El Paso Corporation (NYSE: EP) is reporting today second quarter
2008 financial and operational results for the company.
Highlights:
-- $0.25 earnings per diluted share from continuing operations versus
$0.22 in 2007
-- $0.39 earnings per share after adjusting for production-related
derivatives and other items impacting second quarter 2008 results versus
$0.29 in 2007
-- Pipeline earnings before interest expense and taxes (EBIT) of $295
million
-- Exploration & Production (E&P) EBIT of $304 million -- up 29 percent
versus second quarter 2007
-- Production, including unconsolidated affiliate volumes, totaled 833
million cubic feet equivalent per day (MMcfe/d)
-- Second quarter 2008 production rose 4 percent from first quarter 2008,
pro forma for divested properties
-- Hedge positions expanded for 2009
"This quarter we continued our solid financial and operational
performance, while making tangible progress that enhances our
multi-year growth outlook," said Doug Foshee, president and chief
executive officer of El Paso Corporation. "Our Pipeline Group
secured two major new projects -- the Ruby pipeline and the TGP
Line 300 expansion, which increase our committed backlog to $8
billion -- a level that is more than two times larger than any time
in our 80-year history. In E&P, our Peoples acquisition is
delivering promising new drilling opportunities in the Texas Gulf
Coast and the Arklatex, including the Haynesville Shale. In Brazil,
our Bia/Camarupim project is accelerating with first production now
expected in the first quarter of 2009. And our Pinauna project
remains on schedule with first production expected in late 2009. In
short, the outlook for our businesses has never been better."
A summary of financial results for the three months ended June
30, 2008, and 2007 is as follows:
Financial Results Three Months Ended
June 30,
($ in millions, except per share amounts) 2008 2007
------------ -----------
Income from continuing operations $ 191 $ 169
Discontinued operations, net of income taxes - (3)
------------ -----------
Net income 191 166
Preferred stock dividends(1) - 10
------------ -----------
Net income available to common stockholders $ 191 $ 156
============ ===========
Basic per common share amounts
Income from continuing operations $ 0.27 $ 0.23
Discontinued operations - -
------------ -----------
Net income per common share $ 0.27 $ 0.23
============ ===========
Diluted per common share amounts
Income from continuing operations $ 0.25 $ 0.22
Discontinued operations - -
------------ -----------
Net income per common share $ 0.25 $ 0.22
============ ===========
(1) Due to timing of declaration, second quarter 2008 preferred stock
dividends were reflected in the first quarter.
Items Impacting Quarterly Results
Second quarter 2008 and 2007 net income includes the following
items:
Second Quarter 2008 Before After Diluted
($ millions, except per share amounts) Tax Tax EPS
------ ------ -------
Net income available to common stockholders $ 191 $ 0.25
Adjustments(1)
Change in fair value of power contracts $ 105 $ 67 $ 0.09
Change in fair value of legacy indemnification (9) (6) (0.01)
Other legacy litigation adjustments (27) (29) (0.04)
Change in fair value of production-related
derivatives in Marketing 52 33 0.04
Impact of mark-to-market (MTM) E&P derivatives(2) 61 39 0.06
-------
Adjusted EPS -- continuing operations(3) $ 0.39
=======
(1) Assumes a 36 percent tax rate, except other legacy litigation
adjustments, and 761 million diluted shares
(2) Includes $75 million of MTM losses on derivatives, adjusted for $14
million of realized losses from cash settlements
(3) Based upon 769 million fully diluted shares and includes income impact
from dilutive securities
Second Quarter 2007 Before After Diluted
($ millions, except per share amounts) Tax Tax EPS
------ ------ -------
Net income available to common stockholders $ 156 $ 0.22
Adjustments(1)
Debt repurchase costs $ 86 $ 55 $ 0.08
Change in fair value of production-related
derivatives in Marketing (9) (6) (0.01)
Discontinued operations 5 3 -
-------
Adjusted EPS -- continuing operations(2) $ 0.29
=======
(1) Assumes a 36 percent tax rate, except for discontinued operations, and
757 million diluted shares
(2) Based upon 757 million diluted shares and includes the income impact
from dilutive securities
Financial Results -- Six Months Ended June 30, 2008
For the six months ended June 30, 2008, El Paso reported net
income available to common stockholders of $391 million, or $0.54
per diluted share, compared with $776 million, or $1.11 per diluted
share, for the first six months of 2007, which includes a $674
million, or $0.96 per share, gain on the sale of ANR and related
assets. Earnings for the six-month periods of 2008 and 2007, after
adjusting for the impacts of production-related derivatives and
other items, are $0.74 and $0.47 per diluted share, respectively. A
schedule of items affecting year-to-date results is listed as an
appendix to the release.
Business Unit Financial Update
Three Months Ended
Segment EBIT Results June 30,
($ in millions) 2008 2007
--------- ---------
Pipeline Group $ 295 $ 318
Exploration and Production 304 235
Marketing (153) 5
Power 12 16
Corporate and Other 41 (104)
--------- ---------
$ 499 $ 470
========= =========
Pipeline Group
The Pipeline Group's EBIT for the three months ended June 30,
2008, was $295 million, compared with $318 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 $303 million, a 5
percent decrease from 2007 levels. Higher reservation revenues,
primarily from several expansion projects placed in-service during
2007 and 2008, were offset by higher operating costs. Higher
operating costs primarily reflect increased labor costs and
additional maintenance associated with required work on both the
Tennessee Gas and SNG systems. While higher, these costs are on
track with El Paso's 2008 plan, and the Pipeline Group is on track
to achieve its 2008 financial targets. In addition, second quarter
2007 results were favorably impacted by a $10-million contract
settlement received from a bankruptcy claim.
Three Months Ended
Pipeline Group Results June 30,
($ in millions) 2008 2007
--------- ----------
EBIT before minority interest $ 303 $ 318
Minority interest (8) -
--------- ----------
EBIT $ 295 $ 318
DD&A $ 99 $ 91
Total throughput (BBtu/d)(1) 17,981 17,161
(1) Includes proportionate share of jointly owned pipelines
Exploration and Production
The Exploration and Production segment's EBIT for the three
months ended June 30, 2008, was $304 million, compared with $235
million for the same period in 2007. The increase is primarily due
to higher realized commodity prices, partially offset by losses of
$75 million in 2008 and $5 million in 2007 related to changes in
fair value of derivative contracts not designated as accounting
hedges, higher production taxes, and higher depreciation, depletion
and amortization expense.
Second quarter 2008 production volumes averaged 833 MMcfe/d,
including 71 MMcfe/d of unconsolidated affiliate production
volumes. Second quarter 2007 production volumes averaged 857
MMcfe/d, including 71 MMcfe/d of unconsolidated affiliate
production volumes and 121 MMcfe/d related to properties that were
divested in the first quarter of 2008. On a pro forma basis,
adjusting 2007 production to include People's Energy and
eliminating properties that were divested in the first half of
2008, second quarter 2008 production grew 4 percent from the first
quarter of 2008.
Total per-unit cash operating costs increased to an average of
$2.01 per thousand cubic feet equivalent (Mcfe) in second quarter
2008 from $1.92 per Mcfe for the same 2007 period. The increase is
primarily a result of higher production taxes, which rise with
commodity prices, and was partially offset by a decrease in
controllable costs -- direct lifting costs and G&A expenses,
which were down 7 percent year-over-year.
Three Months Ended
Exploration and Production Results June 30,
($ in millions, except prices and unit cost amounts) 2008 2007
--------- ---------
Natural gas, oil, condensate and NGL revenue $ 711 $ 570
Changes in fair value of derivative contracts(1) (75) (5)
Other revenues 19 10
--------- ---------
Total Operating Revenues $ 655 $ 575
Operating Expenses (374) (346)
Other income 23 6
--------- ---------
EBIT $ 304 $ 235
DD&A $ 197 $ 189
Consolidated volumes:
Natural gas sales volumes (MMcf/d) 662 657
Oil, condensate, and NGL sales volumes (MBbls/d) 17 21
Total consolidated equivalent sales volumes (MMcfe/d) 762 786
Four Star total equivalent sales volumes (MMcfe/d)(2) 71 71
Weighted average realized prices including hedges(3)
Natural gas ($/Mcf) $ 9.53 $ 7.67
Oil, condensate, and NGL ($/Bbl) $ 90.64 $ 56.87
Transportation costs(3)
Natural gas ($/Mcf) $ 0.32 $ 0.24
Oil, condensate, and NGL ($/Bbl) $ 1.07 $ 0.68
Per-unit costs ($/Mcfe)(3)
Depreciation, depletion and amortization $ 2.84 $ 2.64
Cash operating costs(4) $ 2.01 $ 1.92
(1) Represents the income effect of contracts not designated as accounting
hedges
(2) Four Star is an equity investment. Amounts disclosed represent the
company's proportionate share.
(3) Does not include proportionate share of Four Star
(4) Includes direct lifting costs, production taxes, G&A expenses, and
taxes other than production and income
Updated Hedge Positions
As of July 15, 2008, natural gas hedges for the last six months
of 2008 have an average floor price of $7.94 per million British
thermal unit (MMBtu) and an average ceiling price of $10.23 per
MMBtu on 98 trillion British thermal units (TBtu). They are
weighted toward July through October production, with November and
December production hedged at approximately 50 percent of
anticipated production. In addition, El Paso has 1.7 million
barrels of 2008 crude oil production with an average floor price of
$79.17 per barrel and an average ceiling price of $79.54 per
barrel. El Paso's 2009 natural gas hedge position has been expanded
with the addition of collars and swaps. The 2009 natural gas hedges
have an average floor price of $9.02 per MMBtu on 176 TBtu and an
average ceiling price of $14.97 per MMBtu on 151 TBtu. El Paso has
oil hedges for 2009 on 3.4 million barrels of crude oil at an
average fixed price of $109.93 per barrel. Further information on
the company's hedging activities will be available in El Paso's
Form 10-Q.
Other Operations
Marketing
The Marketing segment reported an EBIT loss of $153 million for
the three months ended June 30, 2008, compared with an EBIT gain of
$5 million for the same period in 2007. The decline was due to a
$105-million MTM loss on the company's power obligations that
extend through 2016 in the Pennsylvania-New Jersey-Maryland (PJM)
power market and a $52-million loss in the fair value of
derivatives intended to manage the price risk of the company's
natural gas and oil production. The PJM loss was driven by higher
natural gas prices, which resulted in an 80-percent increase in
locational power price differences within the region. The actual
cash paid in the quarter relating to the basis positions was
approximately $9 million. In the second quarter of 2007, the
company realized a gain of $9 million on its production-related
derivatives and a $36 million loss on its PJM power contracts.
Additionally, 2007 included gains totaling $44 million relating to
the California power price disputes and the sale of the company's
NYMEX investment.
Power
The Power segment reported an EBIT of $12 million for the three
months ended June 30, 2008, compared with EBIT of $16 million for
the same period in 2007. Lower second quarter 2008 earnings were
primarily due to gains recognized on the sale of investments in
Asia and Central America, while 2007 earnings resulted primarily
from the Porto Velho power plant in Brazil, which is expected to be
sold later this year.
Corporate and Other
During the second quarter of 2008, Corporate and Other reported
EBIT of $41 million compared with an EBIT loss of $104 million for
the same period in 2007. Second quarter 2008 results were
positively impacted by a MTM gain related to changes in fair value
of a legacy indemnification from the sale of an ammonia facility
and an adjustment to liabilities for legacy litigation. Second
quarter 2007 results were impacted by the $86-million charge
related to debt repurchase costs.
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 its second
quarter 2008 results on August 6, 2008, beginning at 9:30 a.m.
Eastern Time, 8:30 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 #
54966501) ten 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 August 13, 2008 by dialing
(800) 642-1687 (conference ID # 54966501). If you have any
questions regarding the dial-in procedures, 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.
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, 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 cost, 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, 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 and other legacy litigation adjustments. For 2007,
Adjusted EPS is earnings per share from continuing operations
excluding changes in fair value of production-related derivatives
in Marketing, and debt repurchase costs. 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 implement and achieve our objectives in
our 2008 plan, including achieving our earnings and cash flow
targets; changes in reserve estimates based upon internal and
third-party reserve analyses; the effects of any changes in
accounting rules and guidance; our ability to meet production
volume targets in our Exploration and Production segment;
uncertainties and potential consequences associated with the
outcome of governmental investigations; outcome of litigation; our
ability to comply with the covenants in our various financing
documents; our ability to obtain necessary governmental approvals
for proposed pipeline 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 our announced asset
sales on a timely basis; changes in commodity prices and basis
differentials for oil, natural gas, and power; inability to realize
anticipated synergies and cost savings associated with
restructurings and divestitures 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; 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 August 6, 2008 Earnings Press Release
Items Impacting year-to-date results
Six Months Ended 2008 Before After Diluted
($ millions, except per share amounts) Tax Tax EPS
------ ------ -------
Net income available to common stockholders $ 391 $ 0.54
Adjustments(1)
Change in fair value of power contracts $ 146 $ 93 $ 0.12
Change in fair value of legacy indemnification 34 22 0.03
Case Corporation indemnification (65) (27) (0.04)
Gain on sale of portion of telecommunications
business (18) (12) (0.01)
Other legacy litigation adjustments (27) (29) (0.04)
Change in fair value of production-related
derivatives in Marketing 73 47 0.06
Impact of MTM E&P derivatives(2) 92 59 0.08
-------
Adjusted EPS -- continuing operations(3) $ 0.74
=======
(1) Assumes a 36 percent tax rate, except for Case Corporation
indemnification and other legacy litigation adjustments, and 760
million diluted shares
(2) Includes $110 million of MTM losses on derivatives, adjusted for $18
million of realized losses from cash settlements
(3) Based upon 768 million fully diluted shares and includes the income
impact from dilutive securities
Six Months Ended 2007 ($ millions, except per Before After Diluted
share amounts) Tax Tax EPS
------ ------ -------
Net income available to common stockholders $ 776 $ 1.11
Adjustments(1)
Debt repurchase costs $ 287 $ 184 $ 0.26
Change in fair value of production-related
derivatives in Marketing 78 50 0.07
Sale of ANR and related assets (1,043) (674) (0.96)
Effect of change in number of diluted shares(2) (0.01)
-------
Adjusted EPS -- continuing operations(2) $ 0.47
=======
(1) Assumes a 36 percent tax rate, except for discontinued operations, and
699 million diluted shares
(2) Based upon 757 million diluted shares and includes income impact from
dilutive securities
Reconciliation of Pro Forma Production Volumes
Production Volumes Three Months Ended
June 30, March 31, June 30,
(Equivalents, Mmcfe/d) 2007 2008 2008
---------- ---------- ----------
Total consolidated volumes 786 811 762
Proportionate share of Four Star 71 75 71
---------- ---------- ----------
Total volumes including Four Star 857 886 833
Less volumes from divested properties 121 88 3
---------- ---------- ----------
Pro forma production volumes 736 798 830
========== ========== ==========
EL PASO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per common share amounts)
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
---------------- ----------------
2008 2007 2008 2007
------- ------- ------- -------
Operating revenues $ 1,153 $ 1,198 $ 2,422 $ 2,220
Operating expenses
Cost of products and services 71 60 127 115
Operation and maintenance 282 329 553 630
Depreciation, depletion and
amortization 298 286 611 557
Taxes, other than income taxes 81 72 160 132
------- ------- ------- -------
732 747 1,451 1,434
------- ------- ------- -------
Operating income 421 451 971 786
Earnings from unconsolidated affiliates 52 44 89 81
Loss on debt extinguishment - (86) - (287)
Other income, net 33 60 55 106
Minority Interest (7) 1 (16) -
------- ------- ------- -------
78 19 128 (100)
------- ------- ------- -------
Earnings before interest expense,
income taxes, and other charges 499 470 1,099 686
Interest and debt expense (221) (231) (454) (514)
------- ------- ------- -------
Preferred interests of consolidated
subsidiaries - - - -
------- ------- ------- -------
Income before income taxes 278 239 645 172
Income taxes 87 70 235 51
------- ------- ------- -------
Income from continuing operations 191 169 410 121
Discontinued operations, net of income
taxes - (3) - 674
------- ------- ------- -------
Net income 191 166 410 795
Preferred stock dividends (1) - 10 19 19
------- ------- ------- -------
Net income available to common
stockholders $ 191 $ 156 $ 391 $ 776
======= ======= ======= =======
Earnings per common share
Basic
Income from continuing operations $ 0.27 $ 0.23 $ 0.56 $ 0.15
Discontinued operations, net of
income taxes - - - 0.97
------- ------- ------- -------
Net income per common share $ 0.27 $ 0.23 $ 0.56 $ 1.12
======= ======= ======= =======
Diluted
Income from continuing operations $ 0.25 $ 0.22 $ 0.54 $ 0.15
Discontinued operations, net of
income taxes - - - 0.96
------- ------- ------- -------
Net income per common share $ 0.25 $ 0.22 $ 0.54 $ 1.11
======= ======= ======= =======
Weighted average common shares outstanding
Basic 698 696 698 695
======= ======= ======= =======
Diluted 761 757 760 699
======= ======= ======= =======
Dividends declared per common share (1) $ - $ 0.04 $ 0.08 $ 0.08
======= ======= ======= =======
(1) Due to timing, first quarter 2008 includes two quarters of dividends
EL PASO CORPORATION
SEGMENT INFORMATION
(UNAUDITED)
2008 2007 Year-to-Date
------------- --------------------------- -------------
(In millions) First Second First Second Third Fourth 2008 2007
------ ------ ------ ------ ------ ------ ------ ------
Operating revenues
Pipelines $ 720 $ 646 $ 644 $ 614 $ 586 $ 650 $1,366 $1,258
Exploration and
Production 603 655 505 575 575 645 1,258 1,080
Marketing (57) (146) (135) (16) (9) (59) (203) (151)
Power - - - - - - - -
Corporate and
other, including
eliminations (1) 3 (2) 8 25 14 26 1 33
------ ------ ------ ------ ------ ------ ------ ------
Consolidated
total $1,269 $1,153 $1,022 $1,198 $1,166 $1,262 $2,422 $2,220
------ ------ ------ ------ ------ ------ ------ ------
Depreciation,
depletion and
amortization
Pipelines $ 99 $ 99 $ 94 $ 91 $ 94 $ 94 $ 198 $ 185
Exploration and
Production 212 197 170 189 194 227 409 359
Marketing - - 1 1 - 1 - 2
Power - - - - 1 - - -
Corporate and
other (1) 2 2 6 5 4 4 4 11
------ ------ ------ ------ ------ ------ ------ ------
Consolidated
total $ 313 $ 298 $ 271 $ 286 $ 293 $ 326 $ 611 $ 557
------ ------ ------ ------ ------ ------ ------ ------
Operating income (loss)
Pipelines $ 357 $ 263 $ 324 $ 276 $ 234 $ 277 $ 620 $ 600
Exploration and
Production 226 281 177 229 228 252 507 406
Marketing (60) (154) (136) (20) (13) (65) (214) (156)
Power (8) (5) (5) (9) (9) (3) (13) (14)
Corporate and
other (1) 35 36 (25) (25) (23) (19) 71 (50)
------ ------ ------ ------ ------ ------ ------ ------
Consolidated
total $ 550 $ 421 $ 335 $ 451 $ 417 $ 442 $ 971 $ 786
------ ------ ------ ------ ------ ------ ------ ------
Earnings (losses)
before interest
expense and income
taxes (EBIT)
Pipelines $ 381 $ 295 $ 364 $ 318 $ 275 $ 308 $ 676 $ 682
Exploration and
Production 242 304 179 235 232 263 546 414
Marketing (60) (153) (135) 5 (8) (64) (213) (130)
Power (2) 12 18 16 (67) (4) 10 34
Corporate and
other (1) 39 41 (210) (104) 51 (20) 80 (314)
------ ------ ------ ------ ------ ------ ------ ------
Consolidated
total $ 600 $ 499 $ 216 $ 470 $ 483 $ 483 $1,099 $ 686
------ ------ ------ ------ ------ ------ ------ ------
E&P Cash Costs Second Second
Quarter 2008 Quarter 2007
Total Per Unit Total Per Unit
($MM) ($/Mcfe) ($MM) ($/Mcfe)
------ ------ ------ ------
Total operating
expense $ 374 $ 5.40 $ 346 $ 4.84
Depreciation,
depletion and
amortization (197) (2.84) (189) (2.64)
Transportation
Costs (21) (0.31) (15) (0.22)
Cost of products
& services (10) (0.15) (4) (0.06)
Other (7) (0.09) - -
------ ------ ------ ------
Per unit cash
costs(2) $ 2.01 $ 1.92
------ ------ ------ ------
Total equivalent
volumes (Mmcfe)(2) 69,366 71,493
------------- -------------
(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
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