First quarter profits for Tucson-based UniSource Energy Corp. are expected to come in well ahead of analysts' estimates because of strong retail and wholesale sales by subsidiary Tucson Electric Power Co. TEP's retail and wholesale sales rose 3% in January and 8% in February over a year ago. The company expects earnings to be between 50 cents and 60 cents a share for the first quarter, up from First Call/Thomson Financial estimates of 23 cents per share. In the first two months of 2000, retail sales were 1.14 million MWh and wholesale sales were 945,000 MWh. TEP revenues also increased, in particular wholesale revenues. Higher regional wholesale revenue contributed more than 50% of TEP's operating revenues for the first two months of this year, compared with 24% of operating revenues for the same period of 2000. UniSource plans to release its earnings the week of April 23. Along with its earnings announcement, the company also plans to provide revised earnings guidance for the remainder of 2001. Previously, UniSource said earnings for 2001 would be at least $1.45 per share.
TECO Energy reported that higher commodity prices and colder weather are the primary reasons it expects to exceed consensus earnings forecasts for the first quarter. TECO forecasts that it will beat First Call's consensus of $0.46 per share by exceeding $0.50 per share, more than 15% higher than the same period last year. TECO said its increased first-quarter earnings are being driven by higher than expected utilization at TECO Power Services' Commonwealth Chesapeake Station, which the company brought online in the second half of 2000, higher gas prices at TECO Coalbed Methane, cold winter weather at both Tampa Electric and Peoples Gas, and a strong performance from TECO coal. "We are hitting on all cylinders now and producing very strong results," said CEO Bob Fagan. "The expansion of our domestic independent power generation operations is producing better results, sooner than we anticipated, and improved prices for both coal and gas production are combining to give us a very strong first quarter. We see that we have the pieces in place to produce outstanding results in 2001." After seeing how the first quarter is shaping up, the company said it now expects to see 15% earnings growth for 2001, instead of the 10% previously forecast.
Business infrastructure provider TIBCO Software Inc. has contracted with several energy companies --- including Reliant Energy Services, Altra Energy Technologies Inc. and El Paso Corp. --- to automate their back-office systems. The Palo Alto, CA-based company has four product lines now being used by more than 800 global customers that integrate enterprise applications, provide B2B commerce and deliver personalized enterprise portals. TIBCO will automate Reliant's energy sales and purchase process by linking the energy company's online trading software applications to its internal enterprise systems. The move will allow real-time information to flow from the trading floor directly to its back-office settlement systems. Altra selected TIBCO to provide systems integration capabilities for customers that use the Altra E-Business Solutions software suite. El Paso chose the software provider to automate its energy delivery and procurement process. Energy companies that have already adopted TIBCO systems include Enron Corp., Dynegy Corp., Coral Energy, Duke Energy, Mirant, Marathon, Texaco, TXU Energy, Equiva and Williams. The company added 111 new direct customers during the first quarter of 2001, including Enron, Chevron and Phillips. It has partnerships with Accenture, Arthur Andersen, Deloittte Consulting, KPMG, MetaSolv, Kabira, Valicert and Yahoo!
Williams' exploration and production subsidiary purchased producing and undeveloped leasehold interests in two oil and gas properties in Sublette County, WY, for $15 million. The purchase includes a small interest covering a significant portion of the Jonah Field and the neighboring Pinedale Anticline area. The leasehold acreage represents more than 300 locations where wells already exist or could be developed. "This is a proven, profitable area, said Tony Silvestri, director of acquisitions and divestitures. "We've been involved with the Jonah Field development for two years and have a high level of confidence in our Pinedale position, too, because of the similar geologic setting it has with Jonah." Williams' exploration and production unit primarily drills for natural gas in the Northern Rockies, New Mexico's San Juan Basin and onshore along the Texas and Louisiana Gulf Coast. In January, Williams reported year-end 2000 reserves of 1.20 Tcfe. "The expansion of our reserve base supports Williams' marketing and trading initiatives. Buying and building gas reserves can provide a natural physical hedge for the company's power portfolio," said Bryan Guderian, vice president exploration and production.
Reliant Energy Power Generation announced plans to build a 310 MW peaking facility to provide power during the summer months and a separate 575 MW combined- cycle facility, which together will make up the Reliant Energy Bighorn power complex to serve power markets in Nevada and the West. Reliant previously announced in October 2000 that it would build its second merchant power generation plant in Nevada, Reliant Energy Arrow Canyon, northeast of Las Vegas on land leased from the Republic Waste Services' landfill. Currently, Reliant and a partner jointly own and operate El Dorado Energy, a 480 MW facility, southeast of Las Vegas, near Boulder City, that began operation late in the first quarter 2000. Reliant Energy Bighorn will be located about 35 miles south of Las Vegas in southern Clark County. "We are committed to Nevada, and we want to help provide the state with a balanced portfolio of generation assets," said Joe Bob Perkins, COO of Reliant Energy Wholesale Group. "To date, the majority of proposed new generation will come from baseload units; however, a reliable and efficient generation system also must include generation dedicated to meeting peak demand."
Detroit-based MCN Energy Group Inc. has completed selling its 95% interest in four coal fines plants for $100 million and its interests in two other plants for $32 million to a unit of DTE Energy Co. The transaction was independent of MCN's pending merger with DTE. MCN built the plants to process fine particles of coal into briquettes for traditional coal markets. Concerns about the plants' qualification for synthetic fuel tax credits led MCN in 1998 to record a $133.8 million pre-tax write-off of the coal fines project. Because of its completed sale to DTE Energy Services, MCN will record a pre-tax first quarter gain of approximately $125 million.
Union Light, Heat and Power, an affiliate of Cinergy Corp., filed notice with the Kentucky Public Service Commission (KPSC) that it intends to seek a $7 million increase in base rates for natural gas distribution service. It would be its first increase since 1993. Base rates cover the company's costs to operate and maintain its gas system, and are separate from the gas cost adjustment portion of customers' bills, which reflects the cost of gas ULH&P purchases. Gas costs are billed to customers on a dollar-for-dollar basis without any profit to ULH&P. ULH&P anticipates filing its formal application with the KPSC in early May with new rates to be effective late this year. "Since our last base rate increase in 1993, we have made significant investments in our facilities and have had increases in labor and other operation and maintenance expenses," said J. Joseph Hale, Jr., president of ULH&P. "We have kept our base rates stable for eight years, while the cost of living index has increased over 20%." ULH&P also is initiating a major gas main replacement project to improve reliability over the next 10 years. It will incur $112 million of capital expenditures, which it will seek to recover in future years.
Sempra Energy Trading has acquired a 49% stake in Risk Capital Management Partners, LLC, a risk advisory consulting firm. "This transaction broadens our existing mix of trading and risk management capabilities by adding an independent consulting service company to whom we can direct our customers who seek help identifying commodity and other risks within their businesses and designing strategies to mitigate their exposure," said David Messer, president of Sempra Energy Trading. Financial terms of the transaction were not disclosed.
Entergy New Orleans, the dual utility serving the city, posted two Request for Proposal notices on the Gulf South Pipeline bulletin board soliciting firm gas storage service to meet a portion of peak-day requirements. Both RFPs specify terms of five years, but one is for a total volume of 1 million MMBtus with a 100,000 MMBtu/d Maximum Daily Quantity for withdrawal and redelivery, while the other is for 1,250,000 MMBtus and 125,000 MMBtu/d respectively. The two requests were put out because at this point ENO is still considering how much volume it wants to contract, said spokesman Terry K. Shields. The gas will be used only by the LDC division and not for power generation, he said. The winning bidder(s) must be able to make firm deliveries via Gulf South or Riverway Gas Pipeline at various New Orleans-area citygate points as specified by ENO. The utility reserves the right to adjust the storage capacity and/or the MDQ withdrawal rate by plus or minus 10% on a biannual basis. The bid deadline is May 3. See the Gulf South bulletin board or call Shields at (281) 297-3593 for more information. Proposals must be sent electronically to Shields at email@example.com.
Southern Company completed the spin-off of its energy marketing subsidiary Mirant Corp. through the distribution of all of its 272 million shares of Mirant common stock. After the close of the market April 2, Southern Co. stockholders were issued 0.397614 shares of Mirant common stock for each share of Southern Co. owned on the March 21 record date. Cash will be issued in lieu of fractional shares. As a result of the distribution of shares of Mirant common stock, Mirant now is a fully independent company.
Atmos Energy completed the purchase of the remaining 55% interest in Woodward Marketing LLC on April 1. Atmos acquired the interest in exchange for 1,423,193 restricted shares of Atmos common stock. Prior to the completion of the transaction, Atmos owned a 45% equity interest in Woodward. The acquisition of the remaining interest in Woodward is expected to add about $0.04 - $0.06 to consolidated earnings per share during fiscal 2002. At the closing price of $23.80 on March 30, the 1,423,193 Atmos shares had an indicated market value of $33.9 million. J. D. Woodward, president of Woodward Marketing, was named senior vice president of non-utility operations for Atmos concurrent with closing of the transaction. "We are very pleased to have J. D. join our senior management team. We are confident that his leadership and ability will contribute greatly to the continued growth and success of Woodward Marketing and our non-utility operations," said Atmos CEO Robert W. Best. Atmos also expects to complete the acquisition of the assets of Louisiana Gas Service and LGS Natural on July 1, assuming approval by the Louisiana Public Service Commission on April 18. The acquisition is expected to be accretive during the first full year of operations and add about $0.02-$0.06 per diluted share. If the acquisition is completed by July 1, it will result in dilution of about $0.07-$0.10 per diluted share for Atmos' 2001 fourth quarter.
Williams said it expects to report first quarter 2001 results from continuing operations in the range of $0.65 to $0.75 per share. The company also reported that due to the expected first quarter improvement in performance of its energy trading and natural gas exploration and production activities, it is revising its full year 2001 outlook from $1.75 to $1.95 per share. Williams also disclosed that its spin-off of its communications unit on March 30 will be reported as discontinued operations. The company expects to report full first quarter results on April 26. Despite the good news, the company's stock fell $3.40 to close at $40.15. An analyst said the stock's tumble fit in with the fate of other energy issues Tuesday --- one of the last strongholds to be knocked off in the overall declining market.
Tengasco signed a 20-year natural gas sales contract to supply gas to BAE Systems Ordnance Systems Inc., operator of Holston Army Ammunition plant in Kingsport, TN. Delivery started last week From Tengasco's 60-mile intrastate pipeline. Daily gas purchases are expected to be between 1.8 MMcf and 5 MMcf, with room for increased volume in the future. Gas is used at the facility to fire boilers and furnaces for steam production and process operations utilized in the manufacturing of explosives by BAE Systems for the U.S. military. With BAE taking maximum gas volumes, and current market prices remaining the same, Tengasco estimates the contract will bring an annual gross revenue of about $9.54 million and over $190.8 million over the life of the agreement.
Calpine broke ground on its $215 million Calgary Energy Centre (CEC), a 250 MW combined-cycle facility that will begin commercial operation in Alberta in late December 2002. The facility will be fueled from the natural gas assets Calpine acquired with its purchase last year of Quintana Minerals and TriGas. Calpine will add to those reserves once it completes its acquisition of Encal Energy later this year.
Chesapeake Energy said in a filing with the Securities and Exchange Commission that it expects to generate EBITDA of $725 million, operating cash flow of $625 million and recurring net income of $275 million in 2001 if its operating expense projectons hold up and if Nymex oil and gas futures prices average $25.43/bbl of oil and $5.61/Mcf of gas in 2001 (for a realized price of $4.94/Mcfe). The company's 2001 gas price projection of $5.61 per mcf is based on actual Nymex futures prices of $9.91 for January, $6.22 for February, $5.03 for March, and $5.35 for April, and an average of $5.09 for the remaining eight months of 2001. For the next eight months, Chesapeake has hedged 57% of its projected gas production via swaps at an average price of $5.20/Mcf and collars at prices ranging from $4 to $6.26. Chesapeake has also hedged 63% of its expected oil production for the next eight months at an average Nymex price of $29.66. In addition, the company has also protected 39% of its estimated annual 2002 natural gas production via swaps at an average of $5.09/Mcf and collars at prices ranging from $4.00 to $5.75/Mcf.
A new type of Internet-based energy auction is moving into the California market, which will allow customers to trade demand reductions, or "negawatts." The Demand Exchange, a product of Apogee Interactive, has been approved by the California Energy Commission as one of six key components in its peak load reduction program designed to shave 161 MW of peak demand by June 1. It enables customers to offer critical peak demand reductions in exchange for significant shared savings with their energy providers. Customers can select when they want to cut their usage, either several hours, or days or weeks ahead. Energy suppliers can then aggregate the pledged demand reductions to use in their power supply plans, reducing high-priced peak power purchases. The savings are shared with the customers who provided the negawatts. Several Northwest energy providers such as PacifiCorp, Portland General Electric and the Bonneville Power Administration already are trading on the exchange provided by Apogee. The Demand Exchange is expected to trade more than 200,000 MWh by the end of this year. For more information, visit www.apogee.net.
Swift Energy purchased interests in Lake Washington Field in Plaquemines Parish, LA, for $30.5 million in cash from Elysium Energy, LLC effective March 1. Estimates of the proved reserves total 7.1 million barrels of oil and 3.7 Bcf of gas or 7.7 million barrels of oil equivalent. Current production is approximately 1,000 boe/d. The Lake Washington Field produces oil from multiple Miocene sands ranging in depth from less than 2,000 feet to greater than 10,000 feet. The field, discovered in the 1930s and operated primarily by major oil companies, is located on a salt dome feature and has produced over 300 million boe of oil and gas from 20 producing wells.
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