HOUSTON, TEXAS, August 8, 2002-El Paso Corporation (NYSE:EP) today announced its earnings for the second quarter of 2002, which are summarized in the table below, as well as significant progress on its strategic repositioning plan.

El Paso Corporation's second quarter 2002 pro forma earnings were $234 million, or $.44 per diluted share, which compares with pro forma earnings of $414 million, or $.79 per diluted share, in the second quarter of 2001. The company reported a second quarter 2002 loss of $45 million, or $.08 per diluted share, which included $279 million, or $.52 per diluted share, of various non-recurring items. The most significant non-recurring item was a $234-million (pre-tax), or $.29 per diluted share, ceiling test charge, primarily for Canadian oil and natural gas properties. El Paso reported a loss of $93 million, or $.18 per diluted share, for the second quarter of 2001, which included merger-related charges and other non-recurring items totaling $507 million, or $.97 per diluted share.

Pro forma second quarter earnings before interest expense and taxes (EBIT) totaled $698 million compared with $957 million in 2001. Reported second quarter 2002 EBIT was $411 million compared with $153 million last year.

"Our second quarter pro forma results from operations are a strong endorsement of our asset-rich business model and, we believe, a direct result of the hard work and dedication of our employees," said William A. Wise, chairman, president, and chief executive officer of El Paso. "Although the industry in general, and the energy trading market in particular, have been under severe pressure, our diversified mix of pipelines, production, and midstream assets has allowed us to continue to provide positive operating results. Brent Austin, our chief financial officer, and I will certify the company's financial statements with the Securities and Exchange Commission when the company files its second quarter Form 10-Q next week."

"We continue to deliver on our previously announced commitments to address the current credit and business environments. Since December, we have sold or contracted for the sale of approximately $2.5 billion of assets, issued approximately $2.5 billion of equity securities, eliminated $4 billion of ratings triggers, reduced annual operating expenses by $300 million, and implemented working capital and credit limits on our trading business. Our balance sheet is strong and improving, our liquidity has never been more solid, and our dividend is secure," Wise continued.

"Despite the significant progress the company has made, industry and capital market conditions are increasingly difficult. This environment dictates that we take additional steps to increase financial flexibility while advancing our most promising growth initiatives. Beginning in 2003, we intend to fund our capital expenditures with operating cash flow from our core businesses. To that end, we plan to reduce 2003 capital spending and sell additional non-strategic assets to reduce debt further. We are confident that these steps will further strengthen El Paso's position as North America's leading provider of natural gas services," Wise concluded.

SECOND QUARTER SEGMENT RESULTS

Pipeline Group

Second quarter pro forma EBIT for the Pipeline Group rose 3 percent from 2001 levels due to the reactivation of the Elba Island LNG facility, new expansions, and the recontracting of 1.2 billion cubic feet (Bcf) per day of capacity on the El Paso Natural Gas pipeline at full tariff rates.

The Pipeline Group continues to develop market-area expansions, most of which are designed to serve new power plants. During the second quarter, Southern Natural Gas put the first phase of its South System I expansion into service, which increases capacity to customers in Georgia and South Carolina by 140 million cubic feet (MMcf) per day. In addition, El Paso's 50-percent-owned Florida Gas Transmission completed the first two of three phases of its Phase V expansion, which added 228 MMcf per day of firm capacity for customers in Florida.

Production

El Paso Production Company's second quarter pro forma EBIT declined from 2001 levels as a result of a 6-percent decline in total production as well as higher per-unit depreciation, depletion, and amortization costs. Since the beginning of 2002, El Paso has sold assets with 1 trillion cubic feet of natural gas equivalent proved reserves, which amounts to approximately 15 percent of its total proved reserves at the beginning of 2002. The company has been able to offset much of the loss of production from these sales through a very successful drilling program, especially in South Texas and the deep shelf play in the shallow-water Gulf of Mexico. During the first six months, the company was successful on 276 out of 301 well completions for a 92-percent success rate, including a 97-percent success rate for domestic drilling. Excluding revisions and sales, the company has added 786 Bcf equivalent of proved reserves this year at an average cost of approximately $1.00 per thousand cubic feet (Mcf) equivalent.

Field Services

Field Services' second quarter 2002 pro forma EBIT was below last year's level due to the sale of Field Services' Texas intrastate natural gas transmission system to El Paso Energy Partners (NYSE:EPN) and lower processing margins. El Paso expects to complete the sale of an additional $782 million of midstream assets to EPN by year-end.

Merchant Energy

The Merchant Energy Group's pro forma second quarter EBIT declined from 2001 levels due to lower income from trading and petroleum activities. Income from El Paso's power business improved from the previous year, primarily due to the buyout of a power contract at the company's Nejapa project in El Salvador. Trading profitability declined due to weaker market fundamentals and disorderly liquidation of industry participants' positions in the trading arena. El Paso's petroleum operations were adversely affected by much lower refining margins, including continued historically low light/heavy crude differentials.

During the second quarter, El Paso Global LNG announced the development of EP Energy Bridge^TM, a new ship-based liquefied natural gas (LNG) regasification system. This technology uses proven offshore buoy technology for a flexible, environmentally sound, and cost-effective delivery of natural gas directly to coastal regions, eliminating the need for a conventional land-based terminal. This delivery system is expected to be operational and in service by 2005, and furthers El Paso's plan of becoming a leading worldwide LNG merchant and developer.

Detailed operating statistics for each of El Paso's businesses are available at www.elpaso.com in the "For Investors" section.

BALANCE SHEET AND LIQUIDITY UPDATE

El Paso announced plans today to reduce 2003 capital spending by $900 million to approximately $3.0 billion, with most of the decrease coming from exploration and production activities. In addition, El Paso intends to sell between $1.5 billion and $2 billion of additional non-strategic production, pipeline, and power assets to reduce debt further.

El Paso has already completed approximately $2.5 billion of equity financing since December 2001. The company announced or completed $2.5 billion of asset sales and implemented $300 million of cost reductions. El Paso has eliminated senior executive bonuses for 2002 and terminated certain long-term incentives for senior executives. Parent company expenses in all areas have been significantly reduced. El Paso has also scaled back its energy trading operations and personnel.

In July 2002, El Paso announced that it had completed the elimination of $4 billion in ratings triggers covering its Chaparral and Gemstone investments and its Trinity River and Clydesdale minority interest financings as part of the company's balance sheet enhancement plan.

As of July 31, 2002, El Paso had $5.8 billion in total available liquidity, comprised of $1.8 billion of cash on hand, an available $3-billion, 364-day revolving credit line, and a $1 billion multiple-year bank revolver. The company has debt maturities totaling approximately $490 million for the remainder of 2002 and $1.7 billion in 2003.

OUTLOOK

El Paso expects that it will achieve core earnings between $2.05 and $2.15 per diluted share in 2002 and $1.80 to $2.00 per share in 2003. These estimates assume a NYMEX natural gas price of $3.36 per Mcf ($3.17 per million British thermal units (MMBtu)) for the second half of 2002 and a $3.82 per Mcf ($3.60 per MMBtu) for 2003. The earnings estimates also reflect lower natural gas and liquids production in 2003 given the capital spending reduction, reduced expectations for trading operations, and loss of income from the impact of asset sales.

CONFERENCE CALL REMINDER

El Paso Corporation has scheduled a conference call today at 10:00 a.m. Eastern Daylight Time, 9:00 a.m. Central Daylight Time to discuss its financial results. To access the call, dial (973) 582-2729 ten minutes prior to the call. A live webcast of the call also will be available online through our Web site at www.elpaso.com in the "For Investors" section. During the conference call and webcast, management will refer to charts that will be posted on our Web site. The charts will be available 15 minutes before the call and can be accessed in the "For Investors" section.

A telephone replay of the conference call will be available through August 15, 2002 by dialing (973) 341-3080 (access code 3390780). A replay also can be accessed online through our Web site in the "For Investors" section.

El Paso Corporation is North America's leading provider of natural gas services. The company has core businesses in natural gas production, gathering and processing, and transmission, as well as liquefied natural gas transport and receiving, petroleum logistics, power generation, and merchant energy services. El Paso Corporation, rich in assets and fully integrated across the natural gas value chain, is committed to developing new supplies and technologies to deliver energy to communities around the world. For more information, visit www.elpaso.com.

View the attached financial tables by clicking here.

View the detailed operating statistics information by clicking here.

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, including, without limitation, changes in commodity prices for oil, natural gas, and power; general economic and weather conditions in geographic regions or markets served by El Paso Corporation and its affiliates, or where operations of the company and its affiliates are located; the uncertainties associated with governmental regulation; political and currency risks associated with international operations of the company and its affiliates; inability to realize anticipated synergies and cost savings associated with mergers and acquisitions on a timely basis; difficulty in integration of the operations of previously acquired companies, 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.