El Paso Corp. (ticker: EP, exchange: New York Stock Exchange (.N))
News Release -
El Paso Energy Corporation Reports Nine Percent Increase in Second Quarter Earnings Per Share
HOUSTON, TEXAS, July 21, 1997-El Paso Energy Corporation (NYSE:EPG) reported second
quarter earnings of $43 million, or $0.75 per share, up nine percent compared to net
income of $24 million, or $0.69 per share during the same period a year ago. The 1997
second quarter earnings per share were based on 57.3 million average common shares
outstanding, compared with 35.5 million average shares outstanding in last year's second
Operating income doubled to $125 million during the second quarter of 1997, versus $62
million in the year ago period. The increase in operating income was primarily
attributable to the Tenneco Energy acquisition completed in December 1996. Earnings before
interest expense and income taxes for the second quarter were $139 million, compared to
$65 million for the second quarter 1996, reflecting both the Tenneco Energy acquisition as
well as higher equity income from international development activities.
"The increase in second quarter earnings is a reflection of our continued
commitment to grow this company both domestically and internationally," said William
A. Wise, chairman, president, and chief executive officer of El Paso Energy. "Our
primary goal is to build shareholder value through strategies that produce 10 to 15
percent earnings growth."
Six Months Results
Net income for the first six months of 1997 increased 13 percent to $91 million, or $1.60
per share. Net income for the year ago period, adjusted for the $99 million pre-tax charge
for employee separation and asset impairment, was $49 million, or $1.41 per share.
Earnings before interest expense and income taxes for the six months were $287 million,
compared to an adjusted $129 million for the first six months of 1996.
Natural Gas Transmission Segment
The Natural Gas Transmission segment reported second quarter operating income of $141
million compared to $50 million a year ago. The second quarter 1997 results include a $69
million contribution from El Paso Natural Gas Company and a $72 million contribution from
Tennessee Gas Pipeline Company. Total transmission segment throughput for the second
quarter averaged 9,254 billion Btu per day (BBtu/d), consisting of 3,644 BBtu/d on the El Paso system and 5,610 BBtu/d on the Tennessee system.
Field and Merchant Services Segment
El Paso Field Services reported a 64 percent increase in operating income to $11 million
in the second quarter compared with $6.7 million during the same period a year ago. The
increase resulted from a 42 percent jump in gathering and treating volumes to 2,286
BBtu/d. Processing volumes also increased by 42 percent to 916 BBtu/d. The increases were
attributable to the completion of the Chaco cryogenic plant and the acquisition of the
Cornerstone Natural Gas and Tenneco Energy gathering and processing assets.
El Paso Energy Marketing reported an operating loss of $16 million for the second
quarter, compared to operating income of $7 million a year ago. Marketed gas volumes
totaled 4,764 BBtu/d, up 28 percent from the year ago period. Low industry-wide gas
marketing margins, combined with higher administrative costs from the consolidation of the
former Tenneco Energy gas marketing units, contributed to the second quarter loss.
"The marketing unit is an important component of our long-term corporate
strategy," said Wise. "We expect to complete the reorganization of El Paso
Energy Marketing over the next six months and, with the transition behind us, we expect
this business unit to be a strong competitor in the energy marketing industry."
Corporate and Other Segment
Corporate and Other segment operating expense for the second quarter totaled $12 million,
including $6 million related to discontinued operations assumed as part of the Tenneco
Energy acquisition and $5 million of development expenses related to the Company's
international operations. Including equity earnings from projects, total international
earnings before interest expense and income taxes were $6 million.
El Paso Energy Corporation provides total energy solutions through five business units:
El Paso Natural Gas Company, Tennessee Gas Pipeline Company, El Paso Field Services
Company, El Paso Energy Marketing 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 infrastructure
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.