PHYSICAL NATURAL GAS PRICES ??
Gulf/Eastern Region
| Agua Dulce | 2.30 |
| ANR SE | 2.37 |
| Carthage Tailgate | 2.38 |
| Chicago Citygate | 2.45 |
| Columbia Gulf Onshore | 2.39 |
| Dominion South Point | 2.61 |
| Henry Hub | 2.40 |
| Houston Ship Channel | 2.41 |
| Katy Tailgate/Exxon | 2.39 |
| NGPL LA Pool | 2.36 |
| NGPL - Midcontinent | 2.31 |
| NGPL STX | 2.32 |
| NGPL TX/OK | 2.36 |
| NNG Demarc. | 2.43 |
| Niagara | 2.56 |
| Sonat Tier 1 | 2.38 |
| TCO IPP Pool | 2.50 |
| Tetco ELa | 2.33 |
| Tetco M-3 | 2.66 |
| Tetco STX | 2.30 |
| TGP Zone 0 | 2.34 |
| TGP Zone 1 (500 Leg) | 2.38 |
| TGT Zone SL | 2.39 |
| New York Citygate | 2.66 |
| Transco Station 65 | 2.40 |
| Transco Zone 6 (NY) | 2.66 |
| Trunk ELa | 2.38 |
| Western Region
| California Border | 2.29 |
| El Paso Keystone | 2.21 |
| El Paso San Juan-Blanco | 2.18 |
| Waha Hub | 2.32 |
| Canadian/Rockies Region
| Nova/Aeco (C$/gig) | 3.29 |
| Dawn Hub/Union | 2.49 |
| Northwest Stanfield | 2.28 |
| Wyoming Pool | 2.05 |
| Opal | 2.06 |
| PGT-Malin | 2.29 |
| Sumas | 2.22 |
Flow Date 2/26
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SG Resources Mississippi, L.L.C., a wholly owned subsidiary of SGR Holdings, L.L.C., is conducting an open season for firm storage services at its new high-deliverability, salt cavern, natural gas storage facility, known as the Southern Pines Energy Center. The open season will begin at 9:00 a.m. CDT on February 4, 2002, and will continue until 5:00 p.m. CDT on March 4, 2002. The project is located at the border of Mississippi and Alabama with access to the major pipelines serving the Mid-Atlantic and the Southeastern United States. The facility is ideally located to serve as a transportation and storage hub for shippers on any one of nine major pipelines that will be interconnected directly or indirectly to the project. Information on the facility and the Open Season is available on our web site at
http://www.sgr-holdings.com
or contact us at 713-914-8188.
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Natural gas futures for March delivery on the NYMEX tumbled 6% yesterday, losing $0.142 to $2.307 per MMBtu. The April contract dropped $0.143 to $2.348 per MMBtu. The market, caught between heavy open interest concentrated at $2.00 and $2.50, sold downward into the $2.20s. The market opened down and moved lower. When the midmorning cash trading closed, the market sold down to its intra-day low. Trade and local selling left the market caught in the middle of the open interest concentrations. Look for the market to continue down this morning with expiration likely between $2.00 $2.15. With open interest spread all over everywhere, options expiration yesterday was a non-event. Look for a withdrawal of about 90 Bcf 100 Bcf reported by the AGA tomorrow afternoon. A year ago, 101 Bcf was withdrawn from storage, and the 3-year average is 91 Bcf. Estimated volume yesterday was about 110,000 contracts, about 35,000 of which were considered spreads. The market still carries a !
very high $0.94 forward carry between March-January 2003. Natural gas for next day delivery across the US and Canada was generally flat to $0.05 higher yesterday. Natural gas for next day delivery at the Henry hub was even at $2.40 per MMBtu.
California plans to petition the FERC to void 32 long-term, high-priced power contracts the state signed last year. The California PUC has filed petitions under a section of the Federal Power Act charging that contracts the state has with 22 sellers are at prices and terms that are unjust and unreasonable. With the contracts valued at $43 billion, the state committed to overpayments of about $21 billion for the 32 of the long-term power contracts. Calpine says it is confident that the FERC will find the company's long-term contracts with the state are just and reasonable. The PUC is asking the FERC to void the 32 contracts. The contracts were designed to rescue California from having to pay spot-market prices of $300 per MWh or more. Now, the average price of the contracts, $88 per MWh, is about 3 times more expensive than the spot market. FERC Chairman Wood is planning to investigate whether Enron and other companies manipulated California's power market and inappropr!
iately influenced the prices of long-term power contracts. The contracts also have become an issue in the state's governor's race, where the 3 main Republicans have criticized the handling of the states energy crisis.
UtiliCorp United received the highest percentage profits last year from mark-to-market accounting adjustments not yet realized in cash among 15 companies surveyed by ABN AMRO. UtiliCorps earnings per share was $2.42 last year, about $0.81, or a third, came from MTM. Of that, about 80% relates to contracts to be realized in cash within one year, and 87% within 2 years. MTM accounting which allows company to take a commodity position and calculate the fair market value of
the position at a specific point in time, despite actual earnings that may be years away. However, ABN gave UtiliCorp its highest rating for its level of disclosure. Williams, at 37%, had the highest percentage of earnings per share in the survey, but that is based on estimates, and excludes Enron-related write-offs. Williams has not yet reported 2001 results. Pinnacle West Capital was next at 22%, then Duke Energy at 21%. On Duke's $1.5 billion MTM book, 38% would be realized within a year, 53% in 2 years, and 64% in 3 years.
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Executive recruiters say that more than a thousand Arthur Andersen partners have inquired into getting new jobs due to concerns about the accounting firms exposure to lawsuits stemming from the collapse of Enron. Andersen has about 4,700 partners and 85,000 employees world-wide. Andersen contends that it is only experiencing a normal turnover so far. One recruiting company claims that it has received over 10,000 calls from Andersen employees since Enron filed for bankruptcy. A mass exodus by its staff may impact Andersens ability to attract customers, especially during investigations by Congress, the SEC and the Justice Department into its role in establishing limited partnerships that hid debt and losses from Enron investors. Andersen has admitted that its employees shredded thousands of documents after the SEC inquiry began. Andersen is attempting to settle over $26 billion in lawsuits from Enron shareholders and employees who claim it failed to warn investors about t!
he questionable accounting that led to Enron's downfall. Andersen plans to make a nonnegotiable offer this week to settle the suits. A published report said that the plaintiffs rejected an offer of up $800 million last week. Any settlement could significantly lower a partners net worth, and those who were directly involved in the Enron account could be sued for their personal assets.
Please visit our web site at http://www.rwbeck.com
Congressional investigators reportedly have an October 3, 2000 videotape in which former CEO Jeffrey Skilling vigorously defends Enrons accounting methods and touts the partnership deals now linked to its collapse. The tape raises questions about Skillings recent testimony to lawmakers in which he said he knew of nothing wrong with Enron's finances when he resigned last August, citing personal reasons. In a transcript of the tape, Skilling responds to an Enron employees concern about a Wall Street Journal article. The September 20, 2000 story discussed Enron's use of an accounting method that books long-term contracts as current income. The article also said Enron would have had a 2nd quarter loss if not for $747 million in unrealized gains from risk management activities. However, Skilling says the story is just totally without merit, adding that Enron's accounting is conservative and the company provides more data in its annual report than anyone in a transaction-based!
industry. He then concludes that the company is in a strong position from an accounting basis. During the same meeting, Skilling tells employees the company will be bringing in partners to help Enron leverage its capital in its new Enron Net Works division. Earlier this month in testimony before the House Energy and Commerce Committee, Skilling said he was not aware of any inappropriate financing arrangements designed to conceal liabilities, or overstate earnings. Skilling is likely to be asked again about Enron's partnerships at the Senate consumer affairs subcommittee hearing today. He is also likely to be questioned about other discrepancies congressional investigators have found since he testified before the House committee. Also testifying will be Jeffrey McMahon, Enron's new president, and Sherron Watkins.
After Williams Communications Group, which is $5.2 billion in debt, said it may file for bankruptcy protection, shares of its former parent, Williams Companies, dropped $1.46, or 9%, to $14.84 per share. Shares of Williams Communications lost over half their value, tumbling $0.29 to $0.22 per share. However, Williams Communications stressed that filing for bankruptcy was only one possibility being considered to reorganize the company. The announcement by Williams Communications increased Williams investors concern that bankruptcy could lead to a sizable shareholder dilution, or trigger a ratings review. Williams spun off 95% of Williams Communication in April 2000, but could be liable for up to $2.6 billion if the communication group defaults on its debt. The company backed $1.4 billion of Williams Communications debt and a $750 million lease by agreeing to issue shares if its former unit defaults. Some investors have filed lawsuits accusing Williams of misleading them a!
bout its liability for the communications company before the spin-off. After a change in the way credit agencies handle energy companies rating, Williams may stand to lose long-term contracts until it settles the Williams Communication debt due to credit concerns by its trading partners. A lowering of Williams debt rating could also trigger an immediate pay back Williams Communication debt.
NewPower Holdings, in which Enron holds a 23.5% stake, has agreed to a takeover by UK's Centrica for about $130 million. The deal is designed to keep the financially troubled NewPower in business. NewPower Holdings has just reported a 4th quarter loss of $154 million, compared with a $57 million loss for the same period a year ago. It reported a net loss for 2001 of $327 million, compared with a loss of $170 million for 2000. Enron stake in NewPower would rise to 43.8% when warrants to buy outstanding shares are included. Other major investors are investment banking firm DLJMB Partners, GE Capital Equity Investments, the California Public Employee's Retirement System and Ontario Teachers' Pension Plan Board.
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Futures Implied
Standard & Poor's has retracted an announcement that it was considering reducing Calpines credit rating, saying the statement was based on inaccurate information. Calpines stock and debt rallied after the retracted a statement that Calpine planned to secure its new line of credit with assets, which would make bondholders less secure. The companys 8.5% note due in 2011 closed at $0.67 on the dollar. The notes sold a year ago at $0.998 on the dollar. The stock price has dropped 85% in the last year. Shares fell to $6.15 from $6.56 following the initial announcement, but after the correction, the stock rose to close at $6.83 per share, down $0.28. S&P said the company's ratings remain at BB+ and the outlook for the rating is stable.
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Progas Storage and Services, Inc.
Progas can custom build gas storage in the Upper Midwest.
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Progas is now accepting proposals and orders for years 2002-2007 for approxamately 5 bcf of storage on Midwestern system serving Indiana, Illinois, and 3 bcf on Texas Gas Transmission system serving Tennessee, northern Kentucky, Indiana, and Ohio. Additional potential storage filds beding acquired at this time on Midwestern, anhandle Eastern and A & R (Coastal) systems serving the Upper Midwest. Inquiries from potential partners, investment bankers, and brokers welcome.
Progas Storage and Services, Inc.
8610 South Highway 277
Abilene, TX 79606
Phone: 915-698-3699
Fax: 915-698-2859
Email: gastorage@aol.com
Dynegy has filed with the SEC to sell 8.75 million common shares in Dynegy Energy Partners. The partnership will operate or acquire processing plants, storage tanks and terminals for Dynegys natural gas liquids business. Dynegy Energy Partners expects to use the $165.2 million in projected proceeds to pay $148.3 million owed to Dynegy and use $13.7 million for working capital. Dynegy owns 55% of the partnership. In a move to improve its balance sheet, Dynegy is looking to raise $1.25 billion by cutting costs, selling assets and issuing stock. The partnership will allow Dynegy to raise capital and reduce debt while maintaining control of its pipeline system. Dynegys natural gas liquids business had a profit of $41.5 million last year from $3.9 billion in sales. Since limited partnerships are not required to pay income tax, they retain more of their profit. Dynegy said it expects the partnership to have quarterly dividends of about $0.44 per share, or $1.76 per year.
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FINANCIAL SUMMARY
The TSE 300 increased 85.82 points to 7512.46
The CRB Index lost 1.80 points to 189.91
The US Dollar added 0.65 points to 119.13
The Dow advanced 177.28 points to 10145.71
The S&P 500 gained 19.59 points to 1109.43
The Nasdaq was up 45.34 points to 1769.88
April NYMEX Crude Oil fell 0.59 to 20.48
Canadian-US Exchange rose 0.0073 to 1.6016
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