Cadiz Inc., which is negotiating with the Metropolitan Water District to build a controversial $150-million water storage program in the Mojave Desert, said Wednesday that its losses widened in the last quarter as its interest costs rose sharply.
The Santa Monica-based company said it lost nearly $6 million, or 16 cents a share, on revenue of $23 million in the second quarter, compared with a loss of $5 million, or 14 cents, on $20.3 million in revenue in the same period a year earlier.
The overall financial strength of the company, which is led by Keith Brackpool, a political supporter of and advisor to Gov. Gray Davis, also deteriorated.
Shareholder equity, or the value of Cadiz's assets after its debt and other liabilities are subtracted, fell to $8.9 million from $17.7 million at the beginning of the year.
In 1997, that figure was as high as $50 million.
Before the financial results were released, Cadiz shares fell 5 cents to close at $4.85 in Nasdaq trading.
Among the factors in the quarterly loss was an increase in financing costs by more than $1 million, reflecting the higher price Cadiz paid to increase a crucial bank line of credit and extend it through January.
Cadiz earns most of its current revenue from farming in the Central Valley, but its prospects depend largely on the fate of the Mojave water project.
The 50-year project would allow the MWD to store as much as 1.5 million acre-feet of surplus Colorado River water in the sands under Cadiz property northeast of Palm Springs, extracting it for use during dry years.
Cadiz also would have the right to sell the water district another 1.5 million acre-feet of water from an existing aquifer underlying the parcel.
The latter element of the plan has provoked stiff opposition from critics, including Sen. Dianne Feinstein (D-Calif.), who fear that extracting so much water from the aquifer could damage the desert ecosystem.
An environmental permit expected from the Interior Department has been held up for months.
Others have questioned whether the program makes economic sense.
The MWD reminded Cadiz and Interior officials by letter last week that it is by no means committed to the project.
The district's board "has not approved its final contractual arrangements with Cadiz Inc.," the letter said, adding that the MWD was concerned that threatened cutbacks in Colorado River water supplies to California might eliminate the surplus needed to fill the storage zone and thus render the project pointless.
The MWD "will be considering whether sufficient water supplies are available on the Colorado River," the letter said.