EXHIBIT 99.A
News
For Immediate Release
El Paso Corporation Provides Proved Reserve Estimate and
Production Update; Maintains Production Forecast
HOUSTON, TEXAS, February 17, 2004-El Paso Corporation
(NYSE:EP) today announced that it has completed its annual
review of the company's natural gas and oil reserve
estimates. The following is a reconciliation of proved
reserves from December 31, 2002 to December 31, 2003 for El
Paso Corporation and its consolidated subsidiaries, El Paso
Production Holding Company (EPPH) and El Paso CGP Company:
El Paso Corp. EPPH El Paso CGP
Bcf Equivalent at
Jan. 1, 2003 5,233 2,824 2,286
Production (427) (226) (194)
Net Sales (799) (424) (267)
Additions 452 232 220
Revisions (1,824) (865) (951)
------- ------ ------
at Dec. 31, 2003 2,635 1,541 1,094
The company will provide additional information during
today's conference call. Approximately 66 percent of the
December 31, 2003 reserves are proved developed.
The breakdown of December 31, 2003 proved reserves in
billion cubic feet equivalent (Bcfe) by region and
registrant follows:
El Paso Corp. EPPH El Paso CGP
Gulf of Mexico 440 257 183
Central1 451 363 88
Texas Onshore 624 86 538
Coalbed 836 835 1
Methane
International 284 - 284
----- ----- -----
Total 2,635 1,541 1,094
1 Central includes N. Louisiana and Rockies
"We are committed to turning around our production business,
and this is the first step," said Doug Foshee, president and
chief executive officer of El Paso. "The next steps include
completing the reorganization of this business under Lisa
Stewart's leadership, reviewing our drilling inventory by
region and reallocating capital where appropriate. I remain
confident that we are on track to deliver the goals of our
long-range plan."
During the review process, Ryder Scott reviewed
approximately 90 percent of the company's reserve base. In
its audit letter, Ryder Scott cited a difference of less
than 2 percent with the company's internal reserve analysis,
which it deemed as insignificant.
Maintaining Production Outlook
- ------------------------------
El Paso's January 2004 production averaged approximately 960
million cubic feet equivalent (MMcfe) per day. Based on
expected results from the $850-million 2004 capital program,
El Paso believes that it can achieve the 850 - 950 MMcfe
daily production range established in its plan for 2004.
El Paso's December 31, 2003 reserve report supports
approximately 715 MMcfe of average daily production for 2004
from its existing proved developed producing reserves. This
expected production rate is consistent with the range of 680
- - 750 MMcfe of average daily production utilized in the
company's long-range plan.
Financial Impact
- ----------------
El Paso Corporation expects to take a fourth quarter pre-tax
ceiling test charge of approximately $1 billion (assuming
all adjustments are reflected at December 31, 2003).
Additional ceiling test charges would be incurred if natural
gas prices fall below the approximate $6.00 per million British
thermal units (MMBtu) Henry Hub natural gas price that was used
for the calculation. The company estimates that El Paso would
have incurred an additional $1.5 billion (pre-tax) ceiling test
charge if the Henry Hub natural gas price had been $1.00 per
MMBtu lower at December 31, 2003.
Based on current reserves and the expected fourth quarter
2003 ceiling test charge (assuming all adjustments are
reflected at December 31, 2003), the company expects its
production group to experience first quarter 2004 per unit
DD& A rates of $2.68 for El Paso, $2.11 for EPPH and $2.91
for El Paso CGP.
Asset Sales Program
- --------------------
El Paso continues to make excellent progress with the asset
sales component of its December 15, 2003 long-range plan,
having announced or completed $2.9 billion of the $3.3
billion to $3.9 billion plan goal. In the past two months,
the company has contracted for every major asset sale that
was assumed in the plan. Yesterday, El Paso announced that
it had sold its western Canadian properties to BG Group for
approximately $346 million. The sale encompasses
approximately 690,000 net acres of leasehold, including
properties that had an average production rate of
approximately 57 MMcfe per day, net to El Paso's interest,
as of December 31, 2003. This transaction, which is
expected to close in March 2004, covers all of El Paso's
Canadian assets with the exception of the Caribou natural
gas processing plant, firm capacity on the Alliance pipeline
system, and interests in Nova Scotia. El Paso is in various
stages of selling its Indonesian and other international
upstream properties.
Investor Drilling Program Update
- --------------------------------
In October 2003, El Paso announced that it had entered into
a joint drilling agreement with two third parties that would
result in an additional $350 million of drilling activity
beyond El Paso's direct expenditures during late 2003 and
2004. El Paso is a 30-percent participant in the program
with a planned investment of $150 million. The drilling
program was divided into two packages-El Paso CGP
(approximately $230 million) and EPPH (approximately $270
million). While the drilling results of the EPPH program
have been satisfactory, the El Paso CGP program results have
not met expectations. El Paso is evaluating potential
options for the El Paso CGP package.
Webcast and Conference Call
- ---------------------------
El Paso Corporation has scheduled a live webcast today at
5:00 p.m. Eastern Time, 4:00 p.m. Central Time, to review
the topics mentioned in this release. The webcast 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
(303) 205-0044 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.
The webcast replay will be available online through the Web
site in the Investors section. A telephone audio replay will
be also available through February 24, 2004 by dialing (303)
590-3000 (access code 570921#).
El Paso Corporation's purpose is to provide 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 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 release, including,
without limitation, the ability to implement and achieve our
objectives in the long-range plan; 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 divest of certain assets; 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; changes
in reserves estimates based upon internal and third party
reserve analyses; 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; the uncertainties associated
with the outcome of governmental investigations; the
outcome of pending litigation including shareholder
derivative and class actions; political and currency risks
associated with international operations of the company and
its affiliates especially due to the instability in Brazil
and economic conditions in Mexico; 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.
Contacts
Investor and Public Relations
Bruce L. Connery, Vice President
Office: (713) 420-5855
Fax: (713) 420-4417
Media Relations
Mel Scott, Director
Office: (713) 420-3039
Fax: (713) 420-6341