Mirant reorganized entity $22 million November loss stems from balancing fuel oil inventory

By Caroline Salls

Pittsburgh, Dec. 20 - Mirant North America, LLC, an entity to be formed under Mirant Corp.'s plan of reorganization, reported a $22 million November loss from reducing its fuel oil inventory balance to market value as of Nov. 30 after it significantly increased its inventory in preparation for winter electricity demand levels, according to an 8-K filing with the Securities and Exchange Commission.

Unrealized gains for November related to oil financial swaps were $14 million.

Because of the reduction in the carrying value of the oil in the current period, a lower expense will be recognized as the oil is used by the company's generating facilities in the next few months, the filing said.

In addition, the company said it will realize the gains or losses associated with the financial swaps that it previously entered into in order to hedge its exposure to oil prices.

As a result, the cumulative cost incurred for the oil will be the fixed prices at which the company entered into financial swaps to hedge its exposure.

Mirant, an Atlanta-based power company, filed for bankruptcy July 14, 2003 in the U.S. Bankruptcy Court for the Northern District of Texas. Its Chapter 11 case number is 03-46590.

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