Houston-based El Paso Corp. increased its earnings per share (EPS) in the second quarter by 36% with earnings up from all of its business segments, topping analysts’ predictions despite the downturn in commodity markets of late. EPS were $0.79 compared with an adjusted $0.58 in the second quarter of 2000. Second quarter adjusted net income also jumped 40% to $413 million, compared with an adjusted $294 million for the same period a year ago.
Consolidated earnings before interest expense and taxes (EBIT), adjusted for non-recurring items, rose 30% to an adjusted $955 million, compared with $733 million in 2000. First Call/Thomson Financial analysts had expected earnings to fall between 73-79 cents per share, with a consensus estimate of 77 cents.
“El Paso’s earnings momentum continues to be strong, and we are on track to deliver more than 20% EPS growth in 2001,” said CEO William A. Wise in a statement. “With the strategies and opportunities we have in place, the outlook for El Paso remains excellent.”
In the first six months of this year, diluted EPS increased 39% to an adjusted $1.75, up from an adjusted $1.26 for the first half of 2000. Results from both periods excluded the impact of gains on the sale of assets and merger-related items. Consolidated EBIT for the first half of 2001, excluding non–recurring items, increased 36% to $2,048 million.
UBS Warburg analyst Ronald Barone said he was “pleased to see the performance, particularly in exploration going up, even with weak commodities prices,” which he said reflected El Paso’s good management and benefits from its merger with The Coastal Corp. (see NGI, Feb. 5). Most impressive was El Paso’s pipeline growth, which Barone called “out of the park,” adding that pipeline operators did not usually grow as quickly as El Paso’s has. The Pipeline Group’s adjusted EBIT rose 7% to $315 million, up from $295 for the same period a year ago. Total pipeline system throughput averaged 18,479 billion Btu/d, up 4% from second quarter 2000. The volumes excluded those on the Midwestern Gas Transmission system, which was sold in the second quarter when El Paso merged with Coastal.
In the Merchant Energy group, adjusted EBIT was $265 million, up 8% from $245 million a year ago. Physical natural gas volumes were up 51%, while power volumes doubled to 99%. Financial volumes also increased 58% over the same period a year ago. Production within the El Paso Production Co. reached 1,752 MMcf/d equivalent, up 3% from first quarter 2001 levels and 6% from second quarter 2000. Adjusted EBIT increased 75% to $296 million, up from $169 million in 2000. Currently, El Paso is producing 1,870 MMcf/d equivalent.
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