Reports

While there have been a “dismaying number of reports of improprieties at energy companies” over the past months, natural gas local distribution companies (LDCs) have been “neither the focus nor the cause of [the] attention-grabbing headlines,” the American Gas Association (AGA) told FERC last Wednesday.

Despite the lackluster results from most of its operating companies, El Paso Corp. last week reported a significant corporate-wide gain in earnings during the first quarter thanks in large part to a nearly $2 billion infusion from asset sales. This was a complete about-face from the poor performance that it turned in for the same period a year ago.

Williams was unable to match its performance from last year’s first quarter when there were significantly higher energy prices. Net income in the first quarter fell 46% as it faced not only lower prices, but also the expected bankruptcy of its former communications unit (WCG filed for Chapter 11 protection last week) and the sale of one of its large pipeline systems to lower its debt and placate the credit rating agencies.

Despite the positive spin Mirant put on its quarterly earnings report, the numbers show it was a very tough quarter for the energy merchant and power producer. It reported a 9-cent/share ($42 million) net loss after special charges, compared to net income of 53 cents/share ($180 million) in the first quarter of last year. Mirant said its net income from continuing operations exceeded by 10% its prior guidance, but it still fell 35% to 33 cents per share from the 51 cents per share it earned in 1Q2001.

Williams Cos. and Dynegy Corp. responded quickly to stories alleging certain activities that appeared last Wednesday in the Wall Street Journal, with spokesmen for both companies calling the two separate stories misleading. Williams reported it was not being investigated by the Securities and Exchange Commission (SEC), noting that a review by the SEC of third quarter results of 2001 found the company did not have to make any financial adjustments. Dynegy, scrutinized for a transaction that was approved by two separate accounting firms, said the Journal had “unfairly mischaracterized the transaction and chose to question its intent.”

Houston-based international drilling contractor GlobalSantaFe reports that declines in the Gulf of Mexico’s Summary of Current Offshore Rig Economics, or SCORE, “have slowed considerably,” with the international SCORE near its highest level since early 1999. Overall, the SCORE for February 2002 was down from January by 1.1%. “The improving U.S. economy, which has strengthened U.S. natural gas prices, bodes well for the outlook in the Gulf of Mexico jackup market — the source of significant weakness over the last six to eight months,” said Sted Garber, GlobalSantaFe CEO. According to the latest data, the Gulf of Mexico SCORE for February was 29.7, down from 29.9 the month earlier. For the year, the SCORE is off 41.2%, and is down 45.5% over the past five years. Worldwide, the February SCORE was 44.7, down from 45.2 in January and 0.9% off from a year earlier. SCORE compares the profitability of current mobile offshore drilling rig dayrates to the profitability of dayrates in the 1980-81 peak of the offshore drilling cycle. In the 1980-81 period, when SCORE averaged 100%, new contract dayrates equaled the sum of daily cash operating costs plus approximately $700/day/million dollars invested. SCORE calculates the jackup and semisubmersible rig rates in the Gulf, the North Sea, West Africa and Southeast Asia.

Reliant Energy last Friday reported net income for 2001 of $980 million, or $3.35 per diluted share, more than double the net income of $447 million, or $1.56 per diluted share, for 2000. The results include the company’s approximately 83% interest in Reliant Resources, which more than doubled operating income from its wholesale energy segment to $899 million due to increased power generation sales volumes and margins.

Reliant Energy Friday reported net income for 2001 of $980 million, or $3.35 per diluted share, more than double the net income of $447 million, or $1.56 per diluted share, for 2000. The results include the company’s approximately 83% interest in Reliant Resources, which more than doubled operating income from its wholesale energy segment to $899 million due to increased power generation sales volumes and margins.

The parent of bankruptcy-saddled Pacific Gas and Electric Co. utility, PG&E Corp., San Francisco, Tuesday reported a 19% increase in earnings from operations last year, compared to 2000, including a 19% increase for the utility over 2000 results ($2.51/share, or $914 million). PG&E’s National Energy Group (NEG), its nonutility operations, increased its contribution to earnings from operations by 27% (57 cents/share, or $209 million), compared to the previous year, but that is not expected to continue this year due to currently depressed energy prices..