Predicts

Many industry analysts have been steadily raising their gasprice forecasts because of the year-long drilling slump and itspotential impact on gas deliverability, but St. Petersburg,FL-based Raymond James &amp Associates went out on a limb last weekpredicting sharp price spikes above $10/Mcf at the Henry Hub nextwinter and an average of $3/Mcf at the hub next year.

Many industry analysts have been steadily raising their gasprice forecasts because of the year-long drilling slump and itspotential impact on gas deliverability next winter, but St.Petersburg, FL-based Raymond James & Associates went out on alimb this week predicting sharp price spikes above $10/Mcf at theHenry Hub this winter and an average of $3/Mcf at the hub nextyear.

Storage overhang isn’t enough to temper the optimism of EnronOil & Gas Chairman Forrest Hoglund when it comes to the outlookfor gas this year and next. With demand expected to grow andproduction expected to fall – 3% by Hoglund’s count – on softdrilling activity, the coming months are shaping up to be good onesfor producers.

Avista Corp. of Spokane, WA, its first-quarter earnings pershare could fall as much as 15 cents per share below securitiesanalysts’ current consensus first quarter estimate of 49 cents pershare. However, CEO T.M. Matthews said the company is stillcomfortable with analyst expectations of earnings for the year ofbetween $1.55-$1.65 per share

Salomon Smith Barney (SSB) predicts there will be 405 Bcf moregas in storage at the end of the winter heating season on April 1than the average level of stored gas at the same point over thepast four years. The investment firm raised its forecast forseason-ending storage levels by 72 Bcf last week to 1,306 toreflect lower-than-expected withdrawals for the week ending Feb. 5and 20% warmer than normal weather expected for the week endingFeb. 13. The forecast would put storage levels on April 1 about 247Bcf higher than levels at the same point last year. According tothe American Gas Association (AGA), storage levels currently are428 Bcf higher than they were at the same point last year.

Cambridge Energy Research Associates (CERA) released findingsyesterday that North American gas production capacity will weakenthis year – possibly by as much as 500 MMcf/d – due to cutbacks indrilling and exploration brought about by low oil prices.

Enron Corp. reported a 16% increase in 1998 earnings per dilutedshare, led by wholesale energy marketing operations. Earnings roseto $2.01/share from $1.74 in 1997. Corresponding net incomeincreased 36% to $698 million from $515 million during the year.The comparisons are before non-recurring items and last year’s gainof $61 million, related to the sale of a 7% interest in EnronEnergy Services.

Last year set a 1990s record for exploration and productioncapital spending, but the five-year trend of capital spendingincreases may end this year with the first decline since 1992.That’s one finding of Global Upstream Performance Trends, a reviewof domestic and international results for 131 publicly tradedcompanies by Arthur Andersen and John S. Herold.

The American Gas Association(AGA) predicts additions to domesticproved gas reserves last year will come out between 96% and 120% ofproduction. “The indication of strong 1997 reserves replacementcomes at a time when long-term natural gas growth is expected toreach 30 Tcf by 2015,” said Chris McGill, director of gas supplyand statistics at AGA. “To meet the requirements of robust growthin gas markets, annual additions to gas reserves through drillingmust also remain strong, balancing new sources of natural gas withdomestic production each year.”