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el paso 11_20_Hopper_BofACreditConferenceFINALv2(Web)
1. El Paso Corporation
John Hopper
Vice President & Treasurer
Bank of America
2008 Credit Conference
November 20, 2008
2. Cautionary Statement Regarding
Forward-looking Statements
This presentation includes certain forward-looking statements and projections. 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, changes in unaudited and/or unreviewed financial information; our ability to meet our 2009 debt maturities; volatility in, and access to, the
capital markets; our ability to implement and achieve our objectives in our 2008 plan, including achieving our earnings and cash flow targets; the effects of
any changes in accounting rules and guidance; our ability to meet production volume targets in our Exploration and Production segment; our ability to
comply with the covenants in our various financing documents; our ability to obtain necessary governmental approvals for proposed pipeline and E&P
projects and our ability to successfully construct and operate such projects; the risks associated with recontracting of transportation commitments by our
pipelines; regulatory uncertainties associated with pipeline rate cases; actions by the credit rating agencies; the successful close of our financing
transactions; our ability to close asset sales, as well as transactions with partners on one or more of our expansion projects that are included in the plan
on a timely basis; credit and performance risk of our lenders, trading counterparties, customers, vendors and suppliers ;changes in commodity prices and
basis differentials for oil, natural gas, and power; our ability to obtain targeted cost savings in our businesses; inability to realize anticipated synergies
and cost savings on a timely basis or at all; 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, including the risk of a global recession and negative impact on natural gas
demand; 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.
Certain of the production information in this presentation include the production attributable to El Paso’s 49 percent interest in Four Star Oil & Gas
Company (“Four Star”). El Paso’s Supplemental Oil and Gas disclosures, which are included in its Annual Report on Form 10-K, reflect its proportionate
share of the proved reserves of Four Star separate from its consolidated proved reserves. In addition, the proved reserves attributable to its proportionate
share of Four Star represent estimates prepared by El Paso and not those of Four Star.
Cautionary Note to U.S. Investors—The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to
disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally
producible under existing economic and operating conditions. We use certain terms in this presentation that the SEC's guidelines strictly prohibit us from
including in filings with the SEC. U.S. Investors are urged to consider closely the disclosures regarding proved reserves in this presentation and the
disclosures contained in our Form 10-K for the year ended December 31, 2007, File No. 001-14365, available by writing; Investor Relations, El Paso
Corporation, 1001 Louisiana St., Houston, TX 77002. You can also obtain this form from the SEC by calling 1-800-SEC-0330.
Non-GAAP Financial Measures
This presentation includes certain Non-GAAP financial measures as defined in the SEC’s Regulation G. More information on these Non-GAAP financial
measures, including EBIT and EBITDA, and the required reconciliations under Regulation G, are set forth in this presentation or in the appendix hereto. El
Paso defines Resource Potential or Resource Inventory as subsurface volumes of oil and natural gas the company believes may be present and eventually
recoverable. The company utilizes a net, geologic risk mean to represent this estimated ultimate recoverable amount.
2
3. Defining Our Purpose
El Paso Corporation provides
natural gas and related energy
products in a safe, efficient, and
dependable manner
3
4. Our Vision & Values
the place to work
the neighbor to have
the company to own
4
5. Beyond the Credit Crisis
Credit crisis is a big issue for entire market
El Paso has implemented comprehensive plan
Will meet our maturities
Will fund our pipeline backlog
Will preserve E&P opportunities
Looking past the storm
Pipeline backlog generates $1.2 billion EBITDA*
E&P opportunities have expanded
Credit metrics improve
*Pro rata to El Paso’s interest 5
6. Liquidity Update
$1.9 billion liquidity at 9/30/08
$1.2 billion cash
$0.7 billion revolving credit facilities
$2.5 billion in revolving facilities maturing 2012
$1.0 billion in LC facilities
Roll-off with collateral needs in 2009 and 2011
Diverse group of 31 banks
Primary covenants*
Debt to EBITDA < 5.25x LTM 3.4x
EBITDA to fixed charges > 2.0x LTM 3.1x
*As defined in El Paso Corporation’s $1.5 billion Revolving Credit Agreement 6
7. Debt Maturity Schedule
$ Millions
$956*
$1,000
$900
$800
$700
$600
$500
$400
$251
$300
$115
$200
$4 $4 $4
$100
$0
4Q 2008 1Q 2009 2Q 2009 3Q 2009 4Q 2009 2010
*Excludes $89 MM of euro hedge gain 7
8. 2008–2009 Outlook
Projected 2008 EPS ± $1.25
Capital spending slow down underway
$3 billion 2009 capital program
$1.7 billion Pipelines; $1.3 billion E&P
Plan to meet 2009 maturities primarily through
capex reductions
Minor asset sales
Partner(s) on growth projects
Do not anticipate need to access capital markets
until 2H 2009
Will be opportunistic in capital markets
And have numerous additional liquidity options
8
9. Has the Need for
New Infrastructure Changed?
No
Natural gas fueling most incremental
electric generation
New infrastructure required to meet
producers’ needs
Especially in the Rockies
Fundamentals remain strong
9
10. Executing on $8 Billion Backlog of
Committed Growth
Construct at 7x run rate EBITDA
Ruby Pipeline
$3 Billion TGP Concord
2011 $21 MM
TGP Line 300 Expansion
1.3–1.5 Bcf/d Nov 2009
$750 MM
30 MMcf/d
2010–2011
290 MMcf/d
WIC System Expansion
CIG High Plains Pipeline
$71 MM
$216 MM (100%)
2010–2011 Elba Expansion III & Elba
November 2008
320 MMcf/d Express
900 MMcf/d
$1.1 Billion
2010–2013
WIC Piceance Lateral
CIG Totem Storage 8.4 Bcf / 0.9 Bcf/d & 1.2 Bcf/d
$62 MM
$154 MM (100%)
4Q 2009
July 2009
220 MMcf/d
SNG Cypress Phase III
200 MMcf/d
$86 MM
2011
CIG Raton 2010
160 MMcf/d
Expansion
TGP Blue Water / 800 Ln Exp
$146 MM
$25 MM
2Q 2010
SNG South System III/
Dec 2008
TGP Carthage
130 MMcf/d
SESH Phase II
340 MMcf/d
Expansion
$352 MM / $69 MM
$39 MM
2011–2012
May 2009
Gulf LNG 370 MMcf/d / 350 MMcf/d
100 MMcf/d
$1+ Billion (100%)
2011
El Paso Pipeline Partners, LP FGT Phase VIII
6.6 Bcf / 1.3 Bcf/d
Expansion
$2.4 Billion (100%)
El Paso Pipeline 2011
800 MMcf/d
Note: As of November 6, 2008; El Paso Pipeline Partners owns 25% of SNG & 40% of CIG 10
11. Pipeline Construction Report Card
Remains Excellent
2008 Projects
WIC Kanda Lateral In-service
Cheyenne Plains—Coral In-service
SNG Cypress Phase II In-service
WIC Medicine Bow In-service
CIG High Plains Pipeline 4Q
TGP Blue Water/800 Line Exp 4Q
4 operated pipelines completed—on-budget
11
12. Construction Risk Management
El Paso Capital
($ Billions) Steel Construction
Elba Expansion $ 1.1 Fixed-Price EPC Contract
Elba Express Fixed United-Priced
Gulf LNG (50%) $ 0.5 Fixed-Price EPC Contract
Ruby $ 3.0 Fixed Incentive-Based
FGT Phase VIII (50%) $ 1.2 Fixed Unit-Priced
TGP Line 300 $ 0.8 Fixed Negotiating
Backlog has been significantly de-risked
12
13. E&P 2008 Progress
Completed 2007/2008 portfolio high grading
Reduced unit LOE and G&A
Expanded non-proved resources
Cotton Valley horizontals
Haynesville shale
Niobrara shale
Raton in-fill
Altamont in-fill
13
14. Significant Resource Inventory*
Infill drilling (CBM, Altamont, Arklatex)
Emerging shale gas plays
Upside (Niobrara and Haynesville)
Potential International exploration leads
2.8 Tcfe 6.1 Tcfe unrisked non-proved resources
Unproved
2.0 Tcfe risked unconventional and low risk
Inventory
Heavily weighted to U.S. Onshore (86%)
2.8 Tcfe
Proved 869 Bcfe Proved Undeveloped Reserves
Reserves R/P of 9.6
*As of 12/31/2007 adjusted for 2008 domestic divestitures 14
15. 2009 Program Overview
Favor lower-risk, repeatable programs
More Onshore, resource-based
Less TGC and GOM
Delivers production in line with 2008
Generates very predictable cash flow
Preserves opportunity for future ramp up
15
16. Significant Inventory of
Lower-Risk Programs
Altamont
100%
Arlatex Black Warrior
Raton
100% 100%
100%
Texas Gulf Coast
(non-exploration)
94%
Note: 2008 success rates through September 30, 2008
16
17. Continue to Develop Shale Opportunities
Haynesville Niobrara
CO
Marion
Ups
Claiborne
hur
Webster
Caddo
Harrison Bossier
NM
Travis Lynch #4H
Gregg
Completed
IP 8 MMcfe/d
Bienville
Rusk
Panola
Miller 10H #1 Red
Desoto River
Completed
IP 4 MMcfe/d Gamble 24H
Current prospective area Drilling
Niobrara Shale
El Paso operated wellsShe Natchitoches
Test well locations
Horizontal wells drilled by others
lby
Approximately 42,500 net acres 3 wells drilled and completed
2 horizontal and 1 vertical
2 wells completed
Initial flow rates of 0.4–1.8 MMcfe/d
1 well drilling $2 MM–$3 MM completed well costs
Significant resource potential > 300,000 prospective net acres
17
18. Brazil to Become a Meaningful
Contributor
Pinaúna (100%)
15–20 MBOE/d peak production
Slowed pace of development
Brazil
Copaiba Well (18%)
Drilled and testing
Rio de
Janeiro
Camarupim (24%)
35–50 MMcfe/d in 1Q 2009
Tot Well (35%)
Drilling and
evaluating
18
19. Significant Value in 2009 Hedges
Positions as of October 2, 2008
151 TBtu
Ceiling Average cap $14.97/MMBtu
143 TBtu
168 TBtu 8 TBtu
2009 Gas $15.41
$9.10 $7.33
ceiling
floor fixed price
176 TBtu
Floor
Balance at
Average floor $9.02/MMBtu
Market Price
3.4 MMBbls
2009 Oil $109.93
fixed price
~70% of domestic natural gas and ~60% domestic oil production hedged*
2009 hedge program valued at ~$500 MM at November 3, 2008
Note: See full Production-related Derivative Schedule in Appendix
* Includes proportionate share of Four Star equity volumes 19
20. Summary
Will meet 2009 maturities
Will execute pipeline backlog
While preserving E&P opportunities
Long-term growth potential in tact
20
21. El Paso Corporation
John Hopper
Vice President & Treasurer
Bank of America
2008 Credit Conference
November 20, 2008
23. Disclosure of Non-GAAP
Financial Measures
The SEC’s Regulation G applies to any public disclosure or release of material information that includes a non-GAAP
financial measure. In the event of such a disclosure or release, Regulation G requires (i) the presentation of the most
directly comparable financial measure calculated and presented in accordance with GAAP and (ii) a reconciliation of
the differences between the non-GAAP financial measure presented and the most directly comparable financial
measure calculated and presented in accordance with GAAP. The required presentations and reconciliations are
attached. Additional detail regarding non-GAAP financial measures can be reviewed in El Paso’s full operating
statistics, which will be posted at www.elpaso.com in the Investors section.
El Paso uses the non-GAAP financial measure “earnings before interest expense and income taxes” or “EBIT” to
assess the operating results and effectiveness of the company and its business segments. The company defines EBIT
as net income (loss) adjusted for (i) items that do not impact its income (loss) from continuing operations, such as
extraordinary items and discontinued operations; (ii) income taxes; and (iii) interest and debt expense. The company
excludes interest and debt expense so that investors may evaluate the company’s operating results without regard to
its financing methods or capital structure. EBITDA is defined as EBIT excluding depreciation, depletion and
amortization. El Paso’s business operations consist of both consolidated businesses as well as investments in
unconsolidated affiliates. As a result, the company believes that EBIT, which includes the results of both these
consolidated and unconsolidated operations, is useful to its investors because it allows them to evaluate more
effectively the performance of all of El Paso’s businesses and investments.
El Paso believes that the non-GAAP financial measures described above are also useful to investors because these
measurements are used by many companies in the industry as a measurement of operating and financial performance
and are commonly employed by financial analysts and others to evaluate the operating and financial performance of
the company and its business segments and to compare the operating and financial performance of the company and
its business segments with the performance of other companies within the industry.
These non-GAAP financial measures may not be comparable to similarly titled measurements used by other companies
and should not be used as a substitute for net income, earnings per share or other GAAP operating measurements.
23
24. Reserves Pro Forma Reconciliation
Onshore
Central Western TGC GOM Int’l Total
Reserves (Bcfe)1
Ending reserves 1/1/08 1,328 715 550 269 247 3,109
Adjustments2 (58) (40) (93) (118) – (309)
Pro forma ending reserves 1/1/08 1,270 675 457 151 247 2,800
1 Reserves data includes proportionate share of Four Star
2 Adjustments reflect elimination of divestiture properties and addition of Peoples for full-year 2007
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