2011AM1

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2011AM1

  1. 1. Interstate Pipelines | Exploration & Production | Midstream www.elpaso.com | NYSE: EP May 24, 2011D E P E N D A B L E N A T U R A L G A S
  2. 2. This presentation release includes certain forward-looking statements and projections. The company has made every reasonable effort to ensure thatthe information and assumptions on which these statements and projections are based are current, reasonable, and complete. However, a variety offactors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this release,including, without limitation, our ability to execute our strategy of selling assets to El Paso Pipeline Partners, L.P.; our ability to pay dividends declared;changes in unaudited and/or unreviewed financial information; volatility in, and access to, the capital markets; our ability to implement andachieve objectives in our 2011 plan and updated guidance, including achieving our earnings and cash flow targets; the effects of any changes inaccounting rules and guidance; our ability to meet production volume targets in our Exploration and Production segment; the uncertainty ofestimating proved reserves and unproved resources, the future level of service and capital costs; the availability and cost of financing to fund ourfuture exploration and production operations; the success of our drilling programs with regard to proved undeveloped reserves and unprovedresources; our ability to successfully identify new Midstream opportunities; our ability to comply with the covenants in our various financingdocuments; our ability to obtain necessary governmental approvals for proposed pipeline and E&P projects and our ability to successfully constructand operate such projects; the risks associated with recontracting of transportation commitments by our pipelines; regulatory uncertaintiesassociated with pipeline rate cases; actions by the credit rating agencies; the successful close of our financing transactions; credit and performancerisk of our lenders, trading counterparties, customers, vendors and suppliers; changes in commodity prices and basis differentials for oil, natural gas,and power; general economic and weather conditions in geographic regions or markets served by the company and its affiliates, or where operationsof the company and its affiliates are located, including the risk of a global recession and negative impact on natural gas demand; the uncertaintiesassociated with governmental regulation; political and currency risks associated with international operations of the company and its affiliates;competition; and other factors described in the companys (and its affiliates) Securities and Exchange Commission filings. In addition, there are avariety of risks and other factors associated with our proposed spin-off of our Exploration and Production segment that could negatively impact ourability to implement the transaction and/or its project results, including, without limitation, risks typically inherent in spin-off and relatedtransactions of this type; our ability to pay the targeted initial dividend and to increase the dividend thereafter for our pipeline and midstreambusinesses, our ability to execute on our debt reduction strategy; risks associated with the level of debt to be incurred by the Exploration andProduction segment; the availability of the capital markets for raising capital and additional debt; once separated, the ability of the businesses tosuccessfully operate independently; our ability to obtain all necessary regulatory approvals to implement the separation of the businesses, including,but not limited to, confirmation of the tax-free nature of the transaction; and the receipt of final approval of our board of directors of the separationand related transactions. As a result, there is a risk that the proposed separation may not be completed as contemplated, including the risk that theremay be material changes in timing and/or terms of the transaction or that the transaction may not be completed at all. While the company makesthese statements and projections in good faith, neither the company nor its management can guarantee that anticipated future results will beachieved. Reference must be made to those filings for additional important factors that may affect actual results. The company assumes no obligationto publicly update or revise any forward-looking statements made herein or any other forward-looking statements made by the company, whether asa result of new information, future events, or otherwise.Certain of the production information in this presentation includes the production attributable to El Paso’s 48.8 percent interest in Four Star Oil & GasCompany (“Four Star”). El Paso’s Supplemental Oil and Gas disclosures, which are included in its Annual Report on Form 10-K, reflect its interest in theproved reserves of Four Star separate from its consolidated proved reserves. In addition, the proved reserves attributable to its interest in Four Starrepresent estimates prepared by El Paso and not those of Four Star.Cautionary Note to U.S. Investors – Investors are urged to closely consider the disclosures and risk factors in our Forms 10-K and 10-Q, available from 2our offices or from our website at http://www.elpaso.com, including the inherent uncertainties in estimating quantities of proved reserves.
  3. 3. 8:00 a.m. Bruce Connery ….. Vice President, Investor & Media Relations 20 min Doug Foshee …….. Chairman, President & Chief Executive Officer 8:20 a.m. J. R. Sult ……………..Exec. Vice President & Chief Financial Officer 10 min 8:30 a.m. Pat Johnson ………. Vice President, Strategy 20 min 8:50 a.m. Jim Yardley …………Chairman, Pipeline Group 30 min 9:20 a.m. J. R. Sult ……………..Exec. Vice President & Chief Financial Officer 10 min 9:30 a.m. 15 min 9:45 a.m. Mark Leland ……… President, Midstream Group 15 min10:00 a.m. Brent Smolik ……… President, Exploration & Production 45min10:45 a.m. 30 min11:15 a.m. 30 min 311:45 a.m.
  4. 4. El Paso Corporation provides natural gas and related energyproducts in a safe, efficient, and dependable manner 4
  5. 5. the place to workthe neighbor to have the company to own 5
  6. 6. 2003 2011+Damaged brand Purposeful companyDiffused business Highly focusedBloated overhead EfficientLeverage on the precipice Durable balance sheetMaking payroll Looking over horizonFrom pillar-to-post Execution-focusedCo. pride at rock bottom Values driven Team EP Well-positioned for next 80+ years 6
  7. 7. 2003 2011+Carlsbad recovery Industry safety leaderReasonable growth prospects Best backlog in servicePurchasing department Supply chain managementGood pipeliners Superior execution track recordTactically focused Much more strategicNo MLP Top-performing MLP Biggest, best pipeline franchise 7
  8. 8. 2003 2011+High-risk strategy High repeatabilityDisadvantaged portfolio Cored-upPoor execution Top-tierLow inventory Competitive inventoryHigh-cost Low-cost A top-tier E&P company 8
  9. 9. 2003 2011+Outstanding Midstream Co.—Sold 2004Deep midstream knowledge Retained Re-entry 2010 Important starter kit Focused strategy Great partner Outstanding growth prospects A synergistic new leg on the stool 9
  10. 10. Financial strength restoredFree cash and investment grade profile in 2012Pipes complete backlog, but more growth to comeE&P a top-tier competitor Deep inventory in core areas Growing oil volumesMidstream adds new growth vehicleMLP strategy creating value for EP & EPB 10
  11. 11. Do our businesses have greater capacity tocreate value together or apart?Will investors value the businesses morehighly as independent entities – now andover time? We’ve answered these questions 11
  12. 12. Unanimous conclusion of Mgmt. and BoardTax-free spin of E&P companyWill not require shareholder voteSubject to: IRS tax ruling and other customary approvals Finalization of capital structure Final Board approval Market conditionsTarget completion by year-end 2011 We will create two enduring businesses 12 with similar DNA - Zygosity
  13. 13. Because it is the right thing to do forshareholdersStructural impediments gone Balance sheet in shape Pipeline backlog largely complete E&P well positioned & growingRecent valuations have shifted burden of proofExciting value creation for the company’sbusinessesAllows investors to assess businessesindependentlySimplifies and focuses equity storiesGreater management focus on each company 13
  14. 14. Large stand-alone independent Well capitalized ~20% EBITDA growth in 20121 Inventory – large, oily, profitable, repeatable Low-cost in core areas Mature execution model Excellent growth/returns outlook Strong leadership Doug Foshee - Non-Executive Chairman Brent Smolik - CEO Dane Whitehead - CFO E&P industry leader 141 Assumes E&P capital consistent with 2011 levels and forward 2012 prices as of May 20, 2011
  15. 15. Premier interstate pipeline franchiseGrowing midstream businessBest in class MLP/100% owned high-growth GPSubstantial cash generation & growthPipeline/Midstream synergiesTargeting $0.60 dividend in 2012Targeting low double-digit dividend growthSeasoned management team remains Doug Foshee remains Chairman & CEO Targeting 14% + total return 15 Strong competitor in corporate yield space
  16. 16. Two high-quality companiesBoth well capitalizedBoth with great futuresEach more nimbleMotivated, unified managementSubstantial and sustainable valuation upliftTarget completion by year end We will continue to outperform 16
  17. 17. J. R. SultExecutive Vice President & Chief Financial Officer 17
  18. 18. Greater management focus on distinctbusiness strategies Growth-oriented E&P business Yield-oriented Pipeline and Midstream businesses with substantial and growing dividendCredit enhancing to El Paso CorporationGreater flexibility to grow businessessupported by separate equity currenciesIndependent capital structures &credit profiles = lower cost of capitalImproved capital markets accessIncreased flexibility and efficiency in capital 18allocation
  19. 19. Our drive toward investment grade profilehas been unwaveringKey drivers: MLP drop down strategy Exceeding expectations Expect more to come Growth in businesses Key barrier will be behind us 19
  20. 20. El Paso Corp. E&P Co. Largest pure-play interstate Well-positioned to prosper natural gas transportation independently company Substantial scale and Investment-grade business and operational diversification financial characteristics Multi-year inventory of low-risk growth opportunities Leverage will be comparable Growing oil weighting to investment-grade peers Expect 2012 EBITDA up ~20%1 and will improve Leverage consistent with key Complete backlog competitors Continue MLP strategy $2B - $2.25B net debt Stand-alone capitalization and credit profile will drive lower cost of capital 201 Assumes E&P capital consistent with 2011 levels and forward 2012 prices as of May 20, 2011
  21. 21. Submit IRS tax rulingFinalize capital structure E&P company debt Liability management Credit facilitiesSEC filingsSeparation agreementsFinal BOD approval Target completion by YE 2011 21
  22. 22. Financial & operational results ahead ofscheduleContinued MLP drop-down execution Successfully completed 6th transaction Funding debt reductionAdditional price risk management Good progress on all fronts 22
  23. 23. Original Updated1 Adjusted EPS $0.90–$1.05 $1.00–$1.10 Operating cash flow ($B) $2.1–$2.3 $2.2–$2.4 Capital ($B) $3.2 $3.6 Adj. Segment EBIT ($B) $2.2–$2.4 $2.3–$2.5 Adj. Segment EBITDA ($B) $3.3–$3.5 $3.4–$3.6 Production growth & prices driving higher earnings and operating cash flow 231 Updated guidance assumes $4.50/MMBtu (NYMEX) and $107/Bbl (WTI)
  24. 24. $ Billions $3.6 $3.2 Additional capital for Eagle Ford Central $1.6 $1.3 Activity not inflation Funded by increased cash $0.2 $0.2 flow & non-core divestitures Higher 2011 production $1.7 $1.8 and exit rate Pipelines updated for RubyOriginal 2011 Updated 2011Pipelines Midstream & Corporate E&P 24
  25. 25. Natural Gas Production Hedges Volume % of U.S. Gas EP Avg. Hedge Price1 Current Market Year (Bcf) Production ($/MMBtu) Prices (NYMEX) 2011 153 85% $5.74 $4.31 2012 105 40% $6.01 $4.87 Oil Production Hedges Volume % of Total Oil EP Avg. Floor/Ceiling Current Market Year (MMBbl) Production ($/Bbl) Prices (WTI) 2011 4.3 75% $85.99 – $91.88 $99.03 20122 6.4 90% $93.30 –$112.76 $98.32 2012 4.9 70%2 $91.31–$104.71 (at 3/31)1Represents the average floor price for 2011 and the average fixed price for 2012.2Excludes1.46 MMBbl of $95 call options. 25Note: NYMEX & WTI pricing is as of May 17, 2011, and hedge positions are as of May 17, 2011. Natural gas production with floors reflects domestic production. 2011 percentages based on remaining 2011E production. 2012 percentages based on FY 2011E production. Expected production includes the company’s interest in Four Star.
  26. 26. Pat JohnsonVice President, Strategy 26
  27. 27. (2010–2020)Growing long-term demand Economy  Electricity  GasEnvironmental and climate regulation Power: Coal , Renewables Dramatic supply growth Unconventional production: Shales , Rockies Changing trade balance Imports: Canada , LNG ?; Exports: Mexico , LNG ?, NGLPersistent oil-gas price disparity Resource swaps: Gas LiquidInfrastructure impetus New sources  New plumbing  New money 27
  28. 28. 2010/2020 Volumes in Bcf/d WESTERN 6.1 NW and 2.8 CANADA 8.0 3.6 ALASKA 3.0 EASTERN 4.3 2.8% CANADA 0.7% 0.7% 1.8% 9.6 12.1 2.4% 10.8 12.3 6.3 5.2 4.2 6.1 5.6 5.0 1.3% -0.3% 0.9% 1.8% 12.2 17.0 NORTH AMERICA TOTAL 3.3% 2010 81.7 14.9 17.3 2020 98.8 6.0 2010–2020 CAGR 1.9% 8.0 1.5% 2.9% 28 MEXICOSource: El Paso April 2011 Macro Forecast
  29. 29. PRIMARY ENERGY CONSUMPTION BY SOURCE & SECTOR, 2009 (Quadrillion Btu) SUPPLY SOURCES 35.3 23.4 19.7 7.7 8.3 PETROLEUM NATURAL GAS COAL RENEWABLE ENERGY NUCLEAR (Including hydro) % OF 72 22 5 1 3 32 35 30 7 <1 93 12 26 9 53 100 SOURCE % OF 3 3 40 11 17 76 1 7 18 48 11 22 41 7 1 SECTOR 94 DEMAND SECTORS 27.0 18.8 10.6 38.3 TRANSPORTATION INDUSTRIAL RESIDENTIAL ELECTRIC & COMMERCIAL POWER 29Source: Energy Information Administration Annual Energy Review 2009
  30. 30. Coal Generation Capacity (GW) 4.8 1.98 10.5 8.2 0.86 13.6 1.64 5.72 2.3 CATR—NOx, Sox 1.83 0.6 16.6 HAPS Rule—Hg 0.00 8.49 Waste Management Rules—ash Water Use Rules—cooling systems No Emission Controls—105 GW1 Tailoring and NSPS Rules—GHG Projected Retirements—57 GW2 State and local initiatives Announced Retirements—21 GW1Ventyx2El  9 Bcf/d gas capacity 30 Paso estimate
  31. 31. Mandatory HI: 20% Voluntary 2020 No targets Renewables dampen demand for gas but increase demand for infrastructure  33 GW generation, 5 Bcf/d pipeline, up to $15 B capital 31Sources: RPS - ICF Integrated Energy Outlook, Q1-2011; Gas backup – INGAA Foundation: Firming Renewables
  32. 32. Major Sources (2010/2020) in Bcf/d NA WESTERN LNG EXPORTS CANADA 0.2 16.7 0.9 17.8 ROCKIES APPALACHIA 9.4 2.8 10.7 9.1 MID CONTINENT NA ARKLATEX LNG IMPORTS 13.5 15.0 8.6 1.7 14.9 2.4 L48 PRODUCTION SOUTH GULF OF 2010: 57.7 TEXAS MEXICO 2020: 74.0 4.4 6.8 32 7.8 5.1Source: El Paso April 2011 Macro Forecast
  33. 33. 5,000 PERFORMANCE Haynesville DRIVERS 4,000 Technology Geology Barnett 3,000 MMcf/d Geography Marcellus 2,000 Fayetteville 1,000 0 0 24 48 72 96 120 144 168 192 216 240 264 288 312 Months Since First Production 33Source: Wood Mackenzie, State Production DataHaynesville & Marcellus Time Zero is 1Q 2008; Fayetteville Time Zero is 2004; Barnett Time Zero is 1982
  34. 34. 85 75 65 85% Lower 48 Supply in Bcf/d 55 83% L48 Onshore 45 77% 67% GOM Offshore 35 U.S. LNG (Import) Canada (Import) 25 Mexico (Export) 15 5 >15% 12% 7% <5% Net Trade (% of total supply) -5 2005 2010 2015 2020 34Source: El Paso April 2011 Macro Forecast ; ICF
  35. 35. CANADA DEMAND  +2.7 Western Canada Oil Sands Eastern Canada Coal Generation Retirements CANADA SUPPLY +1.01 All Canada: GHG Coal Replacement Policy WCSB Conventional  Unconventional  +0.7 LNG exports 3 CUMULATIVE CHANGE FROM 2010-2020 IN BCF/D 2 1 Net Exports to Mexico 0 Net Imports from Canada 4 Bcf/d -1 -2 -3 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 MEXICO DEMAND  +2.0 +0.41 Powergen and Industrial Growth MEXICO SUPPLY Oil Conversion Gas Production declines as drilling shifts to oil 35 LNG imports trail demand growthSource: El Paso April 2011 Macro Forecast1Production + LNG imports
  36. 36. U.S. DRILLING 2,000 # of Active Rigs in U.S. 1,600 1,200 800 84% 400 53% 57% 0 20% Jan 2007 Jan 2011 Jan 2007 Jan 2011 Oil Gas Vertical/Directional Horizontal MEXICO DRILLING MEXICO POWER GENERATION 100% 100% % of Active Rigs in Mexico % of Mexico Power Gen* 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010 36 Oil/Misc Gas Oil/Coal GasSource: Baker Hughes ; PIRA * From Combustible Fuel Sources
  37. 37. U.S. TRADE BALANCE ETHYLENE INFRASTRUCTURE GROWTH 400 1,400(Exports) 300 1,200 200 116 136 83 5% 1,000 100 52 78 44 139 150MBbl / d 60 68 70 101 800 MBbl / d 0 100 180 160 276 267 600 200 375 360 400(Imports) 30014% 400 200 500 0 2005 2006 2007 2008 2009 2010 2010 2011 2012 2013 2014 2015 2016 2017 Ethylene Derivative Exports—NGL Equivalent Potential Projects NGL Exports Likely Projects NGL Imports Current Ethane Demand Net Trade ( X% of Total Supply) Export trend continues to enlarge market 37Source: Wells Fargo Securities, LLC
  38. 38. 0.7 Changes 2010–2020 (Bcf/d) -0.5 LNG -0.3 EXPORT -1.1 -0.9 0.3 -0.3 0.4 0.5 1.1 1.5 -0.4 -0.4 0.3 -0.1 1.4 -0.2 0.2 -1.1 0.6 1.8 0.2 0.5 5.3 EAST COAST -1.5 2.4 LNG 0.3 WEST COAST LNG 2.2 0.2 GULF COAST 38 0.4 LNGSource: El Paso April 2011 Macro Forecast
  39. 39. 6,000 ACTUAL PROJECTED GAS INFRASTRUCTURE $B ADDITIONS: 2010-20205,000 15,000 Miles Transmission Mainline 484,000 27 Bcf/d 6,000 Connecting Laterals 153,000 Miles 136,000 Gathering Line 172,000 Miles Pipeline Compression 2,000,000 HP 51,000 Gas Storage Fields – 4 0 2005 2006 2007 2008 2009 2010 2011 2012 Processing Capacity 16 Bcf/d 12 Pipeline Miles Added Source: Energy Information Administration Source: INGAA Foundation, April 2011 39 Expected capital expenditures of >$100 B
  40. 40. Right places, right timeEP acreage 40Industry shale plays
  41. 41. Jim YardleyPresident, Pipeline Group 41
  42. 42. UNIQUE EXCELLENT LONG-TERMFRANCHISE FUNDAMENTALS GROWTH 42
  43. 43. 19% of total U.S. interstate pipeline mileage 28 Bcf/d capacity (13% of total U.S.) 17 Bcf/d throughput (26% of gas delivered 43 to U.S. consumers)Note: As of 12/31/10
  44. 44. Industry leader Integrity programs go beyond regulations Heavily involved in shaping industry positionsStrong commitment across organization Established new role—Sr. VP of Pipeline SafetyCompleting system-wide pipeline integrity program >$1 billion invested in past decade 44
  45. 45. > 90% > 90% 89% 92% 88% 81% 68% Total TGP SNG EPNG CIG Percentage of total revenue increases with TGP rate case 45Note: Percentage of total revenue from reservation charges as of 12/31/10
  46. 46. AVERAGE CONTRACT EXPIRATION EXCEEDS 6 YEARS 63% 46% 17% 13% 13% 10% 8% 10% 9% 5% 4% 2% 2011 2012 2013 2014 2015 Beyond % of Volume % of Revenue New expansions increase average contract life 46*Average percentage of contract expirations as of 12/31/10. Amounts include Florida Gas Transmission volumes
  47. 47. TGP First case in 15 years Improves revenue stabilityEPNG Addresses lower throughput Higher but competitive ratesCIG Just filed early rate settlementSNG Next case expected in 2013FGT Expect to file in 2014Overall long-term regulated returns 47
  48. 48. What Differentiates EPs Pipeline Group? NATIONAL Economies of scale; diversity FOOTPRINT Best positioned for future growth HIGHLY INTEGRATED Better base business and SYSTEMS opportunity set (CONNECTIVITY) SUPERIOR PROJECT Delivering profitable growth EXECUTION 48
  49. 49. Kinder El Paso Morgan Spectra Williams Boardwalk 2010 (EP) (KMI) (SE) (WMB) (BWP)Pipeline Segment $2.0 $0.8 $1.2 $0.9 $0.7EBITDA ($B)Daily throughput1 17.5 7.1 7.4 7.7 6.8(TBtu/d)Miles of natural gas 43,100 24,000 14,400 14,600 14,200pipeline1States served 27 17 23 20 12 Creates economies of scale and diversity 49Note: Domestic statistics based on publicly reported data as of 12/31/101 Includes jointly-owned pipelines, and volumes for KMI and BWP are reported in Bcf/d
  50. 50. Canadian Import Decline Northwest Demand Northeast Rockies Demand Power Generation Marcellus Coal replacements, Supply Shale renewable back-up Power Generation Coal replacements Rockies Demand Power Generation Demand growth and coal & oil replacements Mexico Export Haynesville Increase Shale Southeast Demand Mexico Demand Eagle Ford Shale Power Generation Demand growth and oil conversions 50 In all the best markets/supply basinsSource: El Paso Corporation
  51. 51. HIGH VALUE "FIRST MILE" SERVICE HIGH VALUE "LAST MILE" SERVICE• Physical requirements service • Physical requirements service• Diversity of supply options • Extensive connectivity• Connectivity to growth basins • Multiple connections to LDC 51 EP Pipelines more integrated than point-to-point
  52. 52. >100 customer delivery meters and >150 customer delivery >70 receipt meters in the Rockies meters in NE >300 customer delivery meters in SE >500 customer delivery meters in SW Strong market positions 52
  53. 53. $ Billions Proportionate Rate Base1 $14.9 Project costs within 7%–8% of budget $8.5 19 projects (‘07–’11) On budget excluding Ruby Major projects of competitors 20%–90% over budget Effective risk sharing 2007 YE 2011 YE2 Yields profitable growth 531Includes the company’s proportionate interest in Ruby, Gulf LNG and Florida Gas Transmission2 Estimated
  54. 54. FGT RUBY TGP PHASE VIII 300 LINE SNG SOUTH  Placed SYSTEM III1 July GULF LNG November in service June October April 1 Completing original $8 B backlog Projects to generate significant cash flow 541Phase two of three-phase project, includes SESH II
  55. 55. Construction progressing towardJuly completionNow expect $3.65 billion costFavorable long-term marketfundamentals Large Rockies resource base Canadian exports to US decliningNear-term challenges Especially slower Rockies production growth Long-term strategic asset 55
  56. 56. TGP NE Upgrade Project ALL PROJECTS $416 Million FULLY-SUBSCRIBED 2013 620 MMcf/d TGP NE Supply Diversification $73 Million 2012 250 MMcf/d Elba Express Phase B $30 Million 2014 220 MMcf/d SNG South System III* $111 Million 2012 Pipelines generate 125 MMcf/d significant cash in 2012 56*Phase III of three-phase project which includes SESH Phase II. Phase I placed in-service January ‘11, Phases II and III in-service in June ‘11 and June ’12, respectively.
  57. 57. 2014–2020 Bcf/d Eastern powergen ~5 Marcellus/Utica ~6 Mexico ~2 Rockies/NW powergen ~1 Estimated $7 billion1 annual total industry spend Expect to capture our share 571 INGAA Foundation, April 2011. Transmission mainline and laterals, compression, storage
  58. 58. Expected coal and fuel oil plant closures ~12 GW generation ~2 Bcf/d capacity Includes announced closures by Progress, Southern, FPL Growing electric market Coal plant Oil plant SNG/FGT have strong positions in growing region 58Note: El Paso estimate of potential closures (through 2020)
  59. 59. Expected coal and nuclear plant closures ~18 GW generation ~3 Bcf/d capacity Includes announced closures by TVA, AEP, KY Utilities TGP has available capacity in Coal plant TN, KY, OH Nuclear plant TGP well positioned to capture future growth 59Note: El Paso estimate of potential closures (through 2020)
  60. 60. Bcf/d Marcellus in PA Marcellus into TGP2.0 2.1 TGP1.5 Marcellus 1.3 Shale1.0 PA Drilling locations0.5 Now 33 interconnect receipt points into TGP - 14 more under construction0.0 2008 2009 2010 Mar 2011 Ideally located in northeast PA 60
  61. 61. $50 MM–$60 MM revenuesCANADA from Marcellus backhauls 2012–2013 Completing >$1 billion of expansions; fully-subscribed Area expecting production growth > 6 Bcf/d Marcellus Shale Utica Shale TGP Excellent position in Utica High-activity drilling areas Success to date; more to come 61
  62. 62. Est. U.S./Mexico Exports (Bcf/d) EPNG and TGP provide 2.5 significant deliveries 0.9 to Mexico 2010 2020 Expect power generation and industrial growth Additional growth from: Fuel oil conversions PEMEX emphasizing oil over gasEl Paso Pipelines Recently contractedPEMEX 185 MMcf/d EPNG expansionCurrent gas-fired plantFuture gas-fired plant EPNG and TGP set to win 62
  63. 63. Expected coal closures and renewable generation back-stop ~ 6 GW generation ~ 1 Bcf/d capacity Strong environmental mandates in CO, OR, WA CIG strong market position Ruby provides new capacity/supply diversity 63Note: El Paso estimate of potential closures (through 2020)
  64. 64. 2014–2020 Bcf/d Pipeline Benefitting Eastern powergen ~5 TGP/SNG/FGT Marcellus/Utica ~6 TGP Mexico ~2 EPNG/TGP Rockies/NW powergen ~1 CIG/Ruby $7 billion1 per year in total industry spend Expect to capture our share 641 INGAA Foundation, April 2011. Transmission mainline and laterals, compression, storage
  65. 65. Unique franchise Scale/scope Positioning Connectivity ExecutionStable earnings and cash flowSignificant known growth, cash generationPositioned for future growth opportunities 65
  66. 66. J. R. SultExecutive Vice President & Chief Financial Officer 66
  67. 67. 2010 was best year yet $2.4 B drop down transactions $1.4 B equity raised (most ever by an MLP)Drop down strategy has been win/win forEP shareholders & EPB unit holdersContinued execution results in rapidgrowth of GP distributions (via IDR)Strong start in 2011 67
  68. 68. MARCH Growth through $810 MM acquisition 51% of SLNG acquisitions—$4.1 B 51% Elba Express JUNENOVEMBER $492 MM acquisitionLargest MLP IPO 20% interest in SNG$541 MM100% interest in WIC SEPTEMBER NOVEMBER10% interest in SNG $736 MM acquisition JUNE/JULY $1,133 MM acquisition March10% interest in CIG 30% interest in CIG $215 MM acquisition 49% of SLNG $667 MM acquisition 15% interest in SNG 18% interest in CIG 49% Elba Express 25% interest in SNG 15% interest in SNGNov. 2007 2008 2009 2010 2011 JANUARY MARCH JUNE SLNG Elba IIIA WIC Kanda Lateral CIG Totem Storage Elba Express JANUARY MAY SEPTEMBER NOVEMBER SNG SSIII Phase I SNG Cypress II WIC Piceance Lateral WIC System Exp. SEPTEMBER SNG SESH I DECEMBER CIG Raton 2010 Exp. OCTOBER WIC Medicine Bow NOVEMBER CIG High Plains Completed expansion projects—$1.6 B 68
  69. 69. Market Cap ($ Billions) $7.0 $5.9 $3.3 $1.7 $1.8IPO Nov. YE 2008 YE 2009 YE 2010 May 2007 2010 69
  70. 70. WIC (100%) SNG (85%) Elba Express (100%) CIG (58%) MLP franchise has expanded SLNG (100%) Positions have been cored up 70
  71. 71. $/Unit $0.50 $0.45 $0.40 $0.35 $0.30 $0.25 2008 2009 2010 1Q 2011~25% total annual return to unitholders since IPO 71
  72. 72. $60 $1.90 Annualized GP 2% $1.84 $1.80 $50 Annualized GP IDR $50Annualized GP Distributions Annualized Distribution Annualized Distribution per LP unit $1.70 per LP unit ($) $40 $1.60 ($MM) $1.50 $30 $1.40 $20 $1.30 $1.15 $1.20 $10 $1.10 $2 $0 $1.00 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 GP distribution growth a multiple of EPB distribution growth On track for $60 MM—$70 MM for 2011 72
  73. 73. Hypothetical EPB Distribution per LP unit $600 Hypothetical EPB Distributions GP benefit from same $500 hypothetical Issuance of 40 MM LP units $43 to El Paso ($MM) $400 Current $35 Annualized Distribution $27 $219 $300 level $178 $19 $137 $96 $200 $53 $217 $234 $100 $163 $181 $199 $- $1.84 $2.05 $2.25 $2.45 $2.65 EP LP Distribution GP Distribution GP Distributions from hypothetical new equity GP distributions can double with 10% increase from current distribution level1 731Assumes 10% increase from current annualized per-unit distribution level; includes hypothetical issuance of 40 million new LP units
  74. 74. $925 MM equity raised so far More than assumed in all 2011Well positioned for second drop downthis yearDemand for best in class MLP continuesto be outstanding Trajectory for continued execution of MLP strategy is excellent 74
  75. 75. El Paso committed to continue dropdowns Greater valuation in MLP Grow GP distributions (via IDR) Use cash proceeds to continue balance sheet improvementLarge inventory of suitable assets Only one-third of proportional Pipeline EBITDA in EPB~ $3 billion NOL provides significant flexibility 75
  76. 76. Mark LelandPresident, Midstream Group 76
  77. 77. Gas and Oil/Condensate Processing InterstateGathering Compression Treating Pipelines Pipeline NGL Gathering / Trucking Treating Stabilization Fractionation Petrochem Storage Industry Midstream provides services between the wellhead and interstate pipelines 77
  78. 78. Substantial Midstream Player in key basins whereEl Paso operatesAn Important and Visible Growth Driver toEl Paso CorporationA BU that Adds Value directly and indirectly to Pipeline andE&P Groups Source of supply for pipelines Optimize underutilized pipe capacity Ensure infrastructure available for E&PExecution and results driven—Customer OrientedA BU where EP Employees want to come to work and whereEP BU’s want to recruit 78 78
  79. 79. EP acreage Industry shale plays $30 B of gathering and processing infrastructure to be added in North America by 20201 791Estimates from INGAAs North American Infrastructure Study
  80. 80. El Paso owns 50% of El Paso Midstream Investment Company (EPMIC) EPMIC owns 100% of Altamont assets Partner has committed $500 MM over 4 years Capital efficient vehicle to develop Midstream businessMidstream opportunities executed in partnership 80
  81. 81. Conventional oil play Key Producers:Drilling activity and oil EP / BBG / DVN / Ute Energy / NFX / BRYproduction are increasingGathering and processing Natural Gasinfrastructure easily OilexpandableMidstream servicesinclude: Gathering and compression Treating Processing Third-party fractionation NGL marketing 81
  82. 82. 1,002 pipeline miles402 producing wells23,000 hp compression40 MMcf/d plant capacityAltamont debottleneckproject (50% capacityincrease)Third-party gatheringexpansion 25-mile low-pressure gathering header for new third-party volumes El Paso Acreage Increases dedicated Third Party Field Extensions acreage by ~115,000 Altamont Gathering System Third Party Step Out Line acres (54% increase) $25 MM expansion capex (100% basis) 82
  83. 83. GAS GATHERING SYSTEM OIL LA SALLE 70 miles of 6" to 12" diameter TX pipe Capacity of 150–170 MMcf/d ~ $50 MM total capex E&P plus third-party shippersVOLATILE OILDIMMIT OIL GATHERING SYSTEM EP acreage WET GAS 68 miles 6" to 12" diameter CRGS In-Service CRGS Under Construction pipeline Oil Line Under Construction Oil Terminal DRY GAS 80,000 Bbls/d capacity ~$50 MM total capex Fully operational gas system mid-summer; oil system early-fall 83
  84. 84. LA SALLE EXPECTED GAS INTERCONNECTS OIL FOR PROCESSING AND TAKE-AWAY TX Regency Oil Enterprise Terminal Energy Transfer Oil Kinder-Copano TerminalVOLATILE OIL OIL TAKE-AWAYDIMMIT Immediate on-lease trucking EP acreage WET GAS Central terminal trucking CRGS In-Service CRGS Under Construction DRY GAS Pipeline take-away Oil Line Under Construction E&P and third-parties to enjoy multiple gas and oil export options 84
  85. 85. EPM concentrating on rich gas and oil windows of Marcellus and Utica shales >100 Tcf expected ultimate recovery in southwest PA alone Capturing value of NGLs can Rich increase returns by upwardsGas Area of 30% Marcellus wet gas continues ~4–5 gallons of ethane per Marcellus Shale Mcf of gas; approx 16% of the Utica Shale wet gas stream TGP Utica shale expected oil with associated gas TGP has available capacity 85
  86. 86. PROJECT SCOPE Ethylene Cracker IA MEPS will: Tennessee Gas Pipeline PA OH Collect purity ethane in IL IN S.W. Marcellus WV Redeliver to the Gulf Coast MO VA Initial capacity—60,000 to KY 80,000 BPD; expandable to NC 100,000 BPD TN Best pipeline option to AR premium gulf-coast markets SC ~ $1 billion total capex Gulf Coast Delivery Options: Baton Rouge, Lake Charles, or Mont Belvieu GATX MS AL STATUS Active discussions with LA FL Producers and Petrochemical Companies 86
  87. 87. Utica Shale Underlies Marcellus Shale Most drilling currently in eastern Ohio Expected to be oil/condensate with rich associated gas Rich TGP is situated primarily in theGas Area oily and rich gas sections of the play El Paso has relationships with key producers Opportunity to provide rich-gas gathering header, in-field gathering and processing, fractionation including ethane solution via MEPSPlay in early development lacks midstream infrastructure 87
  88. 88. Oil play with associated rich gas POWDER RIVER SD FALL RIVER SHANNON BASIN BENNETT NIOBRARAWIC Medicine Bow lateral is CONVERSEsituated in the Wyoming region NATRONA WIC DAWESof the play WY Medicine Bow SHERIDEN Lateral SIOUX BOX BUTTEEP has strong relationship with Rawlins PLATTEmajor acreage holders in C.S. & Plant GOSHEN NE FOCUS SCOTTS BLUFF GRANTWyoming Niobrara CARTION ALBANY AREA BANNER MORRILL GARDEN LaramieOpportunity to provide rich-gas C.S. LARAMIE Cheyenne KIMBALL CHEYENNE DEUELgathering header (WIC), in-field C.S. SEDGWICKgathering and processing JACKSON LARIMER DJ BASIN LOGAN WELD NIOBRARA SHALE PHILLIPS ROUTTAvailable WIC capacity WIC CIG CO MORGAN Play in early development lacks midstream infrastructure 88
  89. 89. MEPS well positioned to provide Gulf Coast ethane supply Camino Real Gathering System provides Eagle Ford shale Midstream platform Evaluating option to participate in larger Eagle Ford Rich Gas pipeline and processing project Competing for major projects in Utica and Niobrara Continue to advance Altamont infrastructure JV provides financially efficient platform Midstream poised to participate in$30 B gathering and processing 10-year build out 89
  90. 90. Brent SmolikPresident, Exploration & Production 90
  91. 91. Strategy is consistent and fully operationalExecuting well in all phases of our businessInventory is bigger, lower risk, oilier andmore profitableSupportive organizational culture andstructure is in placeDelivering value and sustainable growth Performance among industry’s best 91
  92. 92. EXECUTION!E&P strategyAsset portfolioOrganizationalcapability 92
  93. 93. Build and apply competencies Add assets within assets with repeatable inventory that fitprograms and our competenciessignificant project and divest assetsinventory that do not Sharpen execution skills to improve capital and expense efficiency and maximize returns 93
  94. 94. CairoEGYPT Rio de Janeiro 94BRAZIL
  95. 95. Net Risked Resource 8.0 Tcfe 0.2 30% CAGR 4.3 3.7 Tcfe 0.8 0.5 2.2 1.5 0.9 1.3 2007 YE 2010 YE PUD Conventional Lower Risk Unconventional Conventional Higher Risk Haynesville, Eagle Ford & Wolfcamp have driven significant growth 95
  96. 96. 48%38% Oil is >2/3 of future value2007YE 2010YE Eagle Ford & Wolfcamp have been impactful 96
  97. 97. CORE DRILLING PROGRAMS LOCATIONS1 Haynesville 415 ALTAMONT Eagle Ford 1,145 Wolfcamp 860 Altamont 840 Total 3,260 WOLFCAMP HAYNESVILLE Oil Resources Gas Resources EAGLE FORD >10 years of drilling locations 971As of 12/31/10 (includes PUD locations and is shown on an unrisked basis
  98. 98. Peoples Eagle Ford Wolfcamp/ Acquisition Leasing Eagle Ford(Haynesville) Leasing 2007 2008 2009 2010 Sale of ~1/2 Flying J GOM & Acquisitions S. TX assets (Altamont) High-grading will continue Sales and additions/oil vs natural gas Continued evaluation of new opportunities New additions must compete with current inventory 98
  99. 99. • Organized geographically and by programSTRUCTURE • Inventory creation and capital management focused • Driven by returns and growth in value • Establish consistent internal performance targetsALIGNMENT • Standardize practices/simplify processes • Pursue break thru opportunities • Share knowledge across company (technical networks)LEARNING • Rigorous post mortem processes • Shape portfolio through targeted A&D 99
  100. 100. • Single operations organizationSTRUCTURE • Capital execution and production optimization focused • Driven by safety, efficiency, and cost control • Establish consistent internal performance targetsALIGNMENT • Standardize practices/simplify processes • Pursue break thru opportunities • Share knowledge across company (technical networks)LEARNING • Benchmark competitors • Build effective partnership (suppliers, operators) 100
  101. 101. DRILLING OPERATIONS Gross Wells Drilled (No.) 154 Footage Drilled (MM ft) 1.6 Rig Count (average) 13 COMPLETION OPERATIONS Gross Wells Completed 142 Stages Completed 1,178 Vol. Pumped (MM bbl) 7.0 Sand Pumped (MM lbs) 317 PRODUCTION OPERATIONS Gross Wells1 5,664 Net operated production (MMcfe/d) 629 101Note: El Paso operated assets only1 As of December 31, 2010
  102. 102. 2.0Committed toresponsible operations 1.5 Zero employee incidentsImproved engagement TRIR YTD 1.0with contractors andservice providers 0.5Enhanced programs toimprove integrity and 0.0reliability Employee Contractor TRIR TRIR 2007 2008 2009 2010 2011 1Q YTD 102
  103. 103. Improved reliability and EXAMPLE: RATON PRODUCTION (MMcfe/d)management 90 No ActivePursuing value added 80 Drillinginvestments Workovers, 70 restimulations, pump upgrades, facility de- 60 bottlenecks 50Overall base decline~35% 40 2005 2006 2007 2008 2009 2010 2011E 103
  104. 104. Tcfe 12 10 Reserves up 22% from YE 20091 38% Proved undeveloped 8 Reserve life increased to 12 yrs 40% of proved value is oil2 6 4 3.41 2 0 SM CRK XCO XEC FST PXP COG QEP EP HK NFX RRC WMB PXD NBL EOG 2010 2010 1041 Including the company’s 48.8 percent interest in Four Star Oil & Gas Company2 Based on YE 2010 PV-10, which assumes 2010 pricing
  105. 105. MMcfe/d2,5002,000 Production up ~3% from 2009 2010 Exit Rate—800 MMcfe/d1,500 ~20% of 2010 revenue from oil1,000 782 500 0 CRK SM XCO COG FST RRC PXP XEC QEP PXD HK NFX EP WMB NBL EOG 2010 2010 105
  106. 106. 2010 ($/Mcfe)$6.00$5.00$4.00 $3.55$3.00$2.00 $1.40$1.00$0.00 WMB NFX PXP EOG QEP FST SM HK XEC CRK PXD NBL XCO COG RRC 106 2007 2010
  107. 107. 2010 ($/Mcfe)$2.00$1.80$1.60$1.40$1.20$1.00 $0.88$0.80 $0.73$0.60$0.40$0.20$0.00 PXP PXD NFX SM XEC EOG NBL COG XCO CRK RRC FST WMB QEP HK 107 2007 2010
  108. 108. ACQUIRE PILOT DELINEATE/ INFILL POSITION WELLS DE-RISK DEVELOPMENT DRILLLOW Maturity HIGH 108
  109. 109. Rapid production growth Top- or top-quartile program by any measure Holly area economic at sub $4 gas price Wells drilled: 86 Wells producing: 79 Wells in backlog: 7 Continue to drive efficienciesExcellent position in the 4–5 year remaining inventory heart of the play 109
  110. 110. MMcf/d (Net)250200150100 50 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2009 2009 2009 2009 2010 2010 2010 2010 2011 Current net production 265 MMcf/d 110
  111. 111. CUMULATIVE SIX-MONTH PRODUCTION1 1,600 Higher productivity a function of: 1,400 Excellent acreage position Well design optimization 1,200MMcf Lateral length 1,000 Number of stages Pumping rate 800 Total stage volumes 600 Proppant concentrations El Paso Industry Average2 1111 Cumulative six-month production based on available state reported production data as of April 20112 Average per well based on newly producing horizontal gas wells in 2010 targeting the Haynesville Shale (deeper than 11,450 ft.)
  112. 112. Avg. Frac Stages Per Day 5.0 4.0 3.4 2.40.52008 2009 2010 2011 YTD Best YTD 112
  113. 113. CUMULATIVE EBITDA/CAPITAL @ $4.00/MCF (NYMEX)* Highest volume/capital efficiency in portfolio 94% 71% Lowest LOE/unit (~$0.05–$0.10/Mcfe) Best F&D of core programs ($1.55–$1.95 Mcfe) Year 1 Year 2 Anchor gas drilling program 113*Based on type model results for a single Holly area Haynesville well
  114. 114. Maintain 4-rig base-loadprogramContinue to drive efficiencies Drilling Completion Fracs per day Frac design Continue to deliver profitable growth 114
  115. 115. Large oil inventory >800 future locations 125 MMboe resource* Substantial production growth potential Improved well productivity Continuous operational Applying new technologies improvement to 3 billion barrel field 115*As of December 31, 2010. Indicates risked resource potential
  116. 116. Boe/d (Net)10,000 9,000 Oil Gas 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2005 2006 2007 2008 2009 2010 1Q 2011 Current net production >9,000 Boe/d 116
  117. 117. Continue drilling in geographically focused areas Expected efficiency gains: Shorter, more efficient rig moves Repeatable drilling program execution Optimized completion designs Facility and artificial lift savingsTargeted capex savings of 20% per well 117
  118. 118. Maintain active oil drillingprogram: 2–3 rigsContinue to drive efficiencies Drilling Vertical Well CompletionsAnalyze 3-D seismic for naturalfracture identificationEvaluate EOR options Long-term value and production growth 118

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