By OGJ editors
HOUSTON, Oct. 16 -- Tom Brown Inc, Denver, has curtailed 20 MMcfd of gas production in the Rocky Mountains because of low regional gas prices, but the company's operating performance is anticipated to offset the effect.
Tom Brown did not change its production guidance for the third quarter of 2002, saying if low gas prices continue in the Rockies, then the company might curtail production into the fourth quarter of 2002, which could result in a change in future guidance.
"We believe it is in the best interest of our shareholders to curtail production," Jim Lightner, Tom Brown chairman and president said in a news release last month. "We remain fully committed to the potential of the Rocky Mountain region and confident that these issues will be resolved in the future."
The Rockies' natural gas price has traded at a steep discount to the New York Mercantile Exchange (Henry Hub) for the second half of 2002. The Colorado Interstate Gas (CIG) index for September was $1.09/MMbtu, which was $2.20/MMbtu below NYMEX. Earlier this year, Rockies natural gas traded as low as 60¢/MMbtu.
Robert Morris at Salomon Smith Barney Inc. in New York has said some producers have shut in portions of their Rocky Mountain gas production because of low prices but he doubts that the curtailments will significantly affect third quarter volumes.
Rocky Mountain gas historically trades at a steeper discount relative to Henry Hub gas prices during the summer because of the lack of industrial and heating load in that region and limited pipeline capacity to move the excess gas to other markets (OGJ Online, Sept. 6, 2002).