8-K

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: August 23, 2004
(Date of Earliest Event Reported: August 23, 2004)

EL PASO PRODUCTION HOLDING COMPANY

(Exact name of Registrant as specified in its charter)

Delaware	333-106586	76-0637534
(State or other jurisdiction of	( 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:

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  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 August 23, 2004, El Paso Corporation, our parent company, provided a progress report on its long-range plan, financial and operational information for the second quarter of 2004, and an update on the status of the filing of our 2003 Form 10-K and first and second quarter 2004 Form 10-Qs, including information related to us. The financial information provided for the quarter and six months ended June 30, 2004 has not been reviewed by our independent auditor. This financial information remains subject to further review by us and our independent auditor and, therefore, is subject to change. A copy of the press release is attached as Exhibit 9.A and a copy of the related slide presentation is attached as Exhibit 9.B.

Item 9.01 Financial Statements and Exhibits

     (c) Exhibits.

Exhibit
Number	Description
99.A	Press Release dated August 23, 2004.
99.B	Slide Presentation dated August 23, 2004.

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 PRODUCTION HOLDING COMPANY
By:	/s/ D. Mark Leland
	D. Mark Leland
	Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Dated: August 23, 2004

EXHIBIT INDEX

Exhibit
Number	Description
99.A	Press Release dated August 23, 2004.
99.B	Slide Presentation dated August 23, 2004.

EX-99.A

EXHIBIT 99-A

News
For Immediate Release

El Paso Corporation Provides Financial and Operational Update

HOUSTON, TEXAS, August 23, 2004—El Paso Corporation (NYSE: EP) is providing today a progress report on its long-range plan, financial and operational information for the second quarter of 2004, and an update on the status of the filing of the company’s 2003 Form 10-K and first and second quarter 2004 Form 10-Qs.

The financial information provided for the quarter and six months ended June 30, 2004 has not been reviewed by the company’s independent auditor. This financial information remains subject to further review by El Paso and its independent auditor and, therefore, is subject to change.

“We continue to make solid progress on our long-range plan,” said Doug Foshee, president and chief executive officer of El Paso Corporation. “With $3.5 billion of asset sales closed or announced, we have effectively met the asset sales goal that we had targeted for year-end 2005. This has led to a sharp reduction in debt, and we expect that reduction to continue as we close as much as $1.8 billion in asset sales in the third quarter of 2004. Our cash flow has been consistent with our long-range plan, and we continue to benefit from natural gas and oil prices that are well above plan assumptions. Operationally, our businesses are performing at or ahead of our expectations, and we are encouraged by the signs of stability in our production business. Given our progress, I’m optimistic about the outlook for El Paso.”

Financial Update

During the second quarter, El Paso continued to make substantial progress toward its goal of reducing debt, net of cash, to $15 billion by year-end 2005. By the end of 2004, El Paso expects its debt, net of cash, to be below $17 billion, well ahead of its original goal.

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Unaudited Net Debt ($ Billions)

	Sept. 30, 2003		Dec. 31, 2003		March 31, 2004		June 30, 2004
Total debt	$	23.6	$	21.9	$	21.3	$	20.0
Balance Sheet Cash		1.6		1.4		1.8		1.4
Net debt	$	21.9	$	20.5	$	19.5	$	18.6

El Paso’s liquidity was approximately $2.7 billion as of July 31, 2004, consisting of approximately $1.3 billion of readily available cash and approximately $1.4 billion of capacity available under its $3-billion bank facility. The company defines readily available cash as cash on deposit or held in short-term investments that is easily accessible for general corporate purposes. During the second quarter of 2004, El Paso purchased approximately $181 million (face value) of its 7.71-percent Gemstone notes due October 31, 2004 at an average price of 101.6 percent, reducing its debt maturities for the remainder of 2004.

El Paso’s cash flow generation has been consistent with its long-range plan. The table below updates El Paso’s net change in cash for the first six months of 2004. In the second quarter of 2004, El Paso paid out $604 million under the terms of the western energy settlement, which was treated as a use of operating cash.

Preliminary Unaudited Financial Information ($ Millions)

	Six Months ended
	June 30, 2004
Cash flow from operating activities before western energy settlement	$	908
Western energy settlement payments		(604	)
Cash flow from operating activities	$	304
Net proceeds from asset sales and other		1,879
Capital expenditures		(858	)
Repayment of debt and other		(1,293	)
Dividends paid		(49	)
Net change in cash	$	(17	)

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Operational Update – Regulated Business

The financial results for El Paso’s Pipeline Group continue to meet or exceed the assumptions of El Paso’s long-range plan. The outlook for this business remains solid as a result of several projects that will add significant capacity to the Group’s natural gas pipeline system. In July, Cheyenne Plains Gas Pipeline Company, L.L.C, a wholly owned, indirect subsidiary of El Paso Corporation (Cheyenne Plains), commenced construction on a two-phase project that will transport 755 million cubic feet per day (MMcf/d) of Rocky Mountain supplies to the Mid-continent region. Phase 1 of this important new pipeline is expected to be in service in December 2004 with the additional compression to be in service by the end of 2005. Cheyenne Plains expects to complete an approximate $275-million non-recourse financing for this project.

Also in the Western Pipeline Group, Wyoming Interstate Company (WIC) announced in July that it had received binding bids for 350 MMcf/d of capacity on the Piceance Lateral Expansion project. The company plans to begin construction in September 2005 and to have the pipeline in service in late 2005 or early 2006, depending upon weather conditions, Federal Energy Regulatory Commission (FERC) approval, and construction conditions.

In the Eastern Pipeline Group, ANR Pipeline is in the final stages of completion on its Westleg expansion, which will add approximately 218 MMcf/d of capacity when it goes into service in November 2004. Two other projects on the ANR system, Eastleg and Northleg, have each recently received FERC approval. The Eastleg project will provide incremental capacity of 142 MMcf/d to the ANR system in 2005. The Northleg project will displace approximately 110 MMcf/d that it currently sources from another pipeline, beginning in 2005.

Southern Natural Gas Company’s (SNG) South System II project was recently placed in-service. The expansion has a design capacity of 330 MMcf/d and increases the SNG firm transportation capacity along the SNG south mainline to Alabama, Georgia, and South Carolina.

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The company continues to make progress on the new 750 MMcf/d Seafarer Pipeline project, which will transport gas from a proposed LNG facility in the Bahamas to southern Florida. The project has secured a customer for all of the firm capacity and is working toward obtaining all regulatory approvals.

Operational Update – Non-Regulated Businesses

El Paso Production Company is on target to achieve the production and operational goals established in the business plan that was announced on June 29, 2004. The company continues to increase its activity, particularly in the Texas Gulf Coast where El Paso has six rigs currently drilling. In the Gulf of Mexico, the company recently added a rig and now has two rigs operating.

During the second quarter 2004, the company closed acquisitions in Brazil (UnoPaso) and the Black Warrior Basin of Alabama totaling $84 million. UnoPaso’s production is ahead of plan, while the coal seam properties it acquired in Alabama are performing in line with expectations. Also, in July 2004, El Paso sold its interests in Indonesia for $23 million plus working capital.

The table below shows the production volumes, capital expenditures, realized prices, and total cash expenses for the first quarter and second quarter of 2004.

Production Operations

	1Q 2004			2Q 2004
Production (MMcfe/d)		956	1		805
Capital expenditures ($MM)	$	247		$	186
Realized prices2 (net of hedges)
Gas ($/Mcf)	$	5.42		$	5.74
Liquids ($/Bbl)		27.43			32.57
Production costs ($/Mcfe)3	$	0.60		$	0.64
Other taxes ($/Mcfe)		0.02			0.03
General and administrative expenses ($/Mcfe)		0.42			0.51
Total cash expenses4	$	1.04		$	1.18

¹ Includes production from Canadian properties divested during 1Q2004.

² Realized prices reflect restatement for hedge accounting.

³ Production costs include lease operating expenses plus production related taxes.

⁴ Cash expenses equal total operating expenses less DD&A and other non-cash charges, including ceiling test charges, which have not been finalized.

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The average daily production rate for the third quarter 2004 to date is estimated to be 803 million cubic feet equivalent per day (MMcfe/d), pro forma for the UnoPaso acquisition.

At El Paso’s marketing business, market volatility, principally the Cordova tolling arrangement, coupled with the mark-to-market impact of the hedge accounting restatement resulted in significant losses in the first half of 2004. The marketing business continues to make good progress in reducing the number of contract positions in its trading portfolio.

El Paso is also making solid progress selling its domestic power assets. Of the 38 plants in its domestic inventory at December 31, 2003, 19 have been sold and 16 are targeted to close by the end of October 2004. El Paso’s international power assets are performing at or above the levels assumed in its long-range plan. El Paso will provide updates for its power businesses in today’s conference call.

Status of Form 10-K Filing

On August 9, 2004, El Paso issued a press release (see www.elpaso.com) in which it announced that it expected to file its 2003 Form 10-K by the end of the third quarter of 2004 and its first quarter and second quarter 2004 Form 10-Qs by November 30, 2004. In that release the company disclosed that a further restatement of its 2003 Form 10-K was likely as it believed that certain transactions that were historically treated as hedges for its natural gas production did not qualify for hedge accounting and that it would restate its 1999 through 2003 financial results accordingly. The company has made a determination that it must restate for the hedge accounting issue in addition to its previously announced restatement for the revisions to its natural gas and oil reserves.

The restatement impact for reserve revisions is expected to be as follows:

• Total $2.7-billion pre-tax reduction to value of oil and gas properties

• Corresponding after-tax reduction in shareholder’s equity

• Significantly lower unit DD&A rate in future periods compared to no restatement

• Increase in 2004 net income and lower exposure to ceiling test charges in the future

• No impact on cash flow for any period

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The restatement impact for hedge accounting is expected to be as follows:

• $1.0-billion (pre-tax) cumulative impact on stockholders’ equity at December 31, 2003

• $1.6 billion incremental ceiling test charges

• Partially offset by $0.6 billion lower DD&A

• The restatement should have little, if any, impact on El Paso Production Holding Company (EPPH) and El Paso CGP Company (EPCGP)

Based upon the restatement for reserve revisions and hedge accounting, the unit DD&A rate for El Paso’s production business by registrant is estimated to be as follows:

	Current Estimate 2004
DD&A rate ($/Mcfe)	1Q 2004		2Q 2004
El Paso Corp.		1.57		1.65
El Paso Production Holding Company		1.72		1.80
El Paso CGP Company		2.26		2.32

Preliminary and Unaudited Balance Sheet

The capitalization of El Paso (in $ billions) at June 30, 2004 is estimated to be as follows:

Balance sheet cash	$	1.4
Debt and obligations	$	20.0
Minority and preferred interests		0.5
Common equity		4.3
Total book capitalization	$	24.8

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With the change in hedge accounting, the previous and new hedge positions for El Paso Production Company’s natural gas production are shown below.

	Previous Hedges				New Hedge Position
			Avg. Price				Avg. Price
	Volume (Tbtu)		($/MMBtu)		Volume (Tbtu)		($/MMBtu)
2004		75		2.55		5.7		3.34
2005		130		3.22		6.4		3.81
2006		84		3.28		6.4		3.76

CONFERENCE CALL REMINDER; SLIDES TO BE AVAILABLE ON WEB SITE

El Paso Corporation has scheduled a live webcast to discuss the matters addressed in this release today at 10:00 a.m. Eastern Daylight Time, 9:00 a.m. Central Daylight Time, which may be accessed online through El Paso’s Web site at www.elpaso.com in the Investors section. A limited number of telephone lines will also be available to participants by dialing (973) 582-2703 ten minutes prior to the start of the webcast. The company requests that those who do not intend to ask questions use the webcast option.

During the webcast, management will refer to slides that will be posted on the Web site. The slides will be available 45 minutes before the webcast and can be accessed in the Investors section.

The webcast replay will be available online through the Web site in the Investors section. A telephone audio replay also will be available through August 30, 2004 by dialing (973) 935-8507 (access code 5043240).

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 press release 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 press release, including, without limitation,

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changes in unaudited and/or unreviewed financial information; the ability to implement and achieve our objectives in the long-range plan, including achieving our debt reduction targets; the extent and time periods involved in the restatement of our prior years’ financial results, whether related to the reserve revisions, the natural gas hedge transactions or otherwise; the ongoing discussions with the SEC regarding the company’s plan for restatement of prior years’ financial results; the potential impact of the restatement of financial results on our access to capital (including borrowings under credit arrangements); further changes in reserve estimates based upon internal and third party reserve analyses; uncertainties associated with the outcome of governmental investigations, including, without limitation, those related to the reserve revisions and the 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 bond and 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; the successful implementation of the settlement related to the western energy crisis; 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.

The financial information provided herein with respect to the year ended December 31, 2003 and the quarters ended March 31, 2004 and June 30, 2004 have not been audited by its independent auditor. This financial information remains subject to final review and audit by the company and its independent auditor and, therefore, is subject to change.

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

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EX-99.B

EXHIBIT 99.B

Investor Update August 23, 2004

Cautionary Statement Regarding Forward-looking Statements This presentation 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 presentation, including, without limitation, changes in unaudited and/or unreviewed financial information; the ability to implement and achieve our objectives in the long-range plan, including achieving our debt reduction targets; the extent and time periods involved in the restatement of our prior years' financial results, whether related to the reserve revisions, the natural gas hedge transactions or otherwise; the ongoing discussions with the SEC regarding the company's plan for restatement of prior years' financial results; the potential impact of the restatement of financial results on our access to capital (including borrowings under credit arrangements); further changes in reserve estimates based upon internal and third party reserve analyses; uncertainties associated with the outcome of governmental investigations, including, without limitation, those related to the reserve revisions and the 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 bond and 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; the successful implementation of the settlement related to the western energy crisis; 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. The financial information provided herein with respect to the year ended December 31, 2003 and the quarters ended March 31, 2004 and June 30, 2004 have not been audited by its independent auditor. This financial information remains subject to final review and audit by the company and its independent auditor and, therefore, is subject to change.

Our Purpose El Paso Corporation provides natural gas and related energy products in a safe, efficient, and dependable manner

Values Stewardship Integrity Safety Accountability Excellence

Highlights Overall asset sales target met Closed $402 MM so far in 3Q 2004 Most of remaining $1.4 billion to close before 9/30/04 Progressing toward $150 MM cost savings goal Restructuring complete Facility consolidation in Houston "Every dollar counts" approach

Highlights Pipelines hitting on all cylinders Financial performance Growth projects Recontracting Integrity program Turnaround of E&P underway Three of four geographic areas stable or improving Progress in Gulf of Mexico Drill bit activity increasing Two acquisitions completed Trading book continues to shrink International power assets performing above plan

Restatement Update The financial information provided herein should be considered preliminary and unaudited; it remains subject to further review and adjustment by El Paso and its independent auditor and subject to change

Restatement Summary Restatement process underway to address two issues Reserve revision and related issues Hedge accounting treatment Process well advanced Presentation today will show preliminary unaudited impact Further revisions may be required Disclosures in Form 10-K designed to provide more detail Comparison of each prior period Discussion of methodology Expect to file 2003 Form 10-K for El Paso by end of 3Q 2004

Reserve Restatement Overview On February 17, 2004, El Paso announced a 1.8 Tcfe negative revision of its oil and natural gas reserves as of December 31, 2003 Audit Committee of company's Board engaged Haynes and Boone to conduct independent investigation of reasons for revision Based on nature of reasons for the revisions as determined by investigation, El Paso believes a restatement of prior periods is required El Paso, in consultation with PWC and Ryder Scott, believes a reserve reconstruction approach is appropriate for the restatement

Restatement Methodology Reserve reconstruction approach Use December 31, 2003 reserve report as a starting point Work backwards, adjusting each quarter for: Actual production and pricing 2003 estimate of operating and capital cost Re-engineered material property sales Ryder Scott independently reviewed the application of the process and re-engineered material property sales Methodology adjusted for periods prior to year- end 2000 due to availability of data

Reserve Reconstruction Approach: Reconstruction of Reserves PDP 12/31/03 PDP 12/31/01 HISTORY HISTORY HISTORY FORECAST FORECAST FORECAST FORECAST PDP 12/31/02 PUD PDNP NON-PVD 12/31/00

Estimated Financial Impact of Proposed Reserve Restatement Total $2.7 billion pre-tax reduction to value of oil and gas properties Corresponding after-tax reduction in stockholder's equity Significantly lower unit DD&A rate in future periods compared to no restatement Increase in 2004 net income and lower exposure to ceiling test charges in the future No impact on cash flow for any period Preliminary and Unaudited

Hedge Accounting Overview In 1999-2002, El Paso pursued a business strategy to hedge the company's exposure to commodity price movement in its Production business by performing the following steps: El Paso Production ("Production") entered into swaps to fix natural gas price with El Paso Merchant Energy ("EPME") EPME entered into identical swaps with unaffiliated third parties In a number of instances, EPME simultaneously entered into transactions with the same unaffiliated party at similar but offsetting terms Where Step 3 existed, EPME would manage the risk through its trading activities In addition, EPME used these steps to hedge a number of other transactions (such as transportation capacity) We believe that a restatement to eliminate hedge accounting treatment for transactions that included Steps 2 and 3 above is required

Estimated Financial Impact of Proposed Hedge Accounting Restatement EPME earnings will be lower or higher in each period due to the mark-to-market adjustments of Step 2 Production earnings will be lower or higher in each period due to: Lower or higher EBIT in each period due to settlement adjustments of Step 1 Increased ceiling test charge in 2001 due to the elimination of the benefit of the Production hedges Lower DD&A in periods after the increased ceiling test charge Change in other comprehensive income ("OCI") will offset impact on stockholders' equity of mark-to-market adjustments

Estimated Financial Impact of Proposed Hedge Accounting Restatement Estimated $1.0 billion (pre-tax) cumulative impact on stockholders' equity at 12/31/03 $1.6 billion incremental ceiling test charges Partially offset by $0.6 billion lower DD&A Restatement should have little, if any, impact on El Paso Production Holding Company ("EPPH") and El Paso CGP Company ("EPCGP") Preliminary and Unaudited

Preliminary Impact of Restatements in 2004 Production DD&A rate ($/Mcfe) EP EPPH EPCGP Production realized gas price ($/Mcf) EP EPPH EPCGP Trading results Stockholders' equity ($ billions) $2.68 2.11 2.91 $4.63 - - - - At plan N/A $1.57 1.72 2.26 $5.42 4.47 4.86 Below plan N/A $1.65 1.80 2.32 $5.74 4.49 5.60 Below plan $4.3 Prior Estimate 1Q 2004 Current Estimate 2004 1Q 2Q Preliminary and Unaudited

Natural Gas Hedged Volumes: 2004-2006 2004 2005 2006 5.7 6.4 6.4 $ 3.34 3.81 3.76 Previous Hedges New Hedge Position 75.0 130.0 84.0 $ 2.55 3.22 3.28 Volume (Tbtu) Average Price ($/MMbtu) Volume (Tbtu) Average Price ($/MMbtu) Preliminary and Unaudited

Financial Highlights

Changes in Cash Position Preliminary and Unaudited ($ Millions) Cash flow from operating activities before Western Energy Settlement Western Energy Settlement payments Cash flow from operating activities Net proceeds from asset sales and other Capital expenditures Repayment of debt and other Dividends paid Net change $ 639 - $ 639 $ 1,033 (429 ) (831 ) (23 ) $ 389 1Q 2004 $ 2,339 (10 ) $ 2,329 $ 1,472 (2,660 ) (1,101 ) (203 ) $ (163 ) Full Year 2003 $ 908 (604 ) $ 304 $ 1,879 (858 ) (1,293 ) (49 ) $ (17 ) 6 Months 2004

Capital Expenditures Preliminary and Unaudited ($ Millions) Pipeline Group Production Other nonregulated Petroleum markets Corporate Total $ 818 1,568 93 171 10 $ 2,660 Full Year 2003 $ 149 247 6 25 2 $ 429 1Q $ 224 186 17 2 - $ 429 2Q 2004

*Net of $1.4 billion of balance sheet cash Estimated Debt (Net of Cash) $ Billions Sep. 30, 2003 Dec. 31, 2003 Mar. 31, 2004 June 30, 2004 Net debt 21.9 20.5 19.5 18.6 $21.9 $20.5 $19.5 $18.6*

2004 Net Debt Target Net debt as of June 30, 2004 Asset sales announced and expected to close in 2004 Non-recourse debt associated with announced sales Cheyenne Plains project financing Targeted net debt at December 31, 2004 $ 18.6 (1.8 ) (0.2 ) 0.3 $ 16.9 Preliminary and Unaudited ($ Billions) Further impact may come from asset sales, cash flow vs. capital expenditures and exchange of debt for other liabilities

Significant Debt Reduction Expected in 3Q 2004 Closed in 3Q 2004 (to date) Domestic power plants Intl. production properties Other Total Announced and expected to close in 2004 GTM/EPD transaction Domestic power plants Total $ 351 50 1 $ 402 $ 1,020 395 1,415 $ 39 - - $ 39 $ - 132 $ 132 Net Proceeds Non-recourse Debt Preliminary and Unaudited ($ Millions)

Liquidity Update Available cash* Revolver capacity Total liquidity $ Billions $ 1.3 1.4 $ 2.7 July 31, 2004 *The company defines readily available cash as cash on deposit or held in short-term investments that is easily accessible for general corporate purposes

Preliminary and Unaudited ($ Billions) Consolidated Balance Sheet Balance sheet cash Debt and obligations Minority and preferred interests Stockholders' equity* Total book capitalization $ 1.4 20.0 0.5 4.3 $ 24.8 June 30, 2004E *Includes estimated impact of full restatement

Significant Items* Severance and restructuring cost Western Energy Settlement Impairments FAS 71 Net gain on asset sales Facility closure: Greenway Impairment CB I&II Gain on sale of GTM units $ 42 4 703 (17 ) (118 ) - - - $ - - - - - 80 -100 250 -300 (30)-(50) 4Q 2003 & 1st Half 2004 2nd Half 2004 Estimated Items Preliminary and Unaudited ($ Millions) *Does not include charges related to reserve revisions or hedge accounting issue

Regulated Business Update

Year-to-date Results Each pipeline has filed Form 10Q for 2Q 2004: El Paso Natural Gas, Southern Natural Gas, Colorado Interstate Gas, Tennessee Gas Pipeline, ANR Pipeline Favorable result in year-to-date earnings; exceeded Long-Range Plan in both 1Q 2004 and 2Q 2004 Favorable result in capital expenditures; spending controlled below the plan level while on target for construction completion

Continued Progress on Growth Growth projects to be completed as planned: CIG Cheyenne Plains in-service December 2004 ANR Westleg in-service November 2004 SNG South System II in-service August 2004 EPNG Line 2000 Power-Up in-service June 2004 Received FERC approval ANR EastLeg (July 2004) ANR Storage Realignment (July 2004) ANR NorthLeg (June 2004) Significant progress made on Seafarer Received binding bids totaling 350 Mdth/d (333 MMcf/d Design Capacity) on WIC Piceance Lateral Expansion

Growth Projects 0.4 1.2 1.2 0.3 - -0.4 0.6 - -0.5 - -0.9 2.9 3.5* *Includes 2.8 LNG 0.5 0.4 0.3 0.6 0.4 0.7 0.7 0.3 0.4 0.2 0.8 0.3 1.4 0.2 N.A. LNG Imports 7.3 0.9 0.3 0.7 Blue Atlantic Pipeline $2.5 billion 2010 1.0 Bcf/d Seafarer Pipeline $276 MM 2008 750 MMcf/d SNG North and South System $445 MM 2002-2003-2004 699 MMcf/d EPNG Line 2000 Power Up $136.4 MM June 2004 320 MMcf/d ANR Westleg $47.8 MM 2004 218 MMcf/d WIC Medicine Bow Expansion $58 MM 2007-2009 560 MMcf/d Cheyenne Plains $384 MM 2004-2005 755 MMcf/d EPNG Ehrenberg to Cadiz (Formerly Line 1903) $71 MM November 2005 365 MMcf/d ANR Eastleg $17.4 MM 2005 142 MMcf/d SNG Elba Island Expansion $158 MM 1Q 2006 3.5 Bcf TGP Freedom Trail Expansion $79.4 MM 2007 100 MMcf/d TGP Northeast ConneXion $32.6 MM 2006 50 MMcf/d 0.6 ANR Northleg $12.7 MM 2005 110 MMcf/d WIC Piceance Lateral Expansion $120.2 MM December 2005 333 MMcf/d CIG Raton Basin Expansion $94 MM 2005-2008 175 MMcf/d 2003-2012 Flow Changes in Bcf/d

Panhandle (53.3 Mdth/d) MichCon (60 Mdth/d) Continued Progress with Recontracting SNG: AGL (926.5 Mdth/d)* EPNG: Southwest Gas (150 Mdth/d) TGP National Fuel (173 Mdth/d) ConEd (95 Mdth/d) Knoxville Utilities (55 Mdth/d) Connecticut Natural (33 Mdth/d) Berkshire (32 Mdth/d) ANR Western Gas Resources (15.6 Mdth/d) Atlanta Gas Light (173.2 Mdth/d)* Aquila (95.8 Mdth/d) Piedmont (155 Mdth/d) Public Service (93 Mdth/d) Columbia Gas: Ohio/Kentucky (60 Mdth/d) East Ohio (36 Mdth/d) Southern Connecticut (25 Mdth/d) *Subject to regulatory approval

Contract Portfolio 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 20.4 27.4 90 20.4 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 2004 2005 2006 2007 2008 2009 2010 Beyond TGP 391 1279 565 662 699 657 354 2362 ANR 184 1233 1749 440 569 228 1002 1371 EPNG 490 563 3191 1469 0 0 11 389 CIG 206 165 223 996 163 462 229 1689 SNG 0 529 139 188 499 189 435 1387 5% 1,271 14% 3,769 21% 5,867 14% 3,755 7% 1,930 6% 1,536 7% 2,031 26% 7,198 Average remaining contract term: 4.8 years Contract Expiration Portfolio Thousands of Dth/d

Continued Progress with Pipeline Integrity Program In-line inspect all onshore pipelines 6-inch diameter and greater In-line inspection will focus on pipe wall loss Utilizing modern tools/technologies On track to meet mileage goals and costs projection for 2004 Ahead of regulatory requirement

Pipeline Integrity Program 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 20.4 27.4 90 20.4 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 Pre-2001 2001 2002 2003 2004 Projected Year End Cumulative 1st ILI 17872 19596 22414 24649 26783 Annual 1st time ILI 0 1723 2795 2235 2134 63% 42% 46% 58% 53% Cumulative In-Line Inspection (ILI) Program Goals

Non-Regulated Business Update

Production Update

Update Activity levels increasing Recent acquisitions performing well Third quarter-to-date production of 803 MMcfe/d (pro forma for UnoPaso acquisition) On target to achieve goals

Production by Region 4Q 2003 1Q 2004 2Q 2004 Texas Gulf Coast 333 308 307 Onshore 213 224 223 GOM 406 369 274 International 4 5 1 MMcfe/d 9561 9061 805 1Excludes production from Canadian properties divested during 1Q 2004 2Includes 20 MMcfe/d of positive prior period adjustments Production stabilized/improving in three of four geographic areas GOM production in-line with June forecast 2

Operational Update Texas Gulf Coast Increasing drilling activity (six rigs currently drilling) Plan to drill 18 wells during second half 2004 and re-complete 15-20 wells Seeing benefits of production enhancement projects GOM/South Louisiana Drilling West Cameron 62 deep shelf well Rig moving off Prince; second well on-line by end of month Onshore Altamont recompletions underway White Oak Creek acquisition performing in-line with plan International Closed on UnoPaso acquisition; production ahead of plan Participated in bid round six and, with two Brazilian partners, were successful in acquiring two blocks in the southern Camamu Basin Closed on Sampang divestiture (Indonesia) Overall production in-line with June update

Overview of Activity Texas Gulf Coast Gulf of Mexico Onshore International Total Current Activity 3 2 2 - - 7 Recompletions1 Drilling Rigs2 4 - - 2 - - 6 Texas Gulf Coast Gulf of Mexico Onshore International Acquisitions Total Capital Expenditures $ 34 59 60 14 19 $186 2Q 2004 Full Year 2004 $175 245 260 80 90 $850 $ Millions 1In process as of 8/20/2004 2Gross EP-operated rigs as of 8/20/2004 Workovers1 6 2 7 - - 15

Operational and Financial Review Production (MMcfe/d) Capital expenditures ($ MM) Realized prices (excludes hedges) Gas ($/Mcf) Liquids ($/Bbl) Realized prices (includes hedges) Gas ($/Mcf) Liquids ($/Bbl) Production costs ($/Mcfe)2 Other taxes ($/Mcfe) General and administrative expenses ($/Mcfe) Total cash expenses3 2Q 2004 956 1 $247 $ 5.47 27.43 $ 5.42 27.43 $ 0.60 0.02 0.42 $ 1.04 1Q 2004 805 $186 $ 5.81 32.57 $ 5.74 32.57 $ 0.64 0.03 0.51 $ 1.18 2004 Forecast 825-875 $850 $0.66-$0.76 0.01-0.02 0.48-0.52 $1.15-$1.30 1Includes production from Canadian properties divested during 1Q 2004 2Production costs include lease operating expenses plus production related taxes 3Cash expenses equal total operating expenses less DD&A and other non-cash charges, including ceiling test charges, which have not been finalized

Power Update

Domestic Power Assets As of December 31, 2003 Contracted power plants: 27 plants; 2,566 net MW Merchant power plants: 11 plants; 1,442 net MW Restructured contract assets: $ Millions Cedar Brakes I & II2 Mohawk River Funding II Mohawk River Funding IV Utility Contract Funding Total $ 610 47 75 829 $ 1,561 $ 348 42 10 112 $ 512 Non-recourse Debt Net Book Value $ 59 5 2 59 $ 125 As of December 31, 2003 Forecasted Annual 2004 EBIT1 12004 plan before corporate overhead allocations and impairments 2Debt is net of unamortized discounts

2004 Power Plant Sales Status Contracted power plants 17 plants closed 6 plants targeted to close by September 30, 2004 2 plants targeted to close by October 31, 2004 1 plant negotiating consent with plant lender Merchant power plants 2 plants closed 8 plants targeted to close by October 31, 2004 Restructured contract assets Mohawk River Funding IV closed Utility Contract Funding closed $354 333 50 8 62 9 5 21 $ 39 135 75 815 Proceeds Projected Debt Removed $ Millions

Remaining Domestic Power Plants Power plants Midland Cogeneration Ventures Berkshire Restructured contract assets Cedar Brakes I Cedar Brakes II Mohawk River Funding II Expect sale of remaining domestic assets by end of 2006

Current Profile of International Power Assets South America Central America & Europe Asia Total Number of plants Number of pipelines 1,784 598 2,191 4,573 30 3 $ 1,166 446 694 $ 2,306 15 countries 514 net km Net MW Current Net Book Value $ Millions 2004E EBIT* $200 28 46 $274 *2004 plan before corporate overhead allocations and impairments

South America As of December 31, 2003 Bolivia-to-Brazil Pipeline (3,150 km) Porto Velho (404 MW) Aguaytia (155 MW)* Argentina-to-Chile Pipeline (540 km) Rio Negro (158 MW) Manaus (238 MW) Macae (895 MW) Araucaria (484 MW) Gross MW *For reporting purposes, Aguaytia is included in Central America

Key Take-aways 1Q and 2Q 2004 results ahead of expectations Significant progress on domestic asset sales has been made and expect sale of remaining domestic assets by end of 2006 Asian assets performing above plan Brazilian assets performing at or above expectations through 2Q 2004, but recontracting northern power projects very difficult

Marketing & Trading Update

Business Update Market volatility coupled with mark-to-market impact of hedge accounting restatement results in significant losses in 1st half 2004 Short position from Step 2 of the hedge accounting restatement results in loss due to rising gas prices Continued progress in the liquidation of trade book Collateral position improving year-over-year despite record commodity prices

Summary

Summary Outlook is positive Debt reduction ahead of schedule Pipelines exceeding plan Production stabilizing Commodity prices a plus Form 10-K filing expected by 9/30/04

Appendix

EPPH Operational and Financial Review Production (MMcfe/d) Capital expenditures ($ MM) Total debt ($ MM) Realized prices (excludes hedges) Gas ($/Mcf) Liquids ($/Bbl) Realized prices (includes hedges) Gas ($/Mcf) Liquids ($/Bbl) Production costs ($/Mcfe)1 Other taxes ($/Mcfe) General and administrative expenses ($/Mcfe) Total cash expenses2 2Q 2004 549 $ 144 1,200 $ 5.54 25.58 $ 4.47 25.58 $ 0.50 0.04 0.38 $ 0.92 1Q 2004 447 $ 124 1,200 $ 5.72 33.37 $ 4.49 33.37 $ 0.52 0.04 0.43 $ 0.99 1Production costs include lease operating expenses plus production related taxes 2Cash expenses equal total operating expenses less DD&A and other non-cash charges, including ceiling test charges, which have not been finalized

EPPH Production by Region 4Q 2003 1Q 2004 2Q 2004 Texas Gulf Coast 60 66 48 Onshore 188 209 207 GOM 248 274 192 MMcfe/d 496 549* 447 * *Includes 40 MMcfe/d of positive prior period adjustments

Example: Creation of Production Hedge Transactions Production sells natural gas forward to EPME for a fixed price (mark-to-market impact deferred in other comprehensive income) EPME sells natural gas forward with third party(s) for a fixed price (mark-to-market impact deferred in other comprehensive income) EPME enters into offsetting transaction(s) with third party(s) (receives mark-to-market accounting) EPME manages natural gas price risk through trading activities (receives mark-to-market accounting) 1 2 3 4 El Paso Merchant Energy 1 2 3 El Paso Production Company Third party Various Parties 4

Example: Settlement of Production Hedge Transactions El Paso Merchant Energy 1 2 3 El Paso Production Company Third party Various Parties 4 Production delivers natural gas to EPME and receives a fixed price Transaction is offset by Step 3 Transaction is offset by Step 2 EPME receives fixed price under financial transactions with various parties and pays market (or index) price 1 2 3 4

Example: Margin Requirements of Production Hedge Transactions El Paso Merchant Energy 1 2 3 El Paso Production Company Third party Various Parties 4 No margining required between Production and EPME Margin requirement is offset by Step 3 Margin requirement is offset by Step 2 EPME pays margin (as prices increase) or receives margin (as prices decrease) from various parties 1 2 3 4

Investor Update August 23, 2004