Analysts

Joining the growing list of concerned analysts, UBS Warburg’s Ronald Barone said that with continued lackluster fundamentals and falling prices this week in the natural gas industry, he would not rule out a “similar decline” in spot prices next week as well. In conjunction, Barone said UBS Warburg will take the step that some of its peers have already taken this week and release an updated 2001/2002 composite spot price forecast, along with earnings per share reductions, next week.

While energy analysts remain shell-shocked following the brazen terrorist attacks on the nation’s financial distriction and admit they have “no answers” for industry, some predict that the war-provoking events may cause the public, Capitol Hill lawmakers and investors to look more favorably upon North American energy producers, service companies and pipelines.

Enron Corp. Chairman Ken Lay told Wall Street analysts and investors the company plans to divest up to $5 billion in assets over the next two years in order to support its plummeting stock price. Included among the assets are Portland General Electric, which the company has been trying to unload for more than a year, some unnamed power plants on the West Coast, the company’s generation interests in India, and some energy businesses in Puerto Rico and Brazil. Enron also may be in talks to sell its wind turbine business, which represents a 6% share of the world market for installed wind turbines.

Due to the rapid growth of new generating capacity across the nation, Salomon Smith Barney analyst Raymond C. Niles said the country is currently “crossing the mountaintop” when it comes to electricity prices peaking. He warned that the third quarter 2001 will become the first full quarter of negative commodity comparisons.

As most investors and analysts continue to scratch their respective heads in search of evidence as to why the country’s natural gas storage facilities are continuing to fill at an exceptionally fast pace over the past three months despite falling prices, Fred Schultz, of Raymond James & Associates, thinks the answer might lie in an overlooked indicator, namely nuclear power.

As most investors and analysts continue to scratch their respective heads in search of evidence as to why the country’s natural gas storage facilities continued to fill at an exceptionally fast pace over the past three months with prices falling, Fred Schultz, of Raymond James & Associates, thinks the answer might lie in an overlooked indicator, namely nuclear power.

Due to the large early season natural gas storage injections and the continued gas demand weakness in the industrial sector, analyst David Pursell of Simmons & Co. International said the research firm is revising its 2001 and 2002 price forecasts lower. For full year 2001, Simmons is lowering its outlook from $5.00/Mcf to $4.27/Mcf. Pursell said the company is also lowering its 2002 forecast from $4.20/Mcf to $3.50/Mcf.

With plenty of new gas-fired generation firing up this summer, Houston-based Purvin & Gertz, an international energy consulting firm, is expecting prices to firm up, particularly in the U.S. Gulf Coast region with the average bidweek delivered-to-pipeline prices predicted to average $4.80/MMBtu in August, dropping in September and then peaking at $6/MMBtu in December.

The small group of analysts who were thought to be crazy just two months ago when they predicted the gas storage deficit compared to levels last year would be erased in short order, are now proving to be soothsayers. As of last week’s American Gas Association storage report, the deficit level shrank to only 36 Bcf on May 23 from 404 Bcf on March 28.