Subsidiaries

Concerns about the amount of cash that Dynegy Inc. and its subsidiaries will be able to generate, and the continuing worries about the energy merchant’s ability to refinance debt obligations not due until next year, led Moody’s Investors Service to downgrade the Houston-based company’s credit ratings on Thursday. Those included in the latest cuts were parent corporation Dynegy Inc., Dynegy Holdings Inc., the primary operating subsidiary, and that of Illinois Power, its largest utility.

AGL Resources (AGLR) said that it has formed a new business division to lead its non-regulated subsidiaries. Called Sequent Diversified Business Group, the new unit will include the activities of Sequent Energy Management, AGL Networks and AGLR’s participation in SouthStar Energy Services LLC, the joint venture offering retail service under the Georgia Natural Gas brand.

Coming as little more than a formality last Tuesday, NewPower Holdings Inc. and its subsidiaries TNPC Holdings and The New Power Co. (collectively NewPower) said that they have filed voluntary petitions for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Northern District of Georgia. The filings came one day after NewPower liquidated its 80,000 power customers in Texas and one day before the company entered into an agreement to sell its 210,000 natural gas customers in Georgia.

KeySpan Energy affiliate Houston Exploration said it purchased 42 Bcfe of proved reserves in South Texas from subsidiaries of Burlington Resources for $48.1 million in cash. The producing and undeveloped properties total 24,800 gross acres in four fields in Webb, Jim Hogg, Wharton and Calhoun counties. The properties currently are producing 16 MMcfe/d. “Our expansion in South Texas is a direct result of our historical operating performance and the investment in 3-D technology that continues to improve drilling and development results,” said CEO William G. Hargett. “These new properties will continue providing operating efficiencies to our South Texas operations as they are adjacent to existing operations in the Charco Field.” The acquisition will increase Houston Exploration’s South Texas production by 15% to an average of 123 MMcfe/d and grow its total reserves by 10%. The 146 wells in the acquisition are located in the following fields: Northeast Thompsonville, South Laredo, McFarlan and Maude Traylor. The acquisition will be financed through cash flow from the company’s previously announced $250 million capital budget.

Moody’s Investors Service Wednesday confirmed the ratings of The Williams Companies, Inc. at Baa2 senior unsecured and its subsidiaries but changed the outlook to negative from stable. The ratings agency cited the potential bankruptcy and contingent liabilities of the company’s former subsidiary, Williams Communications Group (WCG), but noted Williams is negotiating to take over payments for WCG debt and “eliminate certain trigger events.”

Although the end of the story is far from written, Dynegy Inc. has settled a lawsuit with subsidiaries of Enron Corp. for Dynegy to exercise its option to acquire the Northern Natural Gas (NNG) pipeline. Dynegy and Enron have agreed to a closing on the pipe by the end of this month. Dynegy, in return, has agreed to extend Enron’s option to repurchase the pipeline from May 9, 2002, to June 30, 2002.

Southern Union Co. announced that Southern Transmission Co., one of its Texas-based subsidiaries, has sold its Carrizo Springs Pipeline to West Texas Gas Inc., based in Midland, Texas, as part of its cash flow improvement plan. The Carrizo Springs Pipeline consists of approximately 43 miles of eight- and six-inch pipeline and is located in Maverick and Dimmit Counties, Texas. This sale follows a string of non-core asset divestitures over the past year by Southern Union, including, most recently, the sale of its Florida operation in December 2001. These activities are in line with the company’s ongoing cash flow improvement plan — a three-part initiative composed of strategies designed to increase annualized pre-tax cash flow from operations by at least $50 million by the end of fiscal year 2002. Proceeds from non-core asset sales are used toward debt reduction. “As we approach the goal of our cash flow improvement plan, we’re continuing our aggressive non-core asset divestiture activity, allowing us to focus exclusive attention on our natural gas distribution business,” stated Thomas F. Karam, Southern Union president.

Offshore producers have united behind Shell Offshore Inc. in its complaint against Williams subsidiaries Transcontinental Gas Pipe Line, Williams Field Services (WFS) and Williams Gas Processing (WGP) for exerting monopoly power in the rates, terms and conditions offered to shippers on the Williams gathering lines tapping North Padre Island in the Gulf of Mexico (RP02-99).

Offshore producers have united behind Shell Offshore Inc. in its complaint against Williams subsidiaries Transcontinental Gas Pipe Line, Williams Field Services (WFS) and Williams Gas Processing (WGP) for exerting monopoly power in the rates, terms and conditions offered to shippers on the Williams gathering lines tapping North Padre Island in the Gulf of Mexico (RP02-99).