Projections forward of the lower energy prices that already socked fourth quarter earnings, plus the “Enron effect” on stockholders’ confidence, slammed merchant energy companies again last week, as many that were already in the basement, hit new lows on Wednesday before leveling off and rising slightly on Thursday and Friday. The latest stock quotes continued the downward trend for the year, which has seen some merchant energy stocks go from the $50 to $60 range to $6 to $15. Results and projections were suffering from a re-evaluation of power production projects in the current energy price environment.

Calpine took the biggest hit, dropping from over $10 Monday to a low under $7. The company’s stock moved up again to the $8 range, after it announced it had been able to purchase $119 million worth of its Zero Coupon Convertible Debentures “over the last several days” in open-market and privately negotiated transactions. Calpine said it used existing cash on hand to fund the purchases. Still outstanding are $700 million worth of Convertible Debentures.

On Feb.1 Calpine had announced fourth quarter earnings down 23% year over year, blaming soft prices in the national wholesale power markets as the principal deflator. Its 2001 earnings were up 63% over 2000. Calpine officials gave an informal tally of now delayed or abandoned power projects in the U.S. with 86,000 MW capacity. “We enter 2002 mindful of the many uncertainties in today’s economy,” Calpine CEO Peter Cartwright said. In the last year Calpine stock has been as high as $58.

Reliant Energy also dropped to about $21, its lowest level of the year, after the company delayed its earnings report for some last-minute calculations on hedging transactions of its Reliant Resources subsidiary, that it said would actually improve its earnings. But the company estimated earnings in 2002 would be lower than previously projected because of lower energy prices.

Reliant executives took pains to explain that none of the company’s “contracts or financing structures contains triggers or acceleration clauses due to changes in our stock price,” nor are there any ratings triggers in its financial documents. In addition “many of our trading contracts require counterparties to post additional collateral if that party loses investment grade status,” a company official said. The company expects to have its re-stated earnings shortly.

Reliant Resources trimmed its 2002 profit forecast to $1.80 to $2 a share, down from $2.05 to $2.15, to reflect the current outlook for its business activities and steps taken or planned to strengthen its balance sheet in response to changes in credit-rating agency standards. Reliant’s stock also came off the bottom, registering $22 and change Friday. It has been up to $50 in the last year.

AES Corp., reporting problems with Brazilian currency last year and operations in Argentina going forward, had lower fourth quarter and yearly returns. The company announced diluted earnings per share — before charges — for 2001 of $1.35 or a total of $727 million, but the kicker was in the charges, including non-cash foreign currency transaction losses at Brazilian affiliates, mark-to-market losses from FAS 133, nonrecurring severance and transaction costs recorded in conjunction with the IPALCO pooling-of-interests transaction, and discontinued operations.

Net income and diluted earnings per share for the year, after all charges, were $273 million and $0.51, respectively. For the year, revenues increased 24% to $9.3 billion. The Arlington, VA-based firm also announced a re-vamping of its management structure Tuesday and warned of a possible future write-off of as much as $1 billion of operations in politically and financially troubled Argentina. Since the facilities were constructed with non-recourse financing and are separate, stand-alone entities, they will have no impact on the company’s liquidity.

Executives in a conference call said the Argentina operations normally contribute about 1% or $15 million to the company’s overall cash flow of $1.2 billion. AES saw its stock start the week at about $12 and finish around $10. Despite a two-day meeting with company officials explaning in detail its business plan, the stock price refused to come off the bottom. AES stock once was at $60 in the last year.

Fledgling Mirant’s stock price was back to nearly $10 Friday, after starting the week at $10.50 and dropping to $8.50 on Wednesday. The company reported a 55% year over year drop in fourth quarter earnings the week before and said it would cut spending and sell assets.

A more solid Dynegy, side-swiped by Enron but back-stopped by its utility assets, nevertheless also took a hit last week, starting out at just under $25, dropping to a low of about $20 mid-week, and rebounding to more than $22 on Friday. Dynegy stock sold for as much as $59 in the last year.

Even Duke Energy, which sports in-depth assets and then some, took some heat. After starting the week above $34, Duke’s stock price went just under $32 — a new low — on Wednesday and was rebounding Friday, above $33. In the good old days last year the stock hit $47.

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