Financial

Sharply lower income from crude oil refining and marketing led to a 55% drop in Marathon Oil Corp.’s third quarter 2002 net income to $87 million, or 28 cents per diluted share, compared to $193 million, or 62 cents/share in 3Q2001. Results included a $7 million after-tax loss on the early extinguishment of $144 million of long-term debt, a $61 million one-time deferred tax adjustment related to an increase in tax rates in the UK, a $15 million after-tax gain related to the disposition of production interests in the San Juan Basin, and a $9 million after-tax loss on a contract settlement. Third quarter 2001 results included a $126 million after-tax loss related to the sale of Marathon’s heavy oil assets in Canada. Marathon CEO Clarence P. Cazalot said while the industry continues to be “challenged by difficult refining and marketing conditions, Marathon made progress in delivering on our business strategy. During the third quarter, we had encouraging exploration success while also making significant progress in strengthening our core areas and progressing our integrated natural gas strategy, which is creating a platform for Marathon to deliver sustainable value growth.” Marathon bought Enron’s rights to deliver 54 Bcf/year of liquefied natural gas to El Paso’s Elba Island import terminal near Savannah, GA. Marathon’s third quarter oil and gas sales averaged 384,000 boe/d. Production available for sale averaged 401,000 boe/d in line with guidance issued with the second quarter earnings.

Williams’ once mighty pipeline empire has been decimated by the corporation’s financial troubles and its executive personnel have been cut as well, according to a notice appearing Tuesday on the Northwest Pipeline electronic bulletin board.

Indicative of how insulated it has remained from the energy industry’s financial meltdown, Sempra Energy’s Southern California Gas Co. utility unit based in Los Angeles was given an A+ rating by Standard & Poor’s Wednesday for a $250 million bond re-funding offering. SoCalGas’s bonds are rated the same as S&P’s rates Sempra’s corporate credit.

With financial and regulatory results on the upswing, Spokane, WA-based Avista Corp. received a thumbs-up report from Merrill Lynch, which returned investment ratings on the gas and electric utility holding company to “neutral.” Merrill Lynch’s Sam Brothwell attributed the outlook to the absence of anything negative from an ongoing federal investigation of Avista’s energy trading and second quarter earnings that exceeded expectations.

Undeterred by the combination of telecommunications and energy industry financial meltdowns this year, an affiliate of San Diego-based Sempra Energy still expects a slow but steady growth in its seven-patent-ending “fiber links” technology for threading fiber optic cable through natural gas distribution pipeline mains and service lines in dense urban commercial and suburban residential areas.

Financial recovery in the energy industry is going to take a very long time, given that $226 billion — or more than 90% of market capitalization — was lost by the dozen major energy trading and power generation firms, a Nymex executive told a national meeting of state regulators in Portland, OR, last week.

Aquila. Inc. said late Wednesday that the recent credit ratings downgrades of Dynegy Inc., “together with other adverse circumstances and events, have decreased the likelihood” that its acquisition of privately held Cogentrix Energy can be completed as planned. Aquila charged that the downgrades by Standard & Poor’s, Fitch Ratings and Moody’s Investors Service “are expected to cause a Dynegy subsidiary to default under a sizeable agreement to purchase power from a Cogentrix subsidiary, calling into question the Aquila-Cogentrix agreement.”

Financial recovery in the energy industry is going to take a very long time, given that $226 billion — or more than 90% of market capitalization — was lost by the dozen major energy trading and power generation firms, a Nymex executive on Tuesday told a national meeting of state regulators in Portland, OR.

Undeterred by the combination of telecommunications and energy industry financial meltdowns this year, an affiliate of San Diego-based Sempra Energy still expects a slow but steady growth in its seven-patent-ending “fiber links” technology for threading fiber optic cable through natural gas distribution pipeline mains and service lines in dense urban commercial and suburban residential areas. The president and several other senior executives with Sempra Fiber Links were in Portland, OR, Monday at a national meeting of state regulators, pitching their system as being a fast, safe, less costly and environmentally more benign means of bringing fiber optics to commercial and residential areas that are among more than 90% of the nation that is still dependent on copper phone wires.