Termination

Thousands of landowners in New York state, who have received notice that their leases with gas companies are being unilaterally extended, have been given an added bonus: a French lesson.

March natural gas futures continued to rebound Tuesday as traders began their individual expiration dances ahead of the contract’s termination Wednesday. The prompt-month contract pushed higher late in the regular trading session to close at $4.236, up 13.9 cents from Monday’s finish.

The Federal Trade Commission (FTC) granted early termination of the waiting period under antitrust law for Black Hills’ acquisition of Aquila’s electric generation and distribution properties in Colorado and its gas distribution properties in Colorado, Iowa, Kansas and Nebraska. The FTC did the same for the proposed merger of Aquila’s Missouri-based electric utility with a subsidiary of Great Plains Energy Inc., the parent of Kansas City Power & Light.

El Paso Corp. said it received preliminary expressions of interest in a recent open season for about 3 Bcf/d of firm transportation capacity on its proposed 1,000-mile Continental Connector pipeline project, which would connect El Paso’s Rocky Mountain region pipelines, including Colorado Interstate, Wyoming Interstate and Cheyenne Plains, with its three lines in the eastern half of the country, ANR Pipeline, Tennessee Gas Pipeline and Southern Natural Gas.

Commenting on the temporary reprieve ACN Energy received last week that will allow it continue marketing natural gas in Georgia, the Farmington Hills, MI-based company said it was “pleased” that it was able to reach an agreement with Atlanta Gas Light Co. (AGLC) (see Daily GPI, Nov. 18).

Citing a number of irreconcilable differences, including issues related to management and organizational structure and questions raised about financial forecasts, Entergy Corp. and FPL Group yesterday said they were walking away from the altar and foregoing any further pursuit of their proposed merger.

Pioneer Natural Resources Co. of Dallas announced thetermination of a purchase and sale agreement between Pioneer andCostilla Energy Inc. for the sale of certain oil and gas propertiesto Costilla. As a result of Costilla’s failure to close the April 1agreement, Pioneer has received one million additional shares ofCostilla common stock as liquidated damages.

Louis Dreyfus Natural Gas received a payment of $40 million forearly termination of a long-term, fixed-price gas sales contract.The terminated contract, which was with an independent powerproducer, covered 4 Bcf/year of gas which would have been deliveredthrough 2006. The total volumes of 33 Bcf, covered by thisterminated contract, are now available to be sold to othercustomers or in the spot market. Proceeds will be used to reducebank debt. The payment monetizes a portion of the value of Dreyfus’portfolio of long-term, fixed-price contracts. The value of thesecontracts is not reflected on its balance sheet. In the aggregate,the remaining contracts have a present value (discounted 10%) inexcess of market of about $125 million.