NGI The Weekly Gas Market Report

Fort Worth-based independent XTO Energy Inc. is acquiring some coalbed methane (CBM) properties in the San Juan Basin of Colorado for $160 million, after entering into a definitive agreement with J. M. Huber Corp. of Edison, NJ.

Rosemead, CA-based Edison International’s merchant energy companies under the Edison Mission Energy (EME) family were slammed with credit rating downgrades to BB- from, in some cases, BBB- by Standard & Poor Ratings Services (S&P) reflecting heavy debt payments and restructuring facing it while wholesale power prices remain depressed, further worsening the chances of bringing more order to its chaotic financial house.

Another day, another corporate scandal. On Thursday, the target was Westar Energy Inc. Chairman David Wittig, who was indicted by a federal grand jury on charges of money laundering, conspiracy and four counts of submitting false books to a federally insured bank in Topeka, KS.

The low level of residual fuel and distillate inventories this winter means there will be less fuel available for switching and a higher natural gas price threshold for consumers to begin switching, according to bullish analysts at Raymond James & Associates.

Although it did not provide formal earnings guidance for next year, TXU Corp. said it is “more comfortable” with full-year 2003 earnings estimates of about $2/share because of a planned stock sale and the completion of a recent sale of exchangeable subordinated notes. The company earned $3.78/share in 2001.

Peoples Energy added to its Texas exploration and production assets Tuesday, buying interests in five properties in South Texas and the upper Texas Gulf Coast region from a subsidiary of Magnum Hunter Resources for $33 million.

A whale of a natural-gas drilling target — estimated at up to 43.4 Tcf — is closer to coming into the sights of Canadian producers under a new energy policy announced Nov. 25 by the British Columbia government. B.C. Energy Minister Richard Neufeld served notice that the province is serious about attempting to lift a 30-year-old ban against drilling offshore of Canada’s West Coast.

California regulators last week interpreted a ruling by the bankruptcy judge in the Pacific Gas and Electric Co. case as affirming their authority to enter into a proposed reorganization agreement with the utility. The judge denied a motion by the utility to toss out the California Public Utilities Commission’s alternative Chapter 11 reorganization plan for the PG&E utility. Hearings continue in a San Francisco federal bankruptcy court on the joint proposal by the CPUC and the official unsecured creditors’ committee.

The industrial customer will be the overall loser next year as lagging U.S. and Canadian natural gas production, increased exports to Mexico, increased power generation use and pressure to refill storage is expected to keep the natural gas market tight and prices high, according to a report by Simmons & Co. International.