-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, hCme3BdHuHqAzFXQONdpS1Pzu4gUTyw/ffcqFl5dcmVjZsf1zfiMewYsOEcmHbjX GuGsPehGmGZRzlYAfG6iUg== 0000007332-94-000020.txt : 19941122 0000007332-94-000020.hdr.sgml : 19941122 ACCESSION NUMBER: 0000007332-94-000020 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941031 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19941108 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHWESTERN ENERGY CO CENTRAL INDEX KEY: 0000007332 STANDARD INDUSTRIAL CLASSIFICATION: 4923 IRS NUMBER: 710205415 STATE OF INCORPORATION: AR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08246 FILM NUMBER: 94558151 BUSINESS ADDRESS: STREET 1: 1083 SAIN ST STREET 2: P O BOX 1408 CITY: FAYETTEVILLE STATE: AR ZIP: 72702-1408 BUSINESS PHONE: 5015211141 FORMER COMPANY: FORMER CONFORMED NAME: ARKANSAS WESTERN GAS CO DATE OF NAME CHANGE: 19790917 8-K 1 DATE OF REPORT 10-31-94 =================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) October 31, 1994 ----------------- SOUTHWESTERN ENERGY COMPANY (Exact name of registrant as specified in its charter) Arkansas 1 - 8246 71-0205415 (State of incorporation (Commission (I.R.S. Employer or organization) File Number) Identification No.) 1083 Sain Street, P.O. Box 1408, Fayetteville, Arkansas 72702-1408 (Address of principal executive offices, including zip code) (501) 521-1141 (Registrant's telephone number, including area code) No Change (Former name, former address and former fiscal year; if changed since last report) =================================================================== - 1 - Item 5. Other Events On October 31, 1994, the Registrant announced that two of its wholly owned subsidiaries have entered into a stipulation and agreement with the Staff of the Arkansas Public Service Commission (APSC) and the Attorney General of the State of Arkansas to settle certain gas cost issues which have been outstanding before the APSC for almost four years. The issues in question involve the price of gas sold by one of the Registrant's gas producing subsidiaries under a long-term contract with the Registrant's utility subsidiary. Under the stipulation and agreement the price paid by the Registrant's utility subsidiary will be referenced to an index plus a premium. At current market prices, the new provision will result in a reduced sales price under the contract. The stipulation and agreement must be approved by the APSC before becoming effective. Subsequent to October 31, 1994, the APSC established a procedural schedule for consideration of the stipulation and agreement and set a hearing on the matter for December 5, 1994. A press release dated October 31, 1994, and filed as an exhibit per Item 7.(c) of this report, is hereby incorporated by reference for further details. Item 7.(c) Exhibits Reference (1) Press release dated October 31, 1994. p. 3-6 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SOUTHWESTERN ENERGY COMPANY --------------------------- Registrant DATE: November 8, 1994 BY: /s/ GREGORY D. KERLEY --------------------- Gregory D. Kerley Vice President - Treasurer and Secretary, and Chief Accounting Officer - 2 - EX-1 2 PRESS RELEASE 10/31/94 - SETTLEMENT OF GAS COST ISSUES FOR IMMEDIATE RELEASE For Further Information Contact: October 31, 1994 Stanley D. Green Executive Vice President - Finance and Corporate Development (501) 521-1141 SOUTHWESTERN ENERGY COMPANY ANNOUNCES AGREEMENT TO SETTLE GAS COST ISSUES FAYETTEVILLE, ARKANSAS--Southwestern Energy Company (NYSE : SWN)today announced that two of its wholly owned subsidiaries, Arkansas Western Gas Company (AWG) and SEECO, Inc. (SEECO), have entered into a stipulation and agreement with the Staff of the Arkansas Public Service Commission (APSC or Commission) and the Attorney General of the State of Arkansas (AG) to settle certain gas cost issues which have been outstanding before the APSC for almost four years. The stipulation and agreement must be approved by the APSC before becoming effective. The issues in question involve the price of gas sold under a long-term contract (Contract 59) between AWG and SEECO. Under the stipulation and agreement, the price paid by AWG will be referenced to an index plus a premium. At current market prices, the new provision will result in a reduced sales price under the contract. "Contract 59 has provided unsurpassed reliability to AWG and a wide array of services which would be more costly to obtain from other sources," said Charles E. Scharlau, Chairman and Chief Executive Officer of Southwestern. "After an extensive investigation and two - 3 - hearings, we continue to believe that the price paid by AWG under Contract 59 is fair. But the Commission's investigation has been expensive and has made it difficult for us to remain focused on the things we need to do in the other parts of our business. The settlement, if approved by the Commission, will dispose of this matter and the financial impact to Southwestern will not impair our ability to continue growing." SEECO's net sales in 1993 to AWG under Contract 59 were 6.0 Bcf at an average price of $3.76 per Mcf. The key provisions of the settlement agreement are as follows: 1. SEECO and AWG will execute an Amended and Restated Contract 59 effective July 1, 1994. The contract annual volume will be changed to a fixed gross volume of 9.0 billion cubic feet (Bcf), including the royalty owners' portion of the gas sold. SEECO's net sales under the contract will be approximately 7.65 Bcf. 2. Of the gross volume to be sold, 7.0 Bcf will be purchased by AWG at a price equal to the INSIDE FERC GAS MARKET REPORT index for first of month deliveries into NorAm Gas Transmission Company from Arkansas and Oklahoma (NorAm index), plus a fixed term premium of $.95 per thousand cubic feet (Mcf). The remaining 2.0 Bcf of the gross volume will be sold at the NorAm index plus a fixed term premium of $.50 per Mcf. The different premiums will be applied on a pro rata basis to purchases throughout the year. - 4 - 3. No pricing adjustment will be made on volumes sold by SEECO to AWG prior to July 1, 1994. The parties agree not to seek refunds of costs incurred by AWG under Contract 59 prior to July 1, 1994. 4. SEECO will obtain ownership of all storage rights, equipment, wells and gas in storage presently utilized by AWG as a part of two storage facilities. SEECO will purchase these facilities from AWG at book value. AWG will retain ownership of one other storage facility and will make pipeline and equipment improvements which will enable it to meet its storage requirements from that one facility. The cost of those improvements is projected to be approximately $2.6 million. The reduction in AWG's rate base which will result from the transfer of facilities to SEECO will not be reflected as a reduction of AWG's revenue requirement prior to July, 1998. 5. SEECO's existing obligation to dedicate reserves and leasehold acreage to AWG will be eliminated. 6. SEECO will waive all accumulated take-or-pay, pricing, buy down, or other contractual claims against AWG. AWG will take delivery of the amended contract annual volume from SEECO each year and deliver to storage any quantity not needed for its system supply sales. All such volumes delivered to storage will be added to AWG's rate base investment in stored gas and AWG will be allowed to earn its full authorized return on such volumes at the time of its next rate case. - 5 - 7. AWG will agree not to file an application requesting a general change in the rates and tariffs of its AWG division prior to January 1, 1996. AWG will also file for approval by the Commission prior to July 1, 1996, a gas supply plan which addresses the arrangements to be made upon expiration of the Amended and Restated Contract 59 in July, 1998. The original version of Contract 59 was approved by the APSC in 1979. The pricing issues were raised by the Commission in connection with AWG's 1990 rate case. In the 1990 rate case, the APSC Staff hired a consultant who performed an extensive review of the utility's purchasing practices and gas costs and recommended in filed testimony that all of AWG's gas costs, including those under the intercompany contract, be accepted without adjustment. After an extended period of time during which the parties involved attempted to negotiate a settlement, the Commission conducted a hearing in January, 1993. In November, 1993, the Commission issued an order which found the purchases of AWG under Contract 59 to be in violation of an Arkansas statute requiring that gas purchases be made "from the lowest or most advantageous market." The order found that the price paid by AWG was too high, but said that additional evidence was necessary to enable the Commission to determine a proper price. A hearing was held in January, 1994, to receive additional evidence, but the Commission has not yet issued an order reporting its determination of a more appropriate price under Contract 59. Southwestern expects the Commission to establish a procedural schedule for consideration of the stipulation and agreement. # # # - 6 - -----END PRIVACY-ENHANCED MESSAGE-----