Marine Calpine is not a fuel cell company but is an energy producer. It was a darling stock in the late 1990s, as California had the energy crisis, and price for power went to all time highs.
Calpine busily built power plants to meed the demand. this drove up debt (which is still a concern), and then power prices fell. also were hurt by Enron.
everyone started looking at all of the power producers books much more carefully because of enron and they wanted to leave the sector.
Calpine once a $40 stock fell on hard times, for a variety of reasons; high debt, falling energy prices (compared to the high prices many people thought would last, Enron/accounting, some of their accounting was aggressive nothing as bad as Enron (that would be hard to accomplish).
Calpine is at $4, will probably not go bankrupt (famous last words), it will also not go to $20-$30 in the next 6-8 months that is BS.
if Calpine breaks through $4.25 I will probably buy some, small position, my stop loss will be $3.25.
they just completed the Hermiston Power Plant 630 MW natural gas, 150 MW sold to Bonneville power (5 year contract), PR today. rest will be sold to California.
this is a very high risk stock, your mother should know that, high risk, hopefully high reward. could lose 25-50% very quickly.
I personally think they will survive buying if it breaks above $4.25 currently at $4. make sure your mother has a stop loss if she buy the stock.
enclosed is the companies comments on August 1, 2002 when they announced 2nd Q earnings of .19 a share.
thanks
selkirk
"2002 is proving to be one of the most -- if not the most -- challenging years for the U.S. power industry and for Calpine. Yet we continued to achieve new milestones as we execute the program that we outlined at the beginning of the year: focus on strengthening liquidity, efficiently operate our plants, complete projects currently under construction and reduce overhead and operating costs," stated Calpine Chairman, CEO and President Peter Cartwright. "In the quarter just ended, we made significant progress toward strengthening liquidity, while adding to our portfolio of clean, fuel- efficient power generating facilities. With our low-cost fleet, we continued to operate profitably despite low power prices."
"Thanks to the hard work and dedication of our employees, we have, since the beginning of the year, brought on line ten new energy centers and completed three expansion projects, adding approximately 5,300 megawatts of clean, low-cost power generation."
"On the liquidity front, Calpine raised $2.5 billion through major financings during the first six months of 2002, reduced capital spending and sold assets. We also have launched several new initiatives to strengthen Calpine's cash resources and reduce our debt. We will only proceed with new projects that meet our stringent investment criteria, have long-term power sales contracts, and have access to attractive financing."
2002 Second Quarter Financial Results
Financial results for the three and six months ended June 30, 2002 reflect a significant decrease in electricity prices, gas prices and spark spreads as compared with the same periods in 2001, primarily reflecting an increase in supply and a softened demand resulting from depressed economic activity. Declines in market prices for electricity were mitigated by the company's volume of long-term contracts. The company did experience a significant drop in mark-to-market gains from trading activities, which reflects the company's decision to limit this activity due to costs associated with credit support for trading.
Total electrical generating production for the three and six months ended June 30, 2002, increased by 99% and 101%, respectively, as the company brought additional facilities into operation. The combination of lower spark spreads on electrical generation, lower revenues on sales of oil and gas, and lower trading gains resulted in decreases of 16% and 25%, respectively, in gross profit for the three and six months ended June 30, 2002 as compared with the same periods in 2001. Calpine's low-cost production, economies of scale and volume of long-term contracts mitigated the effect of the depressed power market.
For the three months ended June 30, 2002, fully diluted earnings per share from recurring operations was $0.19, compared with $0.39 for the second quarter of 2001. For the same periods, GAAP fully diluted earnings per share was $0.19 and $0.32 (after merger expense), respectively. For the six months ended June 30, 2002, fully diluted earnings per share from recurring operations was $0.30, compared with $0.75 for the six months ended June 30, 2001. For the same periods, GAAP fully diluted earnings (loss) per share was $(0.01) (after effects of pre-tax equipment cancellation costs of $168.5 million) and $0.68, respectively. Financial results for the second quarter of 2002 also reflect higher project development costs as the company expensed $18.1 million in costs related to the cancellation or indefinite suspension of certain development projects.
Industry-Leading Low-Cost Power Portfolio
Calpine remains committed to providing its customers with clean, reliable and low-cost electricity. The company's highly efficient natural gas-fired and geothermal power plants represent the cleanest, most modern fleet of electric generating facilities in North America.
Calpine has slowed or suspended capital spending on a significant number of development projects. It remains focused on completing plants currently in construction and on projects that have attractive power sales contracts in place with access to financing. In addition, the company continues to reduce costs -- including overhead, operating and capital -- as it transitions from a development company to an operating company.
Calpine currently has 70 operating power plants that generate up to 16,300 megawatts of electricity. In 2004, upon completion of its revised construction program, Calpine expects to produce up to 28,500 megawatts of electricity from 95 power plants located in 23 states, three Canadian provinces and the United Kingdom. Since last reported in May, recent highlights include:
-- Generated 15.7 million megawatt-hours and produced approximately
35 billion cubic feet of gas and gas equivalents at costs well below
market prices during the quarter.
-- Signed a three-year power sales agreement with the Tennessee Valley
Authority (TVA) to supply TVA with an option to purchase up to
500 megawatts per day of baseload capacity from Calpine's 794-megawatt
Decatur Energy Center beginning in June 2004;
-- Secured several mid- and long-term power sales contracts with major
wholesale customers, increasing Calpine's total contractual sales since
December 2001 to approximately 40 customers and nearly 3,300 megawatts;
and
-- Completed construction of six new natural gas-fired energy centers and
two peaking units, adding over 3,800 megawatts of capacity; new
facilities are now providing clean, reliable electricity for power
customers in New York, California, Alabama, Illinois, Texas and British
Columbia; since January 2002, Calpine has added approximately 5,300
megawatts of low-cost capacity.
Calpine Energy Services
Calpine Energy Services (CES) continues to execute on the company's business model of entering long-term contracts directly with load-serving entities. CES remains focused on securing low-cost fuel to supply Calpine's generating plants, selling electricity from its generating assets and optimizing the company's portfolio.
Calpine currently has 125 power sales contracts in place with 80 major wholesale and industrial customers. These contracts represent $6.6 billion of above market value when discounted at 9% and have a seven-year weighted average life. Additional detailed information regarding the company's long-term contracts can be found in part under the Supplemental Data and in full on the investor relations page of the company's website at
www.calpine.com.
The company continues to evaluate joint venture alliances for its energy services group and will only move forward if such alliance will add value for Calpine.
Liquidity-Enhancing Initiatives
Calpine continues to take steps to strengthen its balance sheet and ensure sufficient liquidity for the company's revised business plans. Recent milestones since Calpine's last quarterly update include:
-- Funded and increased its two-year secured bank term loan to
$1.0 billion from $600 million and reduced the size of its secured
corporate revolving credit facilities to $1.0 billion from
$1.4 billion; and
-- Received BBB- investment grade rating on Calpine's term loan and
revolving credit facilities from Standard & Poor's; assigned
Ba3 ranking by Moody's Investors Service.
The company reiterated its policy that only those projects with long-term power sales agreements in place and which will have access to financing will move into construction. Calpine will continue to carefully manage expenditures and plans to further reduce overhead and operating costs.
The company also stated that it is carefully evaluating alternatives with its major equipment suppliers that may enable Calpine to cancel or restructure its contracts for 89 turbines. A significant component of the company's equipment currently on order consists of 112 "F-type" gas turbines for delivery between 2002 and 2007.
