Earnings Watch: El Paso Corp. & El Paso Pipeline

May 8, 2009

Both El Paso Corp. (EPC) and El Paso Pipeline Partners (EPP) reported 1Q09 earnings today, EPC is the parent of several placement issuers including Southern LNG, and EPP itself is also a private placement issuer.

EPC reported a net loss of $969 million for the quarter, due to a non-cash charge related to the profitability of proven reserves. Though that may sound pretty bad, if the non-cash charge is excluded, the company would have posted $0.47 per share, which is well above the $0.27 per share that analysts expected. The news was enough to lift the company’s stock [NYSE:EP] 17% from Thursday’s close of $7.67 per share to close at $9.03 per share on Friday.

So, is that good news for holders of the $135 million private placement issued by EPC’s Southern LNG in February via BASML? Or for holders of the $250 million 144A issued by Tennessee Gas Pipeline Co.—also an EPC holding—back in January? Well, analysts at bond research firm KDP Advisor seem to think so. “Bottom line: very strong quarter,” wrote Kenneth Duffel in a report.

EPP [NYSE:EPB] also released its first quarter earnings today, which looked great from any vantage point. The company reported net income of $46 million on the quarter, up from $27.6 million in the first quarter of last year.

Private market aficionados will remember EPP from its September 2008 private placement, a $175 million transaction led by BASML (still just BAS at that time), just as the roof of the entire credit market was beginning to cave in.

For more information on any of the above deals, please see the PPL Deal Log available on www.privateplacementletter.com. Otherwise, have a great weekend…

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