Reduced

Recent gas injection trends and a re-assessment of the reduced reward/risk profile of the oil and gas drilling sector have led analysts with RBC Capital Markets to assume a cautious stance on certain energy stocks through this year.

CIG declared force majeure due to unscheduled maintenance at Muddy Gap Compressor Station and reduced available capacity on its Wind River Lateral in central Wyoming to 225 MMcf/d Thursday until further notice. The duration of the Muddy Gap work is unknown but is anticipated to continue through Jan. 3, CIG said.

El Paso’s San Juan Basin capacity is reduced by 100 MMcf/d through Friday due to the installation of pigging facilities on Line 1200 between Gallup and Window Rock Stations. The work also cuts North Mainline capacity by 135 MMcf/d.

Unseasonably warm weather reduced energy demand in the Northeast, lowered prices and cut into KeySpan’s fourth quarter earnings. The company reported slightly lower earnings, excluding special items, of $99 million, or 71 cents per share, down from $100.9 million, or 75 cents per share, a year earlier. Wall Street analysts had expected earnings of 73-78 cents per share, with a consensus estimate of 75 cents. Including special items, earnings fell to $34.4 million, or 25 cents per share, from $58.9 million, or 44 cents per share.

Unseasonably warm weather reduced energy demand in the Northeast, lowered prices and cut into KeySpan’s fourth quarter earnings. The company reported slightly lower earnings, excluding special items, of $99 million, or 71 cents per share, down from $100.9 million, or 75 cents per share, a year earlier. Wall Street analysts had expected earnings of 73-78 cents per share, with a consensus estimate of 75 cents. Including special items, earnings fell to $34.4 million, or 25 cents per share, from $58.9 million, or 44 cents per share.

Higher production volumes weren’t enough to halt the earnings decline stemming from substantially reduced prices among independent oil and gas producers in the third quarter, according to Energy Performance Review, which maintains a line-of-business financial and operating database.

Denbury Resources said it has reduced its projected 2002 development and exploration budget by $25 million (20%) to $95 million to adjust for the loss in potential revenue and cash flow during 2002 from its natural gas hedges with Enron Corp. and for the general decline in commodity prices.

The Alberta Energy and Utilities Board (EUB) last week assumed the lead role to direct operations following the uncontrolled release Aug. 26 of storage cavern ethane and the resulting fire from two wellheads at BP Canada’s natural gas liquids plant near Fort Saskatchewan, AB. While there were no reported injuries, EUB said the incident is “impacting other petroleum operations within the province involving both upstream natural gas liquids production and downstream natural gas liquids product use.”

The swing market continued to move higher Tuesday in the East and the Southwest basins, but at significantly reduced momentum. Most points ranged from flat to up about a nickel with only scattered points, mostly in the Northeast, realizing gains of more than a nickel.