Hedge

Describing operations in picked-over natural gas fields at home as a case of “managing decline,” Canada’s seventh-ranked producer has set out to expand in international liquefied natural gas development in order to maintain and increase sales to the United States.

Describing operations in picked-over natural gas fields at home as a case of “managing decline,” Canada’s seventh-ranked producer has set out to expand in international liquefied natural gas development in order to maintain and increase sales to the United States.

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.

Reliant Resources Inc. (RRI) increased its after-tax operations for 2000 through 2002 by $17 million after miscalculating hedge ineffectiveness in 2001 and 2002 and eliminating four previously disclosed natural gas swap transactions from 2000 and 2001 that should not have been recorded.

As a hedge against wholesale energy market price and supply volatility, California should use its extensive underground storage system to establish a “strategic gas storage reserve” to assure reasonably priced and reliable electric generation in the state, an energy consumer advocate told a special meeting of the state’s major energy policymakers Tuesday.

Becoming the latest industry player to attempt to cash in on natural gas market volatility, Fort Worth-based XTO Energy Inc. has hedged 100 MMcf/d of production for 2003 at an average New York Mercantile Exchange (Nymex) price of $4.06/Mcf. A few days ago, Energen Resources Corp. locked in 40 new natural gas contracts in all 12 months of 2003, representing 4.8 Bcf of production at an average Nymex price of $4.10/Mcf.

Enron launched EnronCredit.com, a global online creditdepartment to provide live credit prices and enablebusiness-to-business customers to hedge credit exposure instantlyvia the Internet. EnronCredit.com helps businesses evaluate thecredit quality of their customers in real time and, beginning March8, will allow them to transact in bankruptcy swaps via Enron’sglobal Internet-based transaction system, EnronOnline.

Aquila Energy has won a long-term, $24.3 million contract tosupply gas to to Nebraska municipals under a pre-paid contractdriven by the current low interest rates. Aquila will supply14,419,850 MMBtu over 10 years to Energy America, which isaffiliated with the Nebraska Municipal Power Pool, the MunicipalEnergy Agency of Nebraska and the Nebraska Public Gas Agency.

LG&E Energy Marketing (LEM), a subsidiary of LG&EEnergy, has introduced risk management products designed to manageweather-related risk.