Hedging

By hedging additional natural gas, oil and natural gas liquids (NGL) production for 2005, Energen Corp. said Wednesday it is raising its earnings guidance by 15 cents to a range of $4.25-$4.45/share in 2005.

Not enough hedging and abnormal weather on both coasts played a role in driving Bellevue, WA-based Puget Sound Energy (PSE) to announce Wednesday it was filing with state regulators for about a 17%, or almost $10 monthly, retail natural gas rate increase. Only 25% of the Puget’s supplies were locked in at fixed prices last year, a spokesperson said Thursday in an interview with NGI.

Incentives and profits for speculative trading are out, and traditional hedging and marketing centered on assets are in, according to the head of theWestern Power Trading Forum.

With 2001 earning results out of the way, Denver-based Western Gas Resources Inc. announced its Dec. 31, 2001 reserve additions and its capital budget and hedging positions for 2002. The company replaced 275% of 2001 production of 36.3 Bcfe. Net production increased 31% in 2001 compared to 2000.

Devon Energy said it entered into additional hedging transactions, covering its first quarter 2002 natural gas production. It entered into fixed-price physical delivery contracts covering an additional 116,400 MMBtu/d in the United States at an average price of $2.65/MMBtu, and in Canada, the company entered into fixed-price physical delivery contracts covering an additional 118,400 MMBtu/d of gas at an average price of $2.46. Devon said it currently has downside price protection in place for about one-half of its expected first quarter 2002 gas production at an average price of $2.94. For the full year 2002, Devon has downside price protection in place for 39% of its expected gas production at an average price of $3.02. On the oil side, Devon has downside price protection in place for 53,200 b/d in 2002 at an average price of $22.34/bbl, That represents 55% of Devon’s expected 2002 oil production.

Denver, CO-based Westport Resources Corp. said late last week that the company spudded eight natural gas exploration wells and 59 development wells during the third quarter. The company also reported that it has hedged approximately 60% and 40% of its estimated oil and gas production, respectively, from its proved developed producing reserves for 2002. Westport said its oil and gas hedges are predominantly collars with average floor prices of $22.26 per barrel and $3.10 per MMBtu respectively.

While ONEOK’s energy marketing and trading and production units prospered in the second quarter, gathering and processing suffered as a result of lower processing spreads, cutting net income to $23.6 million or 20 cents per diluted share, compared to $27.2 million or 23 cents per diluted share for the same period a year ago.

Petroleum Development Corp. of Bridgeport, WV, said it haslocked in November to March prices at an average of about$2.95/MMBtu based on NYMEX futures quotes that have reached “thehighest average price we’ve seen for any winter in the past 10years.”

Petroleum Development Corp. of Bridgeport, WVA, said it haslocked in November to March prices at an average of about$2.95/MMBtu based on NYMEX futures quotes that have reached “thehighest average price we’ve seen for any winter in the past 10years.”