Floor

Houston-based El Paso Corp. last Tuesday said it purchased put options, which place a floor price on part of its natural gas production to manage the company’s exposure to volatile prices.

Houston-based El Paso Corp. said Tuesday it has purchased put options, which place a floor price on part of its natural gas production to manage the company’s exposure to volatile prices.

Houston-based El Paso Corp. said Tuesday it has purchased put options, which place a floor price on part of its natural gas production to manage the company’s exposure to volatile prices.

While convinced the oil price is a bubble ready to burst at any time, Canadians see a firm floor holding up under natural gas — and not least because it is a struggle to maintain their contribution to the North American “continental market.” Consensus forecasts north of the border draw a sharp contrast between the oil and gas markets.

While convinced the oil price is a bubble ready to burst at any time, Canadians see a firm floor holding up under natural gas — and not least because it is a struggle to maintain their contribution to the North American “continental market.” Consensus forecasts north of the border draw a sharp contrast between the oil and gas markets.

Kerr-McGee Corp. has added hedge positions for 2004 sales. They include 100,000 MMBtu/d with a floor price of $5/MMBtu and a ceiling price of $6.06/MMBtu for the first quarter; 565,000 MMBtu/d through fixed-price swaps at an average price of $4.75 for the second quarter; and 575,000 MMBtu/d through fixed-price swaps at an average price of $4.75 for the third and fourth quarter. With the additional hedges, Kerr-McGee has hedged approximately 70% of its projected 2004 U.S. oil volumes at an average WTI price of $27.69/bbl and approximately 70% of its 2004 North Sea oil volumes at an average Brent price of $25.99/bbl. Approximately 75% of the projected 2004 U.S. gas sales have been hedged through a combination of fixed-price swaps and costless collars. Details on Kerr-McGee’s oil and gas hedges for the remainder of 2003 and for 2004 are available at www.kerr-mcgee.com/guidance.html.

Huge declines of 40 to 50 cents were seen in Friday’s cash market as futures prices finally gave way to significant downward pressure that had been mounting all week, pulling down the cash market with it.

Rep. Lois Capps (D-CA) on Wednesday offered a motion on the House floor that directed conferees on the national energy bill to strike provisions calling for the federal government to inventory oil and natural gas resources in the Outer Continental Shelf (OCS), and to respond to appeals of state permitting decisions under the Coastal Zone Management Act (CZMA) within a compressed time frame. The House postponed a vote on the motion until next Wednesday.

From the triple-digit weekly gas storage injections in the last three EIA storage reports, analysts at Raymond James & Associates calculate that there has been a 3-4 Bcf/d decrease in gas demand from fuel switching and a 0.75 Bcf/d increase in gas supply because of gas liquids being left in the gas stream due to low liquids margins.