MCN Energy followed through as planned on the previously announcedsales of its Midcontinent/Gulf Coast exploration and production(E&P) properties and subsidiaries. Undisclosed privately heldcompanies paid about $105 million for the assets, which are primarilylocated in Texas and Oklahoma. Proceeds from the sales will helpstrengthen MCN’s balance sheet by reducing its debt. At year-end 1998,these Midcontinent/Gulf Coast assets represented 144 Bcfe of reserves,or 12% of the 1.2 Tcfe of proved reserves on MCN’s books. About 80% ofthe reserves sold were gas. MCN announced earlier in August that,consistent with its new regional, operating strategy, the company willretain its natural gas producing properties in Michigan (see Daily GPIAug. 3). Negotiations continue on theremaining Appalachian E&P package.

Mexico’s Energy Secretariat Luis Tellez said his country’s 4%tariff on natural gas imports from the United States will be liftedwithin the next few days. His announcement came at a pressconference in Mexico City late Tuesday – one day after the U.S.Commerce Department rejected a petition brought by anOklahoma-based group of independent producers to impose tariffs oncrude oil imports from Mexico, Venezuela, Saudi Arabia and Iraq.The group, called “Save Domestic Oil” SDO, accused the foreigncountries of dumping oil in the U.S. and robbing strugglingindependent producers of their jobs. SDO has indicated it maypossibly appeal the Commerce decision, but Tellez appearedconfident the petition posed no further threat – given thesubstantial opposition to it in the U.S. from major producers, gaspipelines and other groups.

Raymond James & Associates noted that the intelligence ofanalysts closely correlates with their respective industry stockprices. As a result, last year likely will go down as the year ofthe “dumb” energy analysts, but 1999 is fast making geniuses out ofthem. Over the past few weeks, the energy indexes havesubstantially outperformed the S&P 500 and the “level ofintelligence of energy analysts has skyrocketed. Unfortunately,intelligence can be short-lived in our business” so Raymond Jameshas reevaluated its investment strategy. The “snowball effect” ofinvestors flocking to energy stocks already has started, leavingoil-heavy companies at a fair price based on the near-term earningsoutlook, Raymond James said. But the rush is likely to continue incertain areas, particularly for North American natural gas-relatedstocks. Raymond James sees significant upside over the next year ingas-focused stocks because gas is getting most of the E&Pspending and has the greatest commodity price upside. The number ofrigs drilling for gas has climbed sharply over the last few monthsto nearly 85% of all U.S. drilling activity, the firm notes.Raymond James recommends energy investors focus on companies thatare exposed to three key area: 1) Canada, 2) U.S. Land, and 3) U.S.shallow water offshore.

Hunter Gas Gathering, a subsidiary of Magnum Hunter Resources,bought a 50% stake in the Madill Gas Processing Plant andassociated gathering system from Dynegy Midstream Services. Theplant includes 3,350 hp of high speed compression and will have gasprocessing capacity of 18 MMcf/d. The facilities are located inMarshall and Bryan Counties, OK, and are being acquired inconjunction with it’s 50% industry partner, Carrera Gas GatheringCo. of Tulsa. Carrera is also a 50% partner with Hunter in theownership of a similar plant in the Texas Panhandle. The financialclosing is anticipated sometime during the fourth quarter of 1999.Terms of the deal were not announced.

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