El Paso announced its fourth quarter and full-year 2009 financial and operational results for the company.
Key highlights include:
"Our fourth quarter results reflect a strong finish to an exceptional 2009 performance for team El Paso," said Doug Foshee, chairman, president, and chief executive officer of El Paso Corporation. "I am extremely proud of the way our management team and employees delivered on our goals in one of the most challenging economic environments since the Great Depression. Our pipelines delivered excellent earnings growth, while continuing to execute very well on the construction of our backlog of pipeline and LNG projects. In addition, the operating performance of our E&P company was the best since I joined the company in 2003. We further reduced our cost structure, delivered excellent reserve growth and reserve replacement metrics, generated significant cash flow in excess of capital expenditures, and substantially increased our inventory of low-risk, repeatable drilling opportunities. We are off to a strong start and have already made significant progress towards our 2010 goals."
Exploration and Production
The Exploration and Production segment reported EBIT of $187 million for the quarter ended December 31, 2009, compared with an EBIT loss of $2.5 billion for the same period in 2008. Fourth quarter 2009 EBIT includes $38 million of non-cash ceiling test charges in the company's Brazilian and Egyptian full cost pools, primarily driven by lower prices and a reserve revision in Brazil, as well as a $9 million non-cash impairment of a domestic processing plant. Fourth quarter 2008 results include $2.7 billion of non-cash ceiling test charges in the company's domestic and Brazilian full cost pools as well as a $125 million non-cash impairment related to the company's investment in Four Star. After considering these charges, the primary reasons for the decline in E&P segment reported EBIT from 2008 to 2009 were overall lower commodity prices and lower gains on financial derivatives, partially offset by reduced operating expenses.
Fourth quarter 2009 production volumes averaged 742 MMcfe/d, including 69 MMcfe/d of Four Star unconsolidated affiliate volumes. Fourth quarter 2008 production volumes averaged 752 MMcfe/d, including 73 MMcfe/d of Four Star unconsolidated affiliate volumes. Total per-unit cash operating costs decreased to an average of $1.81 per Mcfe in fourth quarter 2009, down from $2.09 per Mcfe for the same period in 2008. The E&P segment reduced its cash operating costs per unit through greater operating efficiencies and lower service costs.
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