Sheet

Mergers and acquisitions (M&A) between U.S. exploration and production companies continued on a slow pace in the second quarter, and unless oil and gas prices sustain a rise in the final half of the year, the lull could continue, as sellers hold their ground and refuse to drop their prices, said Standard & Poor’s in a new ratings round-up of domestic energy companies.

Dynegy Inc.’s power subsidiary plans to raise $325 million by Tuesday (July 23) through two mortgage bond offerings, as part of the energy merchant’s strategic plan to build liquidity and restore investor confidence, which Friday was at an all-time low. With the close of the public offering, Dynegy will have raised more than $1 billion of its $2 billion goal, and has already eliminated two credit ratings triggers and slashed capital expenses. Illinois Power Co., headquartered in Decatur, IL, priced $100 million worth of bonds due in 2007, and $225 million due in 2012; both carry a 10.625% rate.

Dynegy Inc.’s power subsidiary plans to raise $325 million by Tuesday (July 23) through two mortgage bond offerings, as part of the energy merchant’s strategic plan to build liquidity and restore investor confidence, which Friday was at an all-time low. With the close of the public offering, Dynegy will have raised more than $1 billion of its $2 billion goal, and has already eliminated two credit ratings triggers and slashed capital expenses. Illinois Power Co., headquartered in Decatur, IL, priced $100 million worth of bonds due in 2007, and $225 million due in 2012; both carry a 10.625% rate.

Significant balance sheet challenges kept at least one Wall Street rating agency restrained in its outlook following Bellevue, WA-based Puget Energy’s report of record second quarter earnings last Thursday. Puget’s second quarter results showed $29.4 million, or 34 cents/common share, in net income, compared to second quarter results last year of $17.4 million, or 20 cents/share.

In an effort to further reduce its debt and strengthen its balance sheet, CMS Energy Corp. announced it has put its oil and gas exploration and production unit, CMS Oil and Gas Co., on the block and intends to exit the E&P business. The E&P operation is one of many CMS will sell this year to improve its financial situation (see NGI, May 6).

Continuing its plan to divest non-core assets and strengthen its balance sheet, Williams’ midstream gas and liquids group sold three natural gas gathering systems located in South Texas for $6 million to Hurd Investments of San Antonio and a subsidiary of Houston-based Copano Energy. The companies purchased Williams’ 76% partnership interest in the Webb-Duval system, and 100% ownership interests in the Olmitos and Cinco Compadres systems.

Continuing its plan to divest non-core assets and strengthen its balance sheet, Williams’ midstream gas and liquids group said late Thursday that it has sold three natural gas gathering systems located in south Texas for $6 million to Hurd Investments of San Antonio and a subsidiary of Houston-based Copano Energy. The companies purchased Williams’ 76% partnership interest in the Webb-Duval system, and 100% ownership interests in the Olmitos and Cinco Compadres systems.