Dynegy execs say energy markets to recover in second half of 2002

By the OGJ Online Staff

HOUSTON, Jan. 23, 2002 -- In a tumultuous 2001 for Dynegy Inc., profits improved to $648 million, or $1.90/share, on $42.2 billion of revenue, up from $501 million, or $1.48/share, on $29.4 billion in 2000.

However, the fourth quarter 2001 slipped over one-time charges related to the failed merger attempt with Enron Corp. and reserves for losses in contracts associated with Enron's Chapter 11 bankruptcy filing. Dynegy reported income of $77 million, down from $106 million for the comparable 2000 fourth quarter. Earnings per share fell 11¢/share to 21¢ from 32¢.

Dynegy executives built into their 2002 earnings estimates based an improving economy by the third quarter. For 2002, executives called for earnings per share to be $2.26 with 62% of that being generated in the third and fourth quarter because of an expected economic recovery in the second part of the year and adding new generation late in the second quarter and in the third quarter.

CEO Chuck Watson said Dynegy performed well despite the "significant industry events" and the increased financial scrutiny the energy industry endured after Enron filed for Chapter 11 bankruptcy protection. In a reference to the failed merger attempt with Enron in the fourth quarter, Watson said the event would not affect the company's interest in pursuing other deals.

The company reacted to the increased demands of the financial community after the Enron collapse by shoring up its balance sheet with an equity offering in late December and intends to sell some assets later in the year. Responding to analysts' questions, the company provided more details on its capital structure and income from the marketing and trading business.

Executives said Dynegy ended the year with $3.9 billion in debt and a debt to capital ratio of 50% using the calculations of Standard & Poor's. But chief financial officer Rob Doty said Moody's Investors Service calculates Dynegy's debt to equity ratio at 61% because it counts the company's minority interests in outside entities as debt and not equity.

"Our strategy hasn't changed. Even though some have mischaracterized Dynegy as a trading company, we still focus on marketing, origination, and delivery logistics around our assets and network," Doty said. "We were asset focused before asset focused was cool."

He said 70% of the company's recurring financial contribution was generated by assets owned by Dynegy.

In an effort to distinguish itself from more pure trading companies, Dynegy renamed Dynegy Marketing and Trade, Wholesale Energy Network or WEN. The organization will continue to be engaged in the physical supply and risk management activities around wholesale natural gas, power, and coal. Recurring net income for the WEN segment was $660 million in 2001, up from $354 million in 2000

Dynegy said 55% of that income was generated from its asset businesses. The rest was from customer and risk management activities. Natural gas sales volumes increased 16% to 11.3 bcfd in 200, up from 9.7 bcfd in 2000. Physical power sold also increased to 317 million Mw-hr in 2001, compared to 138 million Mw-hrs in 2000.

Company officials attributed much of the increase in power volume to the initial "demise" of Enron. They said they don't expect that kind of volume growth to continue into 2002.

Dynegy Midstream Services, or natural gas liquids processing, marketing, and transportation, increased its income to $59 million for 2001, up from $55 million for 2000. Dynegy restructured contracts and realized some higher prices from a forward sales program. Dynegy is anticipating continued growth because Dynegy purchased all of ChevronTexaco Inc.'s liquids production through 2006.

The company's distribution and transmission businesses had flat income year over year and its communications segment reported a $61 million loss for 2001. The loss resulted from the "extremely depressed" conditions in the technology and telecommunications markets. Dynegy said.

Sponsored by FLSmidth

Related Articles

Forrest Kerr hydro project reaches commercial operation

Canada's AltaGas Ltd. announced its 195-MW Forrest Kerr hydropower project in British Columbia completed a 72-hour testing period required to achieve commercial operation under its power purchase agreement with BC Hydro.

DOE announces $53M investment to cut cost of solar power

Department of Energy (DOE) Secretary Ernest Moniz announced that the department will invest more than $53 million for 40 research and development (R&D) projects that aim to drive down the cost of solar energy, tackling key aspects of technology development in order to bring innovative ideas to the market more quickly.

Follow Power Engineering on Twitter

Products Showcase

Dynamic Fluoride Ion cleaning DFIC of industrial natural gas turbines Hi-Tech Furnace Systems

Dynamic Fluoride Ion Cleaning of IGT Parts

The Dynamic Fluoride Ion Cleaning (DFIC) Process from Hi-Tech Furnace Systems is able to clean deep, narrow cracks of oxides by cycling between negative, atmospheric, and positive pressure.

Latest News

Shutterstock coal production trucks

Weekly Coal Production

The Weekly Coal Production shows how much coal is being produced across the U.S.

Federal Reserve Bank of Dallas Weekly Economic Indicators financial business

The Federal Reserve Bank of Dallas' Economic Indicators

The Federal Reserve Bank of Dallas offers a glimpse into how the markets are doing domestical...

Kvaerner awarded contract for gas-fired power plant in Delaware

Kvaerner North American Construction Inc. and its joint venture partner, Parsons Brinckerhoff...

Canadian Solar purchases two solar projects

Canadian Solar Inc. has acquired a majority interest in two utility-scale solar power project...

Operators Restart Unit 2 at PPL Susquehanna

Unit 2 at the PPL Susquehanna nuclear power plant near Berwick, Pa. resumed generating electr...

Settlement agreement limits cost recovery at Edwardsport

The Indiana Utility Regulatory Commission (IURC) on Dec. 27 modified and approved a settlemen...

Toshiba in talks to sell portion of Westinghouse nuclear unit

Toshiba Corp is in talks  to sell up to 16% of its stake in the Westinghouse Electric Co...

Utah nixes nuclear waste storage facility

Plans to park radioactive waste at a storage facility in Utah have been officially called off.

Archived Articles

2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013

Power Engineering Current Issue

10/01/2014
Volume 118, Issue 10
1410pe-cover

Buyers Guide Company Listings

Datapartner Inc

Our software Invest for Excel is used by more than 100 power companies worldwide for capital budgeting, financial modeling and valuation. We also offer a Sharepoint solution for capex portfolio.

Interdevelopment Inc

Offers management consulting and marketing, financing for power plants, particularly energy production by renewable fuels, such as wind/solar/biomass power, including compliance issues.

The Clifton Corp

Engineering and development company specializing in water resources, hydro and solar power and biogas/methane facilities. Provides development services from engineering, economic and financial feasibility to financing and operations and maintenance.

Valentin Software Inc

Valentin Software is the largest, most comprehensive and oldest developer of solar PV and thermal design, simulation, modeling and financial analysis software, with customers in over 70 countries.

Power Industry Wire News

BASF Brings Hands-On Science to More Than 2,000 Schoolchildren During National Chemistry Week

BASF Brings Hands-On Science to More Than 2,000 Schoolchildren During National Chemistr...

SCS-Certified Products Among Top 10 Products Honored by BuildingGreen at Greenbuild 2014

SCS-Certified Products Among Top 10 Products Honored by BuildingGreen at Greenbuild 2014

Arabella Exploration Backs Into Additional Acreage

Arabella Exploration Backs Into Additional Acreage

FLIR Systems Announces Third Quarter 2014 Financial Results

FLIR Systems Announces Third Quarter 2014 Financial Results

Despite Declining Demand, BASF Increases Sales and Earnings in the Third Quarter of 2014

Despite Declining Demand, BASF Increases Sales and Earnings in the Third Quarter of 2014

Power Engineering

Article Archives for Power Engineering Magazine

Continuing Education

Professional Development Hours

To access a course listing associated to a specific topic listed below, click on the topic of choice from the list below.

Latest Energy Jobs

View more Job Listings >>


Power Engineering Newscasts

EPA chief: carbon caps will boost economy
Australia, Russia enter nuclear power agreement with Argentina
Largest battery energy storage in North America now operational
EPA chief: carbon caps will boost economy Largest battery energy storage in North America now operational Australia, Russia enter nuclear power agreement with Argentina Texas’ Panda Temple combined cycle plant up and running
Siemens agrees to acquire Dresser-Rand
Safety concrete poured at UAE nuclear reactor power project
Foster Wheeler to upgrade natural gas-fired power plant’s emission controls
GE, TransCanada partner on natural gas turbine design
Energy storage global market to grow to $15.6B by 2024; DOE awards $2M to support taller wind turbine towers; Hinkley Point C nuclear project have financial incentives approved; N.J. company building waste-to-energy project in Ireland