Financial

EEX Corp., headquartered in Houston, reported third quarter 2001 net income of $16 million, or $0.39 per share, compared to a net loss of $2 million, or ($0.04) per share for the third quarter of 2000. The current quarter’s net income includes net after-tax gains from the sale of assets of $20 million in assets, primarily arising from the sale of the Llano Field in September 2001. Excluding these gains on asset sales, the third quarter of 2001 resulted in a net loss of $4 million or ($0.09) per share. Revenues for the third quarter of 2001 were $48 million, compared to $66 million for the same quarter last year. Natural gas production volumes were 122 MMcf/d, 17% lower quarter-to-quarter, primarily as a result of the sale of the offshore Gulf of Mexico shelf properties in December 2000. Average natural gas prices also were 11% lower quarter-to-quarter. The company produced approximately 11 Bcf during the third quarter of 2001 and received an average price of $2.89/Mcf, compared to 14 Bcf and $3.25/ Mcf in the third quarter of 2000. Crude oil production was down 6% and average prices decreased 24% quarter to quarter. Expenses for the third quarter of 2001 were $41 million, compared to $52 million for the same period of 2000, excluding the impact of asset sales in each period. CEO Tom Hamilton noted that EEX’s average total production from onshore U.S. business rose 7% from the first quarter to 130 MMcfe/d during the third quarter, and that “practically all of our capital spending during the third quarter was invested in development of our onshore properties.” He said the drop in natural gas prices will “likely” cause the company to defer some capital spending in the onshore program until prices improve.

Financial analysts and El Paso Corp. executives greeted the long-awaited decision by FERC Chief ALJ Curtis Wagner Jr. last week in the high-profile big rigging and price manipulation case as extremely positive for El Paso, even though the judge didn’t completely exonerate the company.

Louis Dreyfus Natural Gas Corp. Tuesday announced record financial results for the second quarter 2001, with net income of $47.8 million, or $1.07 per share, on revenues of $157.4 million. This compares to net income of $9.1 million, or $0.22 per share, on revenues of $88.0 million for the second quarter of 2000. Net income excluding the non- cash impact of SFAS 133 derivative accounting was $47.9 million, or $1.07 per share, for the second quarter of 2001 and $16.5 million, or $0.39 per share, for the second quarter of 2000.

In a critical step on the road to financial solvency for the state and two private-sector utilities, the California Public Utilities Commission last Wednesday issued its draft rate agreement with the state water resources department (DWR), which since January has been buying billions of dollars of wholesale electricity for the state. Comments on the draft are due by Aug. 1, and the regulators expect to act on the final document at their regular business meeting Aug. 23.

With the convergence of regulatory, political and financial solutions for California’s investor-owned utilities heating up Monday in the state legislature and regulatory halls, questions about additional retail rate increases are being raised. Officials with Gov. Gray Davis are going out of their way to squash the notion that any more increases are imminent, on heels of 40% hikes earlier this year that just became effective in June.

Calling the evidence “compelling,” Reliant Energy Inc.’s first public financial disclosure of its California operations between October 2000 and May 2001 revealed last week that while its wholesale power net revenues equalled $570.9 million, expenses totaled $413.7 million, which made the $127 million gross profit equal to $41/MWh, closely paralleling prices for the past three years. Reliant noted that its operating margin was $38/MWh in 1998; $11/MWh in 1999; and $28/MWh in 2000.

Calling the evidence “compelling,” Reliant Energy Inc.’s first public financial disclosure of its California operations between October 2000 and May 2001 revealed that while its wholesale power net revenues equalled $570.9 million, expenses totaled $413.7 million, which made the $127 million gross profit equal to $41/MWh, closely paralleling prices for the past three years. Reliant noted that its operating margin was $38/MWh in 1998; $11/MWh in 1999; and $28/MWh in 2000.

“Significant web-based investments directed at residential consumers can only be justified on the basis of faith–not rational financial analysis,” according to a survey by Primen which found virtually no consumers interacting with energy companies on the internet.

Overlooking for the time being its current financial position, Pacific Gas & Electric Co. is eyeing in-state gas transportation and storage expansions in California to help alleviate the current strain on the system and prevent likely future curtailments during peak summer demand periods, a utility official said last week.