Merchant sector begins to recover
FERC findings had pressured stocks
By Lisa Sanders, CBS.MarketWatch.com
Last Update: 4:55 PM ET March 27, 2003
NEW YORK (CBS.MW) -- Energy merchants' shares rose solidly by Thursday's close after falling sharply on an
unfavorable regulatory ruling in the previous session.
Dynegy (DYN: news, chart, profile) rose 7.7 percent to close at $2.51 on volume of
5.6 million shares - slightly below the daily average of 6 million. Williams Cos. (WMB: news, chart, profile) tacked on 7.1
percent to close at $4.70 on volume of 6 million - higher than the daily average of 4.7 million -- and Reliant Resources (RRI:
news, chart, profile) rose 10.5 percent to close at $3.37. Reliant's volume was 12.7 million at session's end compared to a
daily average of 3.7 million.
Wednesday's sell-off followed word the Federal Energy Regulatory Commission found companies conspired to drive up
power prices and limit supplies during California's energy crisis.
Pat Wood, chairman of the FERC, said California would receive an estimated $3.3 billion refund, higher than the $1.8 billion
recommended by an agency judge in December. See full story.
Reliant Resources plunged as much as 44 percent Wednesday after the FERC said it might take away the company's
wholesale trading privileges.
Reliant said the ruling did not revoke its market-based rates authority.
"The show cause orders would mean that the FERC is continuing to investigate the matters that are described ... to
determine what, if any, action relative to Reliant's market based rates authority would be appropriate." See more.
Meanwhile, Mirant (MIR: news, chart, profile) shed 3.2 percent to close at $1.51 on volume of 8.1 million. The daily average
is 5.5 million shares. On Thursday, Fitch Ratings cut Mirant to "B-plus" with a negative outlook from "BB".
Fitch noted Mirant's need to refinance debt and said it expects any restructuring to be secured, putting "unsecured
noteholders and creditors at a disadvantage."
On Wednesday, Moody's Investors Service downgraded Mirant's senior unsecured credit rating to "Caa2" from "B1,"
expressing similar concerns about refinancing.
Shares of El Paso Corp. (EP: news, chart, profile) rose by 3.1 percent to close at $5.91. The company said Thursday it has
achieved more than 50 percent of its asset sale program, having signed or completed deals worth more than $1.7 billion
since Jan. 1, 2003. For more energy news, read Energy Watch.
In other action, the Philadelphia Utility Index (UTY: news, chart, profile) was up 0.4 percent to close at 247.10.
Shares of Allegheny Energy (AYE: news, chart, profile) jumped 6 percent to close at $6.17 after the FERC excluded
Allegheny Energy Supply from the list of companies that were sent "show cause orders," and said it supported upholding
power supply contracts that companies signed with California.
Xcel Energy (XEL: news, chart, profile) rose by 5 cents to close at $12.97. On Wednesday, the company announced a
tentative agreement to pay $752 million over 13 months as part of a settlement with the creditors of its NRG Energy (NRZ:
news, chart, profile) unit.
"The agreement paves the way for an orderly voluntary bankruptcy filing by NRG and eliminates the greatest uncertainty
facing Xcel," said Ellinghaus.
On the New York Mercantile Exchange, May crude rose by $1.74 to settle at $30.37 a barrel. April natural gas, in its last day
as the front-month contract, advanced by 4.9 cents to settle at $5.146 per million British thermal units. May natural gas was
up 9.3 cents to settle at $5.24 per BTU. See Futures Movers.
The Amex Natural Gas Index gained 2 percent to close at 168.26.
Burlington Resources (BR: news, chart, profile) said Thursday it expects first quarter daily natural gas production to come
in at the upper half of previous expectations of 1,800 to 1,900 million cubic feet. Natural gas price realizations are expected
to average between $5 and $5.25 per thousand cubic feet, and natural gas liquids production should average between
60,000 to 65,000 barrels per day, in excess of previous guidance. Oil production should fall in the upper half of previous
estimates of 35,000 to 38,000 barrels per day.
The Houston-based company also said it resumed repurchasing stock under a previously authorized $1 billion program.
Fitch said it would consider an upgrade of Burlington's "BBB" credit if the company is able to achieve 3 percent production
growth in 2003 and 3 percent to 8 percent in 2004.
"Given today's updated production guidance figures, it appears that Burlington is making good progress," Fitch noted.
Shares tacked on $1.53 to close at $47.09.
Elsewhere, the PSE Oil Service Index (OSX: news, chart, profile) rose by 2.4 percent to close at 85.23. The CBOE Oil Index
(OIX: news, chart, profile) inched higher to close at 248.02. On Wednesday, ChevronTexaco (CVX: news, chart, profile) said
it expects to take more than $250 million in charges in the first quarter. See more. Shares lost 60 cents to close at $65.20.
Shares of ConocoPhillips (COP: news, chart, profile) were at $52.65, up 78 cents, or 1.5 percent at the close. Merrill Lynch
analyst Steven Pfeifer upped his earnings-per-share estimate on ConocoPhillips to $1.96 in 2003 from $1.66 on Thursday.
Pfeifer said the company's refining and marketing business is positioned to report "significant earnings, helped by
better-than-expected refining margins in each of its key regions." |
