El Paso Corp., owner of the longest U.S. natural-gas pipeline system, said its fourth-quarter net loss widened to $166 million on costs to exit a pipeline contract.
The loss, equivalent to 25 cents a share after payment of preferred dividends, widened from $162 million, or 26 cents, a year earlier, Houston-based El Paso said in a statement today. The company on Feb. 21 estimated the per-share loss at about 25 cents. Revenue rose 12 percent to $913 million.
Chief Executive Officer Doug Foshee, 47, spent three years selling assets to reduce $22 billion in debt after a slump in its energy-trading business, culminating with the $3.4 billion sale of its ANR Pipeline business and other assets to TransCanada Corp., completed on Feb. 22.
``This company has gone through quite a bit of turmoil in recent years,'' said Gordon Howald, an analyst at Calyon Securities (USA) Inc. in New York who rates El Paso stock at ``neutral'' and owns 1,000 shares. ``El Paso's balance sheet looks good now with the ANR sale, and that's a positive, but investors still need to be willing to look long-term when evaluating this stock.''
Segment Earnings
The company recorded pretax costs of $188 million, or 17 cents a share, for terminating the accord to use the Alliance pipeline system, which connects Chicago with gas-production areas in western Canada. That was in line with the Feb. 21 statement.
The results also included a pretax gain of $13 million, or 1 cent a share, for the increased value of derivatives used to lock in prices for its production, El Paso said.
Fourth-quarter earnings before interest and taxes from gas and oil production fell 18 percent to $137 million, the company said. Output of gas and oil rose 11 percent to the equivalent of 762 million cubic feet of gas a day. The company has said it will focus on lower-risk exploration projects this year.
``Production was pretty good, and that's certainly a near- term positive because that's the big driver for the stock,'' Calyon's Howald said.
Pipeline profit rose 65 percent to $302 million, El Paso plans to create a master limited partnership this year to lower borrowing costs for new pipeline projects.
Losses from energy trading narrowed to $184 million from $224 million a year earlier.
Energy Trading
El Paso accumulated debt when energy-trading and power-plant businesses went sour after the collapse of Enron Corp. in December 2001. The company was ranked 455th in the Fortune 500 ranking of U.S. corporations by revenue for 2006, down from 17th place in 2002.
El Paso's 43,000-mile (68,187-kilometer) network of pipelines carries about one-quarter of U.S. gas supplies, according to the company's Web site.
The statement was issued before the opening of regular trading on U.S. stock markets. Shares of El Paso were unchanged at $14.83 yesterday in New York Stock Exchange composite trading. The stock, which has five buy recommendations from analysts, nine holds and two sells, has risen 9.2 percent in the past year.
To contact the reporter on this story: Victor Epstein in New York at vepstein@bloomberg.net .
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