El Paso Corporation
) announced first-quarter 2012 operating earnings of 20 cents per
share, which fell short of the Zacks Consensus Estimate by 7 cents.
The results of the company were lower than the year-ago figure by
GAAP earnings per share in the quarter were 11 cents versus 8 cents
in the first quarter of 2011.
The difference between GAAP and operating earnings during the
reported quarter was due to the impact of a few one-time items.
These include an 8 cent ceiling test charge in Egypt, a 1 cent
charge for merger related costs, a 1 cent change in fair value of
legacy indemnification and other legacy items and a 1 cent gain for
favorable tax effect.
Total revenue at the end of the first quarter was $1.26 billion
versus $0.98 billion in the year-ago period, which reflects growth
of 27.4%. The year-over-year growth in revenue was mainly due to
strong performance from its
Exploration and Production
(E&P) segment, which grew 93.6% from the previous year
However, the quarterly revenue was lower than the Zacks
Consensus Estimate of $1.32 billion.
El Paso's cash operating costs for the first quarter of 2012
averaged $1.74 per thousand cubic feet (Mcfe), down from $1.85 per
Mcfe for the same period in 2011, primarily due to higher
production volumes and lower G&A costs.
Total operating expenses at the end of the first quarter of 2012
were $866 million versus $682 million in the year-ago period,
reflecting an increase of 26.9%.The increase in expenses was
attributable to higher operating and maintenance expenses and
increase in the cost of products and services supplied.
Operating income during the first quarter 2012 was $394 million,
up 28.3% from $307 million in the year-ago quarter.
Interest and debt expenses at the end of first quarter 2012 were
$226 million, 5.8% lower than the first quarter of 2011.
Production and Realized Price
El Paso's production in first quarter 2012 averaged 908 million
cubic feet per day (MMcfe/d), representing an increase of 87
MMcfe/d from first quarter 2011 production volumes, which averaged
821 MMcfe/d. The 11% year-over-year rise in production volumes was
primarily due to the increase in oil and condensate volumes.
Pipeline throughput volumes were up 10.1% to 19,864 billion
British thermal units per day (BBtu/d) in first quarter 2012 from
18,038 BBtu/d in first quarter 2011. The upsurge was due to higher
volumes in the Tennessee Gas Pipeline (TGP) system.
Realized natural gas and oil prices, including financial
derivatives, in first quarter 2012 averaged $4.27 per Mcf, down
21.5% and $100.16 per barrel, up 16.9%, respectively, both on a
Capital expenditures in the first quarter of 2012 were $0.5
billion, which was considerably lower than the first quarter 2011
level of $1.1 billion. During the quarter investment on exploration
and production (E&P) grew by 28.5% year over year, while the
investment in the pipeline segment was $80 million versus $744
million invested in the prior-year quarter.
Cash flow from operations during the first quarter 2012 was $516
million versus $531 million in the first quarter of 2011.
) competes directly with El Paso Corporation. The former announced
operating earnings for the first quarter 2012 of 39 cents per
share, beating the Zacks Consensus Estimate by 3 cents and the
year-ago results by 11 cents.
The operating revenue in the first quarter 2012 was $2.01
billion which surpassed both year-ago results of $1.87 billion and
the Zacks Consensus Estimate of $1.84 billion.
El Paso failed to match up to our expectation this quarter. We
believe, like other operators in the industry, El Paso is also
impacted by lower realized prices of natural gas and natural gas
liquids. The decline in realized prices to a large extent negates
the impact of increase in production.
El Paso Corporation currently retains a Zacks #4 Rank, which
translates into a short-term Hold rating.
Based in Houston, Texas, El Paso Corporation involves in the
natural gas transmission and in the exploration and production
sectors of the energy industry. The company primarily operates in
United States and has some exposure in Brazil and Egypt.
EL PASO CORP (EP): Free Stock Analysis Report
WILLIAMS COS (WMB): Free Stock Analysis Report
To read this article on Zacks.com click here.