Responding to a California power market gone haywire andteetering on the brink of operational and financial disaster, FERCFriday issued a series of remedial measures, virtually strippingthe Cal-PX and Cal-ISO of their control of the market and callingmarket stakeholders together to negotiate bilateral forwardcontracts.
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Fort Worth, TX-based Quicksilver Resources reported that itsthird quarter earnings set a company best record with net incomerising 372%. Net income was $4.8 million ($0.26 per share) comparedto $1 million ($0.08 per share) during the third quarter 1999. Thecompany accredited the breakout quarter to higher prices andincreased volume production and sales of natural gas and oil. Thecompany’s net natural gas sales went from $10.4 million for 3Q 1999to $20.3 million for 3Q2000, a 96% increase. Gas production volumesalso jumped 65% between the two time periods to end up at 7 Bcf inthe third quarter of this year. Gas prices on average increasedabout 19%. Natural gas liquids (NGL) followed in tandem, growing to$957,000 with volumes growing 175% and prices by 213% when comparedto the same time period last year. Oil sales enjoyed similar leaps,growing 112% to $6.8 million over last year’s $3.2 million figure.Crude production also rose 41% higher to finish at 305 bbls. Theaverage crude oil price grew approximately 50%.
NiSource Inc., the gas and electric power distributor headquarteredin Merrillville, IN, reported that its earnings were up 25% for thethird quarter, with a per common share of $1.27 compared with $1.02 inthe third quarter of 1999. The results were “favorably impacted” bythe sale of Market Hub Partners (see Daily GPI, Aug. 31), which resulted in a $23.8 millionafter-tax gain, or approximately 19 cents per common share. NiSourcesaid that continued customer growth from the company’s natural gas,electric and water distribution businesses contributed to improvedearnings, offset by decreased electricity sales in the cool summer,increased interest charges of $28.4 million related to the Bay StateGas and EnergyUSA-TPC acquisitions, and expenditures of $5 millionrelated to the NiSource Columbia Energy Group merger (see Daily GPI,June 2). Net income was $1.55 million,an increase of $27.6 million from the third quarter of 1999. Gasoperations EBIT increased $83 million to $144.7 million from lastyear, mostly because of its Market Hub Partners sale. Electricoperation earnings EBIT increased $8.9 million to $292 million becauseof decreased operating expenses, which were partially offset bydecreased sales to residential customers during the cooler summercompared to the same period in 1999. NiSource said its cooling degreedays were down 23% from a year ago, which also decreased bulk powersales to other utilities. As part of its merger with Columbia EnergyGroup, which is slated to close Wednesday (Nov. 1), NiSource completedexchanging Columbia common shares for those electing to receive stockunder an exchange ratio of 3.04414. Under the merger terms, theexchange ratio was determined by dividing $74 by the average closingprice of NiSource common stock beginning Sept. 18 and endingOct. 27. The average for the period was $24.3090. Columbiashareholders who wanted to receive NiSource stock in the merger weresupposed to submit their completed election forms and stockcertificates by 5 p.m. Monday (Oct. 30). Contact ChaseMellonShareholder Services at (800) 685-4258 for information.
On average, U.S. gas production appears to have been up slightly (2%, according to financial reports from 25 producers) at the end of the third quarter compared to 3Q99. However, there was a wide variation among producers, with some reporting huge increases, such as Mitchell Energy, Devon and Coastal, while others reported large declines, including Amerada Hess, Texaco, Kerr McGee and Ocean Energy (see preliminary tally).
On average, U.S. gas production appears to have been up slightly(2%, according to financial reports from 25 producers) at of theend of the third quarter compared to 3Q99. However, there was awide variation among producers, with some reporting huge increases,such as Mitchell Energy, Devon and Coastal, while others reportedlarge declines, including Amerada Hess, Texaco, Kerr McGee andOcean Energy (see preliminary tally below).
UtiliCorp United reported a 75% jump in earnings per share forthe third quarter led by strong results from its Aquila Energysubsidiary and an increased contribution from internationalbusinesses. “The energy merchant business continues to be strong,”said CEO Richard C. Green. “Aquila’s performance and the continuedunleashing of value in our international businesses resulting fromthe initial contribution of our recent electric network acquisitionin Canada and the successful initial public offering of our telecombusiness in Australia enabled us to exceed last year’s thirdquarter results.”
Burlington Resources expects to top First Call/ThomsonFinancial’s earnings estimate for the company’s third quarter by$.06 to $.11 cents, but reports production may lag in comparison tolast quarter due to the “natural decline” in some of its operationareas.
The California power debacle, with its political and financialramifications, coupled with high natural gas and heating oil pricesand dire government warnings of even worse prices this winter, hasled to a host of actions by those who deal with retail customersand constituents.
A preliminary survey of second quarter financial reports from 25 producers reveals a 0.5% decline in U.S. gas production compared to 2Q99. Out of 25 producers, 14 reported lower production and five of those showed double digit drops. Pioneer Resources, Ocean Energy, Union Pacific and Kerr McGee showed the largest U.S. production declines on a percentage basis.
A survey of second quarter financial reports from 25 producersreveals a 0.5% decline in U.S. gas production compared to 2Q99. Outof 25 producers, fourteen reported lower production and basinexploration. Pioneer Resources, Ocean Energy, Union Pacific andKerr McGee showed the largest U.S. production declines.