Houston, Texas, April 23, 1997-El Paso Energy Corporation (NYSE:EPG) reported record first quarter earnings of $47 million, or $0.85 per share, up 20 percent from the year ago period. The first quarter 1997 earnings per share were based on 55.6 million average shares outstanding, including the impact of the 3.0 million shares issued in the February 1997 common equity offering. Earnings for the year ago period, adjusted for the $99 million pre-tax charge for employee separation and asset impairment, were $25 million, or $0.71 per share, based on 35.1 million shares outstanding.

Consolidated first quarter 1997 operating income more than doubled to $139 million, compared to $66 million in the year ago period adjusted for the pre-tax charge. "The first quarter of 1997 was a landmark quarter for El Paso, reflecting the first full quarter of our ownership of the Tenneco Energy assets," said William A. Wise, chairman, president, and chief executive officer of El Paso Energy. "During the quarter we also completed the restructuring of each of the company's business segments, as well as our debt reduction and recapitalization plan. These achievements, together with the Federal Energy Regulatory Commission's recent approval of the El Paso rate settlement and the Tennessee gas supply realignment cost settlement, position El Paso Energy for continued future growth."

Natural Gas Transmission Segment

The Natural Gas Transmission segment reported first quarter operating income of $142 million compared to $48 million a year ago. The first quarter 1997 results include a $62 million operating income contribution from El Paso Natural Gas and an $80 million operating income contribution from Tennessee Gas Pipeline. Total transmission segment throughput averaged 9,805 Bbtu/d, consisting of 3,684 Bbtu/d on the El Paso system and 6,121 Bbtu/d on the Tennessee system.

Field and Merchant Services Segment

Operating income at El Paso Energy Resources Company totaled $10 million in 1997 compared to $18 million in the 1996 quarter, reflecting higher gathering and processing income offset by lower marketing results.

El Paso Field Services reported record operating income of $27 million compared to $3 million a year ago. The nine-fold increase resulted from a 52 percent increase in gathering and treating volumes to 2,321 Bbtu/d and a 60 percent increase in processing volumes to 860 Bbtu/d, reflecting the addition of the new Chaco cryogenic plant and the acquisition of Cornerstone Natural Gas and the Tenneco Energy gathering and processing assets.

Due to generally declining and extremely volatile energy prices, as well as increased administrative costs from the consolidation of Tenneco Energy's marketing operations, El Paso Energy Marketing reported a first quarter 1997 operating loss of $17 million, versus a $15 million operating profit in the year ago period. Average marketed gas volumes in the quarter almost doubled to 7,292 Bbtu/d, compared with 3,700 Bbtu/d a year ago.

Corporate and Other Segment

Corporate and Other segment operating expense for the first quarter totaled $13 million, including $7 million related to discontinued operations assumed as part of the Tenneco Energy acquisition and $4 million for the Company's international project development activities. During the first quarter, the Company's international subsidiary acquired a 29 percent interest in Argentina's CAPSA, an existing electric generator and oil and gas producer, for $157 million.

El Paso Energy Corporation provides total energy solutions through four business units: El Paso Natural Gas Company, Tennessee Gas Pipeline Company, El Paso Energy Resources Company, and El Paso Energy International Company. With offices worldwide, the company has operations in interstate natural gas transmission, gas gathering and processing, energy marketing, and international energy development.

This release includes forward-looking statements and projections, made in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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. While the company makes these statements and projections in good faith, neither the company nor its management can guarantee that the anticipated future results will be achieved. Reference should be made to the company's (and its affiliates') Securities and Exchange Commission filings for additional important factors that may affect actual results.