UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: May 31, 2002
(Date of Earliest Event Reported: May 29, 2002)
EL PASO CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 1-14365 76-0568816
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation or Number) Identification No.)
organization)
El Paso Building
1001 Louisiana Street
Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
(713) 420-2600
(Registrant's telephone number, including area code)
Item 5. OTHER EVENTS
On May 29, 2002, we announced a plan to limit our
investment in and exposure to energy trading and increase
our investment in core natural gas businesses. The plan was
announced via a press release dated May 29, 2002, and a
conference call that was simultaneously webcast. The key
elements of the strategic repositioning plan announced on
May 29, 2002 include the following:
1. Restructuring our Merchant Energy segment.
* Downsize trading and risk management activities.
* Reduce trading personnel by approximately 50%. Achieve
$150 million of annualized cost savings. We expect
to incur severance expense of approximately $70
million after-tax over the second and third quarters
of 2002.
* Limit working capital investment in trading activites
to $1 billion.
* Create three separate divisions in the Merchant
Energy segment- Power, Petroleum and Liquefied Natural
Gas (LNG), and Energy Trading.
2. Further enhance our credit beyond the plan announced in
December 2001.
* Issue $1.5 billion of equity securities.
* Sell the San Juan Basin natural gas gathering assets
to El Paso Energy Partners, L.P. for an estimated
$800 million. These assets include a 5,500-mile
gathering system that is connected to 9,600 wells
producing natural gas from the San Juan Basin located
in northwest New Mexico.
* Reduce company-wide annual operating expenses by at
least $300 million (inclusive of Merchant Energy savings).
* Decrease net debt to total capitalization to approximately
49 percent, including the $1.95 billion of guaranteed debt
in the Electron and Gemstone transactions.
3. Increase investment in core natural gas assets.
* Increase capital spending in El Paso Production to $2.3
billion.
* Pursue an aggressive LNG strategy as outlined to investors
in our first quarter analyst meeting.
* Continue an active infrastructure investment program.
* Reduce non-cash earnings to approximately 5% of 2003 net
income.
In addition to the plan above, we have also modified our
hedging strategy. We now expect our hedge position to be at or
below 50 percent of our anticipated production for a rolling
12-month forward period.
This Form 8-K includes forward-looking statements and projections,
made in reliance on the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. We have made every reasonable effort to
ensure that the information and assumptions on which these statements
and projections are based are current, reasonable and complete. However,
a variety of factors could cause actual results to differ materially
from the projections, anticipated results or other expectations
expressed herein, including our success in implementing the strategic
repositioning plan. While we make these statements and projections in
good faith, neither we nor our management can guarantee that the
anticipated future results will be achieved. Reference should be made to
our (and our affiliates') Securities and Exchange Commission filings
for additional important factors that may affect actual results.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
EL PASO CORPORATION
By: /s/ Jeffrey I. Beason
--------------------------
Jeffrey I. Beason
Senior Vice President and
Controller
(Principal Accounting Officer)
Date: May 31, 2002