DOW JONES NEWSWIRES
El Paso Corp.'s (EP) second-quarter earnings fell 59% as an
increase in profit at its pipeline business was more than offset by
lower natural-gas prices, though profit exceeded expectations.
Chairman and Chief Executive Doug Foshee said the company has
cut its drilling activity by about 70% since the third quarter of
2008.
Oil-and-gas companies have been hurt amid a glut of U.S. output
and a collapse in industrial demand. El Paso and its peers have
taken big write-downs to reflect the sagging prices. Companies that
borrowed heavily to fund expansion were squeezed as credit markets
tightened, though some have been able to tap credit and equity
markets in recent months.
The largest U.S. natural gas producer reported a profit of $89
million, or 11 cents a share, down from $191 million, or 25 cents a
share, a year earlier. Excluding hedging and other impacts,
earnings fell to 25 cents from 39 cents.
Revenue decreased 15% to $973 million.
Analysts polled by Thomson Reuters most recently were looking
for earnings of 21 cents a share on revenue of $1.14 billion.
El Paso's exploration and production unit and its pipeline
segment, the company's largest businesses, have been contributing
similar revenue levels recently.
At its pipeline business, earnings rose 11% and volume fell
0.3%. Foshee noted Thursday that El Paso found a partner for one of
its pipeline projects and brought two other projects into service
during the quarter.
At its exploration and production business, profit tumbled 80%
and sales fell 69% amid the commodity-price slump. Volume dropped
7.7%.
Shares closed at $10.17 on Wednesday and didn't trade premarket
Thursday. The stock is down 40% the past year, though it has nearly
doubled since March.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
tess.stynes@dowjones.com