Wall

Key energy stocks suffered a rout again on Wall Street in the opening days of July, with Williams descending briefly below $5, Dynegy Inc. bouncing around under $7 a share, and analysts predicting that more of the same was ahead. One analyst said she feared the credit rating agencies’ constant downgrading of the creditworthiness of energy traders, which has pushed stocks to record depths, could end up shattering the companies completely.

Analysts at Raymond James said they aren’t buying the recent talk on Wall Street of gas demand deterioration. Although lighter storage injections suggest demand is down due to higher gas prices, analysts should remember that prices for competing fuels are even higher, they said.

After having one of the more bullish gas price forecasts on Wall Street, Raymond James is changing its tune because there’s a good chance this winter will be one of the warmest in history. The firm said Monday it was lowering its Henry Hub price forecast for the first quarter to $2.30 from $2.75 and its forecast for the second quarter to $2.80 from $3.25. Its forecast for the year was dropped to $3.25 from $3.50, but the firm expects a strong recovery in the last two quarters of 2002.

Marking the fifth year in a row that it has met or exceeded its earnings growth commitments to Wall Street, UtiliCorp United reported Thursday full-year 2001 operating earnings of $2.44 per diluted share, a 17% increase over the previous year’s operating earnings per diluted share of $2.08. Earnings before interest and taxes (EBIT) for 2001 were $704.7 million, up 31% from $540 million a year earlier. The company also reported that sales for the year were up 39%, from $29 billion in 2000 to $40.4 billion for 2001.

After having one of the more bullish gas price forecasts on Wall Street, Raymond James is changing its tune because there’s a good chance this winter will be one of the warmest in history. The firm said Monday it was lowering its Henry Hub price forecast for the first quarter to $2.30 from $2.75 and its forecast for the second quarter to $2.80 from $3.25. Its forecast for the year was dropped to $3.25 from $3.50, but the firm expects a strong recovery in the last two quarters of 2002.

Convertible securities are becoming a popular vehicle among energy companies as a quick fix for Wall Street’s cash flow concerns in the wake of Enron’s bankruptcy. Williams announced its own program Friday, saying it plans this week to offer $1 billion in securities automatically convertible into company stock, as part of a previously announced plan to maintain the company’s investment-grade credit ratings.

Aquila Inc., whose initial public offering opened with a flourish on Wall Street last spring, is essentially one year ahead in its earnings per share (EPS) forecast, and is on track to continue to deliver 25% growth into 2002, according to executives presenting third quarter earnings on Monday. The Kansas City, MO-based company, a subsidiary of UtiliCorp United Inc., reported net income of $37.2 million, or $.37 per share, an increase of 37% over the third quarter a year ago, when earnings posted were $.27 per share, or $23 million of net income. UtiliCorp offered Aquila as an IPO last April (see Daily GPI, April 25).

Enron Corp. Chairman Ken Lay told Wall Street analysts and investors the company plans to divest up to $5 billion in assets over the next two years in order to support its plummeting stock price. Included among the assets are Portland General Electric, which the company has been trying to unload for more than a year, some unnamed power plants on the West Coast, the company’s generation interests in India, and some energy businesses in Puerto Rico and Brazil. Enron also may be in talks to sell its wind turbine business, which represents a 6% share of the world market for installed wind turbines.

Murphy Oil shares plummeted 7% ($5.70) Friday to $75.45 after the company issued a profit warning. Murphy was among Wall Street’s 10 biggest losers, while most other energy stocks showed small losses or gains. The El Dorado, AR-based company said after the market closed on Thursday that third-quarter earnings will fall short of analysts’ expectations of $1.12 and would probably be between $0.80 to $1 per share.