Quarters

With normal cooling degree and heating degree days in the third and fourth quarters, Stephen Smith Energy Associates estimates in its latest Monthly Energy Outlook that third quarter Henry Hub natural gas prices will average $5.82/Mcf and fourth quarter prices will be $5.62, yielding an average annual forecast of $5.80 for 2004. If the estimate holds, gas prices would average 40 cents higher than in 2003.

With three-quarters of the year complete, producers are “well positioned” to generate cash flow that exceeds drilling budgets by about 30% this year — and a similar situation in 2004 could lead to more acquisitions, according to a recent analysis by Lehman Brothers.

With three-quarters of the year complete, producers are “well positioned” to generate cash flow that exceeds drilling budgets by about 30% this year — and a similar situation in 2004 could lead to more acquisitions, according to a recent analysis by Lehman Brothers.

In a 10-K filing with the Securities and Exchange Commission last week, Reliant Resources Inc. officially amended its earnings for the second and third quarters of 2001. The restatement, which was announced in early February by the company, relates to a correction in accounting treatment for a series of four structured transactions that apparently were inappropriately accounted for as cash flow hedges between May 2001 and Sept. 2001 (see Power Market Today, March 18).

Houston-based Hanover Compressor Co., which has already restated the financial results for its last seven fiscal quarters, said its annual reports since going public in 1997 have contained an “error” that makes it appear the company built less equipment than it actually has. The company makes pumps that move natural gas and oil through pipelines and from wells. CFO John Jackson said the company ” inadvertently” omitted the amount of equipment made at an Oklahoma factory, and not including that output, makes it appear that fabrication costs for some compressors were higher than they actually were, he said. Jackson said the error will be corrected in this year’s annual report, and said the correction would not affect prior revenue or earnings. The annual report is expected to be released in early April. Jackson succeeded former CFO William Goldberg in February after Hanover said it would restate its previous earnings as far back as January 2000.

Temperatures that were 15.2% and 2.1% warmer than normal in thefirst and second quarters of the year, respectively, prompted theAmerican Gas Association to significantly scale back its gas demandforecast for the year. The association is projecting a 0.3% decline(0.1 quadrillion Btus -1 quad is roughly equivalent to 1 Tcf) ingas demand in 1998 to 22.6 quads in contrast to its Decemberforecast of 3.1% gas demand growth this year.