Steady

Raymond James analysts are lowering their 2002 rig count forecast but holding steady their forecast for 2003. Despite the recent sharp increases in oil and gas prices, producers have not responded with increases in drilling. The apparent disconnect seems to be related to their desire to use increased cash flows to strengthen balance sheets rather than re-invest in the drill bit, said Raymond James’ Marshall Adkins.

Despite the negative impact on production this year from Anadarko Petroleum’s plan to sell $220 million in non-core oil and gas assets and another $100 million of low-margin, low-growth properties, CEO John Seitz reiterated the company’s forecast of 6% production growth next year and 10% production growth in 2004. Production this year is expected to be down 5.5% to 188 million boe. Production growth next year and in 2004 is expected to come mainly from fields in the Gulf of Mexico, Canada and Qatar.

With all signs pointing to a continued population boom and steady economic growth over the next several years, key parts of the Southeast will see a dramatic upturn in the amount of power they will require over the next decade, an executive with a leading economic forecasting firm said last Thursday. One region alone, the South Atlantic, is going to need to be supplied with 30% more power over the next 10 years than was supplied in 2000, Mary Novak, managing director-energy consulting with DRI-WEFA, said at a conference looking at the Southeast’s energy infrastructure.

Making steady progress since Monday against a rising tide of declining energy stock prices, Atlanta, GA-based Southern Co., Akron, OH-based FirstEnergy and New Jersey-based GPU Inc. again were on the plus side Wednesday. It wasn’t hard to figure, as U.S. aircraft carriers steamed toward the Caribbean and the Middle East, with fighter planes expected to follow soon. The three utilities own no foreign facilities.

For the second session in a row, natural gas futures were lifted from early morning lows Tuesday as bargain buying more than offset short selling. But just like Friday, the session-long rally yesterday was not enough to recoup losses sustained on the open, leaving the market with yet another in a string of down-days. The October contract closed at $2.359, off 2.1 cents for the session, but more than a dime above its $2.255 low.

Amid a steady and seemingly limitless stream of commercial buying, natural gas futures rallied for the second-straight session Monday, as traders priced in the first forecasts for hot weather in the eastern U.S. Breaking through several important technical levels to notch its daily high just moments before the closing bell, the July contract finished 25.7 cents higher at $4.179.

Amid a steady stream of non-commercial selling, natural gasfutures tumbled lower yesterday morning, renewing fears that themarket may not have reached a bottom and further losses arepossible. Plunging to its lowest level in more than three months,the April contract took the selling on the chin yesterday, falling15.7 cents to close at $5.006. Volume at Nymex was healthy with anestimated 56,626 contracts changing hands.

Citing forecasts of “an extended period of steady, cold weatherthroughout the pipeline system,” Texas Eastern said it is imposingseveral restrictions this morning to preserve linepack and systemreliability. Until further notice no forward-haul mainline IT-1volumes will be delivered to the market area; no due-shipperimbalances are available; TABS-1 shippers are required to be inbalance daily; and all non-interstate Operational BalancingAgreements upstream of the Berne (OH) Compressor Station have beensuspended. Affiliate Algonquin is restricting the taking of anydue-shipper imbalances. Both pipes said they will consider thepotential for secondary restrictions going into the holiday weekendas conditions warrant.

Slow but steady appears to be winning the race for the retailnatural gas market in Maryland, where some marketers have droppedout — casualties to high prices and billing problems — butothers are closing ranks and developing the sophisticationnecessary to weather changing conditions.