12. Equity and Noncontrolling Interests

Convertible Perpetual Preferred Stock. In March 2011, we exercised our mandatory conversion right related to our $750 million of convertible perpetual preferred stock. Upon conversion, holders of our convertible preferred stock received approximately 57.9 million shares of common stock (approximately 77.2295 shares of El Paso common stock for each share of preferred stock converted).

Common and Preferred Stock Dividends. The table below shows the amount of dividends paid and declared (in millions, except per share amount):


	Common Stock		Convertible Preferred Stock
	($0.01/Share)		(4.99%/Year)
Amount paid for the nine months ended September 30, 2011	$	22	$	9
Amount paid in October 2011	$	7	$	—
Declared in October 2011:
Date of declaration	October 6, 2011			—
Payable to shareholders on record	December 2, 2011			—
Date payable	January 3, 2012			—

Dividends on our common stock and convertible preferred stock are treated as a reduction of additional paid-in-capital since we currently have an accumulated deficit. For 2011, we expect dividends paid on our common and preferred stock will be taxable to our stockholders because we anticipate that these dividends will be paid out of current or accumulated earnings and profits for tax purposes. Our ability to pay dividends can be impacted by certain restrictions as further described in our 2010 Annual Report on Form 10-K.

Noncontrolling Interests in EPB. We are the general partner of EPB, a master limited partnership (MLP) formed in 2007. As of September 30, 2011, we own a 44 percent interest in EPB (2 percent general partner interest and a 42 percent limited partner interest). During the first nine months of 2011, we contributed the remaining 40 percent ownership interest in SNG and an additional 28 percent interest in CIG to EPB in exchange for approximately $1.4 billion. EPB raised the funds for the acquisitions primarily through $948 million in proceeds from the issuance of 28.5 million common units and $444 million in borrowings under the EPPOC revolving credit facility. Our consolidated statement of equity for the nine months ended September 30, 2011 reflects the issuance of the EPB common units as an increase of $610 million to noncontrolling interests and an increase of $338 million to El Paso Corporation’s additional paid-in capital. Our net income attributable to El Paso Corporation, together with the increase in El Paso Corporation’s additional paid-in capital for the nine months ended September 30, 2011 totaled $294 million.

In accordance with its partnership agreement, EPB is obligated to make quarterly distributions of available cash to its unitholders. We receive our share of these cash distributions through our limited partner ownership interest, general partner interest, and incentive distribution rights (IDRs) we are entitled to as the general partner. Prior to February 15, 2011, we held subordinated units in EPB. Upon payment of the quarterly cash distribution for the fourth quarter of 2010, the financial tests required for the conversion of subordinated units into common units were satisfied. As a result, our subordinated units were converted on February 15, 2011 into common units on a one-for-one basis effective January 3, 2011.

To the extent that the consideration for the sales of assets to EPB is not in the form of additional equity in EPB, our interest in our assets becomes diluted over time. However our economic interest will benefit from the receipt of incentive distributions in accordance with the partnership agreement.

Our IDRs provide for the receipt of an increasing portion of quarterly distributions based on the level of distribution to all unitholders. We can elect to relinquish the right to receive incentive distribution payments and reset, at higher levels, the minimum quarterly distribution amount and cash target distribution levels upon which the incentive distribution payments would be set. We are currently entitled to receive the maximum level of incentive distributions.

Net Income Attributable to Noncontrolling Interests. The components of net income attributable to noncontrolling interests on our statements of income are as follows for the quarters and nine months ended September 30:


	Quarters Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(In millions)
EPB	$	55	$	25	$	161	$	75
Preferred Stock of Cheyenne Plains (Note 15)		5		5		15		15
Preferred Stock of Ruby (Note 15)		15		11		50		11

Net income attributable to noncontrolling interests	$	75	$	41	$	226	$	101