Properties in the gas pipeline and storage segment, among the billions of dollars of assets flooding the market from companies looking to raise cash quickly, offer the most value at the fairest prices, according to Entergy Corp. officials who are studying the possibilities.

In a conference call with investors, executives at the utility also said that the earnings before interest, taxes, depreciation, and amortization (EBITDA) multiple fetched as part of Dynegy’s recently announced deal to sell Northern Natural Gas Co. (NNG) to MidAmerican Energy Holdings Co. is roughly on par with where Entergy sees as the clearing price for similarly situated gas transportation assets that may come up for sale (see related story).

“As we look at the opportunities, at the top of the list is probably gas assets — there’s a lot we could do there,” Entergy CEO Wayne Leonard said in a conference call with analysts following the Louisiana utility’s release of second quarter earnings. “As we sit here today, probably the better transactions in the marketplace are pipes and storage.”

The Entergy CEO listed a couple of reasons why pipeline and storage-related assets are attractive. “One is they’re probably the most liquid. They’re not really impaired. They can bring better prices,” he said. Leonard said that pipeline companies are closer than the rest of the energy sector to completing what he described as a “12-step program.”

In other words, those companies are “realizing the problems they have,” he said. “So I think those assets are more likely to be offered in the marketplace at fair prices because they are marketable and because those companies understand the situation they’re in.”

Dynegy’s deal to sell NNG is “about where we would see the clearing price for gas transportation assets, for a good asset that’s contracted well in a market that can’t be interrupted by some competitive threats,” said Entergy Chief Financial Officer John Wilder.

Under the deal announced last week, Dynegy will sell all of NNG for $928 million in cash and the assumption of $950 million in outstanding NNG debt. Wilder said that the transaction’s EBITDA multiple “was about where we see the prices clearing at, anywhere from maybe six-and-a-half to eight, and that’s off the highs, in particular the most recent multiples of kind of nine to 11.” Dynegy’s sale of NNG is part of a broader push by the company to shore up its liquidity position and restore investor confidence, which has been severely tested in recent weeks after a slew of credit ratings downgrades.

As for the current market for power assets, Leonard believes that there are “a lot of people out there still hoping that the spark spread squeeze that we continue to see is going to bail them out somehow. We don’t believe that. We think prices still need to get down into the area of $150/kW for a combined cycle unit in order for it to make sense and we just don’t see those kind of assets being offered up today,” the Entergy official said.

Entergy on Tuesday reported that its earnings on an operational basis were $267.1 million, or $1.17 per share, in the second quarter 2002, compared with $238.9 million, or $1.06 per share, in the year-earlier period.

On an as-reported basis, Entergy recorded income of $241.7 million, or $1.06 per share, a per share amount equal to earnings for the same period in 2001. Second quarter 2002 reported results reflected a special charge associated with the restructuring of Entergy’s wholesale power development business, which was announced earlier this year.

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