Forced

Without a business partner for its faltering energy marketing and trading unit, Tulsa-based Williams Cos. may be forced to cut more jobs, according to Bill Hobbs, CEO of energy trading for the company. He told the Tulsa World in an interview this week that the cuts would impact jobs on the trading floor. Williams cut about 16% of its 800-member trading workforce last month in London and the United States, affecting about 130 employees (see Daily GPI, June 24).

Without a business partner for its faltering energy marketing and trading unit, Tulsa-based Williams Cos. may be forced to cut more jobs, according to Bill Hobbs, CEO of energy trading for the company. He told the Tulsa World in an interview this week that the cuts would impact jobs on the trading floor. Williams cut about 16% of its 800-member trading workforce last month in London and the United States, affecting about 130 employees (see Daily GPI, June 24).

Sharply lower gas and oil prices in the fourth quarter of 2001 forced Devon Energy to write down the value of its reserves by $556 million (after taxes) and take a $518 million net loss compared to $307 million in net earnings in 4Q2000. Quarterly earnings per share before special charges were 23 cents, or nearly double the average of Wall Street estimates. Despite the poor results, Devon reported record high oil and gas production, revenues and year-end reserves, mainly because of its mergers with Canada’s Anderson Exploration and Houston-based Santa Fe Snyder. Earnings for the year including special charges were $103 million, down from $730 million a year earlier. Earnings per share for the year before special charges were $5.03, also beating average Wall Street estimates of $4.87. Sales of oil, gas and natural gas liquids reached a record high $3 billion in 2001, up 10% from 2000. Total production of oil, gas and natural gas liquids rose 12% to a record 135 MMboe. There was an 81% increase in Canadian production attributable to the Anderson acquisition. The average price the company received for its oil production decreased 15% to $21.57/bbl and the average price for gas increased 9% to $3.80/Mcf. Gas liquids prices fell 19% to $16.98/bbl. Although the company reported minimal expenses related to its mergers with Anderson Exploration ($1 million pre-tax) and Santa Fe Snyder ($60 million), operating and other expenses rose across the board, including a 20% increase in operating expenses, a 55% in transportation expenses, a 26% increase in rates related to depreciation, depletion and amortization of property and equipment, a 19% increase in general and administrative expenses and a $3 million charge related to exposure to Enron. Estimated proved oil and gas reserves at the end of the year were 1,620 MMboe, or 523 MMboe greater than at Dec. 31, 2000. Total reserve additions were 658 MMboe, reduced by production of 135 MMboe. This resulted in production replacement of 487%. Year-end reserves included 586 MMbbl of oil, 5.5 Tcf of natural gas and 121 MMbbl of gas liquids. The company’s 2002 capital budget for drilling and facilities expenditures is approximately $1.3 billion. In addition, Devon has budgeted approximately $150 million for midstream facilities.

Sharply lower gas and oil prices in the fourth quarter of 2001 forced Devon Energy to write down the value of its reserves by $556 million (after taxes) and take a $518 million net loss compared to $307 million in net earnings in 4Q2000. Quarterly earnings per share before special charges were 23 cents, or nearly double the average of Wall Street estimates. Despite the poor results, Devon reported record high oil and gas production, revenues and year-end reserves, mainly because of its mergers with Canada’s Anderson Exploration and Houston-based Santa Fe Snyder.

National security concerns have forced El Paso Corp. to withhold information regarding liquefied natural gas (LNG) deliveries to the recently recommissioned Elba Island, GA, import terminal. After an initial test shipment in October — which was rerouted from Boston following local security concerns there — the Elba Island terminal has not received any more shipments this year and the company cannot disclose when the next shipment will be delivered.

National security concerns have forced El Paso Corp. to withhold information regarding liquefied natural gas (LNG) deliveries to the recently recommissioned Elba Island, GA, import terminal. After an initial test shipment in October — which was rerouted from Boston following local security concerns there — the Elba Island terminal has not received any more shipments this year and the company cannot disclose when the next shipment will be delivered.

With little in the way of fresh fundamental news, natural gastraders were forced to base their decisions on a combination oftechnical factors and their own personal instinct Thursday, as theylifted prices steadily higher throughout the trading session. TheApril contract closed 17.1 cents higher at $5.212, just off its$5.22 high on the day.

Westcoast declared force majeure after its Pine River Plant lostelectrical power and was forced to shut down all processingoperations late Wednesday afternoon. The plant had reported 153MMcf in receipts for Wednesday’s gas day. One-third of Pine River’soperational capacity had been restored around midnight PSTWednesday, two-thirds was operational at 8 a.m. Thursday, “and Isee [from SCADA instrumentation] that we’ve just now returned to100%,” a plant spokesman told NGI shortly after 1 p.m. Thursday.

With little in the way of fresh fundamental news to go on,natural gas futures traders were forced to trade purely on instinctyesterday, producing another in a string of quiet trading sessionsat Nymex. After matching but failing to surpass Wednesday’s $5.37high, the April contract was left to tumble lower throughout theafternoon. The prompt contract finished on a weak note, off 6.5cents at $5.285.