Friday PM September 22nd, 2006

Former Dynegy official gets sentence reduction...Gas prices fall in Texas for seventh straight week...Houston home sales in August continue to defy national trends...

A former mid-level Dynegy accountant who received 24 years behind bars in a fraud case has been re-sentenced today to six years in prison. A federal judge in Houston re-sentenced 40-year-old Jamie Olis after an appeals court last fall threw out the original sentence--calling it unreasonable. U.S. Attorney Don DeGabrielle listened to the judge's remarks, and will be reviewing the case before deciding whether to press for another sentence.

"Given the amount of time of 292 months originally imposed and now down to 72 months is certainly eye-opening. But then I would hasten to add that the court—Judge Lake—clearly put a lot of time and effort into it. He's issued a very thorough opinion which I have yet to read, and certainly we will that opinion, and then we'll make a decision about what it is that we're going to do next. We have 30 days within which, for example, to announce if we intend to appeal the court's sentencing. But I do intend to review it, and we'll discuss with other attorneys in the office about what our decision ought to be."

Prosecutors had argued shareholder losses topped $100 million, supporting the original 24-year sentence. The defense says the government failed to prove any loss. The new sentence means that Olis has about four more years to serve. A jury in 2003 convicted him of six counts of conspiracy and wire, securities and mail fraud for his role in helping disguise a 2001 transaction called Project Alpha. The gas trading and finance scheme helped Houston-based Dynegy inflate its reported cash flow by as much as $300 million.


Hewlett-Packard's ill-fated investigation of media leaks has cost the company's chairwoman her job. Patricia Dunn resigned today--effective immediately--and is being replaced by HP chief executive Mark Hurd. The company had earlier said Dunn, who authorized the leak investigation, would step down in January, but remain a member of the board. In his first public comments on the boardroom spying scandal, Hurd called the tactics used by the company's outside investigators "very disturbing.'' He also apologized to journalists and others who were targeted by the probe.


Gas prices continue to fall across Texas for a seventh week running. The AAA Texas gas price survey released today finds the retail price of regular, self-serve gasoline averaging $2.33 per gallon statewide--12 cents less than a week ago. The national average is $2.46 per gallon, also down by 12 cents from last week. Houston's average dropped 12.8 cents to $2.24 per gallon. The state's cheapest gas is found in Corpus Christi, where it's averaging $2.14 per gallon. That's down nine cents from last week. The costliest gas remains in El Paso, where it fell nine cents to $2.55 per gallon. Auto club spokeswoman Rose Rougeau says the drop in crude oil and gasoline prices are linked to cooling international tensions, falling demand and a calm hurricane season.


Home sales in the greater Houston area in August continue to defy national trends, according to the Houston Association of Realtors. The rising number of active listings, typical for the peak summer sales season, has been offset by sales volume increasing at a faster rate year over year. Total property sales in August totaled 8,451—a 5.5 percent increase over the same month last year. Properties sold during the month reached more than $1.6 billion—a 12.8 percent increase compared to last year's more than $1.4 billion in August sales. The median home price for a single-family home reached a monthly record for August of $152,000, and the average single-family home price topped the $200,000 mark for the fourth month in a row at $200,555—increases from last year of 5.6 and 6.6 percent.


There's word that the Federal Communications Commission chairman is recommending unconditional approval of AT&T's $67 billion purchase of BellSouth. Sources familiar with the matter says Chairman Kevin Martin circulated the recommendation late yesterday, meaning a formal vote regarding the merger will likely occur at the agency's meeting on October 12th. The FCC's action is unusual in that it comes before the Justice Department has yet to decide whether the deal is in the public interest. Those who've seen the FCC recommendation say there appear to be no conditions on the sale.


Texas spinach growers and produce groups are worried the e. coli outbreak tied to California will ruin the nationwide market for the leafy green. Texas is the nation's third biggest producer of fresh-market spinach, behind California and Arizona. John McClung with the Texas Produce Association says when a crop goes through a food safety scare like this- the market is damaged for everybody. Investigators have focused the hunt for the outbreak's source to nine farms in California's Greater Salinas Valley. Nationwide, more than 150 people in at least 23 states--but not Texas--have been sickened by the outbreak. One person has died. Crystal City, near San Antonio, is the self-proclaimed "spinach capital of the world." Even boasting a statue of Popeye--the cartoon character who derives strength from the veggie--in front of City Hall.


Wall Street is starting to look seriously at the two-week old controversy surrounding Hewlett-Packard's elaborate spying program. Shares of the computer and printer maker plunged five and a-half percent Thursday in response to reports that CEO Mark Hurd knew more than was previously thought. Up to now, the stock had actually gained in value. California Attorney General Bill Lockyer and several federal agencies are looking into whether HP and its execs broke any laws in their effort to find a media leak on the company's board. A Congressional panel plans to hold a hearing next week about the company's probe and has the power to subpoena any key individuals who don't agree to appear.


Some drilling contractors today predicted stronger activity in the energy market. Industry officials who gathered in San Antonio for the International Association of Drilling Contractors continue to revise projected rig activity upward. That optimism has bled into projections for 2007, with rig operators brushing aside worries that energy companies will cut back on drilling should oil or gas prices retreat further. Lee Ahlstrom with Noble pointed out that most deepwater drilling projects remain profitable even when oil hits $30 or $40 per barrel.

Baker Hughes in Houston today reports the number rigs actively exploring for oil and natural gas in the U.S. jumped by 17 this week--to reach 1,754. One year ago the rig count stood at 1,451. Texas gained eight rigs.


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