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Effective September 8, 2008 our billing address has changed to: PO Box 975318, Dallas, TX 75397-5318. Please notify your accounts payable department of this important change.

The Inside FERC posted the September 2008 CIG Index at $1.78.

STORAGE REPORT
This week’s EIA storage report for the week ending August 29, 2008:
This week’s injection of: 90 Bcf
Leaving this week’s balance at: 2847 Bcf
This week’s balance last year: 2995Bcf
This week’s balance, 5-yr average: 2745 Bcf

According to EIA’s data, storage inventories are approx 4% above the 5-year average inventory level for this report week. This is the eighth week in a row that injections into working gas in storage matched or exceeded the 5-year average. This is the second-largest weekly net increase to storage during August since weekly data collection began in 1994.

THOUGHTS ON THE MARKET

The Oct-Dec strip closed last Friday at its lowest price since Aug 2, 2005. So far, the 3rd quarter decline from the 2nd quarter high this year is 49%, far greater than the lifetime average of 36%. Mild temperatures, increasing production and lower crude oil prices all contributed to the price decline.

In the near future, potential hurricane disruptions present the greatest uncertainty in the price forecast. September has historically been the peak month for hurricane activity. Natural gas prices have corrected quite considerable from the near-nosebleed levels of June. Gas prices could potentially fall to $5 to $6/MMBtu in the short term if supply remains strong and severe winter weather does not materialize.

The Inside FERC posted the August 2008 CIG Index at $7.03.

STORAGE REPORT
This week’s EIA storage report for the week ending August 1, 2008:
This week’s injection of: 56 Bcf
Leaving this week’s balance at: 2517 Bcf
This week’s balance last year: 2870 Bcf
This week’s balance, 5-yr average: 2523 Bcf

According to EIA’s data, storage inventories are approx .2% below the 5-year average inventory level for this report week.

THOUGHTS ON THE MARKET

The prompt month (Sep 08) price for natural gas has declined 39% from its July 2nd high and closed the week below a technically important price gap. But keep in mind that every year there is a 4th quarter high and the average price increase is just over 100% greater than the 3rd quarter low.

The Inside FERC posted the July 2008 CIG Index at $8.89.

STORAGE REPORT
This week’s EIA storage report for the week ending July 4, 2008:
This week’s injection of: 90 Bcf
Leaving this week’s balance at: 2208 Bcf
This week’s balance last year: 2597 Bcf
This week’s balance, 5-yr average: 2278 Bcf

According to EIA’s data, storage inventories are approx 3.1% below the 5-year average inventory level for this report week.

NYMEX FUTURES PRICING (7/11/08)

Aug 08 $11.90
Aug 07 closed @ $6.11
NYMEX 1 year strip (Aug 08-Jul 09) $12.05
Actual NYMEX strip (Aug 07-Jul 08) $8.53
Summer NYMEX (Aug 08- Sept 08) $11.95
Actual NYMEX strip (Aug 07-Sept 07 $5.77
Winter NYMEX (Oct 08 – Mar 09) $12.71
Actual NYMEX strip (Oct 07 – Mar 08) $7.50

The prices stated above are in MMBtu and are the simple weighted averages of the term stated, your price could very on usage and the months of those usages.

THOUGHTS ON THE MARKET

Natural gas storage injections could run slightly higher than normal thanks to milder weather in high consuming regions in July. Natural gas prices continue to surpass historical norms for this time of year exceeding $11/MMBtu at many locations. Many factors lead to the run up in prices from peak summer demand season is underway, and the concerns of the upcoming hurricane season. The price of natural gas is expected to increase further by the end of the year and into 2009, according to the Energy Information Administration’s Short-Term Energy Outlook.

The Inside FERC posted the June 2008 CIG Index at $8.68.

STORAGE REPORT
This week’s EIA storage report for the week ending June 6, 2008:
This week’s injection of: 80 Bcf
Leaving this week’s balance at: 1886 Bcf
This week’s balance last year: 2229 Bcf
This week’s balance, 5-yr average: 1905 Bcf

According to EIA’s data, storage inventories are approx 1% below the 5-year average inventory level for this report week.

NYMEX FUTURES PRICING (6/12/08)

July 08 $12.80
July 07 closed @ $6.93
NYMEX 1 year strip (July 08-June 09) $12.72
Actual NYMEX strip (July 07-Jun 08) $8.02
Summer NYMEX (July 08- Sept 08) $12.87
Actual NYMEX strip (July 07-Sept 07 $6.16
Winter NYMEX (Oct 08 – Mar 09) $13.44
Actual NYMEX strip (Oct 07 – Mar 08) $7.50

The prices stated above are in MMBtu and are the simple weighted averages of the term stated, your price could very on usage and the months of those usages.

THOUGHTS ON THE MARKET

In spite of the fact that there is no fundamental reason for natural gas to be trading over $12, IT IS! Natural gas prices have increased over the past week likely to hot temperatures and rising crude oil prices.

There are many analysts that believe natural gas prices will hold in a range between $11/MMBtu and $13/MMBtu. Gas prices have more than doubled since last fall. Record high crude oil prices, lower liquiefied natural gas imports to North America, declines in Canadian gas production and the usual uncertainty of potentially hot summer weather will all contribute to the price support mentioned above.

Rockies Express Pipeline will begin full service today on its West leg to its interconnection with Panhandle Eastern Pipe Line in Audrain County, Missouri. Assuming line pack operations go as scheduled and final gas quality specifications are met for deliveries to the PEPL delivery point, REX will begin accepting nominations on May 19 for full service for deliveries to PEPL effective for gas day May 20th.

The Inside FERC posted the May 2008 CIG Index at $8.94.

STORAGE REPORT
This week’s EIA storage report for the week ending May 2, 2008:
This week’s injection of: 65 Bcf
Leaving this week’s balance at: 1436 Bcf
This week’s balance last year: 1720Bcf
This week’s balance, 5-yr average: 1447 Bcf

NYMEX FUTURES PRICING (5/8/08)

Jun 08 $11.263
Jun 07 closed @ $7.591
NYMEX 1 year strip (Jun 08-May 09)
$11.50 Actual NYMEX strip (Jun 07-Apr 08) $7.66
Summer NYMEX (Jun 08- Sept 08) $11.38
Actual NYMEX strip (Jun 07-Sept 07) $6.52

THOUGHTS ON THE MARKET

Concerns over natural gas supplies and high crude oil prices continued to be the driving forces for the natural gas increases lately. Recent high prices may suggest that prices may remain elevated as industry rebuilds storage inventories for next year’s heating season, which will compete with summertime natural gas demand to fuel power generation for air-conditioning needs. The market is clearly in the hands of the specs while all of us hang on for the ride. I’m not sure when we will experience a strong downside correction from the extremely over-valued level.

The EIA has rasied its full-year 2008 forecast by 13% from a month earlier to $9.70/Mcf – nearly $2.50/Mcf higher than the 2007 average.

The Inside FERC posted the March 2008 CIG Index at $7.81.

STORAGE REPORT
This week’s EIA storage report for the week ending March 28, 2008:
This week’s withdrawal of: 29 Bcf
Leaving this week’s balance at: 1248 Bcf
This week’s balance last year: 1552Bcf
This week’s balance, 5-yr average: 1242 Bcf

NYMEX FUTURES PRICING (4/8/08)

May 08 $9.697
May 07 closed @ $7.607
NYMEX 1 year strip (May 08-Apr 09) $10.12
Actual NYMEX strip (May 07-Apr 08) $7.34
Summer NYMEX (May 08- Sept 08) $9.85
Actual NYMEX strip (May 07-Sept 07 $6.71
The prices stated above are in MMBtu and are the simple weighted averages of the term stated, your price could very on usage and the months of those usages.

THOUGHTS ON THE MARKET

Recent high prices are suggesting prices to remain elevated as the industry begins rebuilding storage inventories for next year’s heating season, which will compete with summertime natural gas demand to fuel power generation for air-conditioning needs.

High oil prices, a drop in liquefied natural gas imports and a significant drawdown in gas storage pushed prices above $9 recently for the first time since Dec 2005. The chance of a gas price collapse this summer has not gone away. If summer weather is warmer than normal, summer gas prices will hold up in the $10/Mcf range. If the summer is mild, then we still may see sub-$6/Mcf gas later this summer.

The Inside FERC posted the March 2008 CIG Index at $7.81.

NYMEX FUTURES PRICING (3/6/08)

Apr 08 $9.742
Apr 07 closed @ $7.472
NYMEX 1 year strip (Apr 08-Mar 09) $10.17
Actual NYMEX strip (Apr 07-Mar 08) $7.18
Summer NYMEX (Apr 08- Sept 08) $9.87
Actual NYMEX strip (Apr 07-Sept 07 $6.85

The prices stated above are in MMBtu and are the simple weighted averages of the term stated, your price could very on usage and the months of those usages.

STORAGE REPORT
This week’s EIA storage report for the week ending February 29, 2008:
This week’s withdrawal of: 135 Bcf
Leaving this week’s balance at: 1484 Bcf
This week’s balance last year: 1653Bcf
This week’s balance, 5-yr average: 1421 Bcf

According to EIA’s data, storage inventories are approx 4% above the 5-year average inventory level for this report week.

THOUGHTS ON THE MARKET

March’s expiration price was the highest since Jan 2006 following the aftermath of Katrina-Rita and a full $2.00 more than the average expiration prices of the 25 months since that historic event, but this time there’s no fundamental event to explain it. April future prices continue to close higher. The market is overbought., which signal that higher prices are possible near-term.

April crude oil prices closed higher and continue to post a new all-time high. April crude settled at a record $105.47. OPEC decided not to cut production earlier this week.

NYMEX FUTURES PRICING (2/12/08)

Mar 08 $8.531 Mar 07 closed @ $7.226
NYMEX 1 year strip (Mar 08-Feb 09) $8.99
Actual NYMEX strip (Mar 07-Feb 08) $7.06
Summer NYMEX (Apr 08- Sept 08) $8.71
Actual NYMEX strip (Apr 07-Sept 07 $6.85

The prices stated above are in MMBtu and are the simple weighted averages of the term stated, your price could very on usage and the months of those usages.

STORAGE REPORT
This week’s EIA storage report for the week ending February 1, 2008:
This week’s withdrawal of: 200 Bcf
Leaving this week’s balance at: 2062 Bcf
This week’s balance last year: 2379Bcf
This week’s balance, 5-yr average: 2000 Bcf

According to EIA’s data, storage inventories are approx 3% above the 5-year average inventory level for this report week. The withdrawal of 200 Bcf was the second largest this heating season but was less than last year for the same report week.

THOUGHTS ON THE MARKET

37 days until spring! WOOHOO!

March natural gas futures as well as the rest of the energy complex finished higher on Monday. Natural gas was largely supported by cold weather that might boost heating demand. Meteorologists report that moderate to strong La Nina conditions should persist well into this summer.

If the primary driver supporting high gas prices is cold winter, the coming of spring will resolve that situation. As hard as it is in the face of making a budget work for your company, remain patient and wait on lower prices even if it means waiting until April or May this year ….. although I doubt it will take that long.