El Paso to Reduce Energy-Trading Activities, Jobs
El Paso Corp., the biggest U.S. natural-gas pipeline owner, said Wednesday that it slashed its 2002 profit forecast, cut energy-trading jobs by half and plans to sell assets and $1.5 billion in stock to raise cash and trim debt.
El Paso shares plunged 23%, the biggest decline since the company went public in 1992. The stock is down 36% since December, when rival energy trader Enron Corp. filed for bankruptcy protection and sparked a decline in energy companies such as Dynegy Inc., Williams Cos. and Mirant Corp.
Chief Executive William Wise is backing away from energy trading a year after he opened 80,000 square feet of offices for 500 traders in Houston.
El Paso has been selling assets to reduce debt, including $2 billion in off-balance-sheet liabilities created through partnerships similar to those used by Enron.
El Paso said it expects to earn $2.60 to $2.75 a share this year, down from $3.33, the average estimate of analysts surveyed by Thomson Financial/First Call. The stock fell $8.26 to $27.01 on the New York Stock Exchange, a 31/2-year low.
Houston-based El Paso is cutting 300 positions from the trading unit, or 2% of its total work force, and people from other units will be fired later, a spokeswoman said. El Paso has 15,000 employees.
The Federal Energy Regulatory Commission is probing charges that El Paso withheld capacity on its pipelines to California when prices soared in 2000 and 2001.
In other energy industry news:
* CMS Energy Corp. said it plans to sell its oil and gas exploration and production unit and exit that business.
CMS plans to auction CMS Oil & Gas Co., which has properties in the Permian Basin of West Texas and in Cameroon, the Republic of Congo, Colombia, Eritrea, Tunisia and Venezuela. CMS said the proceeds would add to the $2.4 billion it has raised toward a target of $2.9 billion in asset sales this year.
The Dearborn, Mich.-based company has been shedding foreign assets to reduce debt and to focus on its natural-gas pipeline network in North America and energy trading.
Shares of CMS fell 49 cents, or 2.6%, to $18.05 on the NYSE.
* Reliant Resources Inc., the energy-trading business being spun off from Reliant Energy Inc., affirmed its 2002 earnings outlook amid regulator probes of trading practices that led to the departure of two executives.
Reliant Resources will earn $1.80 to $2 a share this year and expects profit to grow 12% to 15% annually after the spinoff, the company said in a filing with the Securities and Exchange Commission.
Reliant Resources shares fell 49 cents, or 4.9%, to $9.50 on the NYSE.
