El Paso Corp. disclosed on Friday that it will take $1.3-1.5 billion pre-tax asset impairment charges in the second quarter for its petroleum (including Aruba), telecommunications, and other asset sales. The company already said it expected charges of $150-200 million for the California settlement. It also expects severance and other charges related to its Clean Slate cost cutting initiative of approximately $30 million, bringing total impairment changes to between $1.48 billion and $1.73 billion.

The company, however, also said it has found more cost savings. Clean Slate has identified $445 million in annual cost savings that will be phased in by the end of 2004, El Paso said in a statement. This exceeds El Paso’s initial target of $400 million, and the company has already taken significant steps to implement the cost saving program.

On May 13, 2003, El Paso announced it would increase its original 2003 asset sales goal of $3.4 billion by an additional $2.5 billion (by year-end 2004) to further reduce its debt levels. This additional $2.5 billion in asset sales includes the company’s Aruba refinery and other petroleum assets and a number of other non-core assets for which it will take special impariment charges in the second quarter.

Year to date, El Paso has completed $1.8 billion of asset sales and also has $820 million in asset sales announced or under contract. During the second quarter, it completed the sale of several midstream assets in the north Louisiana and Midcontinent regions, its ownership in Enerplus Global Energy Management Co. and a number of smaller assets.

On Friday, the company also announced the sales of its Asphalt business and its Louisiana Lease Crude business for combined proceeds of $102 million. The Asphalt business is being sold to Trigeant EP, Ltd. for $90 million, including inventory valued at $55 million. The Louisiana Lease Crude business was sold to Plains All American Pipeline, L.P. for $12 million, including inventory valued at $2 million.

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