Vastar Resources would appear to be taking a wait-and-see viewof next year’s gas prices. CEO Chuck Davidson told Houston energyreporters Tuesday that “not much” of the company’s gas productionis hedged next year. Indeed, Vastar generally doesn’t hedge morethan a year out and hedges less than 50% of its production.Davidson said the company also is using more collars rather thanhedges linked to a specific price.

Unlike some in the industry who for the last several months havebeen crowing about the coming 30 Tcf gas market and a perceiveduncertainty of supply’s ability to meet demand, Davidson said hesees supply and demand as pretty closely aligned right now. Henoted the industry has finally burned off the gas bubble thatplagued it for a number of years.

Davidson said Vastar’s 2000 capital budget won’t be hammered outuntil next month. The 1999 exploration and production budget was$700 million, with about 75% of that amount being spent offshore -two-thirds on the Continental Shelf and one-third in thedeep-water. Breaking this year’s budget up another way, about $250was spent on exploration and $360 was spent on development. Theremainder went to acquisitions.

Clearly, Vastar has grown weary of being questioned about itsfuture following the merger of BP Amoco and ARCO, which owns 82% ofVastar. The short answer from Davidson is the company doesn’t knowyet what will happen. He said Vastar’s success can continue “undera variety of ownership structures.”

Joe Fisher, Houston

©Copyright 1999 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.