Substantial

The emerging first quarter reports show that overall, oil and natural gas production for many North American independents is setting a record pace. However, analysts looking at the deeper picture believe that while earnings are up and production may hit records, overall domestic production continues a slow slide, and no likely near-term solution is at the ready.

Independent oil and gas exploration and production companies (E&Ps) still face increasing challenges to reinvest “substantial” capital every year as they seek new reserves to replace current production, according to Moody’s Investors Service. However, analysts because technical and geological risks remain high in mature basins and the deepwater, analysts expect more consolidation, especially among independents.

At its regular meeting on Wednesday, FERC is going to take “very, very substantial steps toward resolving all of the important old business” related to allegations of manipulation of the natural gas and electricity prices in western markets, said Commissioner William Massey last week. But the Commission will not clear away the entire “underbrush.”

Conectiv Energy, the trading arm of Washington, DC-based Pepco Holdings, Inc. (PHI), has suspended trading in natural gas futures after taking a substantial loss due to the high gas prices in the last week in February.

Conectiv Energy, the trading arm of Washington, DC-based Pepco Holdings, Inc. (PHI), has suspended trading in natural gas futures after taking a substantial loss due to the high gas prices last week.

Canada’s Talisman Energy Inc. said it expects substantial cash flow and earnings from the $250 million in natural gas properties, production and facilities that subsidiary Fortuna Energy Inc. has acquired in northern New York State. The subsidiary has amassed 400,000 net acres of land in the Watkins Glen area with current production of 65 MMcf/d. Fortuna plans to spend $45 million in 2003, drilling up to 10 wells, shooting seismic and adding to existing infrastructure.

Canada’s Talisman Energy Inc. said it expects substantial cash flow and earnings from the $250 million in natural gas properties, production and facilities that subsidiary Fortuna Energy Inc. has acquired in northern New York State. The subsidiary has amassed 400,000 net acres of land in the Watkins Glen area with current production of 65 MMcf/d. Fortuna plans to spend $45 million in 2003, drilling up to 10 wells, shooting seismic and adding to existing infrastructure.

Despite a substantial amount of near-winter weather lingering in the Midwest and Northeast market areas, softer cash prices Wednesday showed conclusively that the early-week rally had run out of steam. A few scattered points were flat to barely lower, but otherwise losses ranged up to about 30 cents at the PG&E citygate. Most decreases were around a dime or less, however.

Oversupplied Rockies/San Juan gas failed to share in mostly substantial price gains throughout the rest of the market Friday. Virtually all of the upticks were measured in double digits, ranging up to about 40 cents higher in the Pacific Northwest.