Fisher

Chesapeake Energy Corp. has named a former Boots & Coots executive to lead a newly created oilfield services unit that will house the producer’s growing business and complement its massive U.S. drilling program.

Suncor Energy Inc. of Calgary said it will reposition its gasbusiness to achieve at least a 10% return on capital within fiveyears. Suncor intends to build competitive operating areas, improvebase business efficiency and create new, low-capital businesses.

The recent sale of one million shares of Tom Brown Inc. stock toan undisclosed investor garnered Lakewood, CO-based KN Energy about$29 million in cash and should help the company digest itsacquisition of Kinder Morgan Inc.

Kinder Morgan Energy Partners LP will provide pipelinetransportation services for Aux Sable Liquid Products LP in theChicago area for liquids from Alliance Pipeline. Aux Sable isconstructing natural gas liquids (NGL) extraction and fractionationfacilities in Channahon, IL, about two miles east of KinderMorgan’s Morris, IL, liquids pipeline, storage and truck loadingfacility. Aux Sable’s facilities will initially process up to 1.6Bcf/d from Alliance and remove from the gas stream up to 40,000barrels of ethane, 19,000 barrels of propane, 8,000 barrels ofbutane (both normal butane and isobutane) and 3,000 barrels ofnatural gasoline. The facilities are targeted for completion byOct. 1, 2000.

Chesapeake Energy 1998 year-end results were hammered bynon-cash impairment charges of $881 million. Due mainly to “thesevere decline in oil and natural gas prices during 1998″Chesapeake lost $934 million on revenues of $382 million.

Low oil prices prompted Texaco to cut about 1,000 out of 8,000upstream employee and contractor jobs worldwide as part of areorganization designed to increase emphasis on long-termproduction and reserve growth and streamline costs and improvecompetitiveness. Cost savings are projected to be $200 million peryear, and the reorganization is expected to be completed by the endof the first quarter of next year.

The stock merger of Kerr-McGee and Oryx Energy creates the No. 4U.S. independent producer with market capitalization of $4 billionand is symptomatic of an industry pushed headlong intoconsolidation by sharply depressed oil and gas prices.

ARCO announced a major cost reduction program last week thatwill chop $500 million in before-tax expenses and 900 employeesfrom it operations over the next two years. The majority of thecut-backs, $350 million, are expected in 1999.