By OGJ editors
HOUSTON, May 25 -- El Paso Corp. plans to split into two publicly traded companies, one encompassing its pipeline and midstream businesses and the other its exploration and production operations.
The company’s board has given initial approval for a spinoff of the E&P company by yearend.
El Paso Corp. then will comprise the company’s pipeline group, its midstream group, and its general and limited partner interests in El Paso Pipeline Partners LP.
Doug Foshee, chairman, president, and chief executive officer, said the move “will result in significant and sustainable value creation.”
El Paso’s pipeline group operates 42,000 miles of interstate gas pipelines in the US. It’s the largest interstate system in the country.
The El Paso Exploration & Production Co. unit focuses on unconventional and low-risk conventional gas plays, nearly all in the US. It holds reserves of 3.4 tcf gas equivalent, including its 48.8% interest in Four Star Oil & Gas Co. Average production in 2010, including the Four Star interest, was 782 MMcfd of gas equivalent.
El Paso reentered the midstream business last year with investments in gas gathering systems in the Haynesville shale play of Louisiana and Altamont-Bluebell play of northeastern Utah, where it also owns a gas processing plant. With Spectra Energy Corp., the midstream unit plans to build an ethane pipeline system between the Marcellus shale producing region in the US Northeast and the Gulf Coast.
For the quarter ending Mar. 31, El Paso reported net income of $136 million on operating revenue of $989 million. In the comparable quarter of 2010 the company earned $419 million on $1.401 billion of revenue. Total assets on Mar. 31 were $25.857 billion.
Foshee will remain chairman and chief executive officer of El Paso and become nonexecutive chairman of the E&P company.
Brent Smolik, now president of El Paso Exploration & Production Co., will be chief executive officer of the E&P company. Dane Whitehead, now senior vice-president, strategy and enterprise business development, will be chief financial officer of the spun off unit.