EarlyOne
14 years ago
Hedge Funds Almost Double Bullish Gas Bets on Cold Snap: Energy Markets
Asjylyn Loder, On Monday January 10, 2011, 4:06 am EST
Hedge funds almost doubled bets on gains in natural gas as futures climbed to the highest level since August on forecasts for colder-than-normal weather.
The funds and other large speculators raised their net-long positions, or wagers on rising prices, in four gas contracts by 94 percent in the seven days ended Jan. 4, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report. It was the biggest increase in records dating to January 2010.
Natural gas climbed for seven straight days through Jan. 4, the longest advance since March 2008, as weather forecasters predicted a cold snap across the U.S. About 52 percent of the nation’s households use natural gas for heating, according to the Energy Department in Washington.
“Will the cold persist through the balance of the season? If it does, the floor has risen for natural gas,” said Teri Viswanath, director of commodities research at Credit Suisse Securities USA in Houston.
Natural gas jumped 14 percent from Dec. 23 to Jan. 4, when it reached $4.669 per million British thermal units on the New York Mercantile Exchange, the highest settlement since Aug. 4. The February-delivery contract was little changed at $4.425 a million British thermal units as of 9 a.m. in London today.
Higher Demand
Heating demand will be higher than normal across the U.S. through Jan. 14, David Salmon, a meteorologist with Weather Derivatives in Belton, Missouri, said in a Jan. 7 report.
Increased consumption may cut U.S. inventories to 1.69 trillion cubic feet at the end of the winter season on March 31, according to Viswanath. The Energy Department said in its Short- Term Energy Outlook on Dec. 7 stockpiles may be 1.833 trillion cubic feet by then, about 171 billion higher than last year,
Gas output this year will be 0.1 percent below 2010, according to the Energy Department. Total U.S. marketed gas production in October was 1.945 trillion cubic feet, the highest level since 1973.
Stockpiles fell 135 billion cubic feet to 3.097 trillion in the week ended Dec. 31, the Energy Department said. Analysts predicted a drop of 131 billion cubic feet. The decline left inventories 6.5 percent above than the five-year average, the smallest surplus since September and down from 8.2 percent.
The lowest temperature in Minneapolis on Jan. 11 may be zero degrees Fahrenheit (minus 18 Celsius), 4 degrees below normal, according to State College, Pennsylvania-based AccuWeather Inc. It may drop to 5 degrees, 6 below normal, in Des Moines, Iowa.
“Two really large gas-storage withdrawal weeks are at hand as heating needs surge,” Salmon said.
Conflicting Models
While some weather models signal a warmer-than-average February due to the effect of La Nina, others indicate the emergence of “blocking patterns” that will keep cold air in the U.S.
La Nina, characterized by a cooling of temperatures in the tropical Pacific Ocean, occurs on average every three to five years and can last nine to 12 months, according to the U.S. National Oceanic and Atmospheric Administration. The event is associated with warmer-than-normal winters in parts of the U.S.
If the blocking patterns hold, higher heating demand will combine with falling production to erode stockpiles, driving prices higher, Viswanath said.
The number of natural-gas rigs operating in the U.S. declined for a fifth week to 914, the lowest level since Feb. 26, according to data published by Baker Hughes Inc. on Jan. 7. Rigs increased 21 percent last year.
Managed Money
Net-long positions in natural gas held by managed money, including hedge funds, commodity pools and commodity-trading advisers, in futures and options combined in four contracts increased by about 66,269 futures equivalents to about 136,942 in the week ended Jan. 4, the CFTC data showed.
The measure of net longs includes an index of four contracts adjusted to futures equivalents: Nymex natural gas futures, Nymex Henry Hub Swaps, Nymex Henry Hub Penultimate Swaps and ICE Henry Hub Swaps. Henry Hub, in Erath, Louisiana, is the delivery point for Nymex futures, a benchmark price for the fuel.
In other markets, bullish, or long, bets on gasoline rose 3.3 percent to 69,418 futures and options combined, the CFTC said. Net-long bets on heating oil climbed 3.2 percent to 37,261, while those in crude oil fell 14 percent to 187,408, the data showed.
OilStockReport
14 years ago
SALT LAKE CITY--(BUSINESS WIRE)-- Questar Corp. (NYSE:STR - News) announced today that Martin Craven, vice president and chief financial officer (CFO), has elected to retire, effective March 1, 2011, after 20 years with the company. Craven began his career at Questar in 1990 in the treasury department, after 12 years with other energy companies.
"It has been a privilege and distinct honor to work with Martin over the past many years. His knowledge and experience have been instrumental to Questar's success," said Ron Jibson, Questar president and CEO. “He’s been a key advisor on our management team and a trusted liaison with the financial community. Questar shareholders and employees wish him well in retirement.”
Questar concurrently announced that Kevin W. Hadlock will become Questar Corp. executive vice president and CFO, effective Jan. 1, 2011.
“We’re pleased to bring someone with Kevin’s qualifications to Questar,” said Jibson. “He brings more than 13 years of experience in strategic business operations leadership, including service with a Fortune 100 company and a major utility.”
Hadlock comes to Questar after six years with Baltimore Gas & Electric (BGE) and its parent company, Constellation Energy. He was named senior vice president and CFO of BGE after serving as Constellation Energy’s vice president of investor relations and financial planning and analysis.
From 1999 to 2004, Hadlock held several financial and management positions at General Motors, gaining broad experience in international treasury management, equity and debt capital markets, pension funding and analysis, mergers and acquisitions, and investor relations. Hadlock began his career in 1996 as a credit analyst at Morgan Stanley with a focus on the transportation and utility industries.
Hadlock graduated magna cum laude from Brigham Young University with a bachelor’s degree and earned his master’s degree of business administration from Northwestern University’s Kellogg School of Management.
About Questar Corporation: Questar is a Rockies-based integrated natural gas company with an enterprise value of about $3.9 billion, operating through three principal subsidiaries:
Wexpro develops and produces natural gas on behalf of Questar Gas;
Questar Pipeline operates interstate natural gas pipelines and storage facilities in the western U.S.; and
Questar Gas provides retail natural gas distribution in Utah, Wyoming and Idaho.
frenchee
17 years ago
Questar Completes Acquisition of Louisiana Properties, Raises Production and Earnings Guidance, and Adds to Hedge Positions
SALT LAKE CITY--(BUSINESS WIRE)--March 03, 2008-- Questar Corporation (NYSE:STR) today announced that subsidiary Questar Exploration and Production Company (Questar E&P) has closed the previously announced purchase of two significant natural gas development properties in northwest Louisiana, for an aggregate adjusted purchase price of $659 million, subject to customary post-close adjustments. The properties are located in Red River and Bienville Parishes, approximately 10 miles south and east of Questar E&P's existing Elm Grove Field operations.
Questar also revised 2008 earnings and production guidance and underlying assumptions to incorporate the newly acquired properties, the recent increase in natural gas and crude oil prices, and additional natural gas fixed-price hedges.
Revised Earnings Guidance and Assumptions
2008 2008
Current Previous
-------------- -------------
Earnings per diluted share $3.05-$3.20 $2.90-$3.05
Average diluted shares (millions) 176.2 176.2
Questar E&P production - Bcfe 160-163 148-151
Pinedale well completions 60-65 60-65
NYMEX gas price per MMBtu(a) $9.00-$10.00 $7.50-$8.50
NYMEX/Rockies basis differential per
MMBtu(a) $1.45-$1.20 $1.45-$1.20
NYMEX/Midcontinent basis differential per
MMBtu(a) $1.25-$1.00 $1.25-$1.00
NYMEX crude oil price per bbl(a) $95.00-$100.00 $85.00-$90.00
(a) On unhedged volumes for the remainder of 2008
-- Questar E&P has now hedged about 78% of forecast natural gas
and oil-equivalent production for the remainder of 2008 with
fixed-price swaps. Additionally, the company has hedged about
2% of its forecast natural gas production for the remainder of
2008 with basis-only swaps (see table at the end of this
release).
-- The company estimates that a $1.00 per MMBtu change in the
average NYMEX price of natural gas for the remainder of 2008
would result in about a $0.02 change in earnings per diluted
share.
-- A $10.00 per bbl change in the average NYMEX price of oil for
the remainder of 2008 would result in about a $0.05 change in
earnings per diluted share.
"We're now in a position to grow Questar E&P production 14 to 16% in 2008," said Chuck Stanley, Questar COO and head of the company's exploration and production businesses. "We've also taken advantage of the recent jump in natural gas prices to hedge additional Questar E&P production to lock in attractive returns on invested capital and cash flows, both from the newly acquired properties and from our existing assets." The company has added 11 Bcf of natural gas fixed-price swaps for the remainder of 2008, 28.1 Bcf for 2009, and 28.4 Bcf for 2010 since it last disclosed hedge positions on February 12, 2008 (See table at end of this release for a detailed summary of current hedge positions).
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