Natural gas pipeline partnership Northern Border Partners LP said strong gas prices and the gain from the sale of a Canadian pipeline stake will push its earnings forecast for 2004 about 10 cents above Wall Street estimates. Net income for 2004 is expected to range between $141-144 million ($2.81-2.77/unit), including a $3.4 million (7 cents/unit) gain from selling a stake in its Gregg Lake/Obed Pipeline in Alberta. The Partnership sold its interest in the Alberta pipe in mid-December for $13.8 million. Other items affecting 2004 results include favorable pricing of natural gas and natural gas liquids in the Williston Basin; accounting for financing costs; and adjustments to reserves made in the normal course of business. Wall Street analysts had pegged 2004 average earnings at $2.71/unit.
ConocoPhillips said its 4Q2004 oil and natural gas production, including Syncrude, is expected to be 1.6 MMboe/d, and for the entire year, output will be 1.56 MMboe/d. Production was up worldwide in the final quarter, and the producer said it also benefited from higher crude oil, natural gas and midstream gas prices. In the interim quarterly update, ConocoPhillips said 4Q production will be higher sequentially over 3Q as a result of maintenance completed in Alaska and the North Sea, including the adverse impact of approximately 15,000 boe/d from changes in the governmental royalty rate in Venezuela. Full-year 2004 exploration expenses are estimated to be $700 million, as expected. The numbers exclude expected production increases from the company’s recent investments in Russian oil giant LUKOIL. The company brought its total ownership in LUKOIL shares to 10% by year-end 2004. The Houston-based producer also said it expects its debt-to-capital ratio to be approximately 26% for the final quarter of 2004, down from 28% at the end of 3Q2004.
Dynegy Inc. said that a makeover of its Monument Natural Gas Field Processing Facility in New Mexico is expected to result in $1.4 million in annual cost savings and a 66% reduction every year in nitrogen oxide emissions. The Monument facility has a processing capacity of 85 MMcf/d. The company completed $7 million in “operational enhancements” at its Lea County, NM facility, which included replacing 18 gas compressors with four new 3,250-horsepower compressors. The new units are expected to improve reliability, increase fuel efficiency and operating margins. Dynegy’s natural gas liquids marketing network is located in Mont Belvieu, TX, and in oil and gas exploration and production areas of North Texas, the Permian Basin, southeast New Mexico and the Louisiana Gulf Coast.
ChevronTexaco Corp. estimates in a fourth quarter interim report that last September’s Hurricane Ivan resulted in a net loss in production of 10%, including an 11% decline in U.S. natural gas output and a 9% loss in natural gas liquids, compared with 3Q2004 numbers. The Gulf of Mexico storm resulted in net loss of 79,000 boe/d over 3Q numbers. According to an interim 4Q earnings report issued last Thursday, the storm cost the company $174 million in damages, including $50 million damages and $125 million after-tax profits because of lost production. Total production shut ins for the quarter were 65,000 boe/d, compared with 25,000 boe/d in shut ins during 3Q2004. Asset sales are expected to account for a reduction of another 25,000 boe/d sequentially. The comparisons were based on two months of 4Q versus full 3Q results.
Indicative of the increased pressure for more integrated energy planning in other high-growth western areas, the San Diego-North Baja, Mexico region increasingly has to be considered comprehensively in applying integrated energy planning to what is fast becoming a more economically and demographically linked part of the Southwest, speakers emphasized at a workshop conducted by the California Energy Commission (CEC) in December. “Public interest, regional planning and economic development groups have expressed concerns about energy issues in the border region,” said the CEC summary of the a one-day workshop. “Groups from the Imperial Valley-Mexicali area anticipate energy-related impacts to water availability, the agriculture industry, and air quality.” The CEC is gathering information and ideas for California’s 2005 Integrated Energy Policy Report due by Nov. 1. It is estimated that more than 9 million people will be living in the North Baja region south of the border by 2020 and San Diego County is supposed to add another 1.1 million people during that time. A San Diego Gas and Electric official told the commissioners that a recent power emergency in San Diego caused the Sempra Energy utility to bring natural gas supplies from the North Baja Pipeline into San Diego to fuel electric generation plants. As part of the corporate organization that is scheduled to break ground this month in Baja for the West Coast’s first liquefied natural gas (LNG) receiving terminal, SDG&E’s David Geier urged the state officials not to separate the two regions.
Marce Fuller, CEO of Atlanta-based Mirant Corp., has resigned from the bankrupt energy supplier in exchange for $3.4 million in severance pay plus a promised 2004 short-term incentive payment of $850,000, according to a regulatory filing with the Securities and Exchange Commission. The agreement calls for Fuller to work as a consultant on Mirant’s bankruptcy case after she leaves. The filing, which outlines Fuller’s separation agreement terms, says she will leave on a “mutually agreed” upon date, and will step down from her seat on the board of directors. The company filed for bankruptcy in Forth Worth, TX, on July 14, 2003. It has yet to file a reorganization plan. Last month, some of Mirant’s shareholders asked the bankruptcy court to order the energy supplier to hold a meeting to oust its board of directors. Fuller was appointed Southern Energy Inc.’s (renamed Mirant) president and CEO in 1999. Before that, she served as president and CEO of Southern Company Energy Marketing. Under her guidance, Mirant emerged as a competitive energy provider with an extensive portfolio of power generation assets, and risk management and marketing operations.
Cheniere Energy Inc. will hold a special meeting of stockholders on Feb. 8, 2005 to consider a proposal to triple the number of common stock shares available for issuance, taking the total to 120 million shares from the current 40 million shares. In a Securities and Exchange Commission filing Dec. 30 the company said the board of directors believes the 12,843,086 shares of common stock that are not reserved for any specific use and which currently are available for issuance out of the 40 million authorized do not provide it with sufficient flexibility to act in a timely manner in meeting future stock needs. Cheniere anticipates that it may in the future need to issue additional shares in connection with one or more of the following: acquisitions; strategic investments; corporate transactions, such as stock splits or stock dividends; financing transactions, such as public offerings of common stock or convertible securities; incentive and employee benefit plans; and otherwise for corporate purposes that have not yet been identified. Earlier in December Cheniere closed on a public offering of five million shares of common stock at $60 per share which netted $286 million in cash.
Houston-based producer Contango Oil & Gas Co. said it has completed the sale of substantially all of its South Texas natural gas and oil interests to Edge Petroleum Corp. for $50 million. Contango has no debt and estimates it will have net sale proceeds after taxes of $35 million. After the sale, Contango said it will have remaining production of about 2,300 MMBtue/d. Based on current prices and production rates, it anticipates production revenues of $300,000 to $400,000 per month, a level believed to be adequate to pay ongoing estimated general and administrative expenses of $200,000 per month. Contango said it expects to invest the proceeds from the sale in short-term U.S government and investment grade debt securities. The funds will provide working capital for ongoing operations and will allow the company to continue investing in its existing onshore exploration programs and to maintain its 10% limited partnership interest in the Freeport LNG plant, including any potential expansion in the plant’s capacity, it said.
U.S. antitrust regulators have cleared the path for Penn Virginia Resource Partners LP’s (PVR) purchase of natural gas gathering and processing assets in Oklahoma and Texas from Cantera Resources Holdings LLC, a portfolio company of Morgan Stanley Capital Partners, for $191 million in cash. The Federal Trade Commission granted an “early termination” notice, which meant that it had completed its review of the transaction without taking any action that could have imperiled the acquisition by Radnor, PA-based PVR. Penn Virginia first announced the deal in late November. The midstream assets include 3,400 miles of gas gathering pipelines that supply three gas processing facilities with 160 MMcf/d of total capacity. The assets are located in four geographic regions: the Oklahoma and Texas panhandles, North Central Oklahoma, North Central Texas, and the Arkoma Basin. In total, the assets currently gather 135 MMcf/d and the gas plants process 120 MMcf/d and produce 9,300 b/d of natural gas liquids. Most of Cantera’s operating, commercial and support staff are expected to remain with PVR after the closing, which is expected in the first quarter of 2005.
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