Brief

Irving, TX-based Magnum Hunter Resources Inc. has announced new discoveries on the Gulf of Mexico shelf. At West Cameron 457, a well has tested at production rates of 13 MMcfe/d, and it is in the process of being tied back to the company’s West Cameron 458 discovery via a subsea completion. Up to three additional wells are currently planned from this new facility. First production from the West Cameron discoveries is expected to come on line during the “early” third quarter, the company said. Magnum Hunter owns a 40% working interest in both of these blocks, while Remington Oil and Gas Inc. owns the remaining 60% working interest and operates both blocks. Another discovery at Ship Shoal 322 was drilled at the end of last year and tested at a rate of up to 20 MMcfe/d, according to the company. The well was a subsea completion, and first production is expected by the end of March. Magnum Hunter owns a 25% working interest in this lease. Magnum Hunter also owns a 50% working interest in a new discovery drilled in February at Eugene Island 304. This well, a subsea completion, will be tied back to the company’s existing Eugene Island 302 platform. First production is anticipated in the second quarter.

Regency Gas Services LLC said an affiliate has completed a $62 million purchase of West Texas gas gathering, processing and treating assets from Duke Energy Field Services. The facilities, known as the Waha system, consist of more than 600 miles of pipeline, 40,000 horsepower of compression and gas processing and treating capacities of more than 125 MMcf/d. In June, 2003 Regency acquired gas gathering, processing, treating and transmission pipeline assets in Kansas, Oklahoma, and North Louisiana from El Paso Field Services. Dalls-based Regency now has combined assets consisting of 2,900 miles of pipelines, 115,000 horsepower of compression and five gas processing plants with aggregate processing capacity of about 330 MMcf/d. Total gas throughput for the company is now 450 MMcf/d.

The Oil & Gas Asset Clearinghouse announced that it will hold its next Hybrid Live Floor/Internet Auction offering 980 quality oil and gas properties combined into 143 Lots at the Sheraton North Houston Hotel in Houston, TX on March 10. The full-service marketing and consulting firm for oil and gas property acquisitions and divestitures uses a hybrid auction process that allows Internet bidders to compete in real-time against the live floor bidders. The company said properties in this offering are located in Arkansas, Kansas, Louisiana, Mississippi, Montana, New Mexico, North Dakota, Oklahoma, Texas and Wyoming. Some of the sellers include ExxonMobil, Range Resources, Britnic Oil & Gas, Premier Energy, Raven Resources, PXP, Ward Petroleum, Tulsa Energy Partners and several others. Properties can be previewed online through Data Room Explorer on The Clearinghouse Web site www.ogclearinghouse.com. Data rooms are open through March 5.

As traders had anticipated Friday, a holiday weekend blast of winter weather that managed to bring freezing rain and snow into parts of the South was too short and not severe enough to keep prices rising Tuesday. Instead, dollar-plus losses at several Northeast citygates led overall softening that yielded non-Northeast declines ranging from a dime or so in the Pacific Northwest to 40 cents.

Manitoba Hydro reported that about 1,200 gas customers in the town of Stonewall were without service Thursday after a supply line become “blocked.” Electricity supply to Stonewall was not affected. Service was gradually being restored in the community but the restoration process was expected to continue through the evening. The utility said it was installing a bypass around a section of gas supply line that was blocked. All gas services in Stonewall were turned off at the gas meter during the morning and the meters had to be turned on and gas appliances re-lit by Manitoba Hydro staff. The company estimated that 80% of the 1,200 affected customers would have their gas service restored by 4 p.m. and work will continue until all services are returned to normal.

Chattanooga Gas Co. (CGC), which serves 60,000 customers in southeast Tennessee, has asked the Tennessee Regulatory Authority (TRA) to adjust its rates beginning in March to cover rising costs of providing natural gas to its customers. CGC last increased its rates nine years ago. If the rate hike is approved, a typical residential customer would pay about $3.20 more per month. The total rate increase requested is approximately $4.5 million. However, a reduction in gas costs of over $1 million dollars will be put into effect in the spring of 2004; this change will reduce the amounts charged for gas on customers’ bills. CGC’s new proposed rate plan will provide relief to low-income elderly customers and align customer rates to more accurately reflect CGC’s costs of maintaining its natural gas pipeline system. It will also enable the company to replace 100 miles of aging pipe, consistent with CGC’s goal of continually modernizing the gas infrastructure that has served customers for almost a century. Lindsey cited other pressures that have lead to CGC’s decision to request a rate adjustment, including growing employee benefits costs and bad debt, or uncollectible customer bills. CGC also asked the TRA to approve a cost tracking mechanism for additional expenditures to permit the replacement of a 100-mile segment of its over 1400-mile pipeline system. Some of the pipeline is almost 100 years old and needs to be replaced. Construction is expected to begin during 2004.

New bouts of harsh winter weather approaching after a brief respite, the end of a holiday weekend slump in industrial load, suspicions of a large storage withdrawal to be reported Thursday, and sharp spikes in the energy futures complex (especially among the petroleum-based products) all combined to generate large rebounds at nearly all points Tuesday.

Contract drilling provider, Rowan Companies Inc., posted fourth quarter 2003 net income of $4.4 million, or $0.05 per share, on revenues of $195.8 million, compared to a net loss of $2.8 million, or $0.03 per share, on revenues of $146.8 million in the fourth quarter of 2002. However, for full-year 2003, Rowan incurred a net loss of $7.8 million, or $0.08 per share, compared to net income of $86.3 million, or $0.90 per share in 2002. The company noted that prior year results included net proceeds from the settlement of the Gorilla V contract dispute, which increased net income by approximately $102 million, or $1.07 per share. Excluding that special item, the company’s 2002 results would have been a net loss of approximately $16 million, or $0.17 per share. Rowan’s offshore rig utilization was 92% during the fourth quarter of 2003, versus 94% in the third quarter and 88% in the year-earlier period. For the fourth quarter, the company’s average Gulf of Mexico day rate of $42,400 increased by $3,300, or 9%, from the third quarter and by $6,900, or 19%, from the year-earlier period. “We are optimistic that 2004 will continue this trend and are confident that Rowan rigs will continue to lead deep-shelf drilling efforts in the ever-tightening Gulf of Mexico market,” said CEO Danny McNease. “Our optimism is supported by recent reports of declining domestic natural gas production and increased estimates of deep-shelf gas reserves. With continuing high oil and natural gas prices, drilling activity should increase. A recent survey of independent operators indicated that 2004 exploration and production activities will exceed 2003 levels by nearly 25%.”

In addition to moving around some of its executives and appointing a few new ones (see related brief), Richmond, VA-based Dominion also has separated two operating functions overseen by its Dominion Energy operating unit. Under the new organizational structure, the former Dominion Energy operating unit is divided into two separate business segments — Dominion Generation and Dominion Energy. Dominion Generation will manage the company’s portfolio of more than 24,000 MW of generation. Dominion Energy will manage the company’s electric transmission, marketing and natural gas pipeline and storage businesses. This change was effective Jan. 1. “We’re seeking to place our top talent and energy in positions where they can maximize their contribution to shareholder value. As a matter of ongoing policy, we also seek to streamline our organizational structure. The personnel and organizational changes announced today advance these goals,” CEO Thos. E. Capps said.