Locking

After showing early signs of a rally, the expiring April natural gas futures contract on Monday resumed the downtrend of the last few months, locking in a low of $3.820 before going off the board at $3.842, down 3 cents from Friday’s close. The May contract finished the day at $3.916, down 1.4 cents from Friday’s finish.

The rush to drill for oil and natural gas in five Rocky Mountain states is threatening endangered species and is locking out hunters and fisherman from western lands, the Environmental Working Group (EWG) and National Wildlife Federation (NWF) said in a report last Wednesday. Their report further claimed that the amount of natural gas produced in the region has been “modest,” and not enough to justify “runaway drilling.”

The rush to drill for oil and natural gas in five Rocky Mountain states is threatening endangered species and is locking out hunters and fisherman from western lands, the Environmental Working Group (EWG) and National Wildlife Federation (NWF) said in a report Wednesday. Their report further claimed that the amount of natural gas produced from the region has been “modest,” and not enough to justify “runaway drilling.”

Chesapeake Energy Corp. over the past month increased its hedge position, locking in an average Nymex price of $9.49/MMBtu for 721 Bcf of natural gas production over the next three years.

As Marathon Oil announced plans for locking up Indonesian supplies for its proposed North Baja liquefied natural gas (LNG) receiving terminal in Mexico last week, Sempra Energy was still waiting for word from Mexican federal government energy officials on its own proposal for a LNG terminal a few miles south of the proposed Marathon site.

Range Resources boosted its hedging position to take advantage of recent commodity price increases, locking in prices for two-thirds of its oil and gas production next year. All of the Company’s hedges are straight swaps entered into primarily with major financial institutions. “With approximately 75% of projected production from current projects hedged for the fourth quarter, and roughly two-thirds hedged for 2003 at attractive prices, we have greatly enhanced the predictability of our cash flow,” said Range President John H. Pinkerton. “To the extent futures prices maintain current levels or extend their gains, we will continue to pursue our policy of hedging 50-75% of anticipated production at least for 12-18 months.” The company has 97,842 MMBtu/d of gas production hedged for the fourth quarter at $4.08/MMBtu, 84,659 MMBtu/d hedged for 2003 at $3.95, 41,471 MMBtu/d hedged for 2004 at $3.92 and 9,932 MMBtu/d hedged in 2005 at $3.80. Range’s production comes primarily from the Permian Basin, as well as basins in the Midcontinent, Gulf Coast and Appalachian regions.

Locking horns yet again with Naperville, IL-based Nicor Gas, the Citizens Utility Board (CUB) — a utility watchdog group — last week urged state regulators to scrap a controversial “alternative regulation” plan that has allowed the natural gas distributor to charge customers at least $27 million more than they would have paid under standard ratemaking rules.