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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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EL PASO CORPORATION
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NEWS [LOGO - EL PASO]
For Immediate Release
EL PASO CORPORATION REPORTS FIRST QUARTER 2003 RESULTS
HOUSTON, TEXAS, MAY 13, 2003-El Paso Corporation (NYSE:EP)
today reported results for the first quarter of 2003,
updated its progress on its 2003 operational and financial
plan, and provided further details on its plan to achieve
additional debt reduction beyond 2003.
Quarterly Highlights:
* Pipeline Group and Production businesses post strong
results
* Field Services results reflect $1.6 billion of asset
sales in 2002 to
El Paso Energy Partners and other third parties
* Merchant Energy Group results reflect lower Power and
Trading results, partially offset by higher Petroleum
refining operations
First Quarter Results Quarter Ended March 31
(In millions, except per share 2003 2002
amounts) --------- ---------
GAAP net income (loss) $(394) $383
Non-recurring items 534 119
-------- ---------
Pro Forma net income $ 140 $502
GAAP earnings (loss) per
share-diluted $(.66) $.72
Non-recurring items .90 .21
Pro forma earnings per ------- ---------
share-diluted $ .24 $.93
FIRST QUARTER RESULTS
El Paso reported a net loss of $394 million, or $.66 per
diluted share, for the first quarter of 2003, compared with
earnings of $383 million, or $.72 per diluted share, in the
first quarter of 2002. On a pro forma basis, the company
had first quarter 2003 income of $140 million, or $.24 per
diluted share, compared with earnings of $502 million, or
$.93 per diluted share, in the first quarter of 2002.
First quarter 2003 non-recurring items total $534 million,
or $.90 per diluted share, mostly attributable to
impairments of assets to be sold during 2003, the write-
down of El Paso's investment in Chaparral (Project
Electron) to fair market value in anticipation of its
consolidation in the second quarter of 2003, and net gains
on asset sales completed in the first quarter. A complete
schedule of non-recurring items is attached to this
release. The primary components are detailed below.
* Write-down of El Paso's equity investment in Chaparral
of $153 million after-tax, or $.26 per diluted share.
* Impairment of the company's investment in the Milford
power project of $64 million after-tax, or $.11 per
diluted share.
* Impairment of the Eagle Point refinery of $186 million
after-tax, or $.31 per diluted share. El Paso signed a
letter of intent to sell this asset to Sunoco, Inc. in
April.
* Cost to terminate LNG ship charters of $32 million
after-tax, or $.05 per diluted share.
* Adoption of SFAS 143 related to asset retirement
obligations of $22 million after-tax, or $.04 per
diluted share.
* Various other items, including the impairment of the
company's nitrogen business, net gains on asset sales, and
restructuring costs of $77 million after-tax, or $.13 per
diluted share.
"While the trading business was negatively impacted by the
liquidity constraints that existed in the first quarter, we
are very pleased with the performance of our pipeline,
production, and midstream businesses," said Ronald L. Kuehn,
Jr., chairman and chief executive officer of El Paso
Corporation. "The combined pro forma earnings before
interest and taxes (EBIT) of these businesses totaled $713
million, which is up 27 percent from the fourth quarter of
2002 and 8 percent from the first quarter of 2002. We are
increasingly optimistic about the outlook for our natural
gas businesses as we expect the fundamentals for the natural
gas industry to remain strong for the foreseeable future.
We are also very pleased with the progress that we have made
to date on our 2003 operational and financial plan. While
we have more work to do, we are confident that the company
is headed in the right direction, and we are determined to
maximize value for our shareholders."
FIRST QUARTER SEGMENT RESULTS
Pipeline Group
The Pipeline Group's first quarter reported EBIT was $429
million, which compares with reported EBIT of $399 million
in 2002. The increase was driven by expansion projects at
Southern Natural Gas and Colorado Interstate Gas (CIG), the
reactivation of the Elba Island LNG facility, higher equity
earnings from pipeline joint ventures, and operating
efficiencies. Offsetting these benefits were the sale of
CIG's production properties in July 2002, the sale of ANR
Pipeline's ownership in the Alliance pipeline system in
November 2002 and lower revenues at El Paso Natural Gas.
Total pipeline throughput rose 9 percent from 2002 levels
due to expansion projects and colder weather.
Pipeline Group Results First quarter Ended March 31
(In millions) 2003 2002
---------- ----------
GAAP Operating Income $ 384 $ 357
Equity and Other Income 45 42
---------- --------
Reported EBIT $ 429 $ 399
Total throughput (BBtu/d) 23,609 21,727
Production
Production's reported EBIT for the first quarter 2003
totaled $244 million versus $176 million in 2002. Reported
results in 2003 include a $9-million impairment of an
intangible asset related to Canadian properties that have
been sold and $3 million in restructuring costs, while 2002
results include $33 million of ceiling test charges
associated with certain international properties. First
quarter equivalent production declined 24 percent due
largely to significant sales of proved reserves since early
2002. The realized price for natural gas, net of hedges,
rose to $4.60 per thousand cubic feet (Mcf) in 2003 from
$3.46 per Mcf in 2002, while the realized price for oil,
condensate, and liquids, net of hedges, rose to $27.33 from
$15.68 per barrel. While total operating costs declined on
an absolute dollar basis, total per-unit costs increased to
an average $2.55 per thousand cubic feet equivalent (Mcfe)
in the first quarter 2003 compared with $1.96 per Mcfe last
year. The per-unit costs were affected by increased
production taxes due largely to higher commodity prices in
2003, higher depletion costs, and increased corporate
expense allocations on lower equivalent production.
The company has hedged 162 trillion British thermal units
(TBtu) or approximately 47 percent of its remaining expected
2003 natural gas production at a NYMEX price of $3.48 per
million British thermal unit (MMBtu) or $3.69 per Mcf. The
company expects that its 2003 realized price for natural gas
will be approximately $.30 less than the NYMEX spot price
due to transportation costs and regional price
differentials.
Production Results First Quarter Ended March 31
(In millions) 2003 2002
------------ -----------
GAAP Operating Income $235 $175
Equity and Other Income 9 1
-------- ----------
Reported EBIT 244 176
Non-recurring items1 12 33
-------- ----------
Pro forma EBIT $256 $209
Natural gas sales volumes (MMcf) 101,743 133,266
Oil, condensate and liquids
sales volumes (MBbls) 3,724 4,988
Total equivalent sales volumes
(MMcfe) 124,086 163,193
Weighted average realized
prices:
Natural gas ($/Mcf) $4.60 $3.46
Oil, condensate and liquids
($/Bbl) $27.33 $15.68
1 Non-recurring items include an intangible asset
impairment on Canadian properties and restructuring
costs (2003) and ceiling test charges on certain
international properties (2002).
Field Services
Field Services reported EBIT of $27 million for the first
quarter 2003 compared with $51 million in 2002. Reported
results for 2003 include a $1-million loss on an asset sale.
First quarter 2003 pro forma EBIT was lower than 2002
levels, primarily due to the sale of $1.6 billion of assets
to El Paso Energy Partners (NYSE:EPN) and other third
parties during 2002. The earnings contribution from El Paso
Energy Partners increased to $29 million this quarter from
$15 million during the first quarter of 2002. The
significant decrease in gathering and transportation volumes
from prior-year levels reflects the assets sales, as does
the reduction in year-over-year processing volumes.
Gathering and transportation rates improved in 2003 because
the remaining midstream assets have a higher average per-
unit rate than the assets that were sold. Processing
margins improved as well, primarily due to higher natural
gas liquids prices.
Field Services Results First Quarter Ended March 31
(In millions) 2003 2002
----------- ----------
GAAP Operating Income $ -- $ 38
Equity and Other Income 27 13
--------- ---------
Reported EBIT 27 51
Non-recurring items1 1 --
--------- ---------
Pro forma EBIT $ 28 $ 51
Gathering and transportation
volumes (BBtu/d) 577 5,832
Weighted average gathering
and transportation rate
($/MMBtu) $.22 $.16
Total processing volumes
(Inlet BBtu/d) 3,307 4,117
Weighted average processing
margins ($/MMBtu) $.11 $.10
Total NGL production (Bbl/d) 97,117 162,052
1 Non-recurring item - loss on an asset sale
Merchant Energy
The Merchant Energy Group, consisting of domestic and
international power, petroleum and LNG, and energy trading
reported a first quarter 2003 EBIT loss of $756 million
compared with EBIT of $93 million in the prior year period.
Results for 2003 include asset and equity investment
impairments, LNG exit costs, net gains on asset sales, and
restructuring costs while 2002 results include a $342-
million impairment of equity investments in Argentina.
El Paso's power business had pro forma first quarter EBIT of
$46 million versus $303 million in 2002. Last year's
results benefited from domestic power plant contract
restructurings as well as Project Electron management fees.
Petroleum and LNG had pro forma EBIT of $47 million in the
first quarter of 2003 versus EBIT of $87 million last year.
The decrease was primarily due to a steam contract
termination fee received in 2002 partially offset by
improved current year refining margins at the Eagle Point
and Aruba refineries.
Trading operations had a first quarter pro forma EBIT loss
of $186 million compared with $45 million of EBIT in the
same 2002 period. The company's tight liquidity position
during the first quarter of 2003 together with the cost of
exiting trading made it necessary to manage the trading
business for liquidity versus earnings. For example,
El Paso sold or terminated several contracts in order to
eliminate the use of working capital to service these
commitments, as well as to continue liquidating its
portfolio pursuant to its announced decision to exit the
trading business. These early liquidations resulted in an
estimated loss of $34 million in the quarter.
Preserving liquidity was also a major factor in other
trading losses. At the start of the quarter, the company
had a sizeable portfolio of firm pipeline transportation and
storage capacity that it used in conjunction with the
wholesale purchase and sale of natural gas in various areas
of the country. These capacity positions were hedged with
financial derivatives. During the first quarter of 2003,
natural gas prices were extremely volatile, and the basis
spread between producing basins, such as the Gulf of Mexico,
and market areas, such as New York and Boston, periodically
rose to $10 per Mcf and higher. To preserve liquidity, the
company at times chose not to prepay for high-priced natural
gas for shipment or storage and was unable to fully offset
the costs of these positions and their financial hedges,
which resulted in estimated losses of $66 million in the
quarter.
Because El Paso's liquidity is significantly better now due
to the completion of additional asset sales and several
financings, together with a substantial reduction in the
size of the transportation and storage portfolios and their
related hedges, these types of losses should be mitigated in
the future. The overall transportation capacity portfolio
was reduced by 50 percent in the quarter, from 4.4 billion
cubic feet per day (Bcf/d) to 2.2 Bcf/d, while the storage
portfolio was reduced by 56 percent, from 125 Bcf to 55 Bcf.
El Paso continues to make substantial progress with respect
to the overall liquidation of its trading book. The
company's total remaining contract positions declined by
33 percent in the first quarter from approximately 40,000
positions at December 31, 2002 to 27,000 positions at March
31, 2003, and the company is still on track to reduce the
remaining contracts to below 12,000 positions by year-end
2003.
Merchant Energy Results First Quarter Ended March 31
(In millions) 2003 2002
--------- ---------
GAAP Operating Income (Loss) $ (514) $ 455
Equity and Other Income (Loss) (242) (362)
-------- ---------
Reported EBIT (Loss) $ (756) $ 93
Non-recurring items1 663 342
-------- ---------
Pro forma EBIT (Loss) $ (93) $ 435
1 Non-recurring items include asset and equity
investment impairments, LNG exit costs, net gains on
asset sales and restructuring costs (2003) and the
impairment of equity investments in Argentina (2002).
Detailed operating statistics for each of El Paso's
businesses are available at www.elpaso.com in the For
Investors section.
INTEREST EXPENSE
Interest expense on outstanding debt and preferred interests
of consolidated subsidiaries (which includes payments on
financings such as preferred securities, Clydesdale, and
Trinity River) increased to $384 million in the first
quarter of 2003 versus $347 million in the prior year. The
increase is due to higher average debt balances in 2003 and
higher interest rates on recent debt issuances compared with
recent retirements.
Interest Expense and Return
on Preferred Interests of
Consolidated Subsidiaries First Quarter Ended March 31
(In millions) 2003 2002
-------- --------
Interest expense $345 $307
Return on preferred interests
of consolidated subsidiaries 39 40
-------- --------
Total expense $384 $347
OUTLOOK
El Paso continues to make significant progress on its
operational and financial plan. So far this year,
accomplishments include:
* $2.3 billion, or 67 percent, of the $3.4 billion asset
sales program have been announced or completed
* Significant improvement in liquidity
* Simplification of the balance sheet
* Settlement in principle for the Western energy crisis
* Extension of $3-billion bank facility
* $1.9 billion of financings
* Sale of European natural gas trading book
The company is making additional progress on other fronts.
El Paso's Clean Slate Initiative is moving forward with a
goal of achieving a total of $400 million of cost savings
and business efficiencies by the end of 2004. This compares
with the original 2003 goal of $150 million.
Based on current initiatives, El Paso expects to reduce debt
and other obligations by approximately $7.5 billion by mid
2005. This would reduce its obligations senior to common
stock from $25 billion at March 31, 2003, to approximately
$17.5 billion. The path to this goal is well defined--asset
sales, which now include the Aruba refinery,
telecommunications assets, and additional domestic power
assets; the recovery of working capital from the trading and
petroleum businesses; natural gas production hedges; and the
use of excess cash to pay down debt.
In order to complete the restructuring of the company, El
Paso has formed a Board-level Long Range Planning Committee
that is focused on optimizing and streamlining the company's
core natural gas businesses, achieving additional debt
reduction so that the company can restore an investment
grade rating, maximizing the company's earnings power, and
generating free cash flow.
El Paso now expects to achieve pro forma earnings per share
for 2003 that are consistent with the current First Call
consensus estimate of $.87 per share. This is primarily
based on a better performance of the trading business in the
last nine months of the year and the continuance of current
natural gas prices. On March 31, 2003, the company said
that it expected to break even on a GAAP basis. Since then,
the company has decided to sell the Aruba refinery,
telecommunications assets, and additional domestic power
assets. At this time, the company cannot estimate the
impairment for these assets, however the Aruba refinery and
the telecommunications assets have a combined book value of
approximately $1.7 billion.
LIQUIDITY UPDATE
As of April 30, 2003, El Paso had $3.0 billion of available
cash and lines of credit as detailed below.
Sources
(in billions)
Available cash $1.9
2-year bank facility 3.0
Multi-year bank facility 1.0
------
Subtotal sources $5.9
Uses
2-year bank facility ($1.5)
2-year facility letters of
credit (0.5)
Multi-year bank facility (0.5)
Multi-year facility letters of
credit (0.4)
-------
Subtotal uses (2.9)
-------
Net available cash and lines
of credit $3.0
As of March 31, 2003, El Paso had $1.8 billion of total
cash, $1.5 billion of which was readily available.
CONFERENCE CALL REMINDER; SLIDES TO BE AVAILABLE ON WEB SITE
El Paso Corporation has scheduled a live webcast today at
11:30 a.m. Eastern Daylight Time, 10:30 a.m. Central
Daylight Time, to discuss its financial results, which may
be accessed online through our Web site at www.elpaso.com in
the For Investors section. A limited number of telephone
lines will also be available to participants by dialing
973-339-3086 ten minutes prior to the start of the webcast.
During the webcast, management will refer to slides that
will be posted on our Web site. The slides will be
available 30 minutes before the call and can be accessed in
the For Investors section.
The webcast replay will be available online through our Web
site in the For Investors section. A telephone audio replay
will be also available through May 20, 2003 by dialing 973-
341-3080 (access code 3913607).
El Paso Corporation is the leading provider of natural gas
services and the largest pipeline company in North America.
The company has core businesses in pipelines, production,
and midstream services. Rich in assets, El Paso is
committed to developing and delivering new energy supplies
and to meeting the growing demand for new energy
infrastructure. 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, our ability to
attract and retain qualified members of the Board of
Directors; the successful recruitment and retention of a
qualified CEO; the successful implementation of the 2003
operational and financial plan; the successful
implementation of the settlement related to the Western
Energy Crisis; material and adverse impacts from our proxy
contest with Selim Zilkha/Oscar Wyatt; actions by the credit
rating agencies; the successful close of financing
transactions; our ability to successfully exit the energy
trading business; our ability to divest of certain non-core
assets; changes in commodity prices for oil, natural gas,
and power; 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; political and currency risks
associated with international operations of the company and
its affiliates; inability to realize anticipated synergies
and cost savings associated with restructurings and
divestitures on a timely basis; 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.
Additional Important Information
In this release and the attached income statement we include
certain financial information that is calculated and
presented on the basis of methodologies other than in
accordance with generally accepted accounting principles
(GAAP). A presentation of the most directly comparable
financial measure calculated and presented in accordance
with GAAP, and a reconciliation of the differences between
each non-GAAP financial measure used in this presentation
with the most directly comparable financial measure
calculated and presented in accordance with GAAP, is
provided on our Web site, www.elpaso.com. This information
may be accessed in the For Investors section by clicking on
"First Quarter 2003 Operating Statistics" or by clicking the
"First Quarter 2003 Earnings Review" presentation in the
Presentations section of the For Investors section.
On May 12, 2003, El Paso Corporation began the process of
mailing its definitive proxy statement, together with a
WHITE proxy card. Shareholders are strongly advised to read
El Paso's proxy statement as it contains important
information.
Shareholders may obtain an additional copy of El Paso's
definitive proxy statement and any other documents filed by
El Paso with the Securities and Exchange Commission for free
at the Internet Web site maintained by the Securities and
Exchange Commission at www.sec.gov. Copies of the
definitive proxy statement are available for free at El
Paso's Internet Web site at www.elpaso.com or by writing to
El Paso Corporation, Investor Relations, P.O. Box 2511,
Houston, TX 77252. In addition, copies of El Paso's proxy
materials may be requested by contacting El Paso's proxy
solicitor, MacKenzie Partners, Inc. at (800) 322-2885 Toll-
Free or by email at proxy@mackenziepartners.com.
Information regarding the names, affiliation and interests
of individuals who may be deemed participants in the
solicitation of proxies of El Paso's shareholders is
contained in El Paso's definitive proxy statement.
Contacts
Communications and Government Affairs
Norma F. Dunn, Senior Vice President
Office: (713) 420-3750
Fax: (713) 420-3632
Investor Relations
Bruce L. Connery, Vice President
Office: (713) 420-5855
Fax: (713) 420-4417
Alternate Contacts
Joele Frank/Dan Katcher
Joele Frank, Wilkinson Brimmer Katcher
Office: (212) 355-4449
Fax: (212) 355-4554
EL PASO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In Millions, Except per Share Amounts)
(UNAUDITED)
First Quarter Ended
March 31,
----------------------
2003 2002
----------------------
Operating revenues $4,018 $3,765
Operating expenses
Cost of products and services 2,508 1,623
Operation and maintenance 612 662
Restructuring costs 75 -
(Gain) loss on long-lived assets 318 (15)
Ceiling test charges - 33
Depreciation, depletion and
amortization 361 365
Taxes, other than income taxes 83 85
-------- --------
3,957 2,753
-------- --------
Operating income 61 1,012
Equity earnings and other
income (expense) (185) (299)
-------- --------
Earnings (losses) before interest
expense, income taxes and
other charges (124) 713
Interest and debt expense 345 307
Return on preferred interests of
consolidated subsidiaries 39 40
-------- --------
Income (loss) before income taxes (508) 366
Income taxes (133) 118
-------- --------
Income (loss) from continuing
operations before cumulative
effect of accounting changes (375) 248
Discontinued operations, net
of income taxes 3 (19)
Cumulative effect of accounting
changes, net of income taxes (22) 154
-------- --------
Net income (loss) $(394) $383
======== ========
Diluted earnings (losses) per
common share $(0.66) $0.72
========== ==========
Diluted average common
shares outstanding (000's) 595,059 538,015
========= ===========
EL PASO CORPORATION
CONSOLIDATED ANALYSIS OF NON-RECURRING ITEMS
(In Millions, Except per Share Amounts)
(UNAUDITED)
First Quarter Ended March 31,
-----------------------------
2003 2002
-----------------------------
Reported net income (loss) $(394) $383
Non-recurring items affecting EBIT
Restructuring costs 75 -
Impairment of long-lived assets 368 -
Impairment of equity investments 207 286
Impairments of cost basis investments 86 56
Net gain on sale of long-lived assets (49) -
Net loss on sale of equity investments 11 -
Ceiling test charges - 33
--------- ---------
Total non-recurring items affecting
EBIT 698 375
--------- ---------
Income tax- tax effect of above
non-recurring items (183) (121)
Discontinued coal operations,
net of income taxes (3) 19
Cumulative effect of accounting
changes, net of income taxes:
Adoption of SFAS No. 143- retirement
obligations 22 -
Adoption of SFAS No. 141- elimination
of negative goodwill - (154)
--------- ---------
Pro forma net income $140 $ 502
========= =========
Diluted earnings (losses) per
common share:
Pro forma diluted earnings per
common share $0.24 $0.93
Restructuring costs (0.09) -
Impairment of long-lived assets (0.46) -
Impairment of equity investments (0.26) (0.35)
Impairments of cost basis investments (0.11) (0.07)
Net gain on sale of long-lived assets 0.06 -
Net loss on sale of equity investments (0.01) -
Ceiling test charges - (0.04)
Discontinued coal operations 0.01 (0.03)
Cumulative effect of accounting
changes:
Adoption of SFAS No. 143- retirement
obligations (0.04) -
Adoption of SFAS No. 141- elimination
of negative goodwill - 0.28
--------- ---------
Reported diluted earnings (losses) per
common share $(0.66) $0.72
========= =========
Adjusted pro forma diluted average
common shares outstanding (000's) 595,059 546,472
========= =========
Reported diluted average common
shares outstanding (000's) 595,059 538,015
========= =========
EL PASO CORPORATION
SCHEDULE OF NON-RECURRING ITEMS
(UNAUDITED)
First Quarter Ended March 31
---------------------------------------
2003 2002
_______________________________________
Pre-tax After-tax Pre-tax After-tax
(In Millions ------- --------- ------- ---------
Restructuring costs
Employee severance, retention
and transition costs $31 $23 $ - $ -
LNG charter cancellation and
restructuring costs 44 32 - -
---------------------------------------------------------------------------
Total restructuring costs 75 55 - -
---------------------------------------------------------------------------
Asset impairments and net
(gain)/loss on sales
Long-lived assets impairment 368 271 - -
Equity investments impairment 207 153 286 193
Cost basis investments impairment 86 64 56 38
Long-lived assets net gain on
sales (49) (36) - -
Equity investments net loss
on sales 11 8 - -
---------------------------------------------------------------------------
Total loss on assets 623 460 342 231
---------------------------------------------------------------------------
Ceiling test charges - - 33 23
---------------------------------------------------------------------------
Total charges impacting EBIT 698 515 375 254
---------------------------------------------------------------------------
Discontinued operations, net
of income taxes - (3) - 19
---------------------------------------------------------------------------
Cumulative effect of accounting
changes, net of income taxes - 22 - (154)
---------------------------------------------------------------------------
Total non-recurring items $698 $534 $375 $119
---------------------------------------------------------------------------
First Quarter 2003
------------------------------------------
Pro forma Non-Rec Reported
Total EBIT by segment EBIT Charges EBIT
------------------------------------------
Pipelines $429 $ - $ 429
Production 256 12 244
Merchant Energy (93) 663 (756)
Field Services 28 1 27
Corporate and Other (46) 22 (68)
----------------------------------------------------------------------
Total $574 $698 $(124)
----------------------------------------------------------------------
First Quarter 2002
------------------------------------------
Pro forma Non-Rec Reported
Total EBIT by segment EBIT Charges EBIT
-------------------------------------------
Pipelines $399 $ - $ 399
Production 209 33 176
Merchant Energy 435 342 93
Field Services 51 - 51
Corporate and Other (6) - (6)
----------------------------------------------------------------------
Total $1,088 $375 $ 713
----------------------------------------------------------------------