East

Eastern markets maintained the week’s general pattern of flatpricing Friday, even eking out small increases here and there. TheWest tended to be a little softer due to the usual weekend fall-offin demand, but the declines there were fairly minuscule at no morethan 1-4 cents down in nearly every case.

The U.S. Department of the Interior’s Minerals ManagementService (MMS) served official notice Tuesday of its intentions tohold lease sale 181 for 5.949 million acres in the eastern Gulf ofMexico. The MMS issued a Call for Interest and Information and aNotice of Intent (NOI), which gives interested parties 60 days tocomment on the proposed sale. The MMS tentatively scheduled thesale for December 2001. An MMS spokesperson said no minimum bid hasbeen set.

Samson Investment Co. of Tulsa, OK, completed its acquisitionfrom Nuevo Energy Co. of gas properties in East Texas. The totalpurchase price was $192 million. In addition to existingproduction, the properties contain more than 135 drillinglocations. The closing follows Samson Resources’ December closings,which included the acquisition of properties in six states fromDuer Wagner & Co. for $41 million and the acquisition ofcertain properties in the Homeglen-Rimbey and Westerose areas ofAlberta, Canada from Chevron Canada Resources for $9 million bySamson Canada Ltd.

Mild softness dominated Monday’s cash trading in spite of a bigdrop on the futures screen. Drops of up to a nickel or so tended tocluster in eastern markets, where late-autumn weather is relativelymild. Meanwhile, flatness prevailed in much of the West as theNational Weather Service is predicting below-normal temperatureslater this week for the Rockies and interior parts of SouthernCalifornia.

International gas producers are sailing into a political stormas they pursue their next drilling target off the East Coast, theCanadian half of Georges Bank between Nova Scotia and New England.Three wholly-owned arms of senior U.S. gas suppliers — TexacoCanada, Chevron Canada and Amoco Canada — are out to persuadeCanadian federal and provincial authorities to let a moratorium onresource exploration on Georges expire.

The futures market followed-through on its usual hurricanescript Wednesday by reversing early week price spikes to plummetlower as Hurricane Earl plodded toward Florida and away from gulfcoast production. “Buy the rumor, then sell the fact,” is the adageoften bandied about when there is the potential for a hurricane todisturb supplies in the gulf and yesterday the phrase rang true asdismal fundamentals factors once again took center stage in themarket. That carried the October contract down 13.4 cents to settleat $1.652.

The initial September aftermarket was both above and belowbidweek levels at various Eastern points Monday but decidedlystronger to the West. One trader found Southern California bordernumbers mostly in the mid $2.10s, nearly a dime above bidweekaverages. The situation was similar for Malin and the PG&Ecitygate, which got a little extra boost from a low-inventoryPG&E OFO (see Transportation Notes). “It’s hot here inCalifornia,” said a source, adding it seemed “like everybody wasout buying today.”

Given mild weather, bearish storage levels and the normal slumpin weekend demand, many traders were surprised Friday to see nearlyall Eastern points stay flat or go up as much as 3-4 cents. ThoughGulf Coast numbers were “falling hard” near deadline after startingseveral cents higher, a producer surmised they were being held upat first by “hurricane hype.” Other sources also mentioned that asthe reason for the relative Eastern strength, saying they couldthink of no other explanation.

Geographic price tendencies shifted going into the weekend.Western markets, which had been resisting the week’s overallsoftness earlier due to heavy cooling load andsupply/transportation problems, were being routed Friday,particularly at the California border. Meanwhile Eastern pricesfell by a nickel or less in most cases, with Appalachian pipes andNortheast/Midwest citygates flat or close to it.