Despite the downturn in the U.S. economy and the recent drop in natural gas and oil prices, Houston-based El Paso Corp. expects to meet or beat Wall Street’s third quarter earnings estimate, CEO William A. Wise said Thursday. The corporation expects full-year 2001 earnings to total $3.30 per diluted share before non-recurring charges, and meet or exceed First Call’s third quarter estimate of $0.74 a share.

“Our large, strong businesses in natural gas, power and petroleum and our disciplined risk management strategies will allow us to continue to deliver exceptional returns and earnings growth,” Wise said. “In addition, our significant and stable cash flows and excellent competitive position in our core businesses will create additional opportunities in the face of more difficult markets.”

Earnings growth is also expected to be “robust” in 2002. “All of our business segments are performing very well,” Wise said. “The Merchant Energy Group expects to achieve in excess of 25% earnings before interest and taxes (EBIT) growth in 2002 over 2001. Approximately 80% of the expected earnings for 2002 is from contractually certain income or existing projects.”

Wise said the company’s Pipeline Group “continues to meet the growing need for additional pipeline infrastructure and enjoys a high degree of rate certainty on its pipelines,” and El Paso Production expects to achieve 2-5% growth next year. El Paso Field Services also is “benefiting from the strong earnings and cash distribution growth” from the company’s master limited partnership, El Paso Energy Partners, he said.

Based upon current 2002 natural gas futures prices of approximately $3/Mcf, El Paso expects to earn between $3.60-$3.70 per diluted share in 2002. It estimates that a $.10/Mcf change in the annual spot price for natural gas, above or below the $3/Mcf figure, would result in an approximate $.02/share change to earnings.

Recently, El Paso also has added more hedges for its natural gas production. From October through December 2001, about 85% of projected production is hedged at a Nymex price of $3.79/Mcf. For 2002, approximately 70% is hedged at $4.07/Mcf and for 2003, about 39% is hedged at $4.06/Mcf. El Paso expects that its realized price for natural gas will be approximately $.30 less than the Nymex per Mcf price because of transportation costs and regional price differentials.

©Copyright 2001 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.