Mirant Corporation and Dynegy Inc, whose shares have plummeted in the recent months amid regulatory investigations, reported record losses for the second quarter as energy trading collapsed and the value of power and natural-gas assets fell.
Mirant's net loss of $151 million reflected a decline in its UK electricity business. The Atlanta based company said it may have misreported $253 million in assets and liabilities last year. Houston-based Dynegy slashed its profit forecast by four fifths after a loss of $328 million in the quarter.
Dynegy and Mirant have led a collapse in energy stocks since Enron Corp.'s bankruptcy last year. Sham trades and accounting errors by Dynegy and other companies led to regulatory probes and discouraged banks from lending just as energy prices fell. Energy traders and producers have been selling assets to raise cash.
“The biggest things that killed them is that credit got tight and the profit margin from running power plants shrank,” said Timothy O'Brien, who owns Mirant securities in the $213 million he manages in the Evergreen Utility and Income Fund.