Profit

Profit for exploration and production companies, which has been soaring for the past two years, may fall well short of the 21% forecasted again this year because of rising service costs and lower commodity prices, with shares of natural gas-focused exploration and production companies possibly showing a steep decline over the coming months, an energy analyst said in a new report.

Although they agreed to review next year the methodology used in calculating authorized profit levels for the energy utilities they oversee, California’s five regulators Thursday unanimously agreed to increase returns-on-equity (ROE) for the three major electric or combination utilities. The action drew a lot of commentary from the five members of the California Public Utilities Commission, which reviews the utilities’ so-called “cost-of-capital” annually at the end of each calendar year.

In order to avoid the volatile spot market and lock in a discount on gas supply, Public Gas Partners, Inc. (PGP), a non-profit gas agency formed a year ago by seven southeastern municipal utilities, said Tuesday that it purchased 115 Bcfe of proved natural gas reserves (73% proved, developed and producing) and 30 Bcfe of probable and possible reserves in four gas transactions at a total cost of about $330 million.

With a solid contribution from the Patina Oil and Gas assets, Noble Energy Corp. reported its highest quarterly net income ever, with 3Q profit increasing 111% to $177 million (99 cents/share), compared with $83.7 million (70 cents) in 3Q2004. Daily production rose 61% worldwide, and domestic output also climbed, despite the impact of Hurricanes Katrina and Rita.

Anadarko Petroleum Corp. reported a 50% surge in quarterly profit on Friday, lifted by record commodity prices. Net income rose to $598 million ($2.51/share), from $300 million ($1.58) in 3Q2004. CEO Jim Hackett said the company “hit the middle of our target range” for production, with organic volumes up 8% so far this year.

Record energy prices offset the negative impact from Hurricanes Katrina and Rita, sending Kinder Morgan Inc. (KMI) 3Q profit up 12% from a year ago. Third quarter net income slightly surpassed analysts’ expectations, to stand at $124.8 million ($1.01/share), compared with $111.9 million (90 cents) for the same period of 2004. Master limited partnership Kinder Morgan Partners LP (KMP) earnings were up 18% for the quarter, contributing $144.2 million, compared with $122.1 million a year ago.

Despite another nagging loss in consolidated net income, Sioux Falls, SD-based NorthWestern Corp. reported a profit ($6.4 million, or 18 cents/share) from continuing operations for the second quarter, compared to a loss of $14.4 million from continuing operations for the same period last year.

El Paso Corp. posted a tepid first quarter profit on Tuesday, stung by weak natural gas production and hedging losses. However, the Houston-based company reversed its losses from a year ago, lifted by strong natural gas pipeline and field service earnings.

El Paso Corp. posted a tepid first quarter profit on Tuesday, stung by weak natural gas production and hedging losses. However, the Houston-based company reversed its losses from a year ago, lifted by strong natural gas pipeline and field service earnings.