The following is the next in a series of Oil & Gas Companies analyzed for Y2K compliance status from their own SEC 10-Q quarterly statements The most current statements are for 2nd quarter 1999 being filed or posted in August or September...in some cases companies also have updated their own websites with newer information. Now here's the next 10-Q analysis.

WESTERN GAS RESOURCES.

http://www.westerngas.com/about/y2k.html

[Ed Note: This company is a Natural Gas company primarily although, I believe it is this company that is trying to merge with one or more electric companies in Missouri and Kansas. The following materialis only partial and excerpted from the full disclosure. Edited to essentials to save bandwidth space.]

Year 2000 Readiness Disclosure

[Updated on October 11, 1999

SCOPE

A significant portion of our systems, equipment and software packages have been purchased from third-party vendors. Western is addressing potential readiness issues with these vendors as part of the overall plan.

PLAN

The mission of the Year 2000 Project Team is to ensure that all critical systems across the company are identified, analyzed for Year 2000 Readiness, modified if necessary, tested, and put into service by the end of 1999. The principal components of our Year 2000 plan are as follows:

1) Create Awareness/Communication

2) Assessment and Inventory The assessment and inventory phase includes compiling an inventory of software, hardware and operational systems within the Company, including systems that contains embedded technology and prioritizing them from a risk perspective.

3) Testing It is imperative that all critical date sensitive systems are tested. Testing includes simulating "current" system dates prior to, during, and after the century change including leap year. We have an established list of high risk dates that are considered for various testing scenarios.

4) Remediation The remediation phase involves allocating resources and making modifications as appropriate to ensure that all critical systems are Year 2000 Ready. Due to the fact that Western utilizes neither mainframes nor COBOL code, we believe this step will not require significant resources.

5) Validation This phase includes testing of modifications made to hardware and software components to validate that systems are Year 2000 Ready and operate properly after remediation. Regression testing will be performed so that as new code is introduced, previously tested functionality will be tested again to assure that the new modules have not corrupted the system.

6) Implementation The implementation phase involves installing the modified systems in a production environment. We have also developed procedures to prevent future problems related to Year 2000. The process by which we make software modifications or implement software upgrades ensures that such changes are reviewed for Year 2000 Readiness prior to making the change in a production environment. In addition, we require that any newly acquired date sensitive system be Year 2000 Ready. Western's goal is to complete remediation, validation and implementation efforts by September 30, 1999.

7) Business Continuity Planning The business continuity planning process focuses on reducing the risk of Year 2000 issues. Where necessary, contingency plans are being developed to address specific Year 2000 risk scenarios.

[Ed. Note: Western notes that "no plan can guarantee that mission critical systems will not be impacted by the Year 2000 issue, particularly with respect to systems that interact with third party products or services outside of Western's control."]

STATUS: As of October 11, mission critical systems have been tested and if necessary, remediated. Business continuity plans, including year end staffing requirements, are in place. Interviews with mission critical counter parties will continue through the remainder of the year.

Please be advised that this statement should not in any way be construed as either an amendment or modification of our existing contractual relationships or as an expressed or implied warranty on the part of Western. In addition, this statement is designated a "Year 2000 Readiness Disclosure," granting it all the protection given in the Year 2000 Information and Readiness Disclosure Act signed into law on October 19, 1998.

Conclusions: They are not going to be compliant. They have just announced that they have finished "mission critical" remediation. There IS MORE REMEDIATION YET TO DO. Not a good Sign. Their goalstates that they want to remediate their "critical systems" ... here is the quote again --

"The remediation phase involves allocating resources and making modifications as appropriate to ensure that all critical systems are Year 2000 Ready."

Notice now that their time target statement:

"Western's goal is to complete remediation, validation and implementation efforts by September 30, 1999."

Goal is ... by Sep. 30, 99... but the plan was for "critical" systems ... but NOT ALL systems. And it would seem they're having trouble meeting the critical systems goal. This is a major natural gas company. Now this critical systems aspect is underscored by their follow up disclaimer...

"no plan can guarantee that mission critical systems will not be impacted by the Year 2000 issue, particularly with respect to systems that interact with third party products or services outside of Western's control."

Also: this company cannot do "end to end testing" on line. They can only do "simulated" tests (as stated above) but they can't test the systems on line. That is a real problem with SCADA systems and a big unknown wild card. These folks are (like so many others) rolling the dice with simulations of SCADA systems. As I understand it, this is NOT GOOD and unreliable. For all they know, everything could come crashing down, or nothing may happen, but from what I understand the odds are more likely on the negative than the positive side. This is true of the entire natural gas pipeline system. Simulated testing on the workbench in a theoretical world is far different than "live" conditions out in the field. We've noted from the Baker Hughes Inc. website just how problematical and pervasive embedded problems are. This is no time to be a Pollyana and ignore the data. Likewise, its no time to panic. But things really could get serious, that's why the legal disclaimers are there. The lawyers are not dummies. Aswe draw closer to the date these disclaimers have become more pessimistic in tone signalling that indeed things aren't nearly as rosy as the companies had earlier led us to believe.

NOTE: They admit that the problem is not likely to be solved but rather to mitigate disruptions. In other words, there WILL be some problems.

It seems to me that this company is also in very serious trouble in meeting the rollover deadline.

-- R.C. (racambab@mailcity.com), October 17, 1999

Answers

Here is a scenario that I first mentioned last fall on this forum. It evoked some discussion.

53% of homes in this country are heated by natural gas. There are 5,000,000 miles of pipeline. If natural gas goes down it may be for quite a while. Electric may not be as bad.

Got any small electric heaters?

-- Mike Lang (webflier@erols.com), October 17, 1999.

Mike,

Good points. I didn't realize that the number was at 53%. More than half...well I guess if folks lose their gas they'll just have to have more beans.

-- R.C. (racambab@mailcity.com), October 17, 1999.