An analysis of the latest wave of unbundling, re-bundling, and convergence plays in the gas-power industries.
Dan Gabaldon is a Principal in Booz Allen Hamilton's Energy group, and is based in the San Francisco office. Joe Quoyeser is a Vice President in Booz Allen Hamilton's Energy group, and is based in the Houston office.
The New Year brought turmoil to the merchant energy markets. The Enron bankruptcy, coming on the heels of the Sept. 11 tragedy, has sent a chill through the industry. The debt markets are scrutinizing the quality of earnings and mark-to-market accounting, while the equity markets have simply turned and run. Since June 30, 2001, the market capitalization of six large merchants not named Enron has fallen from $85 billion to $45 billion. At these prices, well-capitalized upstream players (e.g., BP, Shell and ExxonMobil), or the acquisitive European mega-players (RWE, E.On, EdF, Endesa, etc.), may be tempted to simply add a business line to their portfolios, via a distress sale.