Using a combination of fixed-price swaps and costless collars,Oklahoma City-based Louis Dreyfus Natural Gas Corp. has put priceprotections on 200,000 MMBtu/d of natural gas production from Marchthrough October 2001.

The company has sold 100,000 MMBtu/d for the period at anaverage fixed price of $5.68. It also has placed price protectionson 100,000 MMBtu/d in costless collars with an average floor priceof $5 and an average ceiling price of $6.89.

“We continue to be very optimistic about the fundamentals fornatural gas demand,” said CEO Mark Monroe. “Based upon pricescurrently quoted in the Nymex natural gas futures market for 2001,the company’s cash flow is expected to exceed $500 million.” Monroesaid that the “current market dynamics” will give the company anopportunity to add more price protections with its spring, summerand early fall gas production.

Monroe said, “Even if gas prices average higher than $6.89 andthe ceilings are triggered, we will have approximately 40% of our2001 production unhedged.”

Louis Dreyfus was named one of the 10 biggest gainers on the NewYork Stock Exchange last month, climbing more than 15% to stand at$48.188 on Dec. 27. Its 52-week low was a year ago, standing at$15.75 on Jan. 12, 2000.

In December, Louis Dreyfus’ board approved a 32% increase in thecompany’s exploration and development spending for this year,adding 78% of its $290 million budget on developing reservesalready discovered. It expects its combined oil and gas productionthis year to range from 147 Bcfe to 161 Bcfe. Gas production isexpected to range from 132 Bcf to 144 Bcf.

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