Slump

With no drag from a weekend load slump playing a role, colder weather due in the Northeast and Midwest early this week, and the delayed support of a bullish storage report and its accompanying screen run-up Thursday, the March aftermarket got off to an impressively strong launch Friday.

Absorbing the impact of a cooler than normal spring, Consolidated Edison Inc. reported net income for the second quarter of 2003 of $66 million or 29 cents a share, compared with earnings of $98 million or 46 cents a share, for the second quarter of 2002. The company added that the weather’s impact in 2Q2003 accounted for an estimated 6 cent reduction per share when compared to 2Q2002.

Even though its second quarter income fell more than 90% from the same period a year ago — mostly because of natural gas trading losses — the CEO and chairman of American Electric Power (AEP) held fast to the company’s commitment to marketing and trading, and said that going forward, AEP expects the trading business to be a “significant contributor” for 2002. The company lost $20 million, or 4 cents a share, on gas trading in the quarter — mainly in April — but expects to make up the losses because of rising returns in May and June.

Even though its second quarter income fell more than 90% from the same period a year ago — mostly because of natural gas trading losses — the CEO and chairman of American Electric Power (AEP) held fast to the company’s commitment to marketing and trading, and said that going forward, AEP expects the trading business to be a “significant contributor” for 2002. The company lost $20 million, or 4 cents a share, on gas trading in the quarter — mainly in April — but expects to make up the losses because of rising returns in May and June.

Even though its second quarter income fell more than 90% from the same period a year ago — mostly because of natural gas trading losses — the CEO and chairman of American Electric Power (AEP) held fast to the company’s commitment to marketing and trading, and said that going forward, AEP expects the trading business to be a “significant contributor” for 2002. The company lost $20 million, or 4 cents a share, on gas trading in the quarter — mainly in April — but expects to make up the losses because of rising returns in May and June.

At their height a year ago, the domestic natural gas and electricity trading arms of energy companies across the United States employed between 12,000 and 15,000 in front-, middle- and back-offices, many making well above average college-educated salaries. There were nearly 4,000-5,000 sales and marketing professionals, another 6,000-7,000 accountants and analysts, and 2,000 to 3,000 specialists, focusing on transportation and certain contracts. Today, energy trading units are shrinking rapidly, but they won’t disappear, a veteran energy expert said last week. They can’t, he said.

Despite the 35% reduction in domestic drilling activity, drilling service costs have fallen only 15-20% so far because of consolidation in the industry. Today’s drilling and oil field service prices are 20-200% higher than during the same rig utilization in the last industry downturn, analysts at Raymond James & Associates said in an equity research note.

Despite the 35% reduction in domestic drilling activity, drilling service costs have fallen only 15-20% so far because of consolidation in the industry. Today’s drilling and oil field service prices are 20-200% higher than during the same rig utilization in the last industry downturn, analysts at Raymond James & Associates said in an equity research note.

The “steep” natural gas declines in the third quarter of 2001 are “unlikely” to be part of a trend, and so far have not been repeated in fourth quarter reports, according to Lehman Brothers latest exploration and production update. The analyst found that “early returns” from 45 of the largest producers “lead us to estimate that wellhead gas production fell 0.1-0.5%” compared to the third quarter. The analyst also expects a production decline this year to fall between 1.5-2.5%, and import growth and storage to “meet demand growth” in 2002.