Auction

Aquila Gas Pipeline might be taken off the auction block inlight of depressed gas liquids prices and the fear a sale pricewon’t do justice to the company’s value. Indeed, the company’ssecond quarter results were something less than stellar. Net incomewas $1.4 million, down from $7 million in the second quarter of1997. This despite the fact gas throughput and marketed volumesaveraged a record 1.4 Bcf/d, compared to 1.2 Bcf/d in the secondquarter of last year. However, total system throughput was 446MMcf/d, compared to 534 MMcf/d in the second quarter of 1997. Anincrease in gas volumes marketed off system to 954 MMcf/d from 642MMcf/d in the second quarter of 1997 reflects the continuedincreased emphasis on marketing activities. Liquids productiondecreased to 25,000 barrels/d from 38,000 barrels/d 2Q 1997. Lowliquids prices were the reason for the decline.

A big shift in strategy led Equitable Resources to put some ofits most prized Gulf Coast midstream assets on the auction blocklast week. The company announced it is selling the 1,900-mileLouisiana Interstate Gas pipeline (including a 500 MMcf/dDepartment of Energy oil line it converted to transport naturalgas), the 3.6 Bcf capacity Jefferson Island salt dome storageproject and its gas and power marketing operation. The gasmarketing operation sold 500 Bcf of gas in 1997.

Given the lofty prices paid for midstream assets recently, SanAntonio, TX-based Aquila Gas Pipeline believes the time is right totest the waters for a possible sale or merger. The Texas andOklahoma gas processing and pipeline company has hired MerrillLynch & Co. to assist in the effort.