Briefs

Industry Briefs

By hedging additional natural gas, oil and natural gas liquids (NGL) production for 2005, Energen Corp. is raising its earnings guidance by 15 cents to a range of $4.25-$4.45/share in 2005. The Birmingham, AL-based company hedged an additional 0.9 Bcf of its 2005 gas production at a New York Mercantile Exchange-equivalent price of $6.56/Mcf, 0.4 million bbl of its oil production at a Nymex-equivalent price of $43.825/bbl, and 20.2 million gallons of its NGL production at an average price of 62.8 cents/gallon. Included in the company’s 2005 earnings guidance is an estimated 3 cents/diluted share from an unidentified $200 million acquisition in 4Q2004. The company’s 2005 guidance also assumes that prices applicable to Energen’s unhedged production will average $6/Mcf for gas, $32/bbl for oil, and 53 cents/gallon for NGLs.

December 27, 2004

Industry Briefs

Southern Union said it will change from a June 30 fiscal year end to a Dec. 31 calendar year end because of its new more midstream business profile. “Our decision to change to a calendar year end reflects Southern Union’s new business profile — weighted heavily toward the natural gas transportation sector,” said Southern Union President Thomas F. Karam. “We feel that this move will also provide the investment community more comparative information with which to better evaluate Southern Union against its peers.” The change in the company’s reporting period will create a six-month stub period from July 1 through Dec. 31, 2004. A transition report on Form 10-K, including audited financial statements for the six-month stub period, will be filed with the Securities and Exchange Commission on or before March 16, 2005. Southern Union previously announced calendar year 2004 and 2005 earnings guidance of $1.00 to $1.10 per share and $1.45 to $1.55 per share, respectively.

December 21, 2004

Industry Briefs

Oil and natural gas production from the Gulf of Mexico Holstein spar ramped up earlier this month, according to BP plc, the 50% owner and operator. At peak production, the facility will produce more than 100,000 bbl of oil and 90 MMcf/d of natural gas. Holstein, which is also 50% owned by Shell EP Americas, is about 100 miles south of Grand Isle, LA, and is located in approximately 4,300 feet of water in Green Canyon Block 645. The spar is the largest of its kind in the world. Production began on Dec. 9 and will increase over the next year as additional wells are completed and brought online. The Holstein development consists of a truss spar, equipped with facilities for simultaneous production and drilling operations. Oil from Holstein will be transported via the Mardi Gras Transportation System to Ship Shoal 332B, where it will interconnect with the Cameron Highway Oil Pipeline System (CHOPS). Holstein gas will be exported to Ship Shoal 332A, where it will interconnect with Manta Ray Gathering System, and from there to the Nautilus Gas Transportation System into Louisiana. Holstein was discovered by BP in 1999 using the Ocean America mobile offshore drilling unit.

December 20, 2004

Industry Briefs

ExxonMobil Corp. and Qatar Petroleum said Wednesday they lined up $7.5 billion in financing for their giant Qatargas II project, which will export liquefied natural gas (LNG) to Great Britain. The companies said they tapped 57 financial institutions to fund the project, which carries an overall price tag of $12 billion. About $6.5 billion of the $7.5 billion raised to date is in the form of debt. Qatar Petroleum holds a 70% stake in the project, while ExxonMobil owns the remaining 30%. The two companies also said they had awarded $4.5 billion in engineering and construction contracts linked to the project, under which LNG shipments would commence during the winter of 2007-08 using eight tankers engaged on 25-year charters. The Qatargas II project will ship up to 7.8 million tons per year of LNG from a liquefaction plant at Qatar’s Ras Laffan Industrial City to a regasification terminal at Milford Haven in Wales. The initial $700 million construction phase of the Wales project was awarded last month to Texas-based Chicago Bridge & Iron Co.

December 16, 2004

Industry Briefs

Houston-based Southwestern Energy Co., which focuses its oil and natural gas activities in the United States, on Thursday said it would spend up to $352.7 million, or 24% more, in 2005 for capital investments than it expects to spend this year. The budget includes up to $339 million for exploration and production (E&P) and $13.7 million to improve utility systems. Southwestern plans to drill 380 wells in 2005, up from an estimated 206 wells during 2004. Southwestern also plans to drill 35 exploration and exploitation wells in the onshore Texas Gulf Coast, the Permian Basin and in its other operating areas. Of the $339 million E&P capital budget, $271.2 million will be invested in development drilling, $10 million in exploratory drilling, $26.8 million for land and seismic, $24.0 million in capitalized interest and expenses, and $7 million in equipment, facilities and technology. Southwestern is targeting 2005 production at 61-63 Bcfe, an increase of 13-17% over the company’s forecasted 2004 production. The 2005 targeted oil and gas production includes targeted natural gas production for the Fayetteville Shale play of 2.5-3.0 Bcf, “assuming positive operational results and full utilization of the allocated capital,” the company said.

December 13, 2004

Industry Briefs

GulfWest Energy Inc. has entered into a joint venture with Allen Drilling Acquisition Co. (ADAC), a subsidiary of Advanced Energy Recovery Inc., a midstream natural gas and production company located in Mission, KS. The joint venture, incorporated as Elgin Holdings LLC, was formed to activate a currently inactive gas gathering system in Hardin County, TX and to develop deep rights for natural gas on non-producing acreage in Madison County, TX. In forming the joint venture, GulfWest agreed to contribute its deep rights on the non-producing acreage and its ownership of the inactive gas gathering system, and ADAC committed to provide the initial capital funding to Elgin for the projects. GulfWest holds a 47.5% interest in Elgin and will act as the operating partner of Elgin Holdings. The pipeline in Hardin County is being prepared to be operational by the end of December.

December 6, 2004

Industry Briefs

GulfWest Energy Inc. has entered into a joint venture with Allen Drilling Acquisition Co. (ADAC), a subsidiary of Advanced Energy Recovery Inc., a midstream natural gas and production company located in Mission, KS. The joint venture, incorporated as Elgin Holdings LLC, was formed to activate a currently inactive gas gathering system in Hardin County, TX and to develop deep rights for natural gas on non-producing acreage in Madison County, TX. In forming the joint venture, GulfWest agreed to contribute its deep rights on the non-producing acreage and its ownership of the inactive gas gathering system, and ADAC committed to provide the initial capital funding to Elgin for the projects. GulfWest holds a 47.5% interest in Elgin and will act as the operating partner of Elgin Holdings. The pipeline in Hardin County is being prepared to be operational by the end of December.

December 6, 2004

Industry Briefs

The Indiana Utility Regulatory Commission (IURC) approved a $24 million base rate increase for Vectren Energy Delivery of Indiana – North’s gas distribution business. The new rates took effect on Wednesday. The increase covers the ongoing cost of operating, maintaining and expanding the company’s 12,000-mile distribution and storage system, which is used to serve 525,000 customers. It results in a 3.5% increase in average residential bills. The ruling also sets an authorized return on equity (ROE) of 10.6%, an overall cost of capital of 8.38%, a return on a $708 million rate base, a new rate design that includes a larger monthly customer charge to address earnings volatility related to weather; and a pilot program and market study to determine potential benefits associated with gas demand side management programs.

December 6, 2004

Industry Briefs

The Indiana Utility Regulatory Commission (IURC) approved a $24 million base rate increase for Vectren Energy Delivery of Indiana – North’s gas distribution business. The new rates took effect on Wednesday. The increase covers the ongoing cost of operating, maintaining and expanding the company’s 12,000-mile distribution and storage system, which is used to serve 525,000 customers. It results in a 3.5% increase in average residential bills. The ruling also sets an authorized return on equity (ROE) of 10.6%, an overall cost of capital of 8.38%, a return on a $708 million rate base, a new rate design that includes a larger monthly customer charge to address earnings volatility related to weather; and a pilot program and market study to determine potential benefits associated with gas demand side management programs.

December 2, 2004

Industry Briefs

The Indiana Utility Regulatory Commission (IURC) approved a $24 million base rate increase for Vectren Energy Delivery of Indiana – North’s gas distribution business. The new rates took effect on Wednesday. The increase covers the ongoing cost of operating, maintaining and expanding the company’s 12,000-mile distribution and storage system, which is used to serve 525,000 customers. It results in a 3.5% increase in average residential bills. The ruling also sets an authorized return on equity (ROE) of 10.6%, an overall cost of capital of 8.38%, a return on a $708 million rate base, a new rate design that includes a larger monthly customer charge to address earnings volatility related to weather; and a pilot program and market study to determine potential benefits associated with gas demand side management programs.

December 2, 2004