Mirant Corp. has sold its interest in the Shajiao C power project in China for $300 million and sold 96 Bcf of proved oil and gas reserves in Louisiana for $150 million. The sales were reported with its third quarter financial statement, which showed a net loss of $1 million ($0/share) and third quarter adjusted earnings of $149 million, or 33 cents/share. Adjusted earnings per share were below the 47 cents/share average of analysts’ expectations, and the company lowered its earnings guidance for the year to $1.-1.05 compared to the $1.39 average analysts’ expectations.

The producing assets sale included 39 MMcf/d of gas production, 18 natural gas and oil producing fields and 206,000 acres of mineral rights in South Louisiana. Castex Energy Inc. bought back from Mirant the assets it had sold the company a year earlier for $162 million, a Mirant spokeswoman said. Castex, a privately held Houston-based oil and gas producer, had retained an interest in the properties and continued to operate them.

Mirant said its 3Q adjusted earnings excluded the following:

The net after-tax impact of the charges was $150 million, or 33 cents per diluted share. The company also reported a year-to-date net loss of $227 million. Adjusting for operational restructuring and asset-sale related charges taken during the nine-month period, year-to-date adjusted earnings were $412 million or 98 cents per diluted share. The company reported $330 million in net cash from operating activities during the third quarter for a total of $683 million through the nine-months ended Sept. 30.

The company also adopted FASB Emerging Issues Task Force Issue 02-03, which impacts revenues and expenses on energy trading contracts. The adoption reduced both revenues and the cost of fuel, electricity and other products by $7 billion for the third quarter, and by $17 billion through the nine-months ended Sept. 30. However, Mirant said it did not change its gross margin or results from operations.

North American operations reported net income of $123 million, and adjusted earnings of $191 million in the third quarter. They earned gross margins of $578 million from assets and $77 million from energy marketing and risk management activities.

International operations showed a net loss of $72 million, and adjusted earnings of $13 million. The company ceased international greenfield power plant development projects in Italy, Norway and Korea.

“We had a solid quarter despite poor market conditions and made excellent progress in further strengthening Mirant,” said CEO Marce Fuller. “We brought more than 1,100 MW of generation on-line, moved aggressively to preserve liquidity, reduced trading and marketing activity, and eliminated rating triggers during the quarter. Since then, we negotiated a bilateral agreement with the Philippine government that affirmed our existing power contracts, and we resolved insurance requirements associated with our Philippines businesses. These actions continue to position us well for the future.”

Mirant ended the third quarter with liquidity of $1.9 billion and expects to end the year with $1.4 billion given the following factors that are expected in the fourth quarter:

Credit ratings downgrades to below the junk level have forced Mirant to post $850 million in collateral to support its trading and marketing activity. Mirant expects to continue reducing its collateral position during 2003 by further scaling back its gas marketing activities.

The company’s new full-year guidance of adjusted earnings of $1-1.05 per diluted share assumes fourth quarter adjusted earnings per share of 5-10 cents compared to analysts expectations of 25 cents, according to Thomson First Call.

Mirant shares were up nearly 7% Monday to $1.62 at 3:30 p.m. EDT.

©Copyright 2002 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.