(Adds analyst comment, changes dateline from NEW YORK, adds
comment from conference call)
By Anna Driver
HOUSTON Aug 7 Natural gas producer and
pipeline operator El Paso Corp. EP.N reported an 11 percent
increase in second-quarter profit on Tuesday as it boosted its
The Houston-based company reported a profit of $166
million, or 22 cents per share, compared with $150 million, or
19 cents per share, a year earlier.
Excluding one-time charges and the change in the value of
market trading positions, El Paso posted earnings per share of
29 cents, according to Reuters Estimates, topping the 23 cents
that analysts, on average, expected the company to earn.
Shares of El Paso climbed 18 cents, or 1.1 percent, to
$17.01 on the New York Stock Exchange.
Revenue rose 10 percent to $1.20 billion from $1.09 billion
a year ago.
Earnings from the exploration and operations business rose
to $235 million from $163 million a year ago as volumes
produced rose to 786 million cubic feet equivalent per day from
719 million cfe/day.
Profits from the pipeline group rose to $318 million from
$286 million last year.
"In short, we had a very strong second quarter," Doug
Foshee, El Paso's chief executive officer, told analysts on a
conference call. "Both businesses performed well in the quarter
and both are on target to meet our commitments for the year."
Production in the quarter was 857 million cfe/day, an
increase of 9 percent over the second quarter a year earlier.
El Paso also received $7.67 per thousand cubic feet of gas
during the quarter, up from $6.08 a year ago.
In a note to clients, Pickering Energy Partners said there
was "lots to like about the quarter," in particular noting El
Paso's production forecast and its plans to divest some
exploration and production assets.
El Paso also boosted the low end of its 2007 production
forecast to 820 million to 860 million cfe/day. The prior
forecast was for 800 million to 860 million cfe/day.
The company also said it plans to divest some properties in
the Gulf of Mexico and south Texas areas that are not
considered core assets. El Paso said it will market these
properties in multiple packages and expects to complete these
sales in the first quarter of 2008.
On Monday, El Paso said it is planning to offer $500
million of common units in a master limited partnership (MLP),
a larger amount than initially indicated by the company in
El Paso is offering a larger amount of units in El Paso
Pipeline Partners L.P. to the public after a review of the
market and a favorable ruling from a U.S. federal appeals court
in May which allows the pipeline company to put more assets
into the MLP.
Regarding the financing of the MLP, Foshee assured analysts
that the company was not troubled by recent turmoil in credit
"We're very comfortable with our position and our plans
with the capital markets as they stand today," he said.
(Additional reporting by Matt Daily)