Backed by strong year-to-date performance, El Paso Corporation (EP) has decided to enhance its financial and operational guidance for 2011.
Total production in 2011 is expected in the range of 830–860 million cubic feet equivalent per day (MMcfe/d), up from 782 MMcfe/d in 2010. The improved drilling results in the Eagle Ford Shale were attributed to the growth in production target.
The 2011 adjusted segment earnings before interest, taxes and depreciation, depletion and amortization (Adjusted Segment EBITDA) are expected in the range of $3.4–$3.6 billion, above the previous expectation of $3.3–$3.5 billion. While the adjusted segment earnings before interest and taxes (Adjusted Segment EBIT) are expected in the $2.3–$2.5 billion range, up from $2.2–$2.4 billion projected earlier.
El Pasonow looks to spend about $3.6 billion toward capital expenditure for 2011, reflecting an increase of $0.4 billion from the previous guidance. The capital expenditure in Exploration and Production Group is expected to increase by $300 million with the capital infusion earmarked mainly for the Eagle Ford Central operation. In Pipeline Group, the capital increase will be $100 million from the previous level, mainly due to additional investments in the Ruby Pipeline Project.
El Paso projects operating cash flow for 2011 to range between $2.2 billion and $2.4 billion, up from $2.1 billion to $2.3 billion guided earlier.
The operating earnings per share are expected to be $1.00–$1.10, up from the previous expectation of 90 cents to $1.05. The current Zacks Consensus Estimate of $1.05 per share for 2011 is pegged at the higher end of the company’s guidance range.
We are quite confident that El Paso will be able to live up to its new guidance. The company's four new pipeline projects coming on-stream this year plus its current standing in the in Eagle Ford and Wolfcamp shales and the Altamont field, which should boost results, support our optimism.
El Paso Corporation currently retains a Zacks #3 Rank (short-term Hold rating). The company competes with Williams Companies Inc. (WMB).
Based in Houston, Texas, El Paso Corporation is engaged in natural gas transmission and in exploration and production sectors of the energy industry. The company primarily operates in United States and has some exposure in Brazil and Egypt.
EL PASO CORP (EP): Free Stock Analysis Report
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