El Paso 3Q Results Rise 46%
In announcing a 46% increase in third quarter profits led by a
doubling of earnings from the company's nonregulated operations, El
Paso CEO William Wise said last week he expected the company's
acquisition of PG&E Gas Transmission Texas to win final
approvals from the Federal Trade Commission and the Texas Attorney
General's office "literally any moment now." He also said the
Coastal merger still is expected to be completed in the fourth
El Paso reported third quarter earnings of 57 cents/share
compared to 39 cents/share in 3Q99. All of the company's business
units showed earnings growth. Pipeline volumes rose 7%, reflecting
a 16% increase on El Paso Natural Gas and an adjusted 6% increase
at Tennessee Gas Pipeline. Earnings before interest and taxes
(EBIT) for the pipeline division was up 5%. For Field Services,
EBIT rose 36%.
The E&P unit reported a 30% increase in EBIT and is
expecting to replace 200% of its production this year "probably
putting us in the top quartile of all E&P companies for the
year," said Wise. Despite production being down 3% to about 503
MMcf/d during the quarter, Wise said the risk profile of the unit
is down substantially.
EBIT from the Merchant Energy unit soared to $81 million from
only $10 million in 3Q99. Year to date, EBIT from the unit has
increased to $283 million from an adjusted $23 million in 1999. The
growth has been fueled by high fee-based services, new power plants
and significant margins for power sales particularly in the West
this summer. While the units gas sales declined by 25% to 4,8788
billion Btu/d during the quarter, power sales rose by 71% to 40,911
thousand MWh. Liquids sales plummeted to 54 Mbbls from 1,203 Mbbls.
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