said Tuesday that its first-quarter net income jumped 89% over the same period a year ago, but the natural gas producer and distributor's continuing operations profit fell short of analyst estimates.
For the most recent quarter, El Paso's earnings were $629 million, or 89 cents a share, compared with $356 million, or 49 cents a share, in the same period of 2006.
Most of the growth came from a gain on El Paso's sale of ANR Pipeline to
in February. ANR owned more than 10,000 miles of pipeline and distributed one trillion cubic feet of natural gas annually in the U.S. The sale of ANR was worth 94 cents a share for El Paso.
"With the completion of the ANR sale, we reduced our debt to $11.7 billion, which is approximately half of what it was only four years ago. As a result, our pipelines regained investment grade credit ratings, which lowers the cost of capital that we employ," Doug Foshee, El Paso CEO, stated in a press release.
The company also incurred a $128 million charge for debt repurchase costs in the quarter and a $56 million loss from production-related derivatives.
Excluding the ANR sale, debt repurchase expenses and a mark-to-market loss on derivatives, El Paso would have earned 18 cents a share in the first quarter. Analysts were expecting a profit of 26 cents a share on average, according to a survey by Thomson Financial.
Revenue fell to $1.02 billion in the quarter from $1.34 billion a year ago. The decline was primarily caused by a poorer performance in its gas-marketing business. The segment reported a $135 million loss in the quarter, compared with a $208 million profit during the same period a year ago.
El Paso's pipeline business saw 5% year-over-year growth in earnings before interest and taxes.
Speaking during a conference call, Brent Smolik, the president of El Paso Exploration & Production Company, said full-year expenses for his unit might not be at the low end of guidance, but that the average for 2007 could be lower than costs were in the first quarter.
Shares of El Paso fell 4% to close at $14.95.
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