Entergy to Beat 2Q Consensus by 5%, Divests UK Plant

Despite decreased earnings from its wholesale operations and the impact of normal weather, Entergy Corp. indicated last Thursday that it is confident its second quarter 2001 earnings will be at least 5% higher than the current published First Call earnings consensus of $0.91 per share. The company attributed the strong results to "excellent performance" in its competitive businesses.

In its highlights, the company said that all non-utility nuclear plants are continuing to perform well and are expected to contribute solid earnings in spite of recent scheduled refueling outages during the quarter at the Pilgrim and Indian Point three nuclear plants. The company also said Axia Energy is expected to make a strong contribution in its first full quarter of operations. Axia, the trading arm of the Entergy-Koch venture, fell slightly in the natural gas marketer rankings for the first quarter 2001. In 2000, the combined companies ranked tenth, but for the first quarter of 2001, the newly formed venture came in thirteenth place (see NGI, June 4).

Formed in February 2001 by subsidiaries of Entergy and Koch Industries, Houston-based Entergy-Koch LP began to market and trade power, natural gas and other energy-related commodities, including weather derivatives, through Axia Energy LP, Axia Energy Europe Ltd. and Gulf South Pipeline Co. LP.

Entergy also reaffirmed its operational earnings guidance for the full year 2001. The company said it still expects earnings to range from $3.00 to $3.20 per share for the year. Entergy said it remains positive that the recent sale of its Saltend power plant will not affect the company's goal. The company previously announced that it had sold the 1,200 MW gas-fired plant located in the United Kingdom to Calpine Corp.

"While Saltend is a state-of-the-art facility, selling it offered Entergy a substantial opportunity to immediately harvest value and redeploy capital," said J. Wayne Leonard, CEO of Entergy Corp. "Our decision to sell was based on a very disciplined point-of-view-driven risk management process. The sale of Saltend allows us to reduce consolidated debt and maintain the desired balance and risk in our portfolio."

Under the transaction, Entergy will receive approximately 560 million pounds (US$800 million) for the facility, which began commercial operation in November 2000 and is one of the largest gas-fired electric power generating facilities in England. Entergy said the sale will be treated as a special item in its third quarter 2001 results. Calpine reported on Thursday that the acquisition marks its first entrance into the UK power market.

"This modern cogeneration facility marks Calpine's entry into the robust UK power industry and represents the cornerstone for our European strategy," said Rick Haviland, Calpine's senior vice president. "We plan to capitalize on our core power competencies developed in North America, including power plant development, construction, operations and power trading, selectively expanding our operations in the UK, as well as Italy and Spain."

Entergy said it will announce its second-quarter results along with an updated and detailed review of its annual earnings guidance on July 31. An investors teleconference will be held on that date at 10 a.m. CDT.

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