1. John Hopper
Vice President, Treasurer
Deutsche Bank High Yield Conference
September 28, 2005
the place to work
the neighbor to have
the company to own
2. Cautionary Statement Regarding
Forward-looking Statements
This presentation 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 presentation,
including, without limitation, our ability to implement and achieve our objectives in the long-
range plan, including achieving our debt-reduction targets; our ability to obtain necessary
governmental approvals for proposed pipeline projects and our ability to successfully
construct and operate such projects; our ability to meet production volume targets in our
Production segment; uncertainties associated with exploration and production activities; our
ability to successfully execute, manage, and integrate acquisitions; our ability to close our
announced asset sales on a timely basis; changes in commodity prices for oil, natural gas,
and power; general economic and weather conditions in geographic regions or markets
served by the company 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; 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.
2
3. Our Purpose
El Paso Corporation provides
natural gas and related energy
products in a safe, efficient, and
dependable manner
3
4. El Paso Overview
► Premier natural gas pipeline franchise
► One of largest independent producers
– Turnaround almost complete
► Significant leverage to favorable commodity
fundamentals
► Excellent progress on asset sales/debt
reduction
4
5. Significant Progress in Turnaround
December 2003 Current
► Liquidity ► Stressed ► Strong
► Net debt ► $20.5 billion ► $15.9 billion*
► Asset sales ► Long-Range Plan (LRP) goal: ► $4.3 billion sold under LRP
$3.3 billion–$3.9 billion
► Incremental goal: ► $1.4 billion announced or
$1.2 billion–$1.6 billion closed
► Range of businesses ► Pipes, E&P, marketing & ► Pipes, E&P, marketing (out of
trading, petroleum, chemical, or exiting all other)
domestic & international
power, midstream, others
► Corporate structure ► Large corporate center ► Small corporate center—push
► 5 divisions functions to businesses
► 2 divisions
*As of June 30, 2005
5
6. U.S. Natural Gas Market
Macro Overview
Consumption & Supply in Tcf
Demand
Growth
► Gas consumption in the 35 Domestic 2004–2014
supply
power sector will grow
30
substantially
25 +5.0 Tcf
– 200 GWs of gas-fired Power Generation
generating capacity built
since 2000 20
Industrial +1.0 Tcf
► Domestic supply grows 15
slowly Commercial +0.4 Tcf
10
► More than $20 billion in Residential +0.7 Tcf
infrastructure required 5
over next 5 Years Other +0.3 Tcf
0
2002 2004 2006 2008 2010 2012 2014
Source: CERA and FERC
6
8. Leading Natural Gas Infrastructure
Key Statistics
► 58,000 miles
► 1/3 of daily U.S. throughput
► 40% of U.S. growth capital
in 2005*
Distinguishing Features
► Unmatched connectivity
Elba
Island ► Superior market presence
► Favorable recontracting
position
► Outstanding growth potential
*Source: Energy Information Association
8
9. Connectivity Strength: Market
Catoosa Co.
Ringgold
75 SNG delivery
75 SNG delivery
points to 49 SNG delivery
points to
Calhoun
Chatsworth 49 SNG delivery
points to
Alagasco points to
Alagasco Rome AGL
Lincoln
Gadsden Cedartown/
Rockmart
Marietta AGL
Dallas
Jasper Ben Hill
Oakman
Pell City
Carrolton Augusta
Anniston
Birmingham South Atlanta Warrenton
Talladega Yates
Blythe
Newnan
Reform Oak Grove
Bass Junction
Intensive
Tuscaloosa
Sandersville
Greene Co. Thomaston
Centerville Macon
Opelika Danville
Eclectic Phenix City S. Thomaston
Dexter
Connections Demopolis
Uniontown
Selma
Montgomery
Tuskegee
Laurens County
(South)
Springfield/
Guyton
Savannah
► Citygates
► Plants SNG
SNG Delivery Points/Areas
9
10. Connectivity Strength: Supply
► Strong
presence
► Hub-to-hub ANR
service FGT
SNG
TGP
► Diversity
Most GOM take away capacity
10
11. El Paso’s Pipelines Unmatched for
Growth Projects
Why is this good?
► Superior presence
– Market
– Supply basins
Growth Capital
Commitment*
► $586 MM 2004
► + $450 MM 2005
► ± $450 MM 2006–2008
*In addition to ± $450 MM/year maintenance capex
11
13. Early Culture Shifts/Focus Items
Old New
► Basin dominance ► Best in basin
► Inadequate pre-investment ► Consistent and disciplined risk
analysis and reserve determination
► Poor portfolio management ► Comprehensive mapping with
life-of-property exploitation
plans
► Deep exploration emphasis ► Capital allocation to full risk
spectrum
► Production growth through ► Short-term focus on existing
capex properties and base
production. Long-term
emphasis on value creation
13
15. Production Company Overview
Average Daily Production1
► Production stabilized (MMcfe/d)
901 860–9002
► Creating value at 814 810+2
70 Equity
24 Equity
$4.75/MMBtu
► GOM, Onshore, and
Brazil performing well
► Texas Gulf Coast
developing low-risk
inventory
1Q 2004 2004 2005E 2005 Exit
1Includes volumes attributable to Four Star equity
2Assumes no effects from Hurricane Katrina
15
16. Dramatic Shift Towards
Onshore Production
Key takeaways
► Onshore production almost
doubles as percentage of total
International
8% ► Business more predictable
► R/P goes from 6.2 to 7.4
Onshore
GOM 25% GOM Onshore
41% 25% 47% How was this accomplished?
TX Gulf
TX Gulf ► Shifted capital towards Onshore
Coast
34% Coast mid-2004
20%
► Successful drilling program
1Q 2004 2005E Exit ► Medicine Bow accelerates
process
– 80% proved reserves in core
Onshore areas
16
17. Texas Gulf Coast
Turnaround Well Underway
Problems Response
► Focused on deep, ► New management
expensive wells ► Changed risk profile
► Generally 100% working ► Success measured by
interest PVR
► Success defined by high ► Building inventory of
flow rates low-risk prospects
► Wheels came off in 2003 ► Leveraging large
acreage position
Situation analogous to successful GOM turnaround
17
18. Creating More Value in
Shallower Objectives
► Historical focus was
Frio
► Well cost: $1.3 MM lower Vicksburg
► Reserves: 1.1 Bcfe
► F&D costs: ≈ $1.18 Mcfe
► Multi-pay
Upper Vicksburg
8,500' environment offers
► Well cost: $1.7 MM attractive, shallower
► Reserves: 2.0 Bcfe options
► F&D costs: ≈ $0.85 Mcfe
12,000'
Lower Vicksburg ► PVR increases from
► Well cost: $7.6 MM 1.2 to 2.1
► Reserves: 5.3 Bcfe
► F&D costs: ≈ $1.43 Mcfe
19,000'
Note: Estimates based on per Sand Resistivity (HC Indicator)
well data for a South Texas well
18
19. Good Progress in Texas Gulf Coast
Monte Christo Field
Hidalgo
► Early returns very good
► El Paso has ≈ 200,000 net acre
position to evaluate/leverage
Operated wells
► Expect solid inventory for
Jeffress/Samano Field
2005 wells
2006 wells
2006 capital program
EP leases
Initial
Capex Production
Field Formation ($ MM) (MMcf/d)
Hamman Ranch 361 Monte Christo U. Vicksburg $1.0 6.1
Hamman Ranch 471 Monte Christo U. Vicksburg $0.9 9.5
Hamman Ranch 601 Monte Christo L. Vicksburg $2.3 11.0
Salinas M 03 Jeffress L. Vicksburg $2.1 3.4
Hamman Ranch 71 Monte Christo U. Vicksburg $1.8 1.22
Renger 2 Speaks L. Wilcox $5.3 15.0
Saga 1 La Copita U. Vicksburg $3.0 Completing;
sets up 3 offsets
1Recompletions
2Testing continuing
19
20. Production Company Summary
► Very confident in completing E&P turnaround
► Program creating value at plan prices
► Business becoming more predictable
– More onshore production
– Longer R/P
► Strong outlook for 2006
20
22. Substantial Leverage to
Natural Gas & Oil Prices
Potential 2006 Impact
Assumed Gas
Price $/MMBtu $5 $6 $7 $8 $9 $10
$2,891
$2,649
$2,377
$2,105 $10 gas price
$1,803 $1,953
implies $670 MM
$ MM incremental cash
Revenue vs. $5
Current
Cash Loss from
Strip
($90) ($173)
Legacy Hedges ($257) ($341) ($424) ($508)
Assumptions: 330 Bcfe*; 10% basis differential and oil priced at 6x gas
*For illustrative purposes: Will provide 2006 guidance in January; assumes high end
of 2005 exit rate
22
23. Cost Reductions Continue
► Greenway lease’s approximately $50 MM annual costs
ending in 2007
► Political risk insurance cost which peaked at more than
$25 MM per year essentially eliminated with sale of
foreign assets
► D&O insurance annual expense of $29 MM reduced by
nearly one-half after 2005
► Outside legal costs of approximately $55 MM per year
expected to come down in 2006 and down sharply in 2007
► Accounting and audit annual costs of $45 MM to be trimmed
by one-third after 2005
► Trading costs reduce as book continues to shrink
23
24. Summary
► El Paso has made rapid progress
► Pipelines performing great; outlook great
► Production turnaround complete by year end
► Shaping up for a great 2006
24
26. Production Related
Derivative Schedule
2005 2006 2007 2008 2009-2012
Average Average Average Average Average
Notional Hedge Average Notional Hedge Average Notional Hedge Notional Hedge Notional Hedge
Natural Gas Volume Price Cash Price Volume Price Cash Price Volume Price Volume Price Volume Price
(Bcf) ($/MMBtu) ($/MMBtu) (Bcf) ($/MMBtu) ($/MMBtu) (Bcf) ($/MMBtu) (Bcf) ($/MMBtu) (Bcf) ($/MMBtu)
Designated
Fixed Price - Legacy 1 32.60 $6.79 $3.64 83.7 $6.36 $3.93 4.6 $3.28 4.6 $3.42 16.0 $3.74
Fixed Price 0.50 $5.78 $5.78 1.8 $5.28 $5.28 0.8 $5.23
Economic
Fixed Price 6.10 $8.05 $8.05 24.7 $8.11 $8.11
Ceiling 60.0 $9.50 $9.50 21.0 $9.00 18.0 $10.00 16.8 $8.75
Floor 18.00 $6.00 $6.00 120.0 $7.00 $7.00 21.0 $7.00 18.0 $6.00 16.8 $6.00
30.0 $6.00
2005 2006 2007 2008
Average Average Average Average
Notional Hedge Average Notional Hedge Average Notional Hedge Notional Hedge
Oil Volume Price Cash Price Volume Price Cash Price Volume Price Volume Price
(MMBbl) ($/MMBtu) ($/MMBtu) (MMBbl) ($/MMBtu) ($/MMBtu) (MMBbl) ($/MMBtu) (MMBbl) ($/MMBtu)
Designated
Fixed Price 0.1 $35.15 $35.15 0.4 $35.15 $35.15 0.2 $35.15
Economic
Fixed Price 0.2 $59.20 $59.20 1.0 $58.81 $58.81
Ceiling 1.0 $60.38 0.9 $57.03
Floor 1.0 $55.00 0.9 $55.00
See El Paso’s form 10-Q filed 8/5/05 and form 10-K/A filed 6/15/05 for additional information on the company’s derivative activity
1Hedge price and cash price are identical for 2007–2012
Note: As of August 30, 2005
26
27. John Hopper
Vice President, Treasurer
Deutsche Bank High Yield Conference
September 28, 2005
the place to work
the neighbor to have
the company to own