Energy Firms Continue Gains
Shares of AES Corp., Reliant Resources Inc. and Williams Cos. gained for a fourth day because the energy firms are successfully renegotiating loans and selling assets, analysts said.
Reliant Resources, the trading arm of Reliant Energy Inc., has surged 72% this week.
Williams, the second-biggest U.S. pipeline company, has gained 49%. AES, a power producer, is up 54%.
Power producers and energy traders have been selling assets to raise cash and trim debt amid investigations into sham energy transactions and accounting.
The U.S. energy-trading business slumped after the troubles at Enron Corp. and a drop in electricity and gas prices.
“We’re seeing lenders cooperating, realizing it’s in their best interest to keep these companies floating,” said Argus Research analyst Jeffrey Gildersleeve, who rates shares of AES, Calpine Corp. and Mirant Inc. “hold” and owns Calpine and Mirant shares. “There had been speculation that these companies would all go bankrupt in a great ball of fire.”
Williams, based in Tulsa, Okla., this month raised $3.4 billion from asset sales and new loans to stave off insolvency. Part of the financing came from billionaire Warren Buffett and Lehman Bros. Holdings Inc.
Williams said on Wednesday that pipeline and natural-gas exploration profit will rise this year.
Shares of Arlington, Va.-based AES on Thursday gained 74 cents, or 31%, to $3.15 on the New York Stock Exchange. The shares have plunged 91% in the last year, the second-biggest decline among stocks in the Standard & Poor’s 500 index after Dynegy Inc.
Williams shares climbed 16 cents, or 4.4%, to $3.77. Mirant rose 74 cents, or 23%, to $3.95.
Calpine gained 36 cents, or 8.3%, to $4.70. The stock is up 42% this week.
Shares of Houston-based Reliant Resources rose $1.08, or 23%, to $5.70. All trade on the NYSE.
Reliant Resources’ stock has dropped 53% since May 10 after the company canceled a $500-million bond offering because it had not disclosed so-called round-trip energy trades.
In such trades, companies simultaneously buy and sell power at the same price and quantity. The transactions artificially boost revenue or trading volumes.
