El Paso Corporation (NYSE: EP) is reporting today third quarter
2008 financial and operational results for the company.
Highlights include:
-- $0.58 earnings per diluted share from continuing operations versus
$0.20 in 2007
-- $0.35 earnings per diluted share, after adjusting for production-
related derivatives and other items impacting third quarter 2008 results,
versus $0.22 in 2007
-- Pipeline earnings before interest expense and taxes (EBIT) of $278
million, which includes a $12 million negative impact from Hurricanes Ike
and Gustav
-- Exploration & Production (E&P) EBIT of $532 million -- up 129 percent
versus third quarter 2007, including $214 million of mark-to-market (MTM)
gains on derivative contracts not designated as accounting hedges
-- Production, including unconsolidated affiliate volumes, totaled 793
million cubic feet equivalent per day (MMcfe/d), which reflects a
production loss of 41 MMcfe/d due to hurricanes and a tropical storm
"We had another solid quarter, with improved earnings in both
the Pipeline Group and E&P," said Doug Foshee, president and
chief executive officer of El Paso Corporation. "In addition, we
placed three pipeline projects in-service, and we made continued
progress on the Ruby Pipeline Project. On the E&P side, we
completed our first two wells in the Haynesville Shale. As we
announced, we have taken steps to maintain our already strong
liquidity position as we enter 2009 so that we can execute on our
pipeline backlog and meet our financial obligations, even if
current capital market constraints persist."
A summary of financial results for the quarters ended September
30, 2008, and 2007 is as follows:
Financial Results Quarters Ended
September 30,
($ in millions, except per share amounts) 2008 2007
-------- --------
Net income $ 445 $ 155
Preferred stock dividends 9 9
-------- --------
Net income available to common stockholders $ 436 $ 146
======== ========
Basic earnings per common share $ 0.63 $ 0.21
======== ========
Diluted earnings per common share $ 0.58 $ 0.20
======== ========
Items Impacting Quarterly Results
Third quarter 2008 and 2007 net income includes the following
items:
Third Quarter 2008
($ millions, except per share Before After Diluted
amounts) Tax Tax EPS
------- ------- -------
Net income available to common stockholders $ 436 $ 0.58
Adjustments(1)
Change in fair value of power contracts $ (63) $ (40) $ (0.05)
Change in fair value of legacy
indemnification 12 8 0.01
Change in fair value of production-related
derivatives in Marketing (14) (9) (0.01)
MTM impact of E&P derivatives(2) (215) (138) (0.18)
-------
Adjusted EPS--continuing operations(3) $ 0.35
=======
(1) Assumes a 36 percent tax rate and 766 million diluted shares
(2) Consists of $214 million of MTM gains on derivatives, adjusted for $1
million of realized losses from cash settlements
(3) Based upon 766 million fully diluted shares and includes income impact
from dilutive securities
Third Quarter 2007
($ millions, except per share Before After Diluted
amounts) Tax Tax EPS
------ ------ -------
Net income available to common stockholders $ 146 $ 0.20
Adjustments(1)
Brazilian power impairments $ 65 $ 65 $ 0.09
Crude oil trading liability (77) (49) (0.07)
Case Corporation indemnification 11 7 0.01
Change in fair value of production-related
derivatives in Marketing (15) (10) (0.01)
-------
Adjusted EPS--continuing operations(2) $ 0.22
=======
(1) Assumes a 36 percent tax rate, except for Brazilian power impairments,
and 759 million diluted shares
(2) Based upon 759 million diluted shares and includes the income impact
from dilutive securities
Financial Results - Nine Months Ended September 30, 2008
For the nine months ended September 30, 2008, El Paso reported
net income available to common stockholders of $827 million, or
$1.12 per diluted share, compared with $922 million, or $1.31 per
diluted share, for the first nine 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 nine-month periods of 2008 and
2007, after adjusting for the impacts of production-related
derivatives and other items, are $1.09 and $0.69 per diluted share,
respectively. A schedule of items affecting year-to-date results is
listed as an appendix to the release.
Business Unit Financial Update
Segment EBIT Results Quarters Ended
September 30,
($ in millions) 2008 2007
-------- --------
Pipeline Group $ 278 $ 275
Exploration and Production 532 232
Marketing 82 (8)
Power (6) (67)
Corporate and Other (5) 51
-------- --------
$ 881 $ 483
======== ========
Pipeline Group
The Pipeline Group's EBIT for the quarter ended September 30,
2008 was $278 million, compared with $275 million for the same
quarter 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 $285 million, a 4
percent increase from 2007 levels. In the third quarter of 2008,
EBIT includes a $12 million unfavorable impact related to lost
natural gas and higher operations and maintenance costs due to
facility damage caused by Hurricanes Ike and Gustav. The company
continues to assess the damages resulting from the hurricanes and
the corresponding impact on estimated costs to repair and abandon
impacted facilities. El Paso anticipates additional costs to occur
in the fourth quarter and into 2009. During the third quarter of
2008, EBIT was favorably impacted by higher reservation revenues
due to additional capacity sold on the pipeline systems and several
expansion projects that went into service in 2007 and 2008.
Offsetting the favorable impact were higher operating costs,
primarily due to increased labor costs to support growth and
customer activities, as well as additional maintenance work
required on several of the pipeline systems.
Pipeline Group Results Quarters Ended
September 30,
($ in millions) 2008 2007
-------- --------
EBIT before minority interest $ 285 $ 275
Minority interest (7) -
-------- --------
EBIT $ 278 $ 275
DD&A $ 97 $ 94
Total throughput (BBtu/d)(1) 18,905 18,512
(1) Includes proportionate share of jointly owned
pipelines
Exploration and Production
The Exploration and Production segment's EBIT for the quarter
ended September 30, 2008, was $532 million, compared with $232
million for the same period in 2007. The increase was primarily due
to higher realized commodity prices, and $214 million of net MTM
gains in 2008, versus $6 million in 2007, on derivative contracts
not designated as accounting hedges, partially offset by lower
production volumes and higher production taxes.
Third quarter 2008 production volumes averaged 793 MMcfe/d,
including 75 MMcfe/d of unconsolidated affiliate production
volumes. Third quarter 2007 production volumes averaged 848
MMcfe/d, including 61 MMcfe/d of unconsolidated affiliate
production volumes and 117 MMcfe/d related to properties that were
divested in the first quarter of 2008. Production volumes during
the third quarter of 2008 were negatively impacted by Hurricanes
Ike, Gustav, and Dolly, and Tropical Storm Edouard by approximately
41 MMcfe/d. Approximately 80 MMcfe/d of production in the Gulf of
Mexico remains shut-in due to repairs to certain systems owned and
operated by third parties. The operators currently estimate these
systems will be repaired and back in-service by mid-December 2008.
In addition, two platforms that produced a total of 15 MMcfe/d
remain shut-in pending damage assessments.
Total per-unit cash operating costs increased to an average of
$1.89 per thousand cubic feet equivalent (Mcfe) in third quarter
2008 from $1.77 per Mcfe for the same 2007 period. The increase is
primarily a result of lower production volumes and higher
production taxes, which rise with commodity prices, partially
offset by a decrease in G&A expenses, which were lower due
primarily to the reversal of an accrual as a result of a favorable
ruling on a legal matter.
Exploration and Production Results Quarters Ended
September 30,
($ in millions, except prices and unit cost amounts) 2008 2007
-------- --------
Natural gas, oil, condensate and NGL revenue $ 644 $ 560
Changes in fair value of derivative contracts(1) 214 6
Other revenues 23 9
-------- --------
Total operating revenues $ 881 $ 575
Operating expenses (353) (347)
Other income 4 4
-------- --------
EBIT $ 532 $ 232
DD&A $ 191 $ 194
Consolidated volumes:
Natural gas sales volumes (MMcf/d) 615 660
Oil, condensate, and NGL sales volumes (MBbls/d) 17 21
Total consolidated equivalent sales volumes (MMcfe/d) 718 787
Four Star total equivalent sales volumes (MMcfe/d)(2) 75 61
Weighted average realized prices including hedges(3)
Natural gas ($/Mcf) $ 8.92 $ 7.12
Oil, condensate, and NGL ($/Bbl) $ 88.17 $ 66.26
Transportation costs(3)
Natural gas ($/Mcf) $ 0.37 $ 0.29
Oil, condensate, and NGL ($/Bbl) $ 1.18 $ 0.84
Per-unit costs ($/Mcfe)(3)
DD&A $ 2.89 $ 2.69
Cash operating costs(4) $ 1.89 $ 1.77
(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
Hedge Positions
For the fourth quarter of 2008, El Paso has 42 trillion British
thermal units (TBtu) of natural gas production hedged, with an
average floor price of $7.93 per million British thermal unit
(MMBtu) and an average ceiling price of $10.16 per MMBtu. In
addition, El Paso has 0.8 million barrels of fourth quarter 2008
crude oil production hedged with an average floor price of $79.81
per barrel and an average ceiling price of $80.10 per barrel. For
2009, El Paso has natural gas hedges with 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 also 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 EBIT of $82 million for the
quarter ended September 30, 2008, compared with an EBIT loss of $8
million for the same period in 2007. The third quarter 2008 EBIT
included a $63 million MTM gain on the company's power obligations
that extend through 2016 in the Pennsylvania-New Jersey-Maryland
(PJM) power market, a $17 million gain from proceeds recognized on
various Enron bankruptcy claims, and a $14 million MTM gain in the
fair value of derivatives intended to manage the price risk of the
company's oil production. In the third quarter of 2007, the company
realized a MTM gain of $15 million on its production-related
derivatives, a $9 million loss from transport obligations on
Alliance Pipeline, and a MTM loss of $11 million on its PJM power
contracts.
Power
The Power segment reported an EBIT loss of $6 million for the
quarter ended September 30, 2008, compared with an EBIT loss of $67
million for the same period in 2007. The 2007 period included
impairments related to the company's interest in its Brazilian
power assets.
Corporate and Other
Corporate and Other reported an EBIT loss of $5 million for the
quarter ended September 30, 2008, compared with EBIT of $51 million
for the same period in 2007. The 2007 results were favorably
impacted by the reversal of a $77 million liability related to
Coastal Corporation's legacy crude oil marketing and trading
business.
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 third
quarter 2008 results on November 6, 2008, beginning at 10:00 a.m.
Eastern Time, 9:00 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 #
59581981) 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 November 13, 2008 by dialing
(800) 642-1687 (conference ID # 59581981). 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 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, 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, the loss related to
Brazilian power impairments, 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 2008 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 November 6, 2008 Earnings Press
Release
Items Impacting year-to-date results
Nine Months Ended September 30, 2008 Before After Diluted
($ millions, except per share amounts) Tax Tax EPS
------- ------- -------
Net income available to common stockholders $ 827 $ 1.12
Adjustments(1)
Change in fair value of power contracts $ 83 $ 53 $ 0.07
Change in fair value of legacy
indemnification 46 29 0.04
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 59 38 0.05
MTM impact of E&P derivatives(2) (123) (79) (0.10)
-------
Adjusted EPS--continuing operations(3) $ 1.09
=======
(1) Assumes a 36 percent tax rate, except for Case Corporation
indemnification and other legacy litigation adjustments, and 767
million diluted shares
(2) Consists of $104 million of MTM gains on derivatives, adjusted for $19
million of realized losses from cash settlements
(3) Based upon 767 million fully diluted shares and includes the income
impact from dilutive securities
Nine Months Ended September 30, 2007 Before After Diluted
($ millions, except per share amounts) Tax Tax EPS
------- ------- -------
Net income available to common stockholders $ 922 $ 1.31
Adjustments(1)
Brazilian power impairments $ 65 $ 65 $ 0.09
Crude oil trading liability (77) (49) (0.07)
Case Corporation indemnification 11 7 0.01
Debt repurchase costs 287 184 0.26
Change in fair value of production-related
derivatives in Marketing 63 40 0.06
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) $ 0.69
=======
(1) Assumes a 36 percent tax rate, except for Brazilian power impairments
and discontinued operations, and 699 million diluted shares
(2) Based upon 757 million 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 Nine Months
Ended Ended
September 30, September 30,
---------------- ----------------
2008 2007 2008 2007
------- ------- ------- -------
Operating revenues $ 1,598 $ 1,166 $ 4,020 $ 3,386
Operating expenses
Cost of products and services 68 55 195 170
Operation and maintenance 329 348 882 978
Depreciation, depletion and
amortization 292 293 903 850
Taxes, other than income taxes 70 53 230 185
------- ------- ------- -------
759 749 2,210 2,183
------- ------- ------- -------
Operating income 839 417 1,810 1,203
Earnings from unconsolidated affiliates 52 (6) 141 75
Loss on debt extinguishment - - - (287)
Other income, net (3) 73 52 179
Minority Interest (7) (1) (23) (1)
------- ------- ------- -------
42 66 170 (34)
------- ------- ------- -------
Earnings before interest expense,
income taxes, and other charges 881 483 1,980 1,169
Interest and debt expense (221) (228) (675) (742)
------- ------- ------- -------
Income before income taxes 660 255 1,305 427
Income taxes 215 100 450 151
------- ------- ------- -------
Income from continuing operations 445 155 855 276
Discontinued operations, net of income
taxes - - - 674
------- ------- ------- -------
Net income 445 155 855 950
Preferred stock dividends 9 9 28 28
------- ------- ------- -------
Net income available to common
stockholders $ 436 $ 146 $ 827 $ 922
======= ======= ======= =======
Earnings per common share
Basic
Income from continuing operations $ 0.63 $ 0.21 $ 1.19 $ 0.36
Discontinued operations, net of
income taxes - - - 0.97
------- ------- ------- -------
Net income per common share $ 0.63 $ 0.21 $ 1.19 $ 1.33
======= ======= ======= =======
Diluted
Income from continuing operations $ 0.58 $ 0.20 $ 1.12 $ 0.35
Discontinued operations, net of
income taxes - - - 0.96
------- ------- ------- -------
Net income per common share $ 0.58 $ 0.20 $ 1.12 $ 1.31
======= ======= ======= =======
Weighted average common shares
outstanding
Basic 696 696 697 695
======= ======= ======= =======
Diluted 766 759 767 699
======= ======= ======= =======
Dividends declared per common share $ 0.05 $ 0.04 $ 0.13 $ 0.12
======= ======= ======= =======
EL PASO CORPORATION
SEGMENT INFORMATION
(UNAUDITED)
2008 2007
-------------------- ---------------------------
(In millions) First Second Third First Second Third Fourth
------ ------ ------ ------ ------ ------ ------
Operating revenues
Pipelines $ 720 $ 646 $ 628 $ 644 $ 614 $ 586 $ 650
Exploration and
Production 603 655 881 505 575 575 645
Marketing (57) (146) 89 (135) (16) (9) (59)
Power - - - - - - -
Corporate and other,
including eliminations
(1) 3 (2) - 8 25 14 26
------ ------ ------ ------ ------ ------ ------
Consolidated total $1,269 $1,153 $1,598 $1,022 $1,198 $1,166 $1,262
------ ------ ------ ------ ------ ------ ------
Depreciation, depletion
and amortization
Pipelines $ 99 $ 99 $ 97 $ 94 $ 91 $ 94 $ 94
Exploration and
Production 212 197 191 170 189 194 227
Marketing - - - 1 1 - 1
Power - - - - - 1 -
Corporate and other (1) 2 2 4 6 5 4 4
------ ------ ------ ------ ------ ------ ------
Consolidated total $ 313 $ 298 $ 292 $ 271 $ 286 $ 293 $ 326
------ ------ ------ ------ ------ ------ ------
Operating income (loss)
Pipelines $ 357 $ 263 $ 241 $ 324 $ 276 $ 234 $ 277
Exploration and
Production 226 281 528 177 229 228 252
Marketing (60) (154) 82 (136) (20) (13) (65)
Power (8) (5) (5) (5) (9) (9) (3)
Corporate and other (1) 35 36 (7) (25) (25) (23) (19)
------ ------ ------ ------ ------ ------ ------
Consolidated total $ 550 $ 421 $ 839 $ 335 $ 451 $ 417 $ 442
------ ------ ------ ------ ------ ------ ------
Earnings (losses) before
interest expense and
income taxes (EBIT)
Pipelines $ 381 $ 295 $ 278 $ 364 $ 318 $ 275 $ 308
Exploration and
Production 242 304 532 179 235 232 263
Marketing (60) (153) 82 (135) 5 (8) (64)
Power (2) 12 (6) 18 16 (67) (4)
Corporate and other (1) 39 41 (5) (210) (104) 51 (20)
------ ------ ------ ------ ------ ------ ------
Consolidated total $ 600 $ 499 $ 881 $ 216 $ 470 $ 483 $ 483
------ ------ ------ ------ ------ ------ ------
Year-to-Date
--------------
(In millions) 2008 2007
------ ------
Operating revenues
Pipelines $1,994 $1,844
Exploration and
Production 2,139 1,655
Marketing (114) (160)
Power - -
Corporate and other,
including eliminations
(1) 1 47
------ ------
Consolidated total $4,020 $3,386
------ ------
Depreciation, depletion
and amortization
Pipelines $ 295 $ 279
Exploration and
Production 600 553
Marketing - 2
Power - 1
Corporate and other (1) 8 15
------ ------
Consolidated total $ 903 $ 850
------ ------
Operating income (loss)
Pipelines $ 861 $ 834
Exploration and
Production 1,035 634
Marketing (132) (169)
Power (18) (23)
Corporate and other (1) 64 (73)
------ ------
Consolidated total $1,810 $1,203
------ ------
Earnings (losses) before
interest expense and
income taxes (EBIT)
Pipelines $ 954 $ 957
Exploration and
Production 1,078 646
Marketing (131) (138)
Power 4 (33)
Corporate and other (1) 75 (263)
------ ------
Consolidated total $1,980 $1,169
------ ------
E&P Cash Costs Third Quarter Third Quarter
2008 2007
($MM)($/Mcfe) ($MM)($/Mcfe)
------ ------ ------ ------
Total operating expense $ 353 $ 5.35 $ 347 $ 4.79
Depreciation, depletion
and amortization (191) (2.89) (194) (2.69)
Transportation Costs (23) (0.35) (19) (0.26)
Cost of products &
services (13) (0.20) (6) (0.07)
Other (1) (0.02) - -
------ ------ ------ ------
Per unit cash costs(2) $ 1.89 $ 1.77
------ ------ ------ ------
Total equivalent volumes
(Mmcfe)(2)(3) 66,033 72,392
------------- -------------
(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.
(3) Approximately 41 Mmcfe/d was lost in Third Quarter 2008 due to
hurricane impact.
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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