Trimming

With storage building and natural gas prices no longer surging, Friedman, Billings, Ramsey & Co. Inc. (FBR) joined a growing chorus of energy analysts in trimming its forecast for U.S. gas prices for the next two years to reflect the “impending flood of shale gas.”

The senior executive bonuses for this year are gone, some of the long-term executive incentives have been eliminated, capital spending has been reduced even more, and up to $2 billion more in assets will be sold. As El Paso Corp.’s chairman noted, the interstate pipeline leader is not reacting, but rather responding to what shareholders and the marketplace now demand. “We are doing what management is supposed to do,” explained CEO William Wise on Thursday. “We are all sharing the pain.”

The November natural gas futures contract closed down 3.1 centsyesterday at $2.824 after trimming gains notched earlier in thesession. After a spirited sell-off in Tuesday’s Access trading, thenewly crowned prompt month erupted higher Wednesday to print a$2.94 high as buyers picked up contracts which they hope willrepresent bargains heading into the winter heating season. Byafternoon, however, the market banter had turned once again tobearish storage predictions and that pressured the market lower inlight trade.

After a $297 million net loss in 1998, it should come as nosurprise that Baker Hughes is cutting capital spending this yearand will not be out shopping for assets or new combinations likemany other industry companies. Drilling activity continues to plumbnew depths (figuratively, not literally), reaching a record lowlast week with 498 rotary rigs operating in the U.S.

Following the lead of numerous other oil and gas companies whoare trimming staff this year because of low commodity prices, UnionPacific Resources Group announced it will reduce headquarters staffby 14%, or about 140 positions. Combined with attrition, UPR’sheadquarters staff will have been reduced by about 20% since thebeginning of the year.

Following the lead of numerous other oil and gas companies whoare trimming staff this year because of low commodity prices, UnionPacific Resources Group announced it will reduce headquarters staffby 14%, or about 140 positions. UPR has significantly cut back itsU.S. operations this year, divesting an estimated $600 million inexploration and production properties. It also acquired NorcenEnergy, with its strong Latin American focus, and recently sold itsdomestic midstream business to Duke Energy.

Without giving specifics, the CEO of PG&E Corp.confirmedhe is looking to sell some of its recently acquiredmulti-billion-dollar gas and electric assets in the U.S. andAustralia later this year.