Brief

Dallas-based independent Remington Oil and Gas Corp. has made two discoveries in the Gulf of Mexico, with first production for both set in early 2003. The discoveries, West Cameron block 426 and East Cameron Block 377, are two of the company’s 11 exploratory wells so far this year, with seven completions and a 64% success rate. According to the company, East Cameron 185 #2 was drilled to 15,100 feet. The company is evaluating future locations to find higher gas saturation; the East Cameron well had “excellent gas shows” but an electric log analysis indicated low saturation. Now, Remington is sidetracking this well to an optimum structural position to capture hydrocarbon pay intervals at about 11,000 feet. The well will be completed and then tied back to the company’s production platform on block 184. Through 2002, Remington expects to drill another 13 exploratory wells. Since 1998, it has drilled 129 with 97 completions and a 75% success rate.

The Washington Utilities and Transportation Commission (WUTC) has granted Bellevue, WA-based Puget Sound Energy (PSE) a 5.8% increase in revenue to cover higher costs of providing natural gas service to customers. This service-related boost in gas-system revenue was offset by a pass-through rate reduction tied to lower PSE costs to buy customers’ gas on the wholesale market. The two separate but related rate actions approved by the WUTC — a $35.6 million increase in service-related revenues for PSE, and a $45 million rate decrease related to falling gas-supply costs — will save residential customers on average about 30 cents a month beginning in September. In June, PSE customers, which number about 613,000 in the state, received an average 22% cut in gas rates after wholesale gas prices fell. The earlier pass-through reduced the average residential gas bill by about $12 a month. The revenue increase resulted from weeks of review and collaborative negotiation between PSE, WUTC staff, the consumer branch of the state Attorney General’s Office, and various PSE gas customers. The utility’s last increase in general rates for gas delivery service was in 1995. The collaborative settlement approved marks the second phase of a comprehensive, multi-party review of PSE rates and service. In the first phase, the WUTC granted a 4.6% average increase in PSE electric rates, effective July 1. PSE serves primarily central and southern Puget Sound, including the cities of Everett, Seattle, Bellevue, Tacoma, Gig Harbor and Olympia.

With a brief explanation in its Securities and Exchange Commission (SEC) 10-Q filing, Duke Energy Corp. in late August reduced the before-tax earnings of its Duke Energy North America (DENA) unit by $17 million, and cut another $2 million from other units that were associated with the trading unit in the second quarter.

Kerr-McGee Corp. and partner Ocean Energy Inc. have selected Technip Offshore Inc. to construct the world’s first cell spar for the development of the Red Hawk deepwater field in Garden Banks block 877 in the Gulf of Mexico. First production from the natural gas field with estimated proven reserves of more than 250 Bcf is expected in the second quarter of 2004. Located in 5,300 feet of water, Red Hawk will be Kerr-McGee’s deepest development to date. Kerr-McGee Oil & Gas Corp., a subsidiary of the Oklahoma City-based company, operates Red Hawk with 50% interest, and Ocean Energy holds the remaining 50%. Luke R. Corbett, Kerr-McGee CEO, said, “This new cell spar technology will allow us to capitalize on our deepwater prospects by reducing the reserve threshold needed for an economical platform development in deep waters.” The innovative cell spar, which is the third generation of spar technology, will have an initial daily production capacity of 120 MMcf, with ultimate capacity of 300 MMcf. It will measure 64 feet in diameter and 480 feet in length. The design includes seven tubes, each 20 feet in diameter, with a center tube surrounded by the other six tubes, all connected by structural steel. The deck will be 110 feet by 132 feet. Construction is expected to begin in the fourth quarter of 2002.

With a brief explanation in its Securities and Exchange Commission (SEC) 10-Q filing, Duke Energy Corp. reduced the before-tax earnings of its Duke Energy North America (DENA) unit by $17 million, and cut another $2 million from other units that were associated with the trading unit in the second quarter.

Wilshire Oil Co. said it has signed an agreement to participate with one of the largest (non integrated) oil and natural gas companies in the United States in a major drilling program in Canada. Wilshire said it anticipates that the company’s overall gas reserves may increase by as much as 31% by this year-end as a result of this program. Under the agreement, Wilshire will have a 30% interest in a total of 380 wells, in the Medicine Hat-Hilda Area of southeastern Alberta including the 210 new gas wells to be drilled. The new wells are expected to triple the daily gas production from the unit by 2003. The project is expected to commence in the third quarter of 2002 and be completed by year-end. Cash flow from the new production will commence in the fourth quarter with full benefits realized by Wilshire from the increased production in early 2003.

Wilshire Oil Co. said it has signed an agreement to participate with one of the largest (non integrated) oil and natural gas companies in the United States in a major drilling program in Canada. Wilshire said it anticipates that the company’s overall gas reserves may increase by as much as 31% by this year-end as a result of this program. Under the agreement, Wilshire will have a 30% interest in a total of 380 wells, in the Medicine Hat-Hilda Area of southeastern Alberta including the 210 new gas wells to be drilled. The new wells are expected to triple the daily gas production from the unit by 2003. The project is expected to commence in the third quarter of 2002 and be completed by year-end. Cash flow from the new production will commence in the fourth quarter with full benefits realized by Wilshire from the increased production in early 2003.

Rand Capital Corp. invested $500,000 in convertible promissory notes in Buffalo, NY-based Somerset Gas Transmission Co. LLC as part of a $3 million private placement bridge loan. Rand’s investment also provided a warrant for a minority equity interest in the company, which is planning to provide interstate natural gas pipeline transportation services from the Chicago hub and Appalachian producing basins to markets in the Northeast and Mid Atlantic. Somerset’s plan involves gas transportation through its own pipelines and the lines of others. One of Somerset’s initial acquisitions was a 40-mile section of gathering line and related facilities in Indiana County, PA, from Columbia Gas Transmission Corp. “The Somerset management team has worked for more than five years to assemble a network of pipelines and rights-of-way to transport natural gas,” said Rand CFO Daniel P. Penberthy. “Rand’s funding will allow the company to continue this acquisition strategy as the company completes their pipeline network. In this regard, Rand’s investment is structured to provide both a current return and provides the option for Rand to participate in the company’s next round of financing.”

Rand Capital Corp. invested $500,000 in convertible promissory notes in Buffalo, NY-based Somerset Gas Transmission Co. LLC as part of a $3 million private placement bridge loan. Rand’s investment also provided a warrant for a minority equity interest in the company, which is planning to provide interstate natural gas pipeline transportation services from the Chicago hub and Appalachian producing basins to markets in the Northeast and Mid Atlantic. Somerset’s plan involves gas transportation through its own pipelines and the lines of others. One of Somerset’s initial acquisitions was a 40-mile section of gathering line and related facilities in Indiana County, PA, from Columbia Gas Transmission Corp. “The Somerset management team has worked for more than five years to assemble a network of pipelines and rights-of-way to transport natural gas,” said Rand CFO Daniel P. Penberthy. “Rand’s funding will allow the company to continue this acquisition strategy as the company completes their pipeline network. In this regard, Rand’s investment is structured to provide both a current return and provides the option for Rand to participate in the company’s next round of financing.”