1. a meaningful company
doing meaningful work
delivering meaningful results
Mark Leland
Executive Vice President and
Chief Financial Officer
Credit Suisse
Leveraged Finance Conference
March 27, 2008
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, changes in unaudited and/or unreviewed
financial information; our ability to implement and achieve our objectives in the 2008 plan, including earnings and cash flow targets; the effects of any
changes in accounting rules and guidance; our ability to meet production volume targets in our E&P segment; uncertainties and potential consequences
associated with the outcome of governmental investigations, including, without limitation, those related to the reserve revisions; outcome of litigation; our
ability to comply with the covenants in our various financing documents; our ability to obtain necessary governmental approvals for proposed pipeline
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 successfully exit the energy trading business; our ability to close our announced asset sales on a timely basis; changes in
commodity prices and basis differentials for oil, natural gas, and power and relevant basis spreads; inability to realize anticipated synergies and cost
savings associated with restructurings and divestitures on a timely basis; 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.
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, EBITDA, and the required reconciliations under Regulation G, are set forth in this presentation or in the appendix hereto. El
Paso defines Resource Potential 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. Leading Positions in Two Core Businesses
Interstate
Pipelines
Exploration &
Production
3
4. Seizing Opportunities
Pipelines
Favorable Macro Outlook
• Assets well positioned
• Increasing demand for natural gas
– Rockies expansions: CIG, WIC, Ruby
• Strong commodity prices
– LNG related: Elba Express, Cypress
• Infrastructure opportunities with
shifting supply source
E&P
Environmental • Improved portfolio
• Carbon emissions • Increased profitability
• Power generation turning to natural gas • Drilling success
4
6. El Paso Pipeline Group
North America’s Leading Natural Gas Pipeline Company
Tennessee
Wyoming Gas Pipeline
Colorado
Interstate
Interstate Gas
Cheyenne
Mojave
Plains Pipeline
Pipeline
Southern
Natural Gas
Elba Island
El Paso
LNG
Natural Gas
Mexico
Florida Gas
Ventures Gulf LNG
Transmission (50%)
(50%)
• 19% of total U.S. interstate pipeline mileage
• 24 Bcf/d capacity (16% of total U.S.)
• 17 Bcf/d throughput (28% of gas delivered to U.S. consumers)
Source: El Paso Corporation based on 2007 data
6
Note: Includes El Paso Corporation and El Paso Pipeline Partners, L.P.
7. Well Positioned Assets
Major Flow Changes 2007–2016
Canada
(Bcf/d)
Declining exports
-2.0
to U.S.
-0.7 0.6
-0.8
-1.1
-1.3
-1.0 Eastern Demand
Growth
Especially
Southeast
2.2
2.7 1.5
1.1
0.6
3.8
Rockies
Increasing supplies 4.9
leaving region 1.2
0.6
2.1
5.6 LNG
0.6
Expanding current
facilities, Gulf Coast
additions
0.4
7
Source: El Paso Pipeline Group December 2007 Macro
8. Committed Growth Backlog
Approaching $4 Billion
WIC Medicine Bow TGP Concord
Expansion $21 MM
$32 MM Nov 2009
July 2008
CIG High Plains Pipeline 30 MMcf/d
330 MMcf/d
$196 MM (100%)
November 2008
WIC Piceance
900 MMcf/d
Lateral
CP Coral Expansion Elba Expansion III &
$62 MM SNG SESH –Phase I
$23 MM Elba Express
4Q 2009 $137 MM
CIG Totem Storage July 2008 $1.1 Billion
219 MMcf/d Jun 2008
$120 MM (100%) 70 MMcf/d 2010–2013
140 MMcf/d
July 2009
1.2 Bcf/d
200 MMcf/d
SNG Cypress Phase II & III
$20 MM/$82 MM
May 2008/ Jan 2011
TGP Carthage 114 MMcf/d/ 161 MMcf/d
Expansion
$39 MM
May 2009
100 MMcf/d
SNG South System III/
SESH Phase II
Gulf LNG $286 MM/ $33 MM
$1.1 Billion (100%) 2010–2012
Oct 2011 375 MMcf/d/ 360MMcfd
El Paso Pipeline Partners 1.3 Bcf/d
El Paso FGT Phase VIII
Expansion
$2+ Billion (100%)
2011
0.8 Bcf/d
8
Note: El Paso Pipeline Partners owns 10% of SNG and CIG
9. FGT Phase VIII Added to Committed Expansions
Proposed Pipeline Expansion
GA
AL FGT
$2+ billion (100%)
•
• 50% EP, 50% SUG
• 500 miles
• 0.8 Bcf/d capacity FL
• PA with FPL for 0.4 Bcf/d for
25-year term
• 2011 in-service
9
10. Leveraging LNG Experience
Elba Island LNG Gulf LNG
Savannah, GA Pascagoula , MS
• $1.1 billion terminal expansion and • $1.1 Billion (100%); 50% EP
Elba Express Pipeline • $870 MM non-recourse financing
• 8.4 Bcf incremental storage capacity completed
• 0.9 Bcf/d incremental send-out capacity • 1.3 Bcf/d base sendout
• Fully contracted with Shell and BG • Fully contracted with Angola LNG and ENI
• Current expansion will double facility • EPC with Aker Kvaerner
by 2012 • 2011 In-service
Investing more than $2 billion on LNG and related projects
10
11. Managing Capital Costs
Major Greenfield Pipeline Project Costs
30%–35% 35%–40% 25%–35%
• Pipe • Contractor-related • Right-of-way
• Engineering studies
• Other
Primary Party
$ Billion At-Risk for Capex
$1.7 Contractor
0.8 Customer
1.3 El Paso
$3.8
11
12. El Paso Pipeline Partners
• Primary focus is natural gas transmission
and storage assets
• Three FERC regulated interstate pipelines:
– 100% of WIC: 800 miles, 2.7 Bcf/d
– 10% of CIG: 4,000 miles, 3.0 Bcf/d
– 10% of SNG: 7,600 miles, 3.7 Bcf/d
• Demand-based revenues from high-quality
customers with strong credit profiles
• Several organic expansions underway
WIC
SNG
CIG
Diverse, Growing Supply Regions High Connectivity to Growing Markets
12
13. Pipeline Summary
• High-quality, committed growth backlog
– Approaching $4 billion
• Focus on project execution
• Manage capital costs
• Long-term EBIT growth expectation 6%–8%
– Higher with continued success
13
14. El Paso E&P: Top 10 Independent
Total Company
Nile
• Well situated in key U.S. Delta
Sinai
basins Onshore Gulf
Egypt
• Focused on resource & of
Egypt
• 51% of 2007 production
unconventional programs Suez
• Primarily coal seam and
• ~80% natural gas
tight-gas programs
Egypt
• Low risk repeatable plays
• Onshore
conventional
exploration
Brazil • 1MM acres
• First drilling 2H 2008
Texas Gulf Coast
Rio de
Janeiro
• 25% of 2007 production
Brazil • Low-to-medium risk
GOM/SLA
tight–gas programs
• 2 discoveries is 2007
• 22% of 2007 production
• 15,000–20,000 BOE/D
• Medium to high-risk
beginning 2H 2009
exploration
• 20 undrilled prospects
• Large acreage position
• 2% of 2007 production
Note: 2007 production percentages include equity in Four Star 14
15. 2007 YE Proved Reserves—3.1 Tcfe
Solid Growth Onshore & TGC
18% Reserve Growth
(Tcfe)
3.1
TGC
550 Bcfe
2.6
18%
Int’l
247 Bcfe
8%
GOM
Onshore
269 Bcfe
2,043 Bcfe
9%
65%
2006 2007 72% of reserves proved developed
15
Note: Includes proportionate share of Four Star
16. 97% Drilling Success Rate
2007
Gross Wells Actual
Completed Success Rate
High PC < 40%
6 50%
High Impact
Exploration
Risk
PC 40%–80%
Med
29 76%
Medium Risk Development
and Exploration
PC > 80% 568 99%
Low
Low Risk Domestic Development
603 97%
Success Rate by Division
Onshore 99% Texas Gulf Coast 92%
Gulf of Mexico 46% International 100%
16
17. Significant Undrilled Inventory
• 6.1 Tcfe unrisked non-proved resources
3,400
• 2.8 Tcfe risked non-proved resources
• Risked resources grew 12% in 2007
Resource Potential (Bcfe)
• Excludes domestic divestiture properties
Non-Proved
Risked
Unrisked 2,130
1,460
869 835
495 530
PUD* Unconventional Conventional Conventional
Low-Risk Higher-Risk
Raton, Arkoma,
Black Warrior, Arklatex, Rockies, GOM, TGC,
New Albany TGC, Brazil Int’l Exploration,
Brazil, Egypt
*As of 12/31/07 and Includes proportionate share of Four Star 17
18. E&P Production
Solid Growth Trajectory Through 2010
MMcfe/d
R
CAG
%–12%
8
870–930
862
798
20082
2007 2007 2009 2010
Pro Forma1
Note: Includes proportionate share of Four Star
1 Excludes volumes from domestic assets being sold; assumes full year of Peoples
18
2 Assumes 25 MMcfe/d annualized contributed by the divestiture assets prior to closing
19. E&P Profitability
Has Grown Faster Than Peers
EBITDA*/Mcfe, Including Hedging
$5.75–
$6.04
$6.00
$5.84
$5.59
$5.57
$4.82
2006 2007 2008E
Peer Average El Paso
Peer group: APA, APC, CHK, DVN, EOG, FST, NBL, NFX, PXD, XEC, XTO
Actual results from Peer company reports for 2006 and 2007; analyst models 2008E
19
*EBITDA excludes exploration and dry hole expense for successful efforts companies
20. E&P Summary
• Growing reserves and production
• Continued improvement in cost structure
• High grading portfolio improves overall performance
– Divestitures on-track
• Solid inventory provides visible long term growth
E&P moving towards top-tier performance
20
21. 2008 Natural Gas and
Oil Hedge Positions
Positions as of February 22, 2008
(Contract months January 2008 – Forward)
188 TBtu
Average cap $10.21/MMBtu
Ceiling
155 TBtu 33 TBtu
2008 Gas $10.75 ceiling/ $7.65
$8.00 Floor fixed price
Floors
188 TBtu
Balance at
Average floor $7.94/MMBtu
Market Price
3.7 MMBbls
Ceiling
Average cap $81.44/Bbl
2.8 MMBbls 0.9 MMBbls
2008 Oil $89.58 $57.03 ceiling/
fixed price $55.00 floor
Floors
3.7 MMBbls
Average floor $80.94/Bbl
21
Note: See full Production-Related Derivative Schedule in Appendix
22. Substantial Leverage to
Higher Commodity Prices
$ Earnings Per Share
$1.62–
$1.72
$1.70 $1.44–
$1.54
$1.50 $1.25–
Base Case
$1.35
$1.30
$1.00–
$1.10
$1.10
$0.90
$0.70
$0.50
Assumes Assumes Assumes Assumes
$7.50 Gas $9.00 Gas $10.00 Gas $11.00 Gas
22
Note: All data includes $70.00 WTI assumption
23. Improved Financial Strength
Proforma Total Debt
• Four consecutive years $22,282
of debt reduction $19,196
$18,234
• Debt down 17% vs. 2006 $15,430
• Interest expense down $12,814
approximately $300
million vs. 2006
• Minimal debt maturities
in 2008
2007
2006
2003 2005
2004
Note: debt and interest expense include discontinued operations and assets held for sale
23
24. Visible Long-Term Growth
• Focus on growth opportunities
• Pipelines working to expand committed inventory
• E&P more profitable, more focused, increased
opportunities post high grading
• Committed to grow El Paso Pipeline Partners
• Visible multi-year growth for both businesses
– Pipelines 6%–8% EBIT growth
– E&P 8%–12% production growth
24
25. a meaningful company
doing meaningful work
delivering meaningful results
Mark Leland
Executive Vice President and
Chief Financial Officer
Credit Suisse
Leveraged Finance Conference
March 27, 2008
27. 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
provided herein.
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, discontinued operations, and the impact of accounting changes; (ii) income taxes; (iii) interest and
debt expense; and (iv) distributions on preferred interests of consolidated subsidiaries. The company excludes interest
and debt expense and distributions on preferred interests of consolidated subsidiaries so that investors may evaluate
the company’s operating results without regard to its financing methods or capital structure. EBITDA is defined as
EBIT plus depreciation, depletion, and amortization. El Paso’s business operations consist of both consolidated
businesses as well as substantial investments in unconsolidated affiliates. As a result, the company believes that EBIT
and EBITDA, which include 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 defines Resource Potential 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.
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 measurements.
27
29. Reconciliation of EBIT/EBITDA
$ Millions
Twelve Months Ended Twelve Months Ended
December 31, 2006 December 31, 2007
EBITDA $ 2,797 $2,828
Less: DD&A 1,047 1,176
EBIT 1,750 1,652
Interest and debt expense (1,228) (994)
Income before income taxes 522 658
Income taxes (benefit) (9) 222
Income from continuing operations 531 436
Discontinued operations, net of taxes (56) 674
Net Income 475 1,110
Preferred stock dividends 37 37
Net income available to
common stockholders $ 438 $1,073
29