With bulging storage stocks putting increased pressure on natural gas prices, a Prudential Securities Inc. analyst on Friday reduced or left unchanged her 2001 earnings-per-share (EPS) estimates for more than half of the major energy companies that she routinely tracks.

Amid the negative economic fallout from the attack on the United States, as well as the “unprecedented record-high storage builds” over the past two weeks that have caused the price for the gas futures near-month contract to plunge to the low $2 level, analyst M. Carol Coale lowered or kept unchanged her annual EPS estimates for seven of the 13 major energy (oil, natural gas and power) companies that she follows, and raised her estimates for the remaining six.

The companies with reduced or unchanged annual EPS estimates were Enron, El Paso Corp., Kinder Morgan Partners, Pacific Gas and Electric (PG&E), Questar, Reliant Energy and Western Gas Resources (WGR). Those that had their EPS estimates increased were Dynegy, Duke Energy, Kinder Morgan Inc., Enterprise, Equitable Resources and Williams Cos.

Ironically, even though she reduced or left unchanged the 2001 EPS estimates for several of the energy companies that she tracks, Coale expects all — with the exception of El Paso, Reliant and Questar — to turn in an EPS performance for the year that will either surpass or equal First Call’s consensus estimates for them. For the third quarter, however, Coale anticipates that about half of the energy companies that she covers will report a lower EPS than projected by First Call.

For 2002, Prudential’s Coale reduced her EPS estimates for Enron, El Paso, Equitable Resources, PG&E, Questar and WGR.

Of nine energy company stocks she reviewed, Coale lowered her 2001 stock price targets for Dynegy (to $45 from $53), El Paso (to $55 from $72), Equitable (to $39 from $50), and Kinder Morgan Inc. (to $45 from $65). She increased the target for Enterprise (to $53 from $46), and left unchanged her stock targets for Duke Energy and Enron.

Coale said her EPS and stock forecasts were based on an average gas price (spot composite wellhead) of $4/Mcf for 2001, and a revised (lower) $3/Mcf average for 2002. Prices, she noted, were reeling from the effects of an “accelerating” weakness in industrial demand for gas. “Next year’s forecast decline in gas prices marks the most dramatic decrease in the annual average, and many of the gas-sensitive stocks are not yet discounting a ‘worst-case’ situation.” Under such a scenario, she believes El Paso, Kinder Morgan Inc. and WGR face the “greatest downside risk,” while Dynegy, Enron, Reliant Energy and Williams have “upside potential.”

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