6 Bcfe in the quarter, up from 10.1 Bcfe a year earlier. Output was also up sequentially from the first quarter’s 11.4 Bcfe. Based on its exploration success to date, Southwestern now targets 2004 oil and gas production at 50-52 Bcfe, an increase of 22-26% over the company’s 2003 production of 41.2 Bcfe. The increase comes on the heels of a forecast in June that put this year’s output at 48.5-50.5 Bcfe. In the first half of 2004, the company participated in drilling 93 wells. Of these, 67 were successful, seven were dry, and 19 were in progress at the end of the second quarter, for an overall success rate of 91%. Earnings-wise, the company said quarterly net income more than doubled to $20.8 million (56 cents/diluted share) from $9.5 million (26 cents) for 2Q2003. Net cash provided was $50.3 million, up 76% from $28.5 million a year ago.

San Diego-based Sempra Energy’s two utilities filed a partial settlement in their joint cost-of-service rate filing with the California Public Utilities Commission. The settlements are geared to allow San Diego Gas and Electric Co. (SDG&E) and Southern California Gas Co. (SoCalGas) to avoid the need for future general rate case filings until 2008. The focus of the settlement filed with the CPUC was on earnings sharing between utility shareholders and retail ratepayers, cost-of-capital issues and future rates and revenue requirements. According to the filed settlement, SoCalGas would have an annual revenue requirement of about $1.5 billion this year, while SDG&E’s revenue requirement would be a little more than $1 billion in 2004. In the years between now and 2008, the two utilities will be able to raise their revenue requirements by percentage ranges each year. For example, SoCalGas can raise its revenue requirement next year by 2% to 3%; SDG&E by 3.2% to 4.2%, and the percentages increase each year, with the utilities being able to go up to 4.3% and 4.8%, respectively in 2007. The fundamental issue of the use of incentives and how they are applied still needs to be resolved. Consumer advocates, for example, wants penalties to be applied as well as rewards, if the utilities fall significantly short of their targets on reliability,safety and customer satisfaction. Current PBR processes provide only for rewards.

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