Independents

The recent rise in U.S. crude oil prices due to the announcedproduction cuts by the Organization of Petroleum ExportingCountries (OPEC) shouldn’t stop Congress from pursuing legislativereforms for domestic oil and natural gas producers, the head of anindependent producer association said yesterday.

Despite bullish prospects two years ago with the advent ofderegulated energy markets, California independent gas producers atthe start of 1999 are still struggling against depressed prices,slow developing electric and gas restructurings and a hard core ofthree major investor-owned utilities that have proven to beformidable competitors. One independent producer, Tri-Valley Corp.,in Bakersfield still expects to ride out continuing years of redink until real gas/electric competition and increased oil/gasprices eventually make current projects profitable in the long run.

Two recently announced deals provide further proof thatindependent producers are finding it tough going in the current lowcommodity price environment. Houston-based independentRutherford-Moran Oil Corp. struck a deal with Chevron to allow itto continue activities in the Gulf of Thailand, and EEX announcedit is selling $150 million of securities to fund its deep-waterdevelopment program.

Results of Burlington Resources, Apache Corp., and VastarResources are just the beginning of the tale of woe thatindependent producers’ will be telling with their third quarterearnings. The companies turned in results that could only beconsidered poor outside the context of depressed gas and oil pricesand liquids margins that are at historic lows. Production of allthree companies was impacted by Gulf storms and hurricanes.

The Dallas-based investment firm, Hicks, Muse, Tate & Furst,announced it was picking up a significant interest in TritonEnergy, the second major investment in an oil and gas E&Pcompany Hicks Muse has made in the last week.