Business Segment Information

9 Months Ended

Sep. 30, 2011

Business Segment Information [Abstract]

Business Segment Information

13. Business Segment Information

     As of September 30, 2011, our business consists of the following segments: Pipelines, Exploration and Production, and Marketing. We also have other business and corporate activities. Our segments are strategic business units that provide a variety of energy products and services. They are managed separately as each segment requires different technology and marketing strategies. A further discussion of each segment follows.

     Pipelines. Our Pipelines segment provides natural gas transmission, storage, and related services. As of September 30, 2011, we conducted our activities primarily through eight wholly or partially owned interstate pipeline systems and equity interests in three transmission systems. In addition to the storage capacity in our wholly and majority owned pipelines systems, we also own or have interests in three underground natural gas storage facilities and two LNG terminal facilities.

     Exploration and Production. Our Exploration and Production segment is engaged in the exploration for and the acquisition, development and production of oil, natural gas and NGL, in the U.S., Brazil and Egypt.

     Marketing. Our Marketing segment markets on behalf of our Exploration and Production segment and manages the price risks associated with our oil and natural gas production as well as manages our remaining legacy trading portfolio.

     Other. Our other activities include our corporate general and administrative functions, midstream operations and miscellaneous businesses.

     Beginning January 1, 2011, we use segment earnings before interest expense and income taxes (Segment EBIT) as a measure to assess the operating results and effectiveness of our business segments. We believe Segment EBIT is useful to our investors because it allows them to use the same performance measure analyzed internally by our management to evaluate the performance of our businesses and investments without regard to the manner in which they are financed or our capital structure. Segment EBIT is defined as net income (loss) adjusted for interest and debt expense and income taxes. It does not reflect a reduction for any amounts attributable to noncontrolling interests. Segment EBIT may not be comparable to measurements used by other companies. Additionally, Segment EBIT should be considered in conjunction with net income (loss), income (loss) before income taxes and other performance measures such as operating income or operating cash flows. Our 2010 amounts have been conformed to reflect our current performance measure.

     Below is a reconciliation of our Segment EBIT to our net income for the periods ended September 30:

	Quarters Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
	(In millions)
Segment EBIT	$	(181	)	$	513		$	830		$	1,913
Interest and debt expense		(242	)		(255	)		(721	)		(782	)
Income tax  benefit (expense)		130			(75	)		73			(343	)
Net income (loss)		(293	)		183			182			788
Net income attributable to noncontrolling interests		(75	)		(41	)		(226	)		(101	)
Net income (loss) attributable to El Paso Corporation	$	(368	)	$	142		$	(44	)	$	687

     The following tables reflect our segment results for the quarters and nine months ended September 30:

	Segments
				Exploration
	Pipelines			and Production			Marketing			Other			Eliminations			Total
	(In millions)
Quarter Ended September 30, 2011
Revenue from external customers	$	743		$	481	(1)	$	177		$	2		$	—		$	1,403
Intersegment revenue		17			172	(1)		(186	)		—			(3	)		—
Operation and maintenance		213			114			—			39			—			366
Loss on deconsolidation of subsidiary		600	(2)		—			—			—			—			600
Ceiling test charges		—			152			—			—			—			152
Depreciation, depletion and amortization		136			157			—			6			—			299
Earnings (losses) from unconsolidated affiliates		24			(3	)		—			15			—			36
Segment EBIT		(209	)		183			(10	)		(145	)(3)		—			(181	)
Quarter Ended September 30, 2010
Revenue from external customers	$	680		$	340	(1)	$	174		$	19		$	—		$	1,213
Intersegment revenue		12			179	(1)		(190	)		7			(8	)		—
Operation and maintenance		220			87			(3	)		23			—			327
Ceiling test charges		—			14			—			—			—			14
Depreciation, depletion and amortization		111			117			—			11			—			239
Earnings (losses) from unconsolidated affiliates		28			(2	)		—			2			—			28
Segment EBIT		375			261			(12	)		(111	)(3)		—			513

(1)	Revenues from external customers include gains of $251 million and $184 million for the quarters ended September 30, 2011 and 2010 related to our financial derivative contracts associated with our oil and natural gas production. Intersegment revenues represent sales to our Marketing segment.
(2)	Reflects a non-cash loss of approximately $475 million based on the difference between the net carrying value of Ruby and the estimated fair value of our investment in Ruby and a non-cash loss of approximately $125 million related to the recognition of the accumulated other comprehensive loss associated with interest rate swaps on the Ruby debt (see Note 15).
(3)	Includes loss on debt extinguishment of approximately $101 million and $104 million for the quarters ended September 30, 2011 and 2010 primarily related to debt repurchases.

	Segments
				Exploration
	Pipelines			and Production			Marketing			Other			Eliminations			Total
	(In millions)
Nine Months Ended September 30, 2011
Revenue from external customers	$	2,130		$	944	(1)	$	550		$	4		$	—		$	3,628
Intersegment revenue		105			494	(1)		(591	)		2			(10	)		—
Operation and maintenance		614			312			4			65			(1	)		994
Loss on deconsolidation of subsidiary		600	(2)		—			—			—			—			600
Ceiling test charges		—			152			—			—			—			152
Depreciation, depletion and amortization		360			437			—			18			—			815
Earnings (losses) from unconsolidated affiliates		74			(4	)		—			28			—			98
Segment EBIT		718			402			(45	)		(245	)(3)		—			830
Nine Months Ended September 30, 2010
Revenue from external customers	$	2,072		$	966	(1)	$	556		$	38		$	—		$	3,632
Intersegment revenue		37			569	(1)		(601	)		11			(16	)		—
Operation and maintenance		599			275			—			37			—			911
Ceiling test charges		—			16			—			—			—			16
Depreciation, depletion and amortization		327			352			—			20			—			699
Earnings (losses) from unconsolidated affiliates		157	(4)		(3	)		—			13			—			167
Segment EBIT		1,299			754			(44	)		(96	)(3)		—			1,913

(1)	Revenues from external customers include gains of $274 million and $468 million for the nine months ended September 30, 2011 and 2010 related to our financial derivative contracts associated with our oil and natural gas production. Intersegment revenues represent sales to our Marketing segment.
(2)	Reflects a non-cash loss of approximately $475 million based on the difference between the net carrying value of Ruby and the estimated fair value of our investment in Ruby and a non-cash loss of approximately $125 million related to the recognition of the accumulated other comprehensive loss associated with interest rate swaps on the Ruby debt (see Note 15).
(3)	Includes loss on debt extinguishment of approximately $169 million and $104 million for the nine months ended September 30, 2011 and 2010 primarily related to debt repurchases.
(4)	Includes a gain of approximately $80 million for the nine months ended September 30, 2010 related to the sale of certain of our interests in Mexican pipeline and compression assets.

Total assets by segment are presented below:

	September 30,			December 31,
	2011			2010
	(In millions)
Pipelines(1)	$	18,396		$	19,651
Exploration and Production		4,724			4,657
Marketing		182			222
Other		960			943
Total segment assets		24,262			25,473
Eliminations		(184	)		(203	)
Total consolidated assets	$	24,078		$	25,270

⁽¹⁾   Reflects the deconsolidation of Ruby in the third quarter of 2011.