SOURCE: El Paso Corporation
November 06, 2008 07:30 ET
El Paso Corporation Reports 190 Percent Increase in Third Quarter Earnings
HOUSTON, TX--(Marketwire - November 6, 2008) - 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.