El Paso 3rd-quarter profit plunges 87 percent on lower natural gas prices; dividend slashed
Associated Press
11/03/09 7:15 PM EST
HOUSTON — Natural gas distributor El Paso Corp. on Tuesday posted an 87 percent plunge in third-quarter profit, hurt by lower natural gas.
The company also announced cost-cutting measures and slashed its dividend, sending shares down in after-hours trading.
After paying preferred stock dividends, El Paso reported net income of $58 million, or 8 cents per share, compared with profit of $436 million, or 58 cents per share, in the year-ago quarter.
Excluding special items, including write-downs related to the changing value of commodity contracts, the company reported profit of 23 cents per share, down from 35 cents in 2008.
Analysts polled by Thomson Reuters, on average, were expecting profit of 22 cents per share for the quarter.
Revenue dropped 39 percent to $981 million, from $1.6 billion last year. Wall Street forecast average revenue of $1.12 billion.
Separately El Paso said it has take several steps to boost its financial standing, including selling up to $500 million in assets and cost-cutting measures aimed at saving $150 million a year. The company also slashed its dividend by 80 percent, to a penny from 5 cents a share.
The news sent El Paso's shares down 44 cents, or 4.5 percent, to $9.36 in aftermarket trading. The stock closed Tuesday's regular session up 12 cents at $9.80.
El Paso said a sharp decline in natural gas prices and lower production volumes were the major reason for the earnings decline. Natural gas averaged $7.37 per million cubic feet in this year's third quarter, down from $8.67 a year ago.
Sales of natural gas, oil and related products fell to $245 million, from $700 million last year. Production volumes averaged 732 million cubic feet equivalent per day, down from 793 million in the year-ago quarter. The production drop reflected a sharp decline in drilling activity resulting from lower prices, the company said.
