El Paso Provides E&P Update

El Paso provides an update for its exploration and production operations, including December 31, 2004 proved reserves, 2005 capital budget details, updated 2005 production guidance, and its January 2005 production rate.

Year-End 2004 Proved Reserves
El Paso announced that it has completed its reserve estimation process for 2004 with Ryder Scott Company independently evaluating 88 percent of El Paso's properties. Ryder Scott's estimate was within 4 percent of the estimate calculated by El Paso's internal reserves group. Proved reserves at December 31, 2004 were approximately 2.2 trillion cubic feet equivalent. As previously indicated, drilling results were poor during the first half of 2004. With improved results in the second half of the year, total additions were 205 billion cubic feet equivalent (Bcfe). In addition, El Paso had 173 Bcfe of negative reserve revisions that were largely performance-driven. The company sold all of its Canadian production, its Indonesian reserves, and moved Hungarian reserves to discontinued operations during 2004.

"While we have made significant improvements throughout our production business, overall 2004 drilling and reserve replacement results did not meet our expectations," said Doug Foshee, El Paso's president and chief executive officer. "Much of our effort in the second half of 2004 was directed at moving proved undeveloped reserves into the producing category. This is reflected in the overall increase of proved developed reserves to more than 70 percent of total proved reserves. Going into 2005, we have high expectations for this segment. With the early acquisition of 124 Bcfe of reserves and today's deep shelf discovery announcement, we are already a long way toward replacing anticipated 2005 production."

The following is a reconciliation of proved reserves from December 31, 2003 to December 31, 2004 for El Paso Corporation and its consolidated subsidiaries, El Paso Production Holding Company (EPPH) and El Paso CGP Company:




                                        El Paso Corp.    EPPH      El Paso CGP
     Bcf Equivalent at Jan. 1, 2004        2,474        1,541          933
     Production                             (298)        (167)        (131)
     Net Sales                               (29)         (25)          (4)
     Additions                               205           70          135
     Revisions                              (173)        (132)         (41)
     Bcf Equivalent at Dec. 31, 2004(A)    2,181        1,288          893
     PV10(B) ($MM)                        $4,760       $2,756       $2,004

    (A) Approximately 71 percent of the December 31, 2004 proved reserves are
        developed and 82 percent are natural gas.  The company utilized a
        year-end natural gas price of $6.22 per MMBtu and a year-end oil price
        of $43.45 per barrel to determine its present value calculations.
        Excludes reserves of discontinued operations of 161 Bcfe at
        January 1, 2004.
    (B) Present value discounted at 10 percent per annum.
        Note:  Figures may not total due to rounding.
Production Update
The company's January 2005 average daily production rate was 754 million cubic feet equivalent per day (MMcfe/d), which compares with 779 MMcfe/d in the fourth quarter of 2004. The January production rate includes approximately 6 MMcfe/d of production from the recent South Texas acquisition, beginning January 19, 2005. The January rate does not include the pending acquisition of East Texas properties. That transaction is expected to close in the first quarter of 2005 and is expected to add approximately 21 MMcfe of daily production. The Onshore, Gulf of Mexico, and International divisions are all on target; however, well failures, performance, and drilling results have lowered the Texas Gulf Coast production by 16 MMcfe/d from fourth quarter levels. While the current rate is below expectations, El Paso expects 2005 production to average 800 MMcfe/d or more. The company will provide more detailed guidance at its analyst meeting on March 17, 2005.

Divisional Details
The following is a review of 2004 reserve changes by region as well as a review of El Paso's 2005 capital program for production operations and January 2005 production rates for each geographic region. As previously announced, El Paso intends to spend approximately $900 million for its exploration and production activities during 2005. During 2004, El Paso's capital spending for this business totaled $779 million. The breakdown of spending for 2004 was as follows: $396 million for development; $159 million for exploration; $127 million for acquisitions; and $97 million for land, seismic, and other.

Onshore
The Onshore division includes coalbed methane operations in the Raton, Black Warrior, and Arkoma basins and conventional operations in North Louisiana, East Texas, and the Rockies.

In 2004, the company's Onshore division had a capital budget of $246 million and ended the year with 1,196 Bcfe of total reserves, 30 percent of which were proved undeveloped. The net reserve changes were comprised of 67 Bcfe of reserve additions from drilling activities, 15 Bcfe of reserve additions from acquisitions, 17 Bcfe of reserve reductions from asset sales, and 71 Bcfe of negative revisions. Approximately 109 Bcfe was transferred from proved undeveloped to proved producing as a result of the 2004 development program.

All of the negative reserve revisions are related to performance results from producing wells or the recent drilling program coupled with the related impact on booked proven undeveloped locations. In certain areas of the Arkoma and Black Warrior Basins, wells drilled in late 2003 had positive initial results; however, subsequent drilling and additional production history resulted in 70 Bcfe of negative revisions. In the Holly Field of North Louisiana, 14 Bcfe of reserves were revised downward as a result of production performance. These negative revisions were offset by better-than-anticipated performance in the Rockies and other Arklatex fields, resulting in positive reserve revisions of 13 Bcfe.

In January, 2005, the Onshore division had 234 MMcfe of average daily production, compared with 238 MMcfe of average daily production in the fourth quarter of 2004. The company currently intends to spend between $475 million and $500 million of capital in the Onshore division in 2005, which includes $179 million for the announced acquisition in East Texas that is expected to close during the first quarter.

Texas Gulf Coast In 2004, the company's Texas Gulf Coast division had a capital budget of $148 million and ended the year with 510 Bcfe of total reserves, 14 percent of which were proved undeveloped. The net reserve changes were comprised of 18 Bcfe of reserve additions from drilling activities, 4 Bcfe of reserve reductions from asset sales, and 26 Bcfe of negative revisions.

The negative revisions were comprised of approximately 7 Bcfe of performance revisions to proved producing wells, approximately 6 Bcfe due to mechanical failures in five wells, and approximately 13 Bcfe due to lower- than-expected results from the 2004 development drilling program.

In January, the Texas Gulf Coast division's average daily production was 237 MMcfe, down from 253 MMcfe of average daily production in the fourth quarter of 2004. In addition to natural decline, January 2005 results were negatively impacted by mechanical well failures that reduced production by 10 MMcfe/d. The company currently intends to spend between $100 million and $150 million of capital in the Texas Gulf Coast division in 2005, which includes $32 million for the recently completed acquisition in South Texas.

Offshore
The Offshore division of El Paso is comprised of the company's operations in the Gulf of Mexico and South Louisiana.

In 2004, the company's Offshore division had a capital budget of $216 million and ended the year with 261 Bcfe of total reserves, 21 percent of which were proved undeveloped. The net reserve changes were comprised of 7 Bcfe of reserve additions from drilling activities, 8 Bcfe of reserve reductions from asset sales, and 77 Bcfe of negative revisions in the Gulf of Mexico.

Approximately 10 Bcfe of the revisions is a result of zone failures, and approximately 25 Bcfe is due to producing well performance. The remaining 42 Bcfe resulted from the drilling of development wells and adjustments to proved undeveloped reserves as a result of production performance in offsetting locations.

In January, the Offshore division's average daily production was 217 MMcfe, compared with 225 MMcfe in the fourth quarter of 2004. The company currently intends to spend between $125 million and $175 million of capital in the Offshore division in 2005.

International
The International division of El Paso is primarily comprised of our operations in the Camamu, Santos, and Potiguar basins offshore Brazil.

In 2004, the company's International division had a capital budget of $101 million and ended the year with 214 Bcfe of total reserves, 67 percent of which are proved undeveloped. The net reserve additions were primarily related to the acquisition in July of our partner's interest in the UnoPaso joint venture.

As a result of higher-than-expected oil prices and production in excess of the planned volumes, the reserves reported at year end are 49 Bcfe instead of the 70 Bcfe announced at the time of the acquisition due to the acceleration of a reversionary interest held by Petrobras. While reserves are lower, the economics of the acquisition actually improve slightly.

In January, the International division had 58 MMcfe of average daily production, compared with 57 MMcfe of average daily production in the fourth quarter of 2004. The company currently intends to spend between $50 million and $75 million of capital in the International division in 2005.

The breakdown of December 31, 2004 proved reserves in Bcfe by region and registrant follows:




                                      El Paso Corp.     EPPH     El Paso CGP
     Onshore                               1,196        1,084          112
     Texas Gulf Coast                        510           66          443
     Offshore                                261          137          124
     International(A)                        214          ---          214
     Total                                 2,181        1,288          893

     (A)  Excludes reserves of discontinued operations of 161 Bcfe at
          January 1, 2004.
          Note:  Figures may not total due to rounding.
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