NGI The Weekly Gas Market Report / NGI All News Access

Financial Briefs

Financial Briefs

Apache Corp.'s third quarter results surpassed analysts' profit target by 11 cents mainly because of increases in gas and oil prices. Apache's U.S. gas production grew 15% to 572 MMcf/d.. The company's earnings were $201.3 million, or $1.61 per share, more than double the year-earlier profit of $67.8 million, or 59 cents per share. The company's revenues rose 83 percent to $624.6 million. Apache's average realized price for oil was up 42% to $29.11/bbl and its U.S. natural gas prices were up 64% to $4.22/Mcf. During the quarter, the company completed acquisitions of producing properties in South Texas and the Permian Basin from Collins and Ware and in the Gulf of Mexico from Occidental Petroleum. On Oct. 9, Apache said it planned to buy the Canadian assets of New Zealand's Fletcher Challenge Energy in a joint bid with Royal Dutch/Shell Group, which plans to acquire the rest of the company. Regulators have blocked the deal, but Shell and Apache hope to win approval for an amended bid. Apache said the Fletcher deal would bring its oil and gas property acquisitions to about $1.5 billion this year.

Devon Energy reported the highest quarterly revenues, net earnings and earnings per share in the company's history after several acquisitions including the most recent pooling of interests transaction with Santa Fe Snyder. It posted record third quarter oil and gas production, including a 37% increase in U.S. gas production to 972 MMcf/d. Its net earnings were $164.9 million for 3Q2000, or $1.22 per diluted common share). Excluding the $57.2 million of one-time costs attributable to the merger with Santa Fe Snyder, third quarter earnings were $200.2 million, or $1.49 per diluted common share, which compares to 3Q99 net earnings of $50.9 million, or 48 cents/share.

Phillips Petroleum's third-quarter net operating income doubled from year-ago levels, but refinery problems prevented the company from meeting Wall Street targets. The company earned $505 million, or $1.96 a share, compared to $221 million, or 87 cents a share, in 3Q99. "Leading the way were strong results from our E&P segment," CEO Jim Mulva said. "Production from Alaska and stronger year-over-year operating performances in Norway, China and Nigeria - along with higher prices for crude oil and natural gas - contributed to a record quarter for net operating income." In July, Phillips and Chevron combined their chemical businesses. Phillips also closed on its purchase of Atlantic Richfield's Alaskan businesses, for which it paid $700 million and assumed $265 million of debt. Gas gathering, processing and marketing earnings declined as did refining, marketing and transportation earnings.

Even though earnings for Naperville, IL-based Nicor Inc. were up 36% for the third quarter, the charge for mercury-related cleanups pushed its overall results into the red. Excluding the charge, the company posted net income of $27 million, or 59 cents a share, compared with $19.8 million, or 42 cents for third quarter 1999. First Call/Thomson Financial had expected Nicor to earn 51 cents per share. In its first accounting of the costs for inspecting and repairing mercury contamination from spills when old gas regulators were removed from some residences, Nicor said it took a charge of $148 million, or $89.7 million after taxes. The costs were recorded as third quarter operating expenses in the gas distribution business, resulting in a net loss of $62.7 million, or $1.37 per common share. "We are obviously disappointed that the financial effects of the mercury situation clouded what otherwise was an excellent quarter, as well as excellent operating results thus far in 2000," said CEO Thomas Fisher. Still, he said that Nicor expects earnings for the year to be in the range of $2.85 to $2.95 per share. Nicor also raised its earnings estimates for year 2001 to $3.15 per share from $3. Consensus analysts' estimates are $3.02 per share. Nicor expects to continue to incur costs to inspect, and if necessary, cleanup additional homes contaminated from mercury spills. Nicor has submitted a plan to review about 248,000 homes for mercury.

Independent power company Calpine Corp. of San Jose, CA posted its 17th consecutive record quarter since going public in 1996, and the board of directors also authorized a two-for-one split of its common stock. Shares resulting from the split are expected to be distributed to shareholders of record as of Nov. 6 after market close on Nov. 14. Net income before extraordinary charge was $147.1 million, a 243% increase over net income of $42.9 million for third quarter 1999. Diluted earnings per share rose 159%, to 96 cents per share for the third quarter, up from 37 cents per share for the same period in 1999. Revenue for the quarter also increased 168%, to $678.9 million for the quarter, up from $253 million a year ago. "Calpine has turned in another record quarter of earnings," said CEO Peter Cartwright. "We are anticipating a strong fourth quarter, and our prospects for 2001 and beyond continue to be excellent." He attributed Calpine's success to the strong performance of its operating facilities, "strategic acquisition in high growth energy sectors and the execution of an aggressive development program." Strong energy prices in certain markets, the beginning of commercial operations of the Pasadena, CA expansion and Hidalgo projects, and other 1999 acquisitions, including geothermal steam fields and energy facilities at The Geysers, CA and six gas-fired energy centers contributed most, he said. Earnings also benefited from the company's "strong" power portfolio.

UtiliCorp United reported a 75% jump in earnings per share for the third quarter led by strong results from its Aquila Energy subsidiary and an increased contribution from international businesses. "The energy merchant business continues to be strong," said CEO Richard C. Green. "Aquila's performance and the continued unleashing of value in our international businesses resulting from the initial contribution of our recent electric network acquisition in Canada and the successful initial public offering of our telecom business in Australia enabled us to exceed last year's third quarter results."

Amerada Hess beat earnings estimates by a substantial margin, reporting $2.86/share compared to $1.85/share in 3Q99. Street estimates had the company earning only $2.35/share. Its operating earnings came in at $257 million compared with $52 million last year. Operating earnings in the first nine months of 2000 were $683 million compared with earnings of $131 million in 1999. The company's U.S. gas production, however, plummeted 18% to 282 MMcf/d. realized gas prices rose 67 cents to $3.98/Mcf.

Minneapolis-based independent power producer NRG Energy, Inc. reported net income of $88.6 million or 49 cents/share for the third quarter versus $27.6 million or 19 cents/share in 3Q99. Revenue soared 325% to $624.8 million. "Our baseload and intermediate dispatch facilities provide a foundation for consistent earnings, while our peaking facilities enable us to benefit from markets in which weather and local market conditions contribute to stronger demand for electricity," said CEO David H. Peterson. NRG's earnings benefited from increased generation capacity because of a number of recently acquisitions. Since last September, it has increased its net megawatt ownership interest in generating facilities in operation by 112% to 14,216 MW. Additionally, 206 MW in projects were under construction at the end of the quarter. NRG's total assets at the end of the quarter were valued at $6.1 billion compared to $2.5 billion in 3Q99. NRG owns all or a portion of 63 generation projects and its net ownership interest exceeds 14,000 MW.

Reliant Energy beat Wall Street estimates by several cents per share during the third quarter with a 37% increase in earnings to $389 million, or $1.36 per share. Strong performance from the company's unregulated domestic wholesale generation operations and growth in its regulated electric customer base were the primary reasons for the earnings increase. "Our strong commercial management of generating assets and commercial gas and power positions in attractive regions of the U.S. has allowed us to break out of the traditional role of a local energy provider," said CEO Steve Letbetter. The wholesale energy unit reported a 642% increase in third-quarter operating income to $319 million compared to 3Q99. Gross margins increased by $372 million. Reliant attributed the growth primarily to the expansion of commercial assets and trading in several regions, as well as higher energy sales and energy prices due to unique seasonal dynamics in the Western markets. Subsidiary HL&P's operating income jumped 13% to $500 million. Reliant's three gas distribution companies reported an operating loss of $15 million compared to an operating loss of $5 million for the same period of 1999.

Kerr-McGee more than doubled its earnings to a record $266 million, or $2.58/share, which was up significantly from Street estimates of $2.17/share. "We generated substantial cash flow during the quarter and repaid more than $250 million in debt, reducing net debt as a percent of total capitalization to 50%," said CEO said Luke R. Corbett. "In addition, continued success with the drill bit has resulted in development approval for our 100%-owned Leadon field in the North Sea. The development of Leadon, along with developments under way at the North Sea Skene field and the Nansen and Boomvang fields in the deepwater Gulf of Mexico, provides the base for future production growth." Third-quarter operating profit was $461 million compared with $241 million in the 1999 quarter. Exploration and production operating profit rose to $406 million, almost double the $211 million in the year-ago quarter. Sharp increases in both crude oil and natural gas prices were the primary reason for the increase. Daily gas sales averaged 527 MMcf, down 7% from the prior-year quarter, but gas prices averaged $4.13/Mcf, or about $1.49 higher than the 1999 quarter.

Conoco reported record results for the third quarter, as strong prices and margins for refined products and record refinery throughputs produced net income of $523 million, or $0.83 per diluted share, double that of third quarter 1999. "Earnings were at record levels for the third consecutive quarter, and major discoveries were made in Vietnam and the deep-water Gulf of Mexico," said CEO Archie W. Dunham. "In the North Sea, we completed the Norsk Hydro producing properties acquisition and brought onstream the Vixen natural gas field. We also announced a groundbreaking 20-year supply contract to deliver Indonesian natural gas to Malaysia. Great strides are being achieved in exploration. We are extremely encouraged by the Magnolia appraisal well currently being drilled in the Gulf of Mexico. In addition, we unveiled the industry's most powerful exploration supercomputer that allows more cost-effective seismic data analysis. In a related step, we began a massive geophysical survey over 2,000 deep-water blocks in the Gulf of Mexico, using gravity gradiometry technology once used exclusively by the military," he said. The company's U.S. gas production was down 2% from 3Q99 levels to 826 MMcf/d. Its total net worldwide production was down 4% to 619 Mboe/d.

Southern Co. reported third-quarter earnings from continuing operations of $668 million or $1.03 per share compared with $622 million or 91 cents per share in the year-earlier quarter. Including one-time charges such as costs relating to Southern Energy's transition to going public, the company earned $614 million, or 95 cents per share, which was 3 cents/share more than analysts expected, according to First Call/Thomson Financial. The company expects to top analyst estimates for the year by about 5 cents/share, earning $2.10 per share, excluding transition costs and the sale of a 20% stake in affiliate Southern Energy. Southern plans to spin off the remainder of its stake in Southern Energy in the next six to 12 months.

In the company's first earnings report since its $1.8 billion initial public offering, Southern Energy Inc. announced a 59% increase in third quarter earnings to $119 million. CEO Marce Fuller said she believes Southern Energy is on track to achieve an average annual earnings-per-share growth rate over the next four years in excess of 20%. The company is in the process of buying 5,000 MW from Potomac Electric Power Co. It also recently completed the $250 million purchase of Vastar Resources Inc.'s 40% interest in Southern Company Energy Marketing, the company's energy marketing and risk management business. Southern Energy's Americas business unit, which includes the United States, Canada, South America and the Caribbean, reported $113 million in earnings for the third quarter, up from $34 million from the same period last year.

©Copyright 2000 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.

Copyright ©2018 Natural Gas Intelligence - All Rights Reserved.
ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus