-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TXgFe67rFlt4dJ2bzxziM88i0WUoX08qR6WOV7i1ZR2aY4dqSRJkr7b1jcJ704WN KMTyTIzzxV9L6+WtHJ8Agg== 0000950129-04-007566.txt : 20041001 0000950129-04-007566.hdr.sgml : 20041001 20041001172645 ACCESSION NUMBER: 0000950129-04-007566 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20041001 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041001 DATE AS OF CHANGE: 20041001 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EL PASO CORP/DE CENTRAL INDEX KEY: 0001066107 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION [4922] IRS NUMBER: 760568816 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-14365 FILM NUMBER: 041059626 BUSINESS ADDRESS: STREET 1: 1001 LOUISIANA ST, SUITE 2955A STREET 2: EL PASO BLDG CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7134202600 MAIL ADDRESS: STREET 1: 1001 LOUISIANA ST STREET 2: SUITE 2955A CITY: HOUSTON STATE: TX ZIP: 77002 FORMER COMPANY: FORMER CONFORMED NAME: EL PASO ENERGY CORP/DE DATE OF NAME CHANGE: 19980716 8-K 1 h18801e8vk.txt EL PASO CORPORATION - OCTOBER 1, 2004 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: October 1, 2004 (Date of Earliest Event Reported: September 30, 2004) EL PASO CORPORATION (Exact name of Registrant as specified in its charter) Delaware 1-14365 76-0568816 (State or other jurisdiction of (Commission File Number) (I.R.S. Employer incorporation or organization) Identification No.) El Paso Building 1001 Louisiana Street Houston, Texas 77002 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (713) 420-2600 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION On September 30, 2004, we filed our Annual Report on Form 10-K for the year ended December 31, 2003. We also announced that certain operational statistics would be made available on our website at www.elpaso.com. A copy of our press release is attached as Exhibit 99.A. A copy of the operational statistics is attached as Exhibit 99.B. The attached Exhibits are not filed, but are furnished to comply with Item 2.02 of Form 8-K. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits.
EXHIBIT NUMBER DESCRIPTION 99.A Press Release dated September 30, 2004. 99.B Operational Statistics
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EL PASO CORPORATION By: /s/ JEFFREY I. BEASON ------------------------------- Jeffrey I. Beason Senior Vice President and Controller (Principal Accounting Officer) Dated: October 1, 2004 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION 99.A Press Release dated September 30, 2004. 99.B Operational Statistics
EX-99.A 2 h18801exv99wa.txt PRESS RELEASE DATED SEPTEMBER 30, 2004 EXHIBIT 99.A NEWS For Immediate Release [EL PASO LOGO] EL PASO CORPORATION AND EL PASO PRODUCTION HOLDING COMPANY FILE 2003 FORM 10-KS HOUSTON, TEXAS, SEPTEMBER 30, 2004--El Paso Corporation (NYSE: EP) announced today that it has filed its Form 10-K for the year ended December 31, 2003 with the Securities and Exchange Commission. El Paso's wholly owned subsidiary, El Paso Production Holding Company, has also filed its Form 10-K for the year ended December 31, 2003. The complete filings can be accessed on the El Paso Web site at www.elpaso.com in the Investors section. Detailed operating statistics for each of El Paso's businesses will be available by the close of business on October 1, 2004 in the Investors section of the company's Web site. El Paso Corporation provides natural gas and related energy products in a safe, efficient, dependable manner. The company owns North America's largest 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 report 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 report, including, without limitation, the ability to implement and achieve our objectives in the long-range plan, including achieving our debt-reduction targets; the potential impact of the restatement of financial results on our access to capital (including borrowings under credit arrangements); changes in reserve estimates based upon internal and third party reserve analyses; uncertainties and potential consequences associated with the outcome of governmental investigations, including, without limitation, those related to the reserve revisions and natural gas hedge transactions; outcome of litigation, including shareholder derivative and class actions related to reserve revisions and restatements; consequences arising from the delay in filing of our periodic reports including the exercise of remedies by the company's lenders under certain financing arrangements and if such remedies were to be exercised, the company's potential inability to identify and obtain alternate sources of financing and the existence of cross-acceleration provisions in various financing agreements; uncertainties associated with exploration and production activities; actions by the credit rating agencies; the successful close of our financing transactions; our ability to successfully exit the energy trading business; our ability to close our announced asset sales on a timely basis; changes in commodity prices for oil, natural gas, and power; inability to realize anticipated synergies and cost savings associated with restructurings and divestitures on a timely basis; general economic and weather conditions in geographic regions or markets served by El Paso Corporation and its affiliates, or where operations of the company and its affiliates are located; the uncertainties associated with governmental regulation; political and currency risks associated with international operations of the company and its affiliates; difficulty in integration of the operations of previously acquired companies, 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. CONTACTS Investor and Public Relations Bruce L. Connery, Vice President Office: (713) 420-5855 Fax: (713) 420-4417 Media Relations Kim Wallace, Manager Office: (713) 420-6330 Fax: (713) 420-6341 EX-99.B 3 h18801exv99wb.txt OPERATIONAL STATISTICS EXHIBIT 99.B EL PASO CORPORATION OPERATING STATISTICS FOURTH QUARTER 2003 THE OPERATING STATISTICS HAVE BEEN RESTATED. FOR RESTATEMENT OF HISTORICAL FINANCIAL STATEMENTS, SEE FORM 10-K OF EL PASO CORPORATION TABLE OF CONTENTS
PAGE ---- CONSOLIDATED STATEMENTS OF INCOME 2 SEGMENT INFORMATION 3 CONSOLIDATED OPERATING RESULTS CONSOLIDATED NET INCOME 4 CONSOLIDATED EARNINGS BEFORE INTEREST EXPENSE AND INCOME TAXES (EBIT) 5 BUSINESS SEGMENT RESULTS PIPELINE SEGMENT EARNINGS BEFORE INTEREST EXPENSE AND INCOME TAXES 6 THROUGHPUT 7 PRODUCTION SEGMENT EARNINGS BEFORE INTEREST EXPENSE AND INCOME TAXES 8 SALES VOLUMES, REALIZED PRICES AND COST PER UNIT 9 FIELD SERVICES SEGMENT EARNINGS BEFORE INTEREST EXPENSE AND INCOME TAXES 10 VOLUMES AND RATES 11 MERCHANT ENERGY SEGMENT EARNINGS BEFORE INTEREST EXPENSE AND INCOME TAXES 12 ANALYSIS OF EBIT BY DIVISION 13 OPERATING DATA 14 SCHEDULE OF SIGNIFICANT ITEMS 15
EL PASO HAS PROVIDED EARNINGS AS REPORTED AND HAS NOT MADE ADJUSTMENTS FOR CERTAIN SIGNIFICANT ITEMS. THE OPERATING STATISTICS SCHEDULES INCLUDED HEREIN REFLECT THE PRE-TAX IMPACT OF SIGNIFICANT ITEMS; EARNINGS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAX; AND THE CUMULATIVE EFFECT OF ACCOUNTING CHANGES, NET OF INCOME TAX. THIS DATA IS PRESENTED IN ORDER TO PROVIDE THE READER WITH ADDITIONAL INFORMATION ABOUT THE COMPANY AND ITS FINANCIAL CONDITION. EL PASO CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share amounts) (UNAUDITED) - -------------------------------------------------------------------------------- The Operating Statistics have been restated. For Restatement of Historical Financial Statements, see Form 10-K of El Paso Corporation - --------------------------------------------------------------------------------
Fourth Quarter Ended Twelve Months Ended December 31, December 31, ----------------------- ----------------------- 2003 2002 2003 2002 -------- -------- -------- -------- Operating revenues $ 1,569 $ 1,074 $ 6,711 $ 6,917 Operating expenses Cost of products and services 397 493 1,787 2,423 Operation and maintenance 484 544 2,017 2,110 Depreciation, depletion and amortization 287 307 1,207 1,180 Ceiling test charges 8 3 76 128 Loss on long-lived assets 472 209 949 185 Western Energy Settlement 1 899 104 899 Taxes, other than income taxes 66 61 296 255 -------- -------- -------- -------- 1,715 2,516 6,436 7,180 -------- -------- -------- -------- Operating income (loss) (146) (1,442) 275 (263) Equity earnings and other income (expense) 330 (208) 364 (268) -------- -------- -------- -------- Earnings (losses) before interest expense, income taxes, and other charges 184 (1,650) 639 (531) Interest and debt expense 437 343 1,787 1,293 Return on preferred interests of consolidated subsidiaries 7 39 52 159 -------- -------- -------- -------- Loss before income taxes (260) (2,032) (1,200) (1,983) Income tax benefit (91) (664) (584) (649) -------- -------- -------- -------- Loss from continuing operations (169) (1,368) (616) (1,334) Discontinued operations, net of income taxes (116) (215) (1,303) (365) Cumulative effect of accounting changes, net of income taxes - (222) (9) (54) -------- -------- -------- -------- Net loss $ (285) $ (1,805) $ (1,928) $ (1,753) ======== ======== ======== ======== Diluted losses per common share Loss from continuing operations $ (0.28) $ (2.31) $ (1.03) $ (2.38) Discontinued operations, net of income taxes (0.19) (0.36) (2.18) (0.65) Cumulative effect of accounting changes, net of income taxes - (0.37) (0.02) (0.10) -------- -------- -------- -------- Net loss per share $ (0.47) $ (3.04) $ (3.23) $ (3.13) ======== ======== ======== ======== Diluted average common shares outstanding (000's) 601,511 593,894 597,051 559,521 ======== ======== ======== ========
EL PASO CORPORATION SEGMENT INFORMATION (UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------------------- 2003 2002 ----------------------------------------------------------------------------------------------- (In millions) First Second Third Fourth First Second Third Fourth - ----------------------------------------------------------------------------------------------------------------------------------- Operating revenues Pipelines $ 753 $ 620 $ 598 $ 676 $ 705 $ 627 $ 611 $ 667 Production 760 588 473 408 433 547 469 554 Field Services 558 378 326 267 540 501 551 437 Merchant Energy(1) (176) 15 362 189 845 118 2 (556) All other and eliminations (51) (27) (35) 29 (45) (43) (18) (28) - ----------------------------------------------------------------------------------------------------------------------------------- Consolidated total 1,844 1,574 1,724 1,569 2,478 1,750 1,615 1,074 - ----------------------------------------------------------------------------------------------------------------------------------- Depreciation, depletion and amortization Pipelines 95 101 95 95 91 95 94 94 Production 164 150 144 148 155 140 159 168 Field Services 10 8 7 6 19 15 11 11 Merchant Energy(1) 27 33 32 25 19 13 10 14 All other and eliminations 23 19 12 13 13 18 21 20 - ----------------------------------------------------------------------------------------------------------------------------------- Consolidated total 319 311 290 287 297 281 295 307 - ----------------------------------------------------------------------------------------------------------------------------------- Operating income (loss) Pipelines 384 112 267 300 357 275 259 (103) Production 440 290 147 67 116 181 171 230 Field Services -- (15) (8) (170) 38 37 20 178 Merchant Energy(1) (512) (256) 62 (283) 16 (20) (183) (1,508) All other and eliminations (44) (425) (21) (60) (12) (59) (17) (239) - ----------------------------------------------------------------------------------------------------------------------------------- Consolidated total 268 (294) 447 (146) 515 414 250 (1,442) - ----------------------------------------------------------------------------------------------------------------------------------- Earnings (losses) before interest expense and income taxes (EBIT) Pipelines 429 145 301 359 399 321 302 (206) Production 449 294 149 70 117 183 171 232 Field Services 27 (56) 32 130 51 56 (10) 192 Merchant Energy (1) (706) (131) 96 (260) (352) 66 (134) (1,598) All other and eliminations (70) (501) (3) (115) (5) (78) 32 (270) - ----------------------------------------------------------------------------------------------------------------------------------- Consolidated total $ 129 $ (249) $ 575 $ 184 $ 210 $ 548 $ 361 $ (1,650) - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Total significant items impacting EBIT (2) $ 398 $ 653 $ 114 $ 263 $ 369 $ 196 $ 49 $ 1,415 - -----------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------- Year-to-Date ---------------------------------- (In millions) 2003 2002 2001 - ---------------------------------------------------------------------- Operating revenues Pipelines $ 2,647 $ 2,610 $ 2,742 Production 2,229 2,003 2,486 Field Services 1,529 2,029 2,553 Merchant Energy(1) 390 409 2,366 All other and eliminations (84) (134) 67 - ---------------------------------------------------------------------- Consolidated total 6,711 6,917 10,214 - ---------------------------------------------------------------------- Depreciation, depletion and amortization Pipelines 386 374 383 Production 606 622 797 Field Services 31 56 111 Merchant Energy(1) 117 56 41 All other and eliminations 67 72 48 - ---------------------------------------------------------------------- Consolidated total 1,207 1,180 1,380 - ---------------------------------------------------------------------- Operating income (loss) Pipelines 1,063 788 880 Production 944 698 (1,069) Field Services (193) 273 124 Merchant Energy(1) (989) (1,695) 1,762 All other and eliminations (550) (327) (1,406) - ---------------------------------------------------------------------- Consolidated total 275 (263) 291 - ---------------------------------------------------------------------- Earnings (losses) before interest expense and income taxes (EBIT) Pipelines 1,234 816 1,032 Production 962 703 (1,068) Field Services 133 289 196 Merchant Energy (1) (1,001) (2,018) 2,157 All other and eliminations (689) (321) (1,429) - ---------------------------------------------------------------------- Consolidated total $ 639 $ (531) $ 888 - ---------------------------------------------------------------------- - ---------------------------------------------------------------------- Total significant items impacting EBIT (2) $ 1,428 $ 2,029 $ 4,038 - ----------------------------------------------------------------------
(1) Quarterly amounts for 2003 include the consolidation of Chaparral effective January 1, 2003 and Gemstone effective April 1, 2003. All periods exclude the Petroleum business as it is now reflected as discontinued operations. (2) Refer to Schedule of Significant Items on page 15 for details. EL PASO CORPORATION CONSOLIDATED NET INCOME (UNAUDITED)
2003 ------------------------------------------------- (In millions, except per share amounts) First Second Third Fourth - ------------------------------------------------------------------------------------------------------------------------------------ Operating revenues $ 1,844 $ 1,574 $ 1,724 $ 1,569 Operating expenses 1,576 1,868 1,277 1,715 - ------------------------------------------------------------------------------------------------------------------------------------ Operating income (loss) 268 (294) 447 (146) Equity earnings and other income (expense) (139) 45 128 330 - ------------------------------------------------------------------------------------------------------------------------------------ Earnings (losses) before interest expense, income taxes and other charges 129 (249) 575 184 Interest and debt expense 413 463 474 437 Return on preferred interests of consolidated subsidiaries 21 16 8 7 - ------------------------------------------------------------------------------------------------------------------------------------ Income (loss) before income taxes (305) (728) 93 (260) Income taxes (benefit) (105) (409) 21 (91) - ------------------------------------------------------------------------------------------------------------------------------------ Income (loss) from continuing operations (200) (319) 72 (169) Discontinued operations, net of income taxes (222) (917) (48) (116) Extraordinary items, net of income taxes -- -- -- -- Cumulative effect of accounting changes, net of income taxes Adoption of Derivatives Issue No. C-16 - derivative power contracts -- -- -- -- Adoption of SFAS No. 143 - retirement obligations (9) -- -- -- Adoption of SFAS No. 141 and 142 - elimination of negative goodwill -- -- -- -- Adoption of EITF Issue No. 02-3 -termination of MTM on accrual-based trading contracts -- -- -- -- --------- --------- --------- --------- Total cumulative effect of accounting changes, net of income taxes (9) -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Consolidated net income (loss) $ (431) $ (1,236) $ 24 $ (285) - ------------------------------------------------------------------------------------------------------------------------------------ Diluted earnings (losses) per common share $ (0.72) $ (2.07) $ 0.04 $ (0.47) Diluted average common shares outstanding (000's) 595,059 595,569 596,079 601,511 Pretax Significant Items Impacting EBIT (1) $ 398 $ 653 $ 114 $ 263 - ------------------------------------------------------------------------------------------------------------------------------------
2002 ------------------------------------------------- (In millions, except per share amounts) First Second Third Fourth - ------------------------------------------------------------------------------------------------------------------------------------ Operating revenues $ 2,478 $ 1,750 $ 1,615 $ 1,074 Operating expenses 1,963 1,336 1,365 2,516 - ------------------------------------------------------------------------------------------------------------------------------------ Operating income (loss) 515 414 250 (1,442) Equity earnings and other income (expense) (305) 134 111 (208) - ------------------------------------------------------------------------------------------------------------------------------------ Earnings (losses) before interest expense, income taxes and other charges 210 548 361 (1,650) Interest and debt expense 303 304 343 343 Return on preferred interests of consolidated subsidiaries 40 43 37 39 - ------------------------------------------------------------------------------------------------------------------------------------ Income (loss) before income taxes (133) 201 (19) (2,032) Income taxes (benefit) (26) 48 (7) (664) - ------------------------------------------------------------------------------------------------------------------------------------ Income (loss) from continuing operations (107) 153 (12) (1,368) Discontinued operations, net of income taxes 60 (116) (94) (215) Extraordinary items, net of income taxes -- -- -- -- Cumulative effect of accounting changes, net of income taxes Adoption of Derivatives Issue No. C-16 - derivative power contracts -- 14 -- -- Adoption of SFAS No. 143 - retirement obligations -- -- -- -- Adoption of SFAS No. 141 and 142 - elimination of negative goodwill 154 -- -- -- Adoption of EITF Issue No. 02-3 -termination of MTM on accrual-based trading contracts -- -- -- (222) --------- --------- --------- --------- Total cumulative effect of accounting changes, net of income taxes 154 14 -- (222) - ------------------------------------------------------------------------------------------------------------------------------------ Consolidated net income (loss) $ 107 $ 51 $ (106) $ (1,805) - ------------------------------------------------------------------------------------------------------------------------------------ Diluted earnings (losses) per common share $ 0.21 $ 0.10 $ (0.18) $ (3.04) Diluted average common shares outstanding (000's) 526,834 532,163 586,079 593,894 Pretax Significant Items Impacting EBIT (1) $ 369 $ 196 $ 49 $ 1,415 - ------------------------------------------------------------------------------------------------------------------------------------
Year-to-Date --------------------------------------- (In millions, except per share amounts) 2003 2002 2001 - -------------------------------------------------------------------------------------------------------------------------- Operating revenues $ 6,711 $ 6,917 $ 10,214 Operating expenses 6,436 7,180 9,923 - ------------------------------------------------------------------------------------------------------------------------------------ Operating income (loss) 275 (263) 291 Equity earnings and other income (expense) 364 (268) 597 - ------------------------------------------------------------------------------------------------------------------------------------ Earnings (losses) before interest expense, income taxes and other charges 639 (531) 888 Interest and debt expense 1,787 1,293 1,129 Return on preferred interests of consolidated subsidiaries 52 159 217 - ------------------------------------------------------------------------------------------------------------------------------------ Income (loss) before income taxes (1,200) (1,983) (458) Income taxes (benefit) (584) (649) (70) - ------------------------------------------------------------------------------------------------------------------------------------ Income (loss) from continuing operations (616) (1,334) (388) Discontinued operations, net of income taxes (1,303) (365) (85) Extraordinary items, net of income taxes -- -- 26 Cumulative effect of accounting changes, net of income taxes Adoption of Derivatives Issue No. C-16 - derivative power contracts -- 14 -- Adoption of SFAS No. 143 - retirement obligations (9) -- -- Adoption of SFAS No. 141 and 142 - elimination of negative goodwill -- 154 -- Adoption of EITF Issue No. 02-3 -termination of MTM on accrual-based trading contracts -- (222) -- --------- --------- --------- Total cumulative effect of accounting changes, net of income taxes (9) (54) -- - ------------------------------------------------------------------------------------------------------------------------------------ Consolidated net income (loss) $ (1,928) $ (1,753) $ (447) - ------------------------------------------------------------------------------------------------------------------------------------ Diluted earnings (losses) per common share $ (3.23) $ (3.13) $ (0.89) Diluted average common shares outstanding (000's) 597,051 559,521 505,059 Pretax Significant Items Impacting EBIT (1) $ 1,428 $ 2,029 $ 4,038 - ------------------------------------------------------------------------------------------------------------------------------------
(1) Refer to Schedule of Significant Items on page 15 for details. 4 EL PASO CORPORATION CONSOLIDATED EARNINGS BEFORE INTEREST EXPENSE AND INCOME TAXES (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------------------- 2003 2002 ------------------------------------------------------------------------------ (In millions) First Second Third Fourth First Second Third Fourth - --------------------------------------------------------------------------------------------------------------------------------- Operating revenues Pipelines $ 753 $ 620 $ 598 $ 676 $ 705 $ 627 $ 611 $ 667 Production 760 588 473 408 433 547 469 554 Field Services 558 378 326 267 540 501 551 437 Merchant Energy(1) (176) 15 362 189 845 118 2 (556) All other and eliminations (51) (27) (35) 29 (45) (43) (18) (28) - --------------------------------------------------------------------------------------------------------------------------------- Total 1,844 1,574 1,724 1,569 2,478 1,750 1,615 1,074 - --------------------------------------------------------------------------------------------------------------------------------- Operating expenses Cost of products and services 594 442 354 397 969 414 547 493 Operation and maintenance 562 500 471 484 607 497 462 544 Merger-related costs - - - - - - - - Depreciation, depletion and amortization 319 311 290 287 297 281 295 307 Ceiling test charges 1 20 47 8 27 98 - 3 (Gain) loss on long-lived assets 22 401 54 472 (15) (12) 3 209 Western Energy Settlement - 123 (20) 1 - - - 899 Taxes, other than income taxes 78 71 81 66 78 58 58 61 - --------------------------------------------------------------------------------------------------------------------------------- Total 1,576 1,868 1,277 1,715 1,963 1,336 1,365 2,516 - --------------------------------------------------------------------------------------------------------------------------------- Consolidated operating income (loss) 268 (294) 447 (146) 515 414 250 (1,442) Equity earnings and other income (expense) (139) 45 128 330 (305) 134 111 (208) - --------------------------------------------------------------------------------------------------------------------------------- Earnings (losses) before interest expense and income taxes (EBIT) $ 129 $ (249) $ 575 $ 184 $ 210 $ 548 $ 361 $(1,650) - ---------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------- Year-to-Date --------------------------- (In millions) 2003 2002 2001 - ------------------------------------------------------------------------------- Operating revenues Pipelines $2,647 $2,610 $ 2,742 Production 2,229 2,003 2,486 Field Services 1,529 2,029 2,553 Merchant Energy(1) 390 409 2,366 All other and eliminations (84) (134) 67 - ------------------------------------------------------------------------------- Total 6,711 6,917 10,214 - ------------------------------------------------------------------------------- Operating expenses Cost of products and services 1,787 2,423 2,450 Operation and maintenance 2,017 2,110 2,064 Merger-related costs - - 1,493 Depreciation, depletion and amortization 1,207 1,180 1,380 Ceiling test charges 76 128 2,143 (Gain) loss on long-lived assets 949 185 77 Western Energy Settlement 104 899 - Taxes, other than income taxes 296 255 316 - ------------------------------------------------------------------------------- Total 6,436 7,180 9,923 - ------------------------------------------------------------------------------- Consolidated operating income (loss) 275 (263) 291 Equity earnings and other income (expense) 364 (268) 597 - ------------------------------------------------------------------------------- Earnings (losses) before interest expense and income taxes (EBIT) $ 639 $ (531) $ 888 - -------------------------------------------------------------------------------
(1) Quarterly amounts for 2003 include the consolidation of Chaparral effective January 1, 2003 and Gemstone effective April 1, 2003. All periods exclude the Petroleum business as it is now reflected as discontinued operations. PIPELINE SEGMENT EARNINGS BEFORE INTEREST EXPENSE AND INCOME TAXES (Excludes Intrasegment Transactions)
- ----------------------------------------------------------------------------------------------------------------------------------- 2003 2002 ------------------------------------------------------------------------------ (In millions) First Second Third Fourth First Second Third Fourth - ----------------------------------------------------------------------------------------------------------------------------------- Operating revenues $ 753 $ 620 $ 598 $ 676 $ 705 $ 627 $ 611 $ 667 Operating expenses Operation and maintenance 237 235 221 249 229 224 228 243 Merger-related costs - - - - - - - - (Gain) loss on long-lived assets - (8) (1) (1) (12) (2) 2 (1) Western Energy Settlement - 146 (20) 1 - - - 412 Depreciation, depletion and amortization 95 101 95 95 91 95 94 94 Taxes, other than income taxes 37 34 36 32 40 35 28 22 - ----------------------------------------------------------------------------------------------------------------------------------- Total 369 508 331 376 348 352 352 770 - ----------------------------------------------------------------------------------------------------------------------------------- Operating income (loss) 384 112 267 300 357 275 259 (103) Equity earnings and other income (expense) 45 33 34 59 42 46 43 (103) - ----------------------------------------------------------------------------------------------------------------------------------- Earnings (losses) before interest expense and income taxes (EBIT) $ 429 $ 145 $ 301 $ 359 $ 399 $ 321 $ 302 $ (206) - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Significant items: Operating expenses $ - $ - $ (3) $ 2 $ - $ 1 $ - $ - Western Energy Settlement and related expenses - 154 (20) 1 - - - 412 Equity earnings and other income - - - (16) - - - 149 - ----------------------------------------------------------------------------------------------------------------------------------- Total Signifcant Items $ - $ 154 $ (23) $ (13) $ - $ 1 $ - $ 561 - -----------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------ Year-to-Date ------------------------------- (In millions) 2003 2002 2001 - ------------------------------------------------------------------------------------ Operating revenues $2,647 $2,610 $2,742 Operating expenses Operation and maintenance 942 924 1,028 Merger-related costs - - 291 (Gain) loss on long-lived assets (10) (13) 21 Western Energy Settlement 127 412 - Depreciation, depletion and amortization 386 374 383 Taxes, other than income taxes 139 125 139 - ------------------------------------------------------------------------------------ Total 1,584 1,822 1,862 - ------------------------------------------------------------------------------------ Operating income (loss) 1,063 788 880 Equity earnings and other income (expense) 171 28 152 - ------------------------------------------------------------------------------------ Earnings (losses) before interest expense and income taxes (EBIT) $1,234 $ 816 $1,032 - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Significant items: Operating expenses $ (1) $ 1 $ 331 Western Energy Settlement and related expenses 135 412 - Equity earnings and other income (16) 149 3 - ------------------------------------------------------------------------------------ Total Signifcant Items $ 118 $ 562 $ 334 - ------------------------------------------------------------------------------------
PIPELINE SEGMENT THROUGHPUT (Excludes Intrasegment Volumes) (BBtu/d)
- ----------------------------------------------------------------------------------------------------------------------------- 2003 2002 ------------------------------------------------------------------------------ First Second Third Fourth First Second Third Fourth ------------------------------------------------------------------------------ Tennessee Gas Pipeline 5,991 4,266 3,960 4,648 4,789 4,235 4,472 4,889 American Natural Resources 5,461 3,826 3,586 4,079 5,044 3,744 3,637 4,112 Southern Natural Gas 2,451 2,016 1,890 2,053 2,371 1,992 1,982 2,263 El Paso Natural Gas 4,069 3,925 4,198 4,069 4,203 4,046 4,069 3,943 Colorado Interstate Gas 2,933 2,602 2,639 2,799 2,851 2,576 2,613 3,032 - ----------------------------------------------------------------------------------------------------------------------------- Total 20,905 16,635 16,273 17,648 19,258 16,593 16,773 18,239 - ----------------------------------------------------------------------------------------------------------------------------- Equity Investments (Ownership Percentage) Citrus (50%) 917 954 1,071 982 887 1,048 1,151 919 Australia (33%) 293 299 314 288 286 309 320 304 Great Lakes (50%) 1,437 1,092 1,109 1,098 1,245 1,099 1,221 1,192 - ----------------------------------------------------------------------------------------------------------------------------- Total 2,647 2,345 2,494 2,368 2,418 2,456 2,692 2,415 - ----------------------------------------------------------------------------------------------------------------------------- Total throughput(1) 23,552 18,980 18,767 20,016 21,676 19,049 19,465 20,654 - -----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------- Year to Date ------------------------------ 2003 2002 2001 ------------------------------ Tennessee Gas Pipeline 4,710 4,596 4,405 American Natural Resources 4,232 4,130 4,531 Southern Natural Gas 2,101 2,151 2,027 El Paso Natural Gas 4,066 4,065 4,536 Colorado Interstate Gas 2,743 2,768 2,466 - ------------------------------------------------------------------------------ Total 17,852 17,710 17,965 - ------------------------------------------------------------------------------ Equity Investments (Ownership Percentage) Citrus (50%) 981 1,002 808 Australia (33%) 299 305 306 Great Lakes (50%) 1,183 1,189 1,112 - ------------------------------------------------------------------------------ Total 2,463 2,496 2,226 - ------------------------------------------------------------------------------ Total throughput(1) 20,315 20,206 20,191 - ------------------------------------------------------------------------------
(1) Throughput volumes of all periods exclude volumes related to our equity investments in the Alliance Pipeline and Portland Natural Gas Transmission systems which have been sold. Prior period volumes have been revised to be consistent with current year presentation which includes billable transportation throughput volume for storage injection and withdrawal. 7 PRODUCTION SEGMENT EARNINGS BEFORE INTEREST EXPENSE AND INCOME TAXES (EXCLUDES INTRASEGMENT TRANSACTIONS)
2003 2002 ------------------------------------- ------------------------------------ (In millions) First Second Third Fourth First Second Third Fourth - ------------------------------------------------------------------------------------------------------------------------------------ Operating revenues Natural gas $ 653 $ 512 $ 402 $ 339 $ 347 $ 428 $ 379 $ 468 Oil, condensate and liquids 105 69 72 68 82 115 92 84 Other 2 7 (1) 1 4 4 (2) 2 - ------------------------------------------------------------------------------------------------------------------------------------ Total operating revenues 760 588 473 408 433 547 469 554 Transportation and net product costs (1) (31) (24) (20) (21) (22) (33) (29) (29) - ------------------------------------------------------------------------------------------------------------------------------------ Total operating margin 729 564 453 387 411 514 440 525 - ------------------------------------------------------------------------------------------------------------------------------------ Operating expenses Depreciation, depletion and amortization 164 150 144 148 155 140 159 168 Production costs (2) 64 55 58 62 79 76 69 80 Ceiling test and other charges (3) 13 21 56 86 25 98 -- 8 General and administrative expenses 44 46 46 26 33 18 38 38 Taxes, other than production and income taxes 4 2 2 (2) 3 1 3 1 - ------------------------------------------------------------------------------------------------------------------------------------ Total 289 274 306 320 295 333 269 295 - ------------------------------------------------------------------------------------------------------------------------------------ Operating income (loss) 440 290 147 67 116 181 171 230 Equity earnings and other income 9 4 2 3 1 2 -- 2 - ------------------------------------------------------------------------------------------------------------------------------------ Earnings (losses) before interest expense and income taxes (EBIT) $ 449 $ 294 $ 149 $ 70 $ 117 $ 183 $ 171 $ 232 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ Significant items: Ceiling test charges $ 1 $ 20 $ 47 $ 8 $ 27 $ 98 $ -- $ 3 Other operating expenses 12 1 9 78 -- -- -- 4 Total Significant Items $ 13 $ 21 $ 56 $ 86 $ 27 $ 98 $ -- $ 7 - ------------------------------------------------------------------------------------------------------------------------------------
Year-to-Date -------------------------- 2003 2002 2001 --------------------------- Operating revenues Natural gas $1,906 $1,622 $2,139 Oil, condensate and liquids 314 373 326 Other 9 8 21 - ---------------------------------------------------------------------------------- Total operating revenues 2,229 2,003 2,486 Transportation and net product costs (1) (96) (113) (97) - ---------------------------------------------------------------------------------- Total operating margin 2,133 1,890 2,389 - ---------------------------------------------------------------------------------- Operating expenses Depreciation, depletion and amortization 606 622 797 Production costs (2) 239 304 336 Ceiling test and other charges (3) 176 131 2,217 General and administrative expenses 162 127 95 Taxes, other than production and income taxes 6 8 13 - ---------------------------------------------------------------------------------- Total 1,189 1,192 3,458 - ---------------------------------------------------------------------------------- Operating income (loss) 944 698 (1,069) Equity earnings and other income 18 5 1 - ---------------------------------------------------------------------------------- Earnings (losses) before interest expense and income taxes (EBIT) $ 962 $ 703 $(1,068) - ---------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------- Significant items: Ceiling test charges $ 76 $ 128 $2,143 Other operating expenses 100 4 74 ------ ------ ------ Total Significant Items $ 176 $ 132 $2,217 - ----------------------------------------------------------------------------------
(1) Amounts are included in operating expenses on our consolidated statements of income. (2) Production costs include lease operating costs and production related taxes (including ad valorem and severance taxes). (3) Includes ceiling test charges, restructuring and merger-related costs, asset impairments, (gain) loss on long-lived assets, and changes in accounting estimates. 8 PRODUCTION SEGMENT SALES VOLUMES, REALIZED PRICES AND COST PER UNIT
2003 2002 ----------------------------------------- ---------------------------------------- First Second Third Fourth First Second Third Fourth - ------------------------------------------------------------------------------------------------------------------------------------ Natural Gas Sales Volumes (MMcf) Onshore 51,279 50,169 37,766 31,667 82,122 69,866 68,612 62,619 Offshore 35,884 33,166 28,300 28,482 40,024 38,239 36,991 35,818 Coal Seam 10,713 9,906 10,580 10,850 7,261 8,223 9,957 10,350 International 3,867 3,616 3,780 4,273 3,859 3,692 4,532 4,758 - ------------------------------------------------------------------------------------------------------------------------------------ Total Natural Gas Sales Volumes 101,743 96,857 80,426 75,272 133,266 120,020 120,092 113,545 - ------------------------------------------------------------------------------------------------------------------------------------ Oil, Condensate and Liquids Sales Volumes (MBbls) Onshore 1,524 1,176 1,595 1,286 2,132 1,778 1,416 1,261 Offshore 2,068 1,401 1,256 1,472 2,586 2,913 2,323 2,053 Coal Seam -- 0 0 -- International 132 67 40 70 270 275 247 260 - ------------------------------------------------------------------------------------------------------------------------------------ Total Oil, Condensate and Liquids Sales Volumes 3,724 2,644 2,891 2,828 4,988 4,966 3,986 3,574 - ------------------------------------------------------------------------------------------------------------------------------------ Equivalent Sales Volumes (MMcfe) Onshore 60,420 57,227 47,337 39,383 94,913 80,534 77,109 70,183 Offshore 48,291 41,572 35,835 37,314 55,538 55,719 50,931 48,134 Coal Seam 10,715 9,906 10,580 10,852 7,261 8,223 9,957 10,350 International 4,660 4,018 4,018 4,692 5,481 5,340 6,011 6,324 - ------------------------------------------------------------------------------------------------------------------------------------ Total Equivalent Sales Volumes 124,086 112,723 97,770 92,241 163,193 149,816 144,008 134,991 - ------------------------------------------------------------------------------------------------------------------------------------ Weighted Average Realized Prices (1) Natural gas including hedges ($/Mcf) $ 6.20 $ 5.06 $ 4.81 $ 4.29 $ 2.46 $ 3.34 $ 3.01 $ 3.92 Natural gas excluding hedges ($/Mcf) $ 6.46 $ 5.10 $ 4.86 $ 4.32 $ 2.18 $ 3.17 $ 2.93 $ 3.79 Oil, condensate and liquids including hedges ($/Bbl) $ 27.33 $ 25.15 $ 23.82 $ 22.89 $ 15.68 $ 22.14 $ 22.19 $ 22.39 Oil, condensate and liquids excluding hedges ($/Bbl) $ 28.12 $ 25.85 $ 24.41 $ 23.44 $ 15.02 $ 21.99 $ 22.93 $ 23.14 - ------------------------------------------------------------------------------------------------------------------------------------ Production cost Average lease operating cost ($/Mcfe) $ 0.35 $ 0.38 $ 0.51 $ 0.49 $ 0.39 $ 0.50 $ 0.41 $ 0.47 Average production taxes ($/Mcfe) $ 0.17 $ 0.11 $ 0.09 $ 0.18 $ 0.10 $ -- $ 0.07 $ 0.13 - ------------------------------------------------------------------------------------------------------------------------------------ Total production cost ($/Mcfe) $ 0.52 $ 0.49 $ 0.60 $ 0.67 $ 0.49 $ 0.50 $ 0.48 $ 0.60 - ------------------------------------------------------------------------------------------------------------------------------------ Average general and administrative cost ($/Mcfe) $ 0.36 $ 0.41 $ 0.47 $ 0.25 $ 0.21 $ 0.12 $ 0.26 $ 0.27 Unit of production depletion cost ($/Mcfe) $ 1.24 $ 1.25 $ 1.37 $ 1.46 $ 0.92 $ 0.90 $ 1.07 $ 1.20 - ------------------------------------------------------------------------------------------------------------------------------------
Year-to-Date ------------------------------- 2003 2002 2001 - ------------------------------------------------------------------------------ Natural Gas Sales Volumes (MMcf) Onshore 170,881 283,219 323,020 Offshore 125,832 151,072 201,487 Coal Seam 42,049 35,791 27,046 International 15,536 16,841 13,187 - ------------------------------------------------------------------------------ Total Natural Gas Sales Volumes 354,298 486,923 564,740 - ------------------------------------------------------------------------------ Oil, Condensate and Liquids Sales Volumes (MBbls) Onshore 5,581 6,587 6,739 Offshore 6,197 9,875 7,083 Coal Seam International 309 1,052 560 - ------------------------------------------------------------------------------ Total Oil, Condensate and Liquids Sales Volumes 12,087 17,514 14,382 - ------------------------------------------------------------------------------ Equivalent Sales Volumes (MMcfe) Onshore 204,367 322,739 363,457 Offshore 163,012 210,322 243,978 Coal Seam 42,053 35,791 27,046 International 17,388 23,156 16,550 - ------------------------------------------------------------------------------ Total Equivalent Sales Volumes 426,820 592,008 651,031 - ------------------------------------------------------------------------------ Weighted Average Realized Prices (1) Natural gas including hedges ($/Mcf) $ 5.17 $ 3.15 $ 3.67 Natural gas excluding hedges ($/Mcf) $ 5.27 $ 2.98 $ 4.11 Oil, condensate and liquids including hedges ($/Bbl) $ 24.97 $ 20.37 $ 22.10 Oil, condensate and liquids excluding hedges ($/Bbl) $ 25.64 $ 20.46 $ 22.31 - ------------------------------------------------------------------------------ Production cost Average lease operating cost ($/Mcfe) $ 0.42 $ 0.43 $ 0.38 Average production taxes ($/Mcfe) $ 0.14 $ 0.08 $ 0.14 - ------------------------------------------------------------------------------ Total production cost ($/Mcfe) $ 0.56 $ 0.51 $ 0.52 - ------------------------------------------------------------------------------ Average general and administrative cost ($/Mcfe) $ 0.38 $ 0.21 $ 0.15 Unit of production depletion cost ($/Mcfe) $ 1.32 $ 1.02 $ 1.20 - ------------------------------------------------------------------------------
(1) Prices are stated after transportation costs. 9 FIELD SERVICES SEGMENT EARNINGS BEFORE INTEREST EXPENSE AND INCOME TAXES (EXCLUDES INTERSEGMENT TRANSACTIONS)
- ----------------------------------------------------------------------------------------------------------------------------------- 2003 2002 --------------------------------- ---------------------------------- (In millions) First Second Third Fourth First Second Third Fourth - ----------------------------------------------------------------------------------------------------------------------------------- Gross margins Gathering $ 12 $ 7 $ 3 $ 1 $ 82 $ 41 $ 39 $ 29 Processing 31 24 29 33 39 39 39 30 NGL business 4 (2) 1 6 4 4 2 1 Other - - - (17) - - - - - ----------------------------------------------------------------------------------------------------------------------------------- Total 47 29 33 23 125 84 80 60 - ----------------------------------------------------------------------------------------------------------------------------------- Operating expenses Operation and maintenance 31 39 30 10 61 37 44 37 Merger-related costs - - - - - - - - (Gain) loss on long-lived assets 1 (6) 2 176 - (10) 1 (170) Depreciation, depletion and amortization 10 8 7 6 19 15 11 11 Taxes, other than income taxes 5 3 2 1 7 5 4 4 - ----------------------------------------------------------------------------------------------------------------------------------- Total 47 44 41 193 87 47 60 (118) - ----------------------------------------------------------------------------------------------------------------------------------- Operating income (loss) - (15) (8) (170) 38 37 20 178 Equity earnings and other income (expense) 27 (41) 40 300 13 19 (30) 14 - ----------------------------------------------------------------------------------------------------------------------------------- Earnings (losses) before interest expense and income taxes (EBIT) $ 27 $ (56) $ 32 $ 130 $ 51 $ 56 $ (10) $ 192 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Significant items: Operating expenses $ 1 $ (2) $ 2 $ 175 $ - $ (9) $ 1 $ (169) Equity earnings and other income - 79 - (260) - - 47 3 - ----------------------------------------------------------------------------------------------------------------------------------- Total Significant Items $ 1 $ 77 $ 2 $ (85) $ - $ (9) $ 48 $ (166) - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Equity earnings from GulfTerra Energy Partners, L.P.(1) $ 29 $ 42 $ 40 $ 42 $ 15 $ 18 $ 17 $ 19 - ----------------------------------------------------------------------------------------------------------------------------------- Cash Distributions from GulfTerra Energy Partners, L.P. Common unit ownership $ 8 $ 8 $ 8 $ 8 $ 6 $ 8 $ 8 $ 8 Series C unit ownership 7 7 8 8 - - - - General partner ownership 15 16 18 21 9 11 11 12 - ----------------------------------------------------------------------------------------------------------------------------------- Total $ 30 $ 31 $ 34 $ 37 $ 15 $ 19 $ 19 $ 20 - -----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------- Year-to-Date ------------------------- (In millions) 2003 2002 2001 - ----------------------------------------------------------------------------------------- Gross margins Gathering $ 23 $ 191 $ 301 Processing 117 147 235 NGL business 9 11 25 Other (17) - - - ----------------------------------------------------------------------------------------- Total 132 349 561 - ----------------------------------------------------------------------------------------- Operating expenses Operation and maintenance 110 179 252 Merger-related costs - - 46 (Gain) loss on long-lived assets 173 (179) - Depreciation, depletion and amortization 31 56 111 Taxes, other than income taxes 11 20 28 - ----------------------------------------------------------------------------------------- Total 325 76 437 - ----------------------------------------------------------------------------------------- Operating income (loss) (193) 273 124 Equity earnings and other income (expense) 326 16 72 - ----------------------------------------------------------------------------------------- Earnings (losses) before interest expense and income taxes (EBIT) $ 133 $ 289 $ 196 - ----------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------- Significant items: Operating expenses $ 176 $ (177) $ 56 Equity earnings and other income (181) 50 - - ----------------------------------------------------------------------------------------- Total Significant Items $ (5) $ (127) $ 56 - ----------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------- Equity earnings from GulfTerra Energy Partners, L.P.(1) $ 153 $ 69 $ 47 - ----------------------------------------------------------------------------------------- Cash Distributions from GulfTerra Energy Partners, L.P. Common unit ownership $ 32 $ 30 20 Series C unit ownership 30 - - General partner ownership 70 43 25 - ----------------------------------------------------------------------------------------- Total $ 132 $ 73 $ 45 - -----------------------------------------------------------------------------------------
(1) As of December 31, 2003 we owned 50 percent and are the managing member of the general partner and own 17.8 percent (10,384,245) of the common units and all of the partnership's Series C units. The Series C units are reflected in the partnership's capital account at $335 million. Prior to October 2003, we also owned Series B preference units of the partnership which we redeemed for $156 million. In 2003, Gulf Terra issued additional common units and we recognized a $38 million gain as a result of applying Staff Accounting Bulletin No. 51. In connection with GulfTerra's merger with Enterprise, as modified in April 2004, on September 30, 2004, we sold 2.9 million of our common units, all of our series C units and our remaining general partnership interest in GulfTerra to Enterprise for cash and a 9.9 percent interest in the general partner of the combined entity. We also converted our remaining common units into an approximate 4 percent interest in Enterprise common units. FIELD SERVICES SEGMENT VOLUMES AND RATES
- ---------------------------------------------------------------------------------------------------------------------------------- 2003 2002 ------------------------------------ ----------------------------------- First Second Third Fourth First Second Third Fourth - ---------------------------------------------------------------------------------------------------------------------------------- Gathering volumes remaining assets (BBtu/d) 200 217 190 222 309 279 237 343 Gathering volumes from sold assets (1) 377 227 - - 5,523 1,986 1,972 1,496 - ---------------------------------------------------------------------------------------------------------------------------------- Total gathering volumes (BBtu/d) 577 444 190 222 5,832 2,265 2,209 1,839 - ---------------------------------------------------------------------------------------------------------------------------------- Weighted average gathering rates ($/MMBtu) $ 0.22 $ 0.18 $ 0.15 $ 0.10 $ 0.16 $ 0.20 $ 0.19 $ 0.17 - ---------------------------------------------------------------------------------------------------------------------------------- Processing volumes remaining assets (Inlet BBtu/d) 3,139 3,107 3,017 3,299 3,087 3,056 3,073 3,089 Processing volumes from sold assets (2) 168 95 - - 1,030 900 810 640 - ---------------------------------------------------------------------------------------------------------------------------------- Total processing volumes (Inlet BBtu/d) 3,307 3,202 3,017 3,299 4,117 3,956 3,883 3,729 - ---------------------------------------------------------------------------------------------------------------------------------- Weighted average processing margins ($/MMBtu) $ 0.11 $ 0.08 $ 0.10 $ 0.11 $ 0.10 $ 0.11 $ 0.11 $ 0.09 - ---------------------------------------------------------------------------------------------------------------------------------- Total NGL production (Bbl/d) 107,136 100,676 96,202 109,104 162,486 183,065 154,895 141,597 - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- 2003 2002 ------------------------------------ ----------------------------------- First Second Third Fourth First Second Third Fourth - ---------------------------------------------------------------------------------------------------------------------------------- GulfTerra Energy Partners, L.P. Natural gas pipelines and plants (BBtu/d) 7,599 7,831 7,750 7,564 2,430 6,254 5,971 6,501 - ---------------------------------------------------------------------------------------------------------------------------------- Oil and NGL logistics (Bbls/d) 275,800 276,123 243,209 248,719 231,740 240,184 219,449 214,308 - ----------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------ Year-to-Date -------------------------- 2003 2002 2001 - ------------------------------------------------------------------------------------ Gathering volumes remaining assets (BBtu/d) 207 292 454 Gathering volumes from sold assets (1) 150 2,731 5,655 - ------------------------------------------------------------------------------------ Total gathering volumes (BBtu/d) 357 3,023 6,109 - ------------------------------------------------------------------------------------ Weighted average gathering rates ($/MMBtu) $ 0.18 $ 0.17 $ 0.14 - ------------------------------------------------------------------------------------ Processing volumes remaining assets (Inlet BBtu/d) 3,141 3,076 3,323 Processing volumes from sold assets (2) 65 844 1,037 - ------------------------------------------------------------------------------------ Total processing volumes (Inlet BBtu/d) 3,206 3,920 4,360 - ------------------------------------------------------------------------------------ Weighted average processing margins ($/MMBtu) $ 0.10 $ 0.10 $ 0.15 - ------------------------------------------------------------------------------------ Total NGL production (Bbl/d) 103,266 160,438 169,566 - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Year-to-Date --------------------------- 2003 2002 2001 - ------------------------------------------------------------------------------------ GulfTerra Energy Partners, L.P. Natural gas pipelines and plants (BBtu/d) 7,686 5,302 2,099 - ------------------------------------------------------------------------------------ Oil and NGL logistics (Bbls/d) 260,840 226,353 231,650 - ------------------------------------------------------------------------------------
(1) Sold assets primarily include the Texas Intrastate Pipeline, the Waha and Carlsbad Gathering Systems sold in the second quarter of 2002; the San Juan Gathering System sold in the fourth quarter of 2002; and the Mid-Continent and North Louisiana assets sold in the second quarter of 2003. (2) Sold assets primarily include the Indian Basin plant sold in the second quarter of 2002; the Chaco plant sold in the fourth quarter 2002; and the Mid-Continent and North Louisiana plants sold in the second quarter of 2003. MERCHANT ENERGY SEGMENT (1) EARNINGS BEFORE INTEREST EXPENSE AND INCOME TAXES (EXCLUDES INTERSEGMENT TRANSACTIONS)
- ------------------------------------------------------------------------------------------------------------------------------------ 2003 2002 ------------------------------------------------------------------------------------ (In millions) First Second Third Fourth First Second Third Fourth - ------------------------------------------------------------------------------------------------------------------------------------ Gross margin and other revenue $ (226) $ (32) $ 316 $ 134 $ 303 $ 142 $ (37) $ (621) - ------------------------------------------------------------------------------------------------------------------------------------ Operating expenses Operation and maintenance 248 186 168 158 263 139 127 173 Merger-related costs -- -- -- -- -- -- -- -- Loss on long-lived assets 4 15 45 221 -- -- -- 204 Western Energy Settlement -- (25) -- -- -- -- -- 487 Depreciation, depletion and amortization 27 33 32 25 19 13 10 14 Taxes, other than income taxes 7 15 9 13 5 10 9 9 - ------------------------------------------------------------------------------------------------------------------------------------ Total 286 224 254 417 287 162 146 887 - ------------------------------------------------------------------------------------------------------------------------------------ Operating income (loss) (512) (256) 62 (283) 16 (20) (183) (1,508) Equity earnings and other income (expense) (194) 125 34 23 (368) 86 49 (90) - ------------------------------------------------------------------------------------------------------------------------------------ Earnings (losses) before interest expense and income taxes (EBIT) $ (706) $ (131) $ 96 $ (260) $ (352) $ 66 $ (134) $(1,598) - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ Significant items: Operating expenses $ 57 $ 21 $ 57 $ 221 $ -- $ 10 $ 1 $ 217 Western Energy Settlement and related expenses -- (18) -- -- -- -- -- 487 Equity earnings and other income 304 (21) 25 41 342 -- -- 140 - ------------------------------------------------------------------------------------------------------------------------------------ Total Significant Items $ 361 $ (18) $ 82 $ 262 $ 342 $ 10 $ 1 $ 844 - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------ Year-to-Date ------------------------------ (In millions) 2003 2002 2001 - ------------------------------------------------------------------------------ Gross margin and other revenue $ 192 $ (213) $ 2,255 - ------------------------------------------------------------------------------ Operating expenses Operation and maintenance 760 702 398 Merger-related costs -- -- 18 Loss on long-lived assets 285 204 21 Western Energy Settlement (25) 487 -- Depreciation, depletion and amortization 117 56 41 Taxes, other than income taxes 44 33 15 - ------------------------------------------------------------------------------ Total 1,181 1,482 493 - ------------------------------------------------------------------------------ Operating income (loss) (989) (1,695) 1,762 Equity earnings and other income (expense) (12) (323) 395 - ------------------------------------------------------------------------------ Earnings (losses) before interest expense and income taxes (EBIT) $(1,001) $(2,018) $ 2,157 - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ Significant items: Operating expenses $ 356 $ 228 $ 39 Western Energy Settlement and related expenses (18) 487 -- Equity earnings and other income 349 482 73 - ------------------------------------------------------------------------------ Total Significant Items $ 687 $ 1,197 $ 112 - ------------------------------------------------------------------------------
(1) Quarterly amounts for 2003 include the consolidation of Chaparral effective January 1, 2003 and Gemstone effective April 1, 2003. All periods exclude the Petroleum markets operations as it is now reflected as discontinued operations. MERCHANT ENERGY SEGMENT ANALYSIS OF EBIT BY DIVISION
2003 2002 ----------------------------------------- ----------------------------------------- (In millions) First Second Third Fourth First Second Third Fourth - -------------------------------------------------------------------------------------- ----------------------------------------- Power Electron Management Fee $ -- $ -- $ -- $ -- $ 46 $ 46 $ 47 $ 46 Other Domestic (1) (230) 116 31 (127) 264 69 19 (130) International 50 90 78 78 (328) 114 49 (3) - ---------------------------------------------------------------------------------------------------------------------------------- Total Power (180) 206 109 (49) (18) 229 115 (87) - ---------------------------------------------------------------------------------------------------------------------------------- LNG and Other (79) (25) (5) (76) (10) (7) (7) (11) - ---------------------------------------------------------------------------------------------------------------------------------- Trading - Gas and Power (398) (256) 72 (84) (280) (101) (195) (1,285) - ---------------------------------------------------------------------------------------------------------------------------------- General and administrative Power (14) (13) (36) (30) (21) (27) (17) (180) Trading (35) (43) (44) (21) (23) (28) (30) (35) - ---------------------------------------------------------------------------------------------------------------------------------- Total general and administrative (49) (56) (80) (51) (44) (55) (47) (215) - ---------------------------------------------------------------------------------------------------------------------------------- Total EBIT $ (706) $ (131) $ 96 $ (260) $ (352) $ 66 $ (134) $(1,598) - ----------------------------------------------------------------------------------------------------------------------------------
Year-to-Date ------------------------------ 2003 2002 2001 - --------------------------------------------------------------------------- Power Electron Management Fee $ -- $ 185 $ 147 Other Domestic (1) (210) 222 241 International 296 (168) 123 - --------------------------------------------------------------------------- Total Power 86 239 511 - --------------------------------------------------------------------------- LNG and Other (185) (35) (25) - --------------------------------------------------------------------------- Trading - Gas and Power (666) (1,861) 1,776 - --------------------------------------------------------------------------- General and administrative Power (93) (245) (50) Trading (143) (116) (55) - --------------------------------------------------------------------------- Total general and administrative (236) (361) (105) - --------------------------------------------------------------------------- Total EBIT $(1,001) $(2,018) $ 2,157 - ---------------------------------------------------------------------------
(1) Other Domestic includes the effects of our financial services business. 13 MERCHANT ENERGY SEGMENT OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------------- 2003 2002 -------------------------------------------------------------------------------------- First Second Third Fourth First Second Third Fourth - ----------------------------------------------------------------------------------------------------------------------------------- Price Risk Management Statistics Forward Trading Book (In Millions) $ (714) $ (853) $ (577) $ (488) $ 815 $ 822 $ 619 $ (526) Forward Non-trading Book (In Millions)(1) 967 2,199 1,957 1,938 984 979 963 968 ------------------------------------------------------------------------------------- Total Forward Book (In Millions) $ 253 $ 1,346 $ 1,380 $ 1,450 $ 1,799 $ 1,801 $ 1,582 $ 442 Average VAR (In Millions) $ 39 $ 45 $ 35 $ 27 $ - $ - $ - $ - Physical Gas Delivery (BBtu/d) 5,536 3,341 3,113 2,885 13,221 13,639 12,425 8,232 Physical Power Sales (MMWh) 85,330 65,354 74,480 58,533 104,659 107,698 141,022 116,098 Financial Settlements (BBtue/d) 121,223 79,556 71,817 58,434 157,116 194,728 206,625 194,786 - ----------------------------------------------------------------------------------------------------------------------------------- Asset Statistics Power Assets Capacity (Net Megawatts) Domestic 1,825 1,825 1,825 1,690 2,228 2,228 2,183 2,192 Electron 3,452 3,476 3,470 2,318 3,931 3,931 3,465 3,457 ------------------------------------------------------------------------------------- Total Domestic 5,277 5,301 5,295 4,008 6,159 6,159 5,648 5,649 International 4,773 4,598 4,646 4,367 4,389 4,535 5,302 4,836 ------------------------------------------------------------------------------------- Total 10,050 9,899 9,941 8,375 10,548 10,694 10,950 10,485 Power Generation Volumes (MMWh) - for consolidated plants only(2) 1,654 2,030 2,182 1,861 1,663 1,409 1,631 1,206 - -----------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------ Year-to-Date --------------------------------- 2003 2002 2001 - ------------------------------------------------------------------------------ Price Risk Management Statistics Forward Trading Book (In Millions) $ (488) $ (526) $ 1,605 Forward Non-trading Book (In Millions)(1) 1,938 968 - --------------------------------- Total Forward Book (In Millions) $ 1,450 $ 442 $ 1,605 Average VAR (In Millions) $ 37 $ - $ - Physical Gas Delivery (BBtu/d) 3,710 11,879 9,230 Physical Power Sales (MMWh) 283,697 469,477 217,387 Financial Settlements (BBtue/d) 82,556 188,467 232,282 - ------------------------------------------------------------------------------ Asset Statistics Power Assets Capacity (Net Megawatts) Domestic 1,690 2,192 2,301 Electron 2,318 3,457 3,775 --------------------------------- Total Domestic 4,008 5,649 6,076 International 4,367 4,836 4,006 --------------------------------- Total 8,375 10,485 10,082 Power Generation Volumes (MMWh) - for consolidated plants only(2) 7,727 5,909 3,689 - ------------------------------------------------------------------------------ Analysis of Price Risk Management Activities and Forward Book Trading Portfolio Value at Risk: (In millions) ------------- One Day VAR-95% Confidence Level at December 31, 2003 $ 34 Average VAR-95% Confidence Level during 2003 $ 37 High VAR-95% Confidence Level during 2003 $ 48 Low VAR-95% Confidence Level during 2003 $ 23 December 31, 2003 ------------------------------------------------ Forward Return of Cash Total Cash Risk Management Assets and Liabilities Trading Book Collateral(3) Expectations(4) ------------------------------------------------ Mark to Market Value and Cash Liquidation (In millions) 2004 $ (255) $ 115 $ (140) 2005 (108) 45 (63) 2006 (52) (80) (132) 2007 (5) (48) (53) 2008 (10) (4) (14) Remainder (58) 44 (14) ------------------------------------------------ Total $ (488) $ 72 $ (416) ------------------------------------------------ - ---------------------------------------------------------------------------------------------------------------------------------- (1) Forward non-trading book includes $1.2 billion of non-trading assets acquired in May 2003, upon consolidation of Chaparral effective January 1, 2003. (2) Quarterly amounts for 2003 include the consolidated entities of Chaparral effective Jan. 1, 2003 and Gemstone effective April 1, 2003. (3) Return of cash collateral includes margin posted against our production hedge payables that are included in production segment's non-trading book. (4) The estimated present value of our expected settlements of accrual positions through 2028, assuming a reasonable utilization of transportation and storage capacity, is $(338) million. - ----------------------------------------------------------------------------------------------------------------------------------
EL PASO CORPORATION SCHEDULE OF SIGNIFICANT ITEMS (UNAUDITED)
2003 2002 ---------------------------------------- ---------------------------------------- (In millions) First Second Third Fourth First Second Third Fourth - ---------------------------------------------------------------------------------------- ---------------------------------------- Restructuring costs Employee severance, retention and transition costs $ 25 $ 31 $ 6 $ 9 $ -- $ 23 $ -- $ 14 Transaction costs and fees -- -- -- -- -- 40 -- -- LNG charter cancellation 44 -- -- -- -- -- -- -- Business and operational integration costs -- -- -- -- -- -- -- -- Other -- -- 4 -- -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Total restructuring costs 69 31 10 9 -- 63 -- 14 - ------------------------------------------------------------------------------------------------------------------------------------ Impairment and net (gain) loss on sale of long-lived assets Long-lived assets impairment 18 421 43 398 -- -- -- 444 Long-lived assets net (gain) loss on sales 6 (15) 10 76 -- (10) 1 (237) - ------------------------------------------------------------------------------------------------------------------------------------ Total (gain) loss on long-lived assets 24 406 53 474 -- (10) 1 207 - ------------------------------------------------------------------------------------------------------------------------------------ Impairment and net (gain) loss on sale of equity investments Equity investments impairment 293 81 24 51 286 -- -- 292 Cost basis investments impairment -- -- -- (1) 56 -- -- -- Equity investments net (gain) loss on sales 11 (23) -- (261) -- -- 48 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total (gain) loss on equity investments 304 58 24 (211) 342 -- 48 292 - ------------------------------------------------------------------------------------------------------------------------------------ Re-application of SFAS No. 71 (CIG and WIC) -- -- -- (18) -- -- -- -- Change in Accounting Estimate -- -- -- -- -- -- -- -- Western Energy Settlement and related expenses -- 138 (20) 1 -- -- -- 899 Ceiling test charges 1 20 47 8 27 98 -- 3 Currency loss on Euro bond offering -- -- -- -- -- 45 -- -- - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL SIGNIFICANT ITEMS IMPACTING EBIT $ 398 $ 653 $ 114 $ 263 $ 369 $ 196 $ 49 $ 1,415 - ------------------------------------------------------------------------------------------------------------------------------------ Significant Items impacting EBIT by segment: Pipelines (1) $ -- $ 154 $ (23) $ (13) $ -- $ 1 $ -- $ 561 Production (1) 13 21 56 86 27 98 -- 7 Field Services (1) 1 77 2 (85) -- (9) 48 (166) Merchant Energy (1) 361 (18) 82 262 342 10 1 844 Corporate (2) 23 419 (3) 13 -- 96 -- 169 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL SIGNIFICANT ITEMS IMPACTING EBIT $ 398 $ 653 $ 114 $ 263 $ 369 $ 196 $ 49 $ 1,415 - ------------------------------------------------------------------------------------------------------------------------------------ (1) See individual segment EBIT page for Significant Items - ------------------------------------------------------------------------------------------------------------------------------------ Corporate Significant items: (2) Operating expenses $ 23 $ 417 $ (3) $ 8 $ -- $ 51 $ -- $ 169 Western Energy Settlement and related expenses -- 2 -- -- -- -- -- -- Equity earnings and other income -- -- -- 5 -- 45 -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Total Significant Items $ 23 $ 419 $ (3) $ 13 $ -- $ 96 $ -- $ 169 - ------------------------------------------------------------------------------------------------------------------------------------ Revised estimated tax liabilities - Coastal merger - ------------------------------------------------------------------------------------------------------------------------------------
Year-to-Date ------------------------------- (In millions) 2003 2002 2001 - ------------------------------------------------------------------------------- Restructuring costs Employee severance, retention and transition costs $ 71 $ 37 $ 822 Transaction costs and fees -- 40 70 LNG charter cancellation 44 -- -- Business and operational integration costs -- -- 383 Other 4 -- 218 - ------------------------------------------------------------------------------- Total restructuring costs 119 77 1,493 - ------------------------------------------------------------------------------- Impairment and net (gain) loss on sale of long-lived assets Long-lived assets impairment 880 444 75 Long-lived assets net (gain) loss on sales 77 (246) -- - ------------------------------------------------------------------------------- Total (gain) loss on long-lived assets 957 198 75 - ------------------------------------------------------------------------------- Impairment and net (gain) loss on sale of equity investments Equity investments impairment 449 578 78 Cost basis investments impairment (1) 56 67 Equity investments net (gain) loss on sales (273) 48 -- - ------------------------------------------------------------------------------- Total (gain) loss on equity investments 175 682 145 - ------------------------------------------------------------------------------- Re-application of SFAS No. 71 (CIG and WIC) (18) -- -- Change in Accounting Estimate -- -- 182 Western Energy Settlement and related expenses 119 899 -- Ceiling test charges 76 128 2,143 Currency loss on Euro bond offering -- 45 -- - ------------------------------------------------------------------------------- TOTAL SIGNIFICANT ITEMS IMPACTING EBIT $ 1,428 $ 2,029 $ 4,038 - ------------------------------------------------------------------------------- Significant Items impacting EBIT by segment: Pipelines $ 118 $ 562 $ 334 Production (1) 176 132 2,217 Field Services (1) (5) (127) 56 Merchant Energy (1) 687 1,197 112 Corporate 452 265 1,319 - ------------------------------------------------------------------------------- TOTAL SIGNIFICANT ITEMS IMPACTING EBIT $ 1,428 $ 2,029 $ 4,038 - ------------------------------------------------------------------------------- (1) See individual segment EBIT page for Significant Items - ------------------------------------------------------------------------------- Corporate Significant items: (2) Operating expenses $ 445 $ 220 $ 1,252 Western Energy Settlement and related expenses 2 -- -- Equity earnings and other income 5 45 67 Total Significant Items $ 452 $ 265 $ 1,319 - ------------------------------------------------------------------------------- Revised estimated tax liabilities - Coastal merger $ 102 - -------------------------------------------------------------------------------
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