Union Pacific Resources Group and ARCO warned last week theywill be taking massive asset write-downs and restructuring chargesduring the fourth quarter, reflecting their continuing struggle todeal with low crude oil and gas prices.
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Union Pacific Resources Group Inc. said it will take a whopping$760 million after-tax, non-cash charge to fourth quarter earningsfor asset impairment under Financial Accounting Standard 121. UPRalso said its 1999 plans include continuing its cost-reductionprogram and a preliminary capital budget of about $500 million.Excess cash flow of more than $250 million will be used to furthercut debt to keep the company’s $2 billion de-leveraging program ontarget.
The consumer advocacy part of the California Public UtilitiesCommission is trying to get state regulators to second guesswinning bids on the final natural gas-fired power plants PacificGas and Electric Co. auctioned last year. The auction resulted inSouthern Company being awarded three winning bids for plants in theSan Francisco Bay Area totaling 3,065 MW and using up to 50 MMcf/dof gas.
With its California power marketing arrangement with Enron nowhistory, Amway Corp. has hooked up with Columbia Energy, asubsidiary of Columbia Energy Group, to market gas and electricityto residential and small business users, first in Georgia and thennationwide.
Union Pacific Resources Group Canadian subsidiary Union PacificResources Inc. (UPRI) has nearly completed its 1998 propertydivestiture program. The company expects to close on the finalproperty in the original offering later this year and projects its1998 non-core property sales program will top $143 million.
Union Pacific Resources Group (UPR) continues to march aheadwith its de-leveraging program, announcing last week that it agreedto sell interests in certain South Texas oil and gas properties toCollins & Ware Inc. for $148 million. The sale is scheduled toclose Oct. 30, subject to conditions, with an effective date ofSept. 1.
MCN Energy Group warned investors Friday it’s not likely to meetanalysts’ 1998 and 1999 earnings expectations of $1.64/share and$2.02/share, respectively, and reiterated its plan to sell itsexploration and production business, which includes more than 1.3Tcf of proved reserves, making the company among the top 20 largestindependent producers in the nation.
Key Energy Group Inc. announced Tuesday that it has signed adefinitive merger agreement to acquire Dawson Production Servicesfor an estimated $352 million. The terms of the agreement call forKey Energy to purchase 11.5 million outstanding shares of Dawsoncommon stock for a total of $202 million, and to assume Dawson’sexisting debt of $150 million.
NorAm Energy Services (NES), a subsidiary of Houston IndustriesTrading and Transportation Group, signed a three-year assetmanagement contract with Owensboro, KY-based Western Kentucky GasCo. The contract, effective July 1, entails about 60 Bcf/year offirm transportation, 8 Bcf of storage capacity and 26 Bcf/year ofgas supply, as well as citygate delivery asset management services.
Columbia Energy Group reported its second-quarter earnings weredown $16.6 million, or 20 cents per share, from 2Q97 primarilybecause temperatures in its service territory were 38% warmer thanlast year. Despite the loss, however, CEO Oliver G. Richard IIIsaid the company “continued to show improvements in operations,”citing reductions in operation and maintenance costs and a 57%increase from exploration and production operations. Richard alsonoted the massive expansion of Columbia’s customer-choice programsin Ohio and Pennsylvania, which have given 85% of its utilitycustomers the ability to choose their gas supplier.