Energy companies report robust second quarter results

While some large energy companies won’t report second quarter results until next week, most gas and power marketers wrapped up the second quarter by largely exceeding analysts expectations.

Most were buoyed by good returns in the wholesale electricity market. But some were hurt by drought in the Pacific Northwest.

Producer and trader Aquila Inc., recently spun off from UtiliCorp United Inc., Thursday said it expects second quarter earnings to be more than 4.5 times those of a year earlier and more than double what Wall Street expected.

The Kansas City, Mo., company said it expects net income of about $100 million or $1.05/share, compared to $22 million, or 25à‚¢/share, earned in the 2000 second quarter. The company said it will report earnings Aug. 8.

Analysts polled by Thomson Financial/First Call projected earnings of 33à‚¢-40à‚¢/share. Aquila said it expected 2001 net income to be $215-$225 million, or $2.25-$2.36 per share, compared to First Call’s range of $1.55-$1.62/share.

CEO Keith G. Stamm pointed to three main factors behind Aquila’s results. He said the earnings growth was driven by increased interest in risk management solutions, an additional 1,070 Mw of generation brought on line this year, and the performance of its commodity marketing group.

Reliant Resources Inc., a spin-off from Reliant Energy Inc., Houston, easily exceeded analyst projections on the strength of its wholesale power operations. It is the first time the company, which had its initial public offering during the second quarter, has reported quarterly earnings.

The company said second quarter net income, including a one-time gain and accounting change, totaled $175.4 million, up from $111.3 million in the year earlier period. Excluding the one-time items, Reliant earned $143 million, or 51à‚¢/share, a 37% rise over adjusted earnings of $104 million in the 2000 second quarter.

The Wall Street consensus earnings forecast was a range of 37à‚¢-44à‚¢/share. Reliant Resources CEO Steve Letbetter attributed higher earnings to strong performance of its wholesale energy business, including improved contributions from trading and marketing, and increased margins from domestic power generation operations.

AEP to exceed expectations
American Electric Power Co. Inc. Thursday said it expects to report second quarter earnings of 87à‚¢-89à‚¢/share, compared to 48à‚¢/share in the 2000 second quarter. Wall Street consensus estimates are 71à‚¢/share. AEP will report second quarter earnings July 24.

“We are comfortable that our 2001 earnings will be in the upper range of the expectations, despite the implementation of electricity price caps in the West and uncertainty regarding the economy,” said AEP CEO Linn Draper.

Florida’s TECO Energy Inc. Thursday said its second quarter net income rose 25% near the high end of Wall Street estimates, on continued customer growth and strong results from its power services unit. TECO, which owns Tampa Electric, said net income rose to $71.9 million, or 53à‚¢/share, from the $57.5 million, or 46à‚¢/share, in the year-earlier period.

Thomson Financial/First Call forecast earnings were 46à‚¢-55à‚¢/share, with a consensus estimate of 51à‚¢.

TECO Energy CEO Robert Fagan attributed the increase to strong growth in its Florida operations, significantly higher earnings at TECO Power Services, and good results at TECO Coal and TECO Coalbed Methane.

Puget Energy Inc., parent company of Puget Sound Energy, Thursday reported second quarter net income fell more than 8% due to unscheduled outages and a regional drought in the Pacific Northwest which pushed up the cost of buying power.

The Bellevue, Wash., company posted net income of $22.9 million, or 26à‚¢/share, compared to $25.1 million, or 29à‚¢/share, in the year earlier period.

Wall Street analysts expected the company to earn 22à‚¢-35à‚¢/share, with a consensus of 28à‚¢/share, according to Thomson Financial/First Call.

Natural gas merchant El Paso Corp., Houston, earlier said it would beat second quarter earnings estimates despite weak gas prices. CEO William Wise said the company’s second quarter earnings would be 77à‚¢-79à‚¢/share higher than the Thomson Financial/First Call consensus estimate of 76à‚¢/share. That compares with 2000 second quarter earnings per share of 58à‚¢/diluted share. El Paso’s earnings release is set for July 25.

NRG Energy Inc., Minneapolis, Minn., which expects to report July 25, earlier said it is on track to earn 21à‚¢-22à‚¢/share for the second quarter of 200, and said it expects to achieve its stated goal of increasing earnings and megawatt ownership by at least 25% in 2001.

Consistent with NRG’s strategy of being among the top three competitive energy providers in each of its markets, NRG continues to grow through a disciplined acquisition program and accelerated greenfield and brownfield development, said David H. Peterson, NRG Energy CEO.

Enron Corp., Houston, earlier reported a nearly 40% increase in second-quarter earnings, beating analysts’ expectations due to robust growth in its power marketing and energy management businesses in the US and Europe.

The energy wholesaler and retailer earned $404 million for the quarter ended June 30, or 45à‚¢/share, compared with $289 million, or 34à‚¢/share a year earlier. Analysts surveyed by Thomson Financial/First Call predicted earnings of 42à‚¢/share.

Duke Energy Corp., Charlotte, NC, said it earned 54à‚¢/share on net income of $419 million in the second quarter, up from 44à‚¢/share in the year earlier period, compared to the consensus earnings forecast of 49à‚¢-58à‚¢/share. CEO Richard Priory said Duke is “confident” it can deliver full year results in line with its stated goal of growing 10%-15%/year.

Energy merchants Dynegy Inc., Houston, will report second quarter results July 24, and Mirant Corp., spun off from Southern Co., Atlanta, Ga., said it will report earnings July 31. Calpine Corp., San Jose, Calif., is due to report earnings July 26.

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