Hammered

Dynegy Inc. reported a crushing amount of negative financial news on Friday, including a $341 million loss before dividends for the fourth quarter and a $2.8 billion loss for the year after scrapping its natural gas marketing contract with ChevronTexaco, shutting the doors on energy trading and laying off 1,100 employees, including 700 in the fourth quarter. Dynegy shares, which have been in the basement since last summer, fell 16% on Friday to $2.

Still smarting from an unfavorable ruling at FERC and its droopy stock price, embattled El Paso Corp. last week tried to assure investors that its liquidity position remained “strong” after Moody’s Investors Service compounded its troubles by lowering the rating on the company’s $23 billion in debt to near junk status.

Embattled El Paso Corp. assured investors that its liquidity position remains “strong” in the wake of Moody’s Investor Service’s decision Wednesday to lower its rating on the company’s $23 billion in debt to near junk status.

Merchant energy shares were hammered last week by multiple factors, the most significant being a FERC inquiry into the California electricity transactions of 150 energy merchants and power generators prompted by several Enron memos disclosed by FERC on Monday (see related story). Dynegy was struck particularly hard following an announcement on Tuesday that the Securities and Exchange Commission launched a formal investigation into its Alpha Project — a complex gas supply transaction. That was followed by news that some large “wash-out” power deals with CMS Energy might also be included in the probe.

Many energy stocks were hammered hard intially by FERC’s western power price mitigation order last week, but the stocks of some generators, marketers and utilities managed to rebound by the end of the week as investment bankers attempted to put a positive spin on the expected impact of the order.

The Oklahoma Corporation Commission (OCC) and Oklahoma NaturalGas Co. (ONG) hammered out which of the LDC’s transmission anddistribution assets will be regulated and which will be unregulatedand open to competitive bidding. Once sufficient competition existsin the marketplace, competitors will bid to provide service usingthe unbundled assets. Unbundled assets are to be removed from ONG’srate base.

TransTexas Gas Corp. of Houston said last week, followingdiscussions with a group representing a majority of its parentcompany’s note holders, it voluntarily filed for Chapter 11bankruptcy. The company said it believes the filing will allow forcompletion of its recapitalization involving TransTexas and parent,TransAmerican Energy Corp. Details of the recapitalization plan areexpected to be filed in bankruptcy court within 30 days.

TransTexas Gas Corp. of Houston said following discussions witha group representing a majority of its parent company’s noteholders it voluntarily filed for Chapter 11 bankruptcy. The companysaid it believes the filing will allow for completion of itsrecapitalization involving TransTexas and parent, TransAmericanEnergy Corp. Details of the recapitalization plan are expected tobe filed in bankruptcy court within 30 days.

Chesapeake Energy 1998 year-end results were hammered bynon-cash impairment charges of $881 million. Due mainly to “thesevere decline in oil and natural gas prices during 1998″Chesapeake lost $934 million on revenues of $382 million.