UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: February 2, 2004
(Date of Earliest Event Reported: February 2, 2004)
EL PASO CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 1-14365 76-0568816
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation or
organization)
El Paso Building
1001 Louisiana Street
Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 420-2600
Item 5. Other Events and Regulation FD Disclosure
-----------------------------------------
On February 2, 2004, at an investor conference sponsored by
JPMorgan, Dwight Scott, our Chief Financial Officer, will
provide an update on El Paso's progress in implementing the
long range plan which was previously announced on
December 15, 2003. Included in this presentation are the
following updates:
A. Production Segment Updates
--------------------------
Personnel Changes
-----------------
As previously announced, Lisa Stewart commenced her
employment on February 1, 2004, as the President of the
Production and Unregulated business unit.
Production Volumes Update
-------------------------
The production volumes for the fourth quarter of 2003 for
our Production unit averaged approximately 1 Bcfe per day.
The production volumes for our Production unit are expected
to average approximately 950 MMcfe per day for the month of
January 2004, which is in line with the guidance we provided
in December.
Update on Reserve Analysis
--------------------------
As of January 1, 2003, our estimates of proved reserves were
prepared internally by us and reviewed by a third party
reserve engineering firm. We are in the process of
preparing our estimates of proved reserves as of January 1,
2004. As we indicated in our 10-Q filing for the third
quarter of 2003, we appointed Ryder Scott Co. as our primary
reserve engineer. Ryder Scott Co. will prepare an
independent reserve estimate for our properties as of
January 1, 2004.
On December 15, 2003, in the presentation of our
long range plan, Doug Foshee, El Paso's President and Chief
Executive Officer, provided an update on this reserve
analysis. In his presentation and in response to questions,
Mr. Foshee indicated that El Paso was in the process of
reviewing the reserve estimates and that we would provide
updates during the first quarter of 2004 as more information
became available. Mr. Foshee indicated, however, that based
upon recent production disappointments, especially in the
South Texas region, there might be negative revisions to our
proved reserve estimates.
On December 22, 2003, in the Risk Factors section of the
prospectus for the debt exchange offer for El Paso
Production Holding Company, our wholly owned subsidiary and
holder of a significant amount of our total reserves, we
stated that estimating reserves is a complex process and
estimates are based on interpretations and assumptions, and
that it was possible that our proved reserve estimates for
this entity could be revised upon completion of our internal
estimate and Ryder Scott Co.'s independent estimate of our
properties.
On December 23, 2003, in the Risk Factors section of the
prospectus for our common stock offering, we reiterated that
due to the complex nature of estimating reserves, our proved
reserve estimates could be revised upon completion of our
internal estimate and Ryder Scott Co.'s independent estimate
for our properties. We also stated that the reported value
of our reserves at year-end 2003 would be dependent on the
price of natural gas at that time, and that based on
production performance in certain of our basins over the
last year, we expect negative revisions to our previous
reserve estimates. We continued to provide updates by
making a similar statement in the Risk Factors section of
our January 6, 2004 common stock prospectus.
Although the preparation of our internal estimates and Ryder
Scott Co.'s independent reserve estimate for all our
properties have not been completed at this time, we
currently expect that we will have a material negative
revision to our proved reserve estimates. The reported
value of our reserves at year-end is also dependent on the
price of natural gas, which has increased from the pricing
used in valuing our reserves at the beginning of 2003. We
expect to provide a further update of our proved reserve
estimates and reported values of our reserves as soon as
more complete information becomes available, which we would
expect to have no later than by mid-February 2004.
B. Asset Sales Update
------------------
The long range plan included planned asset sales of $3.3
billion to $3.9 billion. As of February 1, 2004, we have
announced or closed $2.3 billion of such asset sales. The
significant transactions announced or closed since then
include the following:
Enterprise Transaction
-----------------------
On December 15, 2003, El Paso, and certain of our
affiliates, Enterprise Products Partners L.P., a Delaware
limited partnership ("Enterprise"), certain of Enterprise's
affiliates, GulfTerra Energy Partners, L.P. ("GulfTerra"),
and certain of GulfTerra's affiliates entered into a series
of definitive agreements pursuant to which, among other
things, a wholly owned subsidiary of Enterprise will be
merged with and into GulfTerra, with GulfTerra surviving the
merger as a wholly owned subsidiary of Enterprise. Pursuant
to the agreements, Enterprise Products GTM, LLC ("Enterprise
GTM"), acquired for $425 million in cash a Class C
Membership Interest with a 50.0% sharing ratio in GulfTerra
Energy Company, L.L.C. and GulfTerra's general partner
("GulfTerra GP"). Immediately prior to this transaction, El
Paso acquired Goldman Sachs & Co.'s Class A Membership
Interest with a 9.9% sharing ratio in GulfTerra GP for
$120.0 million in cash. As a result, GulfTerra GP is now
50.0% owned by Enterprise GTM, an indirect wholly-owned
subsidiary of Enterprise, and 50.0% owned by GulfTerra GP
Holding Company, a Delaware corporation and a wholly owned
subsidiary of El Paso ("GP Holding Company").
As a result of the merger, GulfTerra will be a wholly owned
subsidiary of Enterprise. Pursuant to the Merger Agreement,
holders of GulfTerra's common units (other than Enterprise)
will receive 1.81 Enterprise common units representing
limited partnership interests in Enterprise in exchange for
each GulfTerra common unit owned. Pursuant to a Purchase
and Sale Agreement, concurrently with the closing of the
merger, affiliates of El Paso also expect to sell to a
subsidiary of Enterprise two subsidiaries of El Paso that
own, among other assets, nine natural gas processing plants
located in South Texas for a purchase price of $150 million
in cash. The completion of the merger and other
transactions is subject to the approval of the unitholders
of Enterprise and both the common unitholders and Series C
unitholders of GulfTerra, voting as separate classes, along
with customary regulatory approvals, including under the
Hart-Scott-Rodino Antitrust Improvements Act and other
closing conditions. Completion of the merger is expected to
occur during the second half of 2004.
Eagle Point Transaction
-----------------------
On January 14, 2004, we announced that we closed the sale of
the Coastal Eagle Point refinery and related working
inventories to Sunoco, Inc.
Domestic Contracted Power Plant Transaction
-------------------------------------------
On January 16, 2004, we announced that our business unit El
Paso Merchant Energy had agreed to sell 25 domestic power
generation facilities to Northern Star Generation LLC, a
wholly-owned subsidiary of AIG Highstar Generation LLC, for
approximately $746 million plus the assumption of
approximately $174 million of consolidated non-recourse
debt. Northern Star Generation LLC and AIG Highstar
Generation LLC are units of AIG Global Investment Group.
Cautionary Statement Regarding Forward-Looking Statements
This Current Report on Form 8-K 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; our ability to divest of certain assets;
changes in reserves estimates based upon internal and third
party reserve analyses; 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.
Item 9. Regulation FD Disclosure
------------------------
Attached is the presentation dated February 2, 2004 to
be made at the JPMorgan conference by our Chief Financial
Officer. The attached Exhibit 99.A is not filed, but is
furnished to comply with Regulation FD. The information
disclosed in this Item 9 is not considered to be "filed" for
purposes of Section 18 of the Securities and Exchange Act of
1934 and is not subject to the liabilities of that section.
(a) Exhibits.
Exhibit
Number Description
------- -----------
99.A Slide Presentation dated February 2, 2004.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
EL PASO CORPORATION
By: /s/ Jeffrey I. Beason
-----------------------
Jeffrey I. Beason
Senior Vice President
and Controller
(Principal Accounting Officer)
Dated: February 2, 2004
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
99.A Slide Presentation dated February 2, 2004.