El Paso Corp. (ticker: EP, exchange: New York Stock Exchange (.N))
News Release -
26-Feb-2009
El Paso Corporation Reports Fourth Quarter and Full-Year Financial and Operational ResultsHOUSTON, TX, Feb 26, 2009 (MARKET WIRE via COMTEX) -- El Paso Corporation (NYSE: EP) is today reporting fourth quarter and
full-year 2008 financial and operational results for the company.
- $1.31 adjusted full-year diluted earnings per share (EPS) versus $1.00
in 2007
- $1.24 reported loss per diluted share from continuing operations for
2008 versus $0.57 reported income in 2007
- $0.21 adjusted fourth quarter 2008 diluted EPS versus $0.27 in 2007
- Fourth quarter 2008 reported loss of $2.43 per diluted share versus
earnings of $0.21 in 2007
- Pipeline fourth quarter 2008 earnings before interest expense and
taxes (EBIT) and throughput up 4 percent and 1 percent, respectively, from
fourth quarter 2007
- Exploration & Production (E&P) had a $2.5 billion fourth quarter 2008
EBIT loss, including $2.7 billion of pre-tax non-cash full cost ceiling
test charges, a $0.1 billion non-cash impairment related to the company's
investment in Four Star Oil & Gas Company (Four Star), and $0.2 billion of
mark-to-market (MTM) gains on derivative contracts not designated as
accounting hedges
- Fourth quarter production 752 million cubic feet equivalent per day
(MMcfe/d), including unconsolidated affiliate volumes of 73 MMcfe/d, which
includes production losses of 53 MMcfe/d due to Hurricane Ike
- $2.2 billion of liquidity at December 31, 2008, which has since risen
to $3.3 billion
"We had very solid results in 2008, despite a challenging business
environment during the second half of the year," said Doug Foshee,
president and chief executive officer of El Paso Corporation. "We
were successful on the pipeline expansion front, increasing our
committed project backlog to $8 billion and placing seven pipeline
projects in service. At the same time, we recorded our best-ever
safety performance. On the E&P side, we had success with the drill
bit. Prior to revisions, we added 595 Bcfe to our proved reserves
and reduced our reserve replacement costs to $2.87 per Mcfe."
Foshee added, "We also acted aggressively to meet the challenges of
the current economic environment by adding $1.9 billion of liquidity
over the past several months primarily through debt offerings, a new
revolving credit facility, and non-core asset sales."
A summary of financial results for the quarters and 12-month periods
ended December 31, 2008 and 2007 is as follows:
Financial Results Quarters Ended Twelve Months Ended
December 31, December 31,
($ in millions, except per share 2008 2007 2008 2007
amounts) -------- --------- -------- ---------
Income (loss) from continuing
operations $ (1,678) $ 160 $ (823) $ 436
Discontinued operations, net of
income taxes - - - 674
-------- --------- -------- ---------
Net income (loss) (1,678) 160 (823) 1,110
Preferred stock dividends 9 9 37 37
-------- --------- -------- ---------
Net income (loss) available to
common stockholders $ (1,687) $ 151 $ (860) $ 1,073
======== ========= ======== =========
Basic per common share amounts
Income (loss) from continuing
operations $ (2.43) $ 0.22 $ (1.24) $ 0.57
Discontinued operations - - - 0.97
-------- --------- -------- ---------
Net income (loss) per common
share $ (2.43) $ 0.22 $ (1.24) $ 1.54
======== ========= ======== =========
Diluted per common share amounts
Income (loss) from continuing
operations $ (2.43) $ 0.21 $ (1.24) $ 0.57
Discontinued operations - - - 0.96
-------- --------- -------- ---------
Net income (loss) per common
share $ (2.43) $ 0.21 $ (1.24) $ 1.53
======== ========= ======== =========
Items Impacting Quarterly Results
Fourth quarter 2008 and 2007 net income includes the following items:
Fourth Quarter 2008
Before After Diluted
($ millions, except per share amounts) Tax Tax EPS
-------- -------- --------
Net income (loss) available to common
stockholders $ (1,687) $ (2.43)
Adjustments(1)
Ceiling test charges and Four Star
impairment $ 2,785 $ 2,015 $ 2.90
Change in fair value of power contracts (37) (24) (0.03)
Change in fair value of legacy
indemnification (16) (10) (0.01)
Legal restructuring benefit - (40) (0.06)
MTM impact of E&P derivatives(2) (164) (105) (0.15)
Change in fair value of production-related
derivatives in Marketing (9) (6) (0.01)
--------
Adjusted EPS -- continuing operations(3) $ 0.21
========
(1) Assumes a 36 percent tax rate, except for international portion of
ceiling test charges, and 694 million diluted shares
(2) Consists of $201 million of MTM gains on derivatives, adjusted for
$37 million of realized gains from cash settlements
(3) Based upon 754 million fully diluted shares and includes income
impact from dilutive securities
Fourth Quarter 2007
Before After Diluted
($ millions, except per share amounts) Tax Tax EPS
-------- -------- --------
Net income available to common stockholders $ 151 $ 0.21
Adjustments(1)
Change in fair value of power contracts $ 34 $ 22 $ 0.03
Brazilian power impairments 8 8 0.01
Change in fair value of production-related
derivatives in Marketing 26 17 0.02
--------
Adjusted EPS -- continuing operations(2) $ 0.27
========
(1) Assumes a 36 percent tax rate, except for Brazilian power impairments,
and 759 million diluted shares
(2) Based upon 759 million fully diluted shares and includes income impact
from dilutive securities
Financial Results - Twelve Months Ended December 31, 2008
For the 12 months ended December 31, 2008, El Paso reported a net
loss available to common stockholders of $860 million, or $1.24 per
diluted share, compared with net income of $1,073 million, or $1.53
per diluted share, for full-year 2007, which includes a $674 million,
or $0.96 per share, gain on the sale of ANR and related assets.
Earnings for 2008 and 2007, after adjusting for the impacts of
production-related derivatives, ceiling test charges and other items,
were $1.31 and $1.00 per diluted share, respectively. A schedule of
items affecting annual results is listed as an appendix to this
release.
Business Unit Financial Update
Segment EBIT Results Quarters Ended Twelve Months Ended
December 31, December 31,
($ in millions) 2008 2007 2008 2007
-------- -------- -------- --------
Pipeline Group $ 319 $ 308 $ 1,273 $ 1,265
Exploration and Production (2,526) 263 (1,448) 909
Marketing 27 (64) (104) (202)
Power (3) (4) 1 (37)
Corporate and Other 49 (20) 124 (283)
-------- -------- -------- --------
$ (2,134) $ 483 $ (154) $ 1,652
======== ======== ======== ========
Pipeline Group
The Pipeline Group's EBIT for the quarter ended December 31, 2008 was
$319 million, compared with $308 million for the same period in 2007.
EBIT before minority interest associated with El Paso Pipeline
Partners, L.P. (NYSE: EPB), which completed its initial public
offering in November 2007, was $330 million, a 6 percent increase
from 2007 levels. Fourth quarter 2008 results benefited from higher
reservation revenues due to several expansion projects that went into
service in late 2007 and 2008 and additional capacity sales, offset
by an $18 million unfavorable impact related to higher maintenance
costs caused by Hurricanes Ike and Gustav. El Paso expects to incur
additional hurricane repair costs in 2009.
Pipeline Group Results Quarters Ended
December 31,
($ in millions) 2008 2007
-------- --------
EBIT before minority interest $ 330 $ 311
Minority interest (11) (3)
-------- --------
EBIT $ 319 $ 308
DD&A $ 100 $ 94
Total throughput (BBtu/d)(1) 19,067 18,797
(1) Includes proportionate share of jointly owned pipelines
Exploration and Production
The Exploration and Production segment reported an EBIT loss of $2.5
billion for the quarter ended December 31, 2008, compared with EBIT
of $263 million for the same period in 2007. Fourth quarter 2008
EBIT includes $2.7 billion of non-cash full cost ceiling test charges
in the company's domestic and Brazilian full cost pools, which was
based on the December 31, 2008 spot natural gas and oil prices, as
well as a $125 million non-cash impairment related to the company's
investment in Four Star. Excluding the $2.8 billion of non-cash
fourth quarter charges, EBIT decreased approximately $4 million
compared to the same period in 2007. The decrease was primarily due
to lower production volumes and lower realized commodity prices,
partially offset by MTM gains associated with derivative hedging
contracts and lower DD&A expense. Fourth quarter 2008 production
volumes averaged 752 MMcfe/d, including 73 MMcfe/d of unconsolidated
affiliate volumes. Production volumes were negatively impacted by the
loss of 53 MMcfe/d due to Hurricane Ike. Fourth quarter 2007
production volumes averaged 924 MMcfe/d, including 77 MMcfe/d of
unconsolidated affiliate volumes. Fourth quarter 2007 production
volumes also included 110 MMcfe/d associated with properties sold in
the first quarter of 2008. Total per-unit cash operating costs
increased to an average of $2.09 per thousand cubic feet equivalent
(Mcfe) in fourth quarter 2008, compared with $1.83 per Mcfe for the
same 2007 period due to lower production volumes, partially offset by
lower cash operating costs.
Exploration and Production Results Quarters Ended
December 31,
($ in millions, except price and unit cost amounts) 2008 2007
-------- --------
Natural gas, oil, condensate and NGL revenue $ 411 $ 631
Changes in fair value of derivative contracts(1) 201 6
Other revenues 11 8
-------- --------
Total operating revenues $ 623 $ 645
Operating expenses (3,016) (393)
Other income (expenses)(2) (133) 11
-------- --------
EBIT $ (2,526) $ 263
DD&A $ 199 $ 227
Consolidated volumes:
Natural gas sales volumes (MMcf/d) 587 708
Oil, condensate, and NGL sales volumes (MBbls/d) 15 23
Total consolidated equivalent sales volumes (MMcfe/d) 679 847
Four Star total equivalent sales volumes (MMcfe/d)(3) 73 77
Weighted average realized prices including hedges
Natural gas ($/Mcf) $ 6.26 $ 7.16
Oil, condensate, and NGL ($/Bbl) $ 51.19 $ 77.47
Transportation costs
Natural gas ($/Mcf) $ 0.28 $ 0.24
Oil, condensate, and NGL ($/Bbl) $ 0.94 $ 0.96
Per-unit costs ($/Mcfe)
DD&A $ 3.19 $ 2.91
Cash operating cost(4) $ 2.09 $ 1.83
(1) Represents the income effect of contracts not designated as accounting
hedges
(2) 2008 includes a $125 million non-cash impairment of the company's
investment in Four Star
(3) Four Star is an equity investment. Amounts disclosed represent the
company's proportionate share
(4) Includes direct lifting costs, production taxes, G&A expenses, and
taxes other than production and income
Hedge Positions
As of February 23, 2009, El Paso had derivative positions that
provide price protection for approximately 75 percent of its estimated
2009 domestic natural gas production. The natural gas positions have
an average floor price of $9.02 per million British thermal unit
(MMBtu) on 176 trillion British thermal units (TBtu) and an average
ceiling price of $14.97 per MMBtu on 151 TBtu. The company has
fixed-price hedges on 1.5 million barrels with an average price of
$45.00 per barrel. In February, the company monetized its 3.1
million barrels of 2009 fixed price oil swaps ($110 per barrel) for
approximately $186 million. For 2010, El Paso has natural gas
positions that provide an average floor price of $6.79 per MMBtu on
47 TBtu. Further information on the company's hedging activities
will be available in El Paso's 2008 Form 10-K.
Other Operations
Marketing
The Marketing segment reported EBIT of $27 million for the quarter
ended December 31, 2008, compared with an EBIT loss of $64 million for
the same period in 2007. Changes in the fair value of derivatives
intended to manage the price risk of the company's natural gas and
oil production resulted in a 2008 fourth quarter gain of $9 million
compared to a 2007 fourth quarter loss of $26 million. Fourth
quarter 2008 also includes a $37 million MTM gain on remaining
Pennsylvania-New Jersey-Maryland power contracts, compared with a
fourth quarter 2007 loss of $34 million.
Power
The Power segment reported an EBIT loss of $3 million for the quarter
ended December 31, 2008, compared with an EBIT loss of $4 million for
the same period in 2007. Fourth quarter 2007 results included
impairments of $8 million on the company's Manaus and Rio Negro power
plants in Brazil, which were transferred to the power purchaser on
January 15, 2008. During the first quarter of 2009, El Paso closed
on the sale of its interest in the Porto Velho power generation
facility in Brazil for $178 million, completing the sale of all of
its power assets in Brazil. El Paso received $100 million in cash
and $78 million in notes.
Corporate and Other
During the fourth quarter of 2008, Corporate and Other reported EBIT
of $49 million, compared with an EBIT loss of $20 million for the
same period in 2007. Fourth quarter 2008 results were impacted by a
gain of approximately $16 million on the sale of the company's South
Boston terminal and a MTM gain of $16 million related to changes in
fair value of a legacy indemnification from the sale of an ammonia
facility.
Detailed operating statistics for each of El Paso's businesses will
be posted at www.elpaso.com in the Investors section.
Webcast Information
El Paso Corporation has scheduled a live webcast of a review of its
2008 results and guidance for 2009 on February 26, 2009, beginning at
10 a.m. Eastern Time, 9 a.m. Central Time, which may be accessed
online through El Paso's Web site at www.elpaso.com in the Investors
section. During the webcast, management will refer to slides that
will be posted on the Web site. The slides will be available one hour
before the webcast and can be accessed in the Investors section. A
limited number of telephone lines will also be available to
participants by dialing (888) 710-3574 (conference ID # 85245286) 10
minutes prior to the start of the webcast.
A replay of the webcast will be available online through the
company's Web site in the Investors section. A telephone audio
replay will be also available through March 5, 2009, by dialing (800)
642-1687 (conference ID # 85245286). If you have any questions
regarding this procedure, please contact Margie Fox at (713)
420-2903.
Disclosure of Non-GAAP Financial Measures
The SEC's Regulation G applies to any public disclosure or release of
material information that includes a non-GAAP financial measure. In
the event of such a disclosure or release, Regulation G requires (i)
the presentation of the most directly comparable financial measure
calculated and presented in accordance with GAAP and (ii) a
reconciliation of the differences between the non-GAAP financial
measure presented and the most directly comparable financial measure
calculated and presented in accordance with GAAP. The required
presentations and reconciliations are attached, or included in the
body of this release. Additional detail regarding non-GAAP financial
measures can be reviewed in El Paso's full operating statistics,
which will be posted at www.elpaso.com in the Investors section.
El Paso uses the non-GAAP financial measure "earnings before interest
expense and income taxes" or "EBIT" to assess the operating results
and effectiveness of the company and its business segments. The
company defines EBIT as net income (loss) adjusted for (i) items that
do not impact its income (loss) from continuing operations, such as
extraordinary items and discontinued operations; (ii) income taxes;
and (iii) interest and debt expense. The company excludes interest
and debt expense so that investors may evaluate the company's
operating results without regard to its financing methods or capital
structure. El Paso's business operations consist of both consolidated
businesses as well as investments in unconsolidated affiliates. As a
result, the company believes that EBIT, which includes the results of
both these consolidated and unconsolidated operations, is useful to
its investors because it allows them to evaluate more effectively the
performance of all of El Paso's businesses and investments.
Exploration and Production per-unit total cash costs or cash
operating costs equal total operating expenses less DD&A,
transportation costs, ceiling test charges, and cost of products and
services divided by total production. It is a valuable measure of
operating efficiency. For 2008, Adjusted EPS is earnings per share
from continuing operations excluding the gain or loss related to the
change in fair value of an indemnification from the sale of an
ammonia plant in 2005, the gain related to an adjustment of the
liability for indemnification of medical benefits for retirees of the
Case Corporation, the gain related to the disposition of a portion of
the company's investment in its telecommunications business, changes
in fair value of power contracts, changes in fair value of the
production-related derivatives in Marketing, impact of mark-to-market
E&P derivatives, ceiling test charges and Four Star impairment, other
legacy litigation adjustments, legal restructuring benefit, and the
effect of the change in the number of diluted shares. For 2007,
Adjusted EPS is earnings per share from continuing operations
excluding changes in fair value of production-related derivatives in
Marketing, the loss related to Brazilian power impairments, changes
in the fair value of power contracts, the gain related to the crude
oil trading liability, the loss related to an adjustment of the
liability for indemnification of medical benefits for retirees of the
Case Corporation, debt repurchase costs, and the effect of the change
in the number of diluted shares. Adjusted EPS is useful in analyzing
the company's on-going earnings potential.
El Paso believes that the non-GAAP financial measures described above
are also useful to investors because these measurements are used by
many companies in the industry as a measurement of operating and
financial performance and are commonly employed by financial analysts
and others to evaluate the operating and financial performance of the
company and its business segments and to compare the operating and
financial performance of the company and its business segments with
the performance of other companies within the industry.
These non-GAAP financial measures may not be comparable to similarly
titled measurements used by other companies and should not be used as
a substitute for net income, earnings per share or other GAAP
operating measurements.
El Paso Corporation provides natural gas and related energy products
in a safe, efficient, and dependable manner. El Paso owns North
America's largest interstate natural gas pipeline system and one of
North America's largest independent natural gas producers. For more
information, visit www.elpaso.com.
Cautionary Statement Regarding Forward-Looking Statements
This release includes certain forward-looking statements and
projections. The company has made every reasonable effort to ensure
that the information and assumptions on which these statements and
projections are based are current, reasonable, and complete. However,
a variety of factors could cause actual results to differ materially
from the projections, anticipated results or other expectations
expressed in this release, including, without limitation, changes in
unaudited and/or unreviewed financial information; our ability to
meet our 2009 debt maturities; volatility in, and access to, the
capital markets; our ability to implement and achieve our objectives
in our 2009 plan, including achieving our earnings and cash flow
targets; the effects of any changes in accounting rules and guidance;
our ability to meet production volume targets in our Exploration and
Production segment; our ability to comply with the covenants in our
various financing documents; our ability to obtain necessary
governmental approvals for proposed pipeline and E&P projects and our
ability to successfully construct and operate such projects; the
risks associated with recontracting of transportation commitments by
our pipelines; regulatory uncertainties associated with pipeline rate
cases; actions by the credit rating agencies; the successful close of
our financing transactions; our ability to close asset sales, as well
as transactions with partners on one or more of our expansion
projects that are included in the plan on a timely basis; credit and
performance risk of our lenders, trading counterparties, customers,
vendors and suppliers ;changes in commodity prices and basis
differentials for oil, natural gas, and power; our ability to obtain
targeted cost savings in our businesses; inability to realize
anticipated synergies and cost savings on a timely basis or at all;
general economic and weather conditions in geographic regions or
markets served by the company and its affiliates, or where operations
of the company and its affiliates are located, including the risk of
a global recession and negative impact on natural gas demand; the
uncertainties associated with governmental regulation; political and
currency risks associated with international operations of the
company and its affiliates; competition; and other factors described
in the company's (and its affiliates') Securities and Exchange
Commission filings. While the company makes these statements and
projections in good faith, neither the company nor its management can
guarantee that anticipated future results will be achieved. Reference
must be made to those filings for additional important factors that
may affect actual results. The company assumes no obligation to
publicly update or revise any forward-looking statements made herein
or any other forward-looking statements made by the company, whether
as a result of new information, future events, or otherwise.
Certain of the production information in this press release include
the production attributable to El Paso's 49 percent interest in Four
Star Oil & Gas Company ("Four Star"). El Paso's Supplemental Oil and
Gas disclosures, which are included in its Annual Report on Form
10-K, reflect its proportionate share of the proved reserves of Four
Star separate from its consolidated proved reserves. In addition, the
proved reserves attributable to its proportionate share of Four Star
represent estimates prepared by El Paso and not those of Four
Star.
Appendix to El Paso Corporation February 26, 2009 Earnings
Press Release
Items Impacting full year results
Twelve Months Ended December 31, 2008
Before After Diluted
($ millions, except per share amounts) Tax Tax EPS
-------- -------- --------
Net income (loss) available to common
stockholders $ (860) $ (1.24)
Adjustments(1)
Ceiling test charges and Four Star
impairment $ 2,794 $ 2,024 $ 2.90
Change in fair value of power contracts 46 29 0.04
Change in fair value of legacy
indemnification 30 19 0.03
Case Corporation indemnification (65) (27) (0.04)
Other legacy litigation adjustments (23) (26) (0.03)
Gain on sale of portion of
telecommunications business (18) (12) (0.01)
Legal restructuring benefit - (40) (0.06)
Effect of change in number of
diluted shares - - (0.06)
Change in fair value of production-related
derivatives in Marketing 50 32 0.04
MTM impact of E&P derivatives(2) (287) (183) (0.26)
--------
Adjusted EPS -- continuing operations(3) $ 1.31
========
(1) Assumes a 36 percent tax rate, except for Case Corporation
indemnification, other legacy litigation adjustments, and international
portion of ceiling test charges, and 696 million diluted shares
(2) Consists of $305 million of MTM gains on derivatives, adjusted for
$18 million of realized gains from cash settlements
(3) Based upon 766 million fully diluted shares and includes income impact
from dilutive securities
Twelve Months Ended December 31, 2007
Before After Diluted
($ millions, except per share amounts) Tax Tax EPS
-------- -------- --------
Net income available to common stockholders $ 1,073 $ 1.53
Adjustments(1)
Sale of ANR and related assets $ (1,043) $ (674) $ (0.96)
Crude oil trading liability (77) (49) (0.07)
Brazilian power impairments 72 72 0.10
Change in fair value of power contracts 77 49 0.07
Case Corporation indemnification 11 7 0.01
Debt repurchase costs 291 186 0.27
Effect of change in number of diluted shares - - (0.03)
Change in fair value of production-related
derivatives in Marketing 89 57 0.08
--------
Adjusted EPS -- continuing operations(2) $ 1.00
========
(1) Assumes a 36 percent tax rate, except for Brazilian power impairments
and sale of ANR and related assets, and 699 million diluted shares
(2) Based upon 757 million fully diluted shares and includes income impact
from dilutive securities
EL PASO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per common share amounts)
(UNAUDITED)
Quarters Ended Twelve Months Ended
December 31, December 31,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
Operating revenues $ 1,343 $ 1,262 $ 5,363 $ 4,648
Operating expenses
Cost of products and services 50 75 245 245
Operation and maintenance 316 355 1,190 1,333
Ceiling test charges 2,661 - 2,669 -
Depreciation, depletion and
amortization 302 326 1,205 1,176
Taxes, other than income taxes 54 64 284 249
-------- -------- -------- --------
3,383 820 5,593 3,003
-------- -------- -------- --------
Operating income (loss) (2,040) 442 (230) 1,645
Earnings (loss) from unconsolidated
affiliates (93) 26 48 101
Loss on debt extinguishment - (4) - (291)
Other income, net 10 24 62 203
Minority Interests (11) (5) (34) (6)
-------- -------- -------- --------
(94) 41 76 7
-------- -------- -------- --------
Earnings (loss) before interest
expense, income taxes, and other
charges (2,134) 483 (154) 1,652
Interest and debt expense (239) (252) (914) (994)
-------- -------- -------- --------
Income (loss) before income taxes
from continuing operations (2,373) 231 (1,068) 658
Income tax expense (benefit) (695) 71 (245) 222
-------- -------- -------- --------
Income (loss) from continuing
operations (1,678) 160 (823) 436
Discontinued operations, net of
income taxes - - - 674
-------- -------- -------- --------
Net income (loss) (1,678) 160 (823) 1,110
Preferred stock dividends 9 9 37 37
-------- -------- -------- --------
Net income (loss) available to
common stockholders $ (1,687) $ 151 $ (860) $ 1,073
======== ======== ======== ========
Earnings (loss) per common share
Basic
Income (loss) from continuing
operations $ (2.43) $ 0.22 $ (1.24) $ 0.57
Discontinued operations, net of
income taxes - - - 0.97
-------- -------- -------- --------
Net income (loss) per common
share $ (2.43) $ 0.22 $ (1.24) $ 1.54
======== ======== ======== ========
Diluted
Income (loss) from continuing
operations $ (2.43) $ 0.21 $ (1.24) $ 0.57
Discontinued operations, net of
income taxes - - - 0.96
-------- -------- -------- --------
Net income (loss) per common
share $ (2.43) $ 0.21 $ (1.24) $ 1.53
======== ======== ======== ========
Weighted average common shares
outstanding
Basic 694 697 696 696
======== ======== ======== ========
Diluted 694 759 696 699
======== ======== ======== ========
Dividends declared per common share $ 0.05 $ 0.04 $ 0.18 $ 0.16
======== ======== ======== ========
EL PASO CORPORATION
SEGMENT INFORMATION
(UNAUDITED)
2008
------------------------------
(In millions) First Second Third Fourth
------ ------ ------ ------
Operating revenues
Pipelines $ 720 $ 646 $ 628 $ 690
Exploration and Production 603 655 881 623
Marketing (57) (146) 89 31
Power - - - -
Corporate and other, including
eliminations (1) 3 (2) - (1)
------ ------ ------ ------
Consolidated total $1,269 $1,153 $1,598 $1,343
------ ------ ------ ------
Depreciation, depletion and amortization
Pipelines $ 99 $ 99 $ 97 $ 100
Exploration and Production 212 197 191 199
Marketing - - - -
Power - - - 1
Corporate and other (1) 2 2 4 2
------ ------ ------ ------
Consolidated total $ 313 $ 298 $ 292 $ 302
------ ------ ------ ------
Operating income (loss)
Pipelines $ 357 $ 263 $ 241 $ 291
Exploration and Production 226 281 528 (2,393)
Marketing (60) (154) 82 29
Power (8) (5) (5) (4)
Corporate and other (1) 35 36 (7) 37
------ ------ ------ ------
Consolidated total $ 550 $ 421 $ 839 $(2,040)
------ ------ ------ ------
Earnings (losses) before interest expense
and income taxes (EBIT)
Pipelines $ 381 $ 295 $ 278 $ 319
Exploration and Production 242 304 532 (2,526)
Marketing (60) (153) 82 27
Power (2) 12 (6) (3)
Corporate and other (1) 39 41 (5) 49
------ ------ ------ ------
Consolidated total $ 600 $ 499 $ 881 $(2,134)
------ ------ ------ ------
2007
------------------------------
(In millions) First Second Third Fourth
------ ------ ------ ------
Operating revenues
Pipelines $ 644 $ 614 $ 586 $ 650
Exploration and Production 505 575 575 645
Marketing (135) (16) (9) (59)
Power - - - -
Corporate and other, including
eliminations (1) 8 25 14 26
------ ------ ------ ------
Consolidated total $1,022 $1,198 $1,166 $1,262
------ ------ ------ ------
Depreciation, depletion and amortization
Pipelines $ 94 $ 91 $ 94 $ 94
Exploration and Production 170 189 194 227
Marketing 1 1 - 1
Power - - 1 -
Corporate and other (1) 6 5 4 4
------ ------ ------ ------
Consolidated total $ 271 $ 286 $ 293 $ 326
------ ------ ------ ------
Operating income (loss)
Pipelines $ 324 $ 276 $ 234 $ 277
Exploration and Production 177 229 228 252
Marketing (136) (20) (13) (65)
Power (5) (9) (9) (3)
Corporate and other (1) (25) (25) (23) (19)
------ ------ ------ ------
Consolidated total $ 335 $ 451 $ 417 $ 442
------ ------ ------ ------
Earnings (losses) before interest expense
and income taxes (EBIT)
Pipelines $ 364 $ 318 $ 275 $ 308
Exploration and Production 179 235 232 263
Marketing (135) 5 (8) (64)
Power 18 16 (67) (4)
Corporate and other (1) (210) (104) 51 (20)
------ ------ ------ ------
Consolidated total $ 216 $ 470 $ 483 $ 483
------ ------ ------ ------
Year-to-Date
----------------
(In millions) 2008 2007
------- -------
Operating revenues
Pipelines $ 2,684 $ 2,494
Exploration and Production 2,762 2,300
Marketing (83) (219)
Power - -
Corporate and other, including
eliminations (1) - 73
------- -------
Consolidated total $ 5,363 $ 4,648
------- -------
Depreciation, depletion and amortization
Pipelines $ 395 $ 373
Exploration and Production 799 780
Marketing - 3
Power 1 1
Corporate and other (1) 10 19
------- -------
Consolidated total $ 1,205 $ 1,176
------- -------
Operating income (loss)
Pipelines $ 1,152 $ 1,111
Exploration and Production (1,358) 886
Marketing (103) (234)
Power (22) (26)
Corporate and other (1) 101 (92)
------- -------
Consolidated total $ (230) $ 1,645
------- -------
Earnings (losses) before interest expense
and income taxes (EBIT)
Pipelines $ 1,273 $ 1,265
Exploration and Production (1,448) 909
Marketing (104) (202)
Power 1 (37)
Corporate and other (1) 124 (283)
------- -------
Consolidated total $ (154) $ 1,652
------- -------
E&P Cash Costs Fourth Quarter Fourth Quarter
2008 2007
($MM) ($/Mcfe) ($MM) ($/Mcfe)
------------------------------
Total operating expense $3,016 $48.25 $ 393 $ 5.04
Depreciation, depletion and amortization (199) (3.19) (227) (2.91)
Transportation Costs (16) (0.26) (19) (0.24)
Cost of products & services (10) (0.16) (5) (0.06)
Other (2,660) (42.55) - -
------ ------ ------ ------
Per unit cash costs(2) $ 2.09 $ 1.83
------ ------ ------ ------
Total equivalent volumes (Mmcfe)(2) 62,513 77,914
(1) Includes our corporate businesses, telecommunications business and
residual assets and liabilities of previously sold or discontinued
businesses.
(2) Excludes volumes and costs associated with equity investment in Four
Star.
Contacts:
Investor and Public Relations
Bruce L. Connery
Vice President
Office: (713) 420-5855
Media Relations
Bill Baerg
Manager
Office: (713) 420-2906
SOURCE: El Paso Corporation
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El Paso Corp.
