Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.ibd From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: Companies In The News Date: Wed, 18 Nov 92 12:51:16 EST Message-ID: <9.1992Nov18.125116@AmeriCast.com> 11/18/92 TITLE Companies In The News o#m#California Energy Shows Strong Backing For New Projects John A. Jones California Energy Co. is building on its success in generating electricity from geothermal steam wells, developing several new geothermal projects and preparing to build its first natural gas- fired power plant. California Energy's Coso Project in the Mojave Desert produced record flows of electricity last summer, boosting nine- month earnings. Investor's Business Daily, Energy - Alternate Sources ranks 31st, based on six-month stock-price performance with added weight given to recent months. In this series, leading companies within the group are reviewed. Last year, the company finished moving its headquarters from San Francisco to Omaha, Neb., which is also the home of its largest shareholder, Peter Kiewit Sons'#m#cq#m# Inc., a diversified construction and mining company. Kiewit re- cently increased its stake in California Energy to 37% from 34%. The move cut the company's operating costs and also brought it closer to Kiewit, a strong financial backer. Early this year, Walter Scott, chairman and chief executive of Kiewit, became chairman and chief executive of California Energy. Richard Jaros, a Kiewit vice president, became president and chief operating officer of California Energy, in charge of day-to-day operations. Jaros reported that during the third quarter, the Coso geothermal projects set a new record for summer peak electricity production. "This enabled the projects to earn, for the first time, the max- imum capacity and bonus payments available under their contracts with Southern California Edison Co.," Jaros said. Third-quarter earnings rose 15% to 39 cents a share from 34 cents a year earlier. Net income (before dividends on preferred stock) was up 23% to $15.7 million from $12.8 million. Revenue rose 9% to $41.1 million from $37.7 million. For the nine months to Sept. 30, earnings rose 22% to 73 cents a share from 60 cents a year earlier. Net income was up 46% to $30.6 million from $20.9 million. Nine-month revenue rose 12% to $98.1 million from $87.6 million. "Our most important asset now is our Coso Project, which is running at record levels of output," Jaros told Investor's Business Daily. "We are embarking on increased dril- ling to bring those levels of production up even more." More Drilling Boosted Output Jaros said the company raised Coso's output by drilling more steam wells and by improved reinjection, returning fluid under- ground to prolong the life of the wells. Last month, the company proposed refinancing the debt of its Coso Project partnerships with the U.S. Navy and the Bureau of Land Management. California Energy operates and owns about 50% of the three partnerships, which brought about 90% of its 1991 revenue. The plan calls for a private issue of secured notes, which have received investment-grade ratings from three major agencies. Proceeds of about $554 million will be used to retire existing bank debt at more favorable rates. Jaros said he believes this will be the first investment-grade project financing of its kind, "and it will be very positive for our company and for the industry." This is important because the company plans to arrange separate financing for each of its future projects. In July, California Energy acquired a 50-megawatt natural gas-fired cogeneration pro- ject in Yuma, Ariz., from Bonneville Pacific Corp., intending to finance it and begin construction early next year. The plan is to sell power to San Diego Gas & Electric Co. Total cost will be about $60 million. Jaros said the company plans to develop more natural gas plants in the future, as well as exploring for new geothermal fields. Studying Plant In Oregon California Energy has started environmental studies for a 30- megawatt pilot geothermal plant in Oregon for the Bonneville Power Administration and hopes to start financing construction in 18 months. Development costs will be about $90 million, Jaros said, but the project could include more plants after the pilot is completed. He said the company also is progressing on an international development in partnership with Tenaska Inc., a privately held company, of a gas-fired plant of up to 500 megawatts capacity in an undisclosed location. Jaros said the federal Energy Act signed recently by President Bush will ease past restrictions on independent power providers like California Energy, making it easier for them to compete in larger projects. Stephen L. Schweich of Alex. Brown & Sons Inc. said income from the Coso Project should continue to grow 10% to 12% a year. He believes the company also will be successful in developing more independent power projects. "They have a very strong management team, led by Rich Jaros, with a good deal of experience in pro- ject development," Schweich said. "And the company is extremely well-financed, because Peter Kiewit & Sons has made it very clear to the investment community that they will provide financial backing for California Energy." Thursday: John Wiley & Sons This article is copyright 1992 Investors Business Daily. Redis- tribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM