Mitchell Energy & Development Corp. said the rebound inenergy prices raised its second quarter average gas pricerealizations 30% and pushed gas liquids price realizations up 25%compared to first quarter amounts. Combined with cost cutting gainsand other operating efficiencies implemented over the past year,Mitchell said the improvements should result in quarterly earnings(excluding oil and gas property sales) that will be three timesgreater than the First Call consensus estimate of 13 cents pershare.

“The recovery of the Asian markets and high utilization rates ofthe petrochemical plants in the Gulf Coast Golden Triangle areahave depleted last winter’s abnormal buildup of NGL inventory,”said Allen J. Tarbutton, president of the Gas Services division.”While oil prices are certainly a key driver for NGL prices,competition for ethane and propane supplies – superior feedstocksfor maximizing petrochemical plant ethylene output – should lessenthis winter’s NGL price volatility. We expect to see a continuedstrong demand for NGLs with low to normal inventory levels, ahealthy economy and the approaching heating season.”

The company also announced the completion in early August of amajor turnaround of its largest natural gas processing plant atBridgeport, TX, and the de-bottlenecking of certain gas gatheringsystems supplying that plant. A new automated control system isexpected to improve the plant’s operating efficiencies by 5%. Toease the bottlenecking of gas gathering lines supplying theBridgeport processing plant, a new sales point was constructed onthe outer edge of the gathering system where the gas is leaner anddoes not require processing. This new sales point reduces theoverall system pressure and increases the deliverability of lowerpressure wells connected to the system.

As a result of the six-day plant shutdown and the previouslyannounced sale of the company’s Colorado properties, third quartergas sales are expected to be flat when compared to second quartersales of 237 MMcf/d, but are anticipated to climb to the 250 MMcf/drange by the fourth quarter. NGL production is expected to average46,000 b/d or better for the remainder of the year, compared to thesecond quarter’s 43,500 b/d.

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