El Paso ( EP) continues to lose money -- and even a few executives -- as it heads toward reckoning day with its shareholders.

The nation's largest pipeline operator, together with two other struggling energy companies, surprised no one by ending the first quarter of 2003 in the red. But the former trading giant took center stage Tuesday by coupling news of a big loss and earnings miss with plans to cut its senior executive staff by nearly half. It shares slipped 3%.

Just months after booting longtime CEO William Wise, El Paso has now taken aim at its second-in-command. The Houston energy company is terminating Brent Austin, current president and operating chief, with no plans to replace him. Trailing only Wise and former Executive Vice President Ralph Eads -- who helped build El Paso's doomed trading operation -- Austin ranked as one of the highest-paid executives in El Paso's history. He collected $1.7 million in annual compensation before business soured in 2002, when his paycheck dropped some 50%.

Instead of replacing Austin, El Paso plans to rely on interim CEO Ronald Kuehn and other remaining executives to take up the slack. In addition to Austin, two other El Paso executives -- division presidents Greg Jenkins and Clark Smith -- are leaving the company. Jenkins led El Paso's petroleum and liquid natural gas units, while Smith presided over the company's struggling trading division.

El Paso is axing the executives as part of a sweeping effort to slash costs by $400 million -- nearly triple its original goal -- in 2003.

"All of these senior executives have contributed greatly to El Paso," Kuehn said in a prepared statement Tuesday. But "we must change to address the issues facing the company and the current realities of the marketplace."

Toppling

El Paso has long been criticized for being overly generous to its executives even as the company and its shareholders suffer. Before he left, Wise ranked as one of the highest-paid executives in an industry -- once dominated by Enron -- that was known for its jumbo paychecks. El Paso finally fired the embattled CEO after two powerful shareholders, Selim Zilkha and Oscar Wyatt, launched a proxy fight earlier this year. The dissidents, who hope to topple El Paso's entire board at next month's annual meeting, have loudly criticized both executive pay and performance at the company.

Clearly, El Paso continues to struggle. The Houston-based company swung to a first-quarter loss that was bigger than the profit it reported a year ago. Hurt by writedowns, asset impairments and its flailing trading unit, El Paso ended the first quarter with a loss of $394 million, or 66 cents a share. Even excluding special items, the company wound up with a first-quarter profit of 24 cents a share that was a nickel shy of analyst expectations.

Despite the first-quarter slide, El Paso kept its full-year pro forma earnings guidance of 87 cents a share in place and insisted that its core operations -- which now exclude trading -- are performing quite well.

"While the trading business was negatively impacted by the liquidity constraints that existed in the first quarter, we are very pleased with the performance of our pipeline, production and midstream businesses," Kuehn said.

El Paso's pipeline and production units both showed improvement during the quarter. However, profits fell off in the midstream division because of a $1.6 billion reduction in midstream assets that have been sold off to help pay down debt.

Meanwhile, the losses in merchant energy all but wiped out any gains elsewhere in the company. Liquidity pressures and special charges pushed the division to a loss of $514 million during the period.

Still, El Paso believes the massive bleeding will soon end.

"Because El Paso's liquidity is significantly better now due to the completion of additional asset sales and several financings ... these types of losses should be mitigated in the future," the company said Tuesday.

But the market wanted better. Shares of El Paso fell 5.6% to $7.23 at the open before climbing back to $7.49 as trading picked up.

More Red Ink

Two other money-losing energy companies, Calpine ( CPN) and Williams ( WMB), took quick hits on Tuesday as well. Calpine, which warned last week of losses from equipment repairs and currency exchange rates, ended the first quarter $45.3 million in the red. Still, that loss -- which translated into 12 cents a share -- was roughly half the loss Calpine reported in the same quarter last year. Calpine shares slipped 4.5% to $4.86 after the open but had bounced back above $5 by mid-morning.

Tulsa-based Williams also turned in another losing quarter. The company blamed a big first-quarter loss, which totaled $815 million, or $1.59 a share, on accounting changes related to its energy trading division. While the company lost money even after excluding special charges, it reported a slim 4-cent profit from continuing operations that actually topped Wall Street expectations by a penny.

Despite the small upside surprise, Williams' stock traded down 4.2% to $6.70 as Tuesday's session began. But the stock, which has tripled in recent months, still looks rich to even some industry experts who've applauded the company's comeback.

"The investors who took their chances on Williams when there was talk of bankruptcy have been well rewarded," said Tulsa money manager Fredric E. Russell, who liquidated his position in the company last year. "But I don't know about investors who are buying it right now. The stock price already reflects the most optimistic conditions."

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