el paso d7a9d355-197f-480a-8ff4-86834b0dd876_ep_4q_2008_earnings_final(colorprint)

El Paso Corporation

Fourth Quarter 2008Financial & Operational Update

February 26, 2009

2

Cautionary StatementRegarding Forward-looking Statements

This presentation includes certain forward-looking statements and projections. The company has 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 in this release, including, without limitation, changes in unaudited and/or unreviewed financial information; our ability to meet our 2009 debt maturities; volatility in, and access to, the capital markets; our ability to implement and achieve our objectives in our 2009 plan, including achieving our earnings and cash flow targets; the effects of any changes in accounting rules and guidance; our ability to meet production volume targets in our Exploration and Production segment; our ability to comply with the covenants in our various financing documents; our ability to obtain necessary governmental approvals for proposed pipeline and E&P projects and our ability to successfully construct and operate such projects; the risks associated with recontracting of transportation commitments by our pipelines; regulatory uncertainties associated with pipeline rate cases; actions by the credit rating agencies; the successful close of our financing transactions; our ability to close asset sales, as well as transactions with partners on one or more of our expansion projects that are included in the plan on a timely basis; credit and performance risk of our lenders, trading counterparties, customers, vendors and suppliers ;changes in commodity prices and basis differentials for oil, natural gas, and power; our ability to obtain targeted cost savings in our businesses; inability to realize anticipated synergies and cost savings on a timely basis or at all; general economic and weather conditions in geographic regions or markets served by the company and its affiliates, or where operations of the company and its affiliates are located, including the risk of a global recession and negative impact on natural gas demand; the uncertainties associated with governmental regulation; political and currency risks associated with international operations of the company and its affiliates; competition; and other factors described in the company's (and its affiliates') Securities and Exchange Commission filings. While the company makes these statements and projections in good faith, neither the company nor its management can guarantee that anticipated future results will be achieved. Reference must be made to those filings for additional important factors that may affect actual results. The company assumes no obligation to publicly update or revise any forward-looking statements made herein or any other forward-looking statements made by the company, whether as a result of new information, future events, or otherwise.

Certain of the production information in this presentation include the production attributable to El Paso’s 49 percent interest in Four Star Oil & Gas Company (“Four Star”). El Paso’s Supplemental Oil and Gas disclosures, which are included in its Annual Report on Form 10-K, reflect its proportionate share of the proved reserves of Four Star separate from its consolidated proved reserves. In addition, the proved reserves attributable to its proportionate share of Four Star represent estimates prepared by El Paso and not those of Four Star.

Cautionary Note to U.S. Investors—The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation that the SEC's guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosures regarding proved reserves in this presentation and the disclosures contained in our Form 10-K for the year ended December 31, 2007, File No. 001-14365, available by writing; Investor Relations, El Paso Corporation, 1001 Louisiana St., Houston, TX 77002. You can also obtain this form from the SEC by calling 1-800-SEC-0330.

Non-GAAP Financial MeasuresThis presentation includes certain Non-GAAP financial measures as defined in the SEC’s Regulation G. More information on these Non-GAAP financial measures, including EBIT, EBITDA, adjusted EBITDA, adjusted EPS, cash costs, and the required reconciliations under Regulation G, are set forth in this presentation or in the appendix hereto. El Paso defines Resource Potential or Resource Inventory as subsurface volumes of oil and natural gas the company believes may be present and eventually recoverable. The company utilizes a net, geologic risk mean to represent this estimated ultimate recoverable amount.

3

Our Purpose

El Paso Corporation provides natural gas and related energy

products in a safe, efficient, and dependable manner

4

the place to workthe neighbor to havethe company to own

Our Vision & Values

5

2008 AccomplishmentsPipelines Project execution Placed 7 projects in-service

New expansions Committed backlog increased to $8 billion$1.2 B future EBITDA1

E&P Inventory growth Haynesville, Altamont, Raton CBMReserve metrics 595 Bcfe proven reserve additions2

195% domestic reserve replacement ratio3

$3.25/Mcfe RRC3 total; $2.87/Mcfe domestic3

Brazil Camarupim nearing productionExploration discoveries at Copaiba and Tot

Hedges Improved 2009 position 176 TBtu with $9 floorNatural gas hedges valued at $730 MMat 12/31/08

New 2010 positions $6.79 floor on 47 TBtu

Financial Cash flow Cash from operations up 31%Improved liquidity position Opportunistically accessed capital markets

Progressed on non-core asset sales $2.2 B liquidity at 12/31/08; $3.3 B now1EBITDA run rate on proportional basis

2Excludes revisions; does not include Four Star 3Excludes price-related revisions; does not include Four Star

6

Managing to the Current Realities

Plenty of challenges—capital markets, low commodity prices, uncertain economy

Acted swiftly to address 2009 liquidity needs

Cut capital thoughtfullyPipelines—execute pipeline backlogE&P—preserve future inventory; focused on returns

Board and management reviewing capital spending and financing options on continuous basis

7

Key Priorities

PipelinesConstruct backlog on-time/budget$1.2 billion incremental EBITDA*Be selective on new opportunitiesComplete pipeline integrity program

FinancialMaximize liquidityMaintain pipeline investment-grade ratingUse full suite of funding toolsContinually improve return on total capitalImprove credit metrics

Exploration & ProductionCreate value; prioritize investmentsPreserve inventory of opportunitiesLive within meansContinue to high-grade portfolio

*Proportional future run-rate

Financial Results

9

2008 2007

2008 2007

Fourth Quarter & Annual2008 Financial Results

Note: Appendix and slides 10 and 11 include details on non-GAAP terms*Reflects El Paso’s proportionate interest in Citrus and Four Star

AdjustedDiluted EPS

$1.31$1.00

Adjusted EBITDA*

Operating Cash Flow

Annual($ Millions, Except EPS)

AdjustedDiluted EPS

$0.21$0.27

Adjusted EBITDA*

$1,000 $872

Fourth Quarter($ Millions, Except EPS)

2008 2007 2008 2007

$4,097$3,073

2008 2007

$2,370$1,805

Significant improvement in full-year adjusted earnings and operating cash flow

10

Items Impacting 4Q 2008 Results

Net income (loss) available to common stockholders

Adjustments1

Ceiling test charges and Four Star impairmentChange in fair value of power contractsChange in fair value of legacy indemnificationLegal restructuring benefit

Change in fair value ofproduction-related derivatives in Marketing

MTM impact of E&P derivatives2

Adjusted EPS—continuing operations3

$2,785(37)(16)

–

(9)(164)

Pre-tax$(1,687)

2,015(24)(10)(40)

(6)(105)

After-tax$(2.43)

2.90(0.03)(0.01)(0.06)

(0.01)(0.15)

$ 0.21

Diluted EPS

1All adjustments assume a 36% tax rate, except for the International portion of the ceiling test charges, and694 MM diluted shares

2Includes $201 MM of MTM gains on derivatives adjusted for $37 MM of realized gains from cash settlements3Reflects fully diluted shares of 754 MM and includes income impact from dilutive securities

($ Millions, Except EPS)

11

Business Unit Contribution

Core BusinessesPipelines E&P before ceiling test charges & Four Star impairment

Core businesses subtotalCeiling test charges & Four Star impairment

Core businesses total

Other BusinessesMarketingPowerCorporate & Other

Total

Quarter EndedDecember 31, 2008

$ 319259578

(2,785)

$(2,207)

27(3)49

$(2,134)

AdjustedEBITDA*EBIT DD&A EBITDA

*Adjusted Pipeline EBITDA for 50% interest in Citrus and adjusted E&P EBITDA for 49% interest in Four Star, ceiling test charges and Four Star impairment. Appendix includes details on non-GAAP terms

$ 100199299

–

$ 299

–12

$ 302

$ 419458877

(2,785)

$(1,908)

27(2)51

$(1,832)

$ 450474924

–

$ 924

27(2)51

$ 1,000

($ Millions)

12

Marketing Financial Results

StrategicChange in fair value of

production-related derivatives

OtherChange in fair value of natural gas

derivative contractsChange in fair value of power contractsSettlements, demand charges & otherOperating expenses & other income

Other total

EBIT

EBIT

$ Millions

$ 9

(11)37(4)(4)18

$ 27

Quarters EndedDecember 31,

2008 2007

$ (26)

(5)(34)

6(5)

(38)

$ (64)

$ (50)

7(46)

6(21)(54)

$(104)

Twelve Months EndedDecember 31,2008 2007

$ (89)

(31)(77)(22)17

(113)

$(202)

13

Operating Cash Flow and Capital Investment

$ (823)3,9003,077(707)

2,370–

$2,370

$2,757$ 362$ 682$ 157

Income (loss) from continuing operationsNon-cash adjustments

SubtotalWorking capital changes and other*

Cash flow from continuing operationsDiscontinued operations

Cash flow from operations

Capital expendituresAcquisitionsProceeds from divestituresDividends paid

2008

Twelve Months EndedDecember 31,

$ 4361,7122,148(310)

1,838(33)

$1,805

$2,495$1,197$ 106$ 149

2007

*Includes change in margin collateral of $24 MM in 2008 and $90 MM in 2007

$ Millions

31% increase in operating cash flow

14

Recent Significant Financing Activities

El Paso Corp. 5-year, $500 MM 12% Notes (15.25% yield)Ended high-yield offering drought

El Paso Exploration & Production $300 MM RevolverSecured borrowing base facility (LIBOR + 350 bps)

TGP 7-year, $250 MM 8% Notes (9% yield)Investment-grade unsecured notes

El Paso Corp. 7-year, $500 MM 8.25% NotesSignificant reduction in yield—9.125%

After financings, weighted average cost of debt at 7.1%

15

Substantial Increase in Liquidity$ Billions

Sep. 30,2008

Dec. 31,2008

Jan. 31,2009

Feb. 28,2009E

Bank Lines Cash

$1.9$2.2

$1.2

$1.0

$1.3

$1.2

$1.4

$1.9$2.5

$3.3

$1.2

$0.7

16

7

8

9

10

11

12

13

14

15

Dec. 01,2008

Dec. 14,2008

Dec. 27,2008

Jan. 09,2009

Jan. 22,2009

Feb. 04,2009

Increased Liquidity Has ReducedEP Borrowing Costs

BB Index

El Paso 7%, Due 2017

BBB Index

Yiel

d (%

)

Source: Citigroup/Bloomberg

17

Balance atMarket Price

Note: See full Production-related Derivative Schedule in Appendix1Reflects positions after monetization of oil swaps2Includes proportionate share of Four Star equity volumes

151 TBtuAverage cap $14.97/MMBtu

8 TBtu$7.33

fixed price

176 TBtuAverage floor $9.02/MMBtu

CeilingCeiling

FloorFloor

1.5 MMBbls$45.00

fixed price

2009 Gas

2009 Oil1

Excellent 2009 Hedge Positions

143 TBtu$15.41ceiling

168 TBtu$9.10floor

~75% of domestic natural gas2; gas hedges valued at $730 MM as of 12/31/08$110/Bbl oil swaps monetized for $186 MM

Full-Year 2009

18

Balance atMarket Price

Note: See full Production-related Derivative Schedule in Appendix

25 TBtu$6.61

fixed price

47 TBtuAverage floor $6.79/MMBtu

FloorFloor

2010 Gas

2010 Natural Gas Hedge PositionsPositions as of February 23, 2009

22 TBtu$7.00floor

19

2009 Guidance Assumptions

$5.00/MMBtu (NYMEX); $40.00/Bbl (WTI)

$2.7 billion–$3.1 billion capitalPipelines: $1.7 billionE&P: $0.9 billion–$1.3 billion (~ $250 MM International)

725–815 MMcfe/d production (including Four Star)

E&P plans are highly flexibleEmphasis on maximizing returns on capitalReduced pace of capital spendWill adjust based on prices and service costsLeads to wide range of outcomes, but more efficientuse of capital

20

2009 Financial Targets

EPS*: $0.85–$1.05

EBIT* total: $2.0–$2.3 Pipelines: $1.4; E&P $0.8–$0.9

EBITDA*: $3.1– $3.3 Pipelines: $1.8; E&P $1.4–$1.6

Cash flow from operations: $1.7–$2.0

Sensitivity Gas Oil-$1 +$1 -$10 +$10

EBITDA ($MM) (40) 40 (40) 40EPS ($) (0.04) 0.04 (0.04) 0.04

$ Billions, Except EPS and Sensitivity

*Excludes MTM changes on hedge derivatives and includes cash proceeds on settlements based on Plan prices

21

12/31/08 YTD NetFinancings

& AssetSales

OCF RemainingAssetSales

MayMaturity

Dividends& Minority

Interest

Capex YELiquidity

Liquidity Outlook

$2.2

$ Billions

$1.9

$0.2$0.9

$2.7–$3.1 $1.2–

$1.6

Note: Forecast assumes most of $500 MM LC facility replaced and EPEP $300 MM facility renewed

$0.2

E&P Capex

Ample liquidity for 2009

$1.1

22

Summary

Significant progress on building liquidityAs reflected by EP bond spreads

2009 capital program reflects balanceProvide funding for Pipeline expansion backlogManage E&P for value vs. growthMaximize liquidity

Will continue to be opportunistic in capital markets

Pipeline Group

24

2008 Highlights

Favorable 4Q and YTD EBIT4% increase from 4Q 2007

Throughput increase

Progress on growth$0.7 billion of growth projects placed in-service

~$8 billion committed back-log at year-endAdding Ruby, FGT Phase VIII, TGP 300 Line project

Best-ever safety performance

25

Pipeline Group Financial Results

EBIT before minority interest1Less minority interestEBIT

EBITDAAdjusted EBITDA2

Capital expendituresAcquisition capital3

Quarters Ended December 31,

2008 2007

$ 33011

$ 319

$ 419$ 450

$ 368$ –

$ 3113

$ 308

$ 402$ 430

$ 334 $ –

1 Included unfavorable impact from Hurricanes Gustav & Ike—$18 MM in 4Q, $31 MM YTD2Adjusted Pipeline EBITDA for 50% interest in Citrus3Gulf LNG and TGP Blue Water acquisitionsNote: Appendix includes details on non-GAAP terms

Twelve Months Ended December 31,

2008$1,308

35$1,273

$1,668$1,798

$1,198$ 303

2007$ 1,268

3$ 1,265

$ 1,638$ 1,769

$ 1,099 $ –

9% EBITDA growth in 4Q before hurricane impact

($ Millions)

26

Throughput Growth Varied by Region

4% overall increase

Note: CIG includes Colorado Interstate Gas, Cheyenne Plains and Wyoming InterstateEPNG includes El Paso Natural Gas and Mojave

Full-year % Increase 2008 vs. 2007

Independence Hub

Elba deliveries to Florida

California

Rockies supply, expansions

Hurricanes

Milder summer/4Q industrial demand

–

Milder winter

Ups DownsTGP 0%

SNG 0%

EPNG +5%

CIG +10%

Throughput

27

~$700 MM Projects Placed in Service in 2008

WIC Kanda LateralMedicine Bow 2008Cheyenne Plains—CoralHigh PlainsTGP Blue WaterSNG Cypress IISNG SESH I*

7x run rate EBITDA

* Operated by Spectra Energy

28

TGP Carthage Expansion

$39 MMMay 2009

100 MMcf/d

SNG South System III/ SESH Phase II

$352 MM / $69 MM2011–2012

370 MMcf/d / 350 MMcf/d

Elba Expansion III & Elba Express

$1.1 Billion2010–2014

8.4 Bcf / 0.9 Bcf/d & 1.2 Bcf/d

SNG Cypress Phase III $86 MM

2011160 MMcf/d

CIG Totem Storage$154 MM (100%)

July 2009200 MMcf/d

WIC Piceance Lateral$62 MM4Q 2009

220 MMcf/d

El Paso PipelineEl Paso Pipeline Partners, LP

TGP Concord$21 MM

Nov 200930 MMcf/d

Gulf LNG$1+ Billion (100%)

20116.6 Bcf / 1.3 Bcf/d

CIG Raton 2010 Expansion$146 MM2Q 2010

130 MMcf/d

Committed Growth Backlog:Large, Profitable

FGT Phase VIII Expansion

$2.4 Billion (100%)2011

800 MMcf/d

~$8 billion capex; construct at 7x run rate EBITDA

Note: As of February 26, 2009; El Paso Pipeline Partners owns 25% of SNG & 40% of CIG

Ruby Pipeline$3 Billion

20111.3–1.5 Bcf/d

WIC System Expansion $71 MM

2010–2011320 MMcf/d

TGP 300 Line Project $750 MM

2011290 MMcf/d

29

Construction Risk Management

Elba ExpansionElba Express

Gulf LNG (50%)

Ruby

FGT Phase VIII (50%)

TGP 300 Line

$ 1.1

$ 0.5

$ 3.0

$ 1.2

$ 0.8

El Paso Capital($ Billions) Steel Construction

Fixed-Price EPC ContractFixed

Fixed-Price EPC Contract

Fixed

Fixed

Fixed

Unit-Priced

Incentive-Based

Unit-Priced

Negotiating

Backlog has been significantly de-risked

30

Pipeline Summary

Stability from demand-based revenues

Visible multi-year growth profile

Highly focused on execution ofproject backlog

Significant risk mitigation in place

Exploration & Production

32

2008 Highlights

$2.3 billion adjusted EBITDA817 MMcfe/d production1 (pro forma)195% domestic reserve replacement ratio2

$2.87/Mcfe domestic RRC2

27% inventory growthBrazil Camarupim development progressDomestic divestitures closed

1Includes interest in Four Star2Before price-related revisions; does not include Four StarNote: Appendix includes details on non-GAAP terms

33

E&P Results

EBIT before ceiling test charges &Four Star impairment1

Ceiling test charges &Four Star impairment

EBITEBITDA1

Adjusted EBITDA2

Capital expendituresAcquisition capital

Cash costs ($/Mcfe)

$ 259

(2,785)

(2,526)(2,327)

474

567–

$ 2.09

20072008


$ 263

–

263490525

34124

$ 1.83

1Quarters ended includes MTM gains on derivatives of $201 MM in 2008 and $3 MM in 2007. Received cash related to settlements of these derivatives of $37 MM in 2008 and paid cash of $6 MM in 2007. Year-to-date includes MTM gains on derivatives of $305 MM in2008 and $7 MM in 2007. Received cash related to settlements of these derivatives of $18 MM in 2008 and paid cash of $31 MM in 2007

2Adjusted E&P EBITDA includes proportionate share of Four Star but excludes non-cash ceiling test charges andFour Star impairment

Note: Appendix includes details on non-GAAP terms

$ 1,346

(2,794)

(1,448)(649)

2,267

1,68161

$ 1.97

20072008


$ 909

–

9091,6891,803

1,4251,178

$ 1.88

($ Millions)

34

Total Cash Costs$/Mcfe

4Q 2007 4Q 2008 FY 2007 FY 2008

Production TaxesTaxes Other Than Production & IncomeGeneral & AdministrativeDirect Lifting Costs

$1.83

$0.04

$0.57

$0.33

$0.89

$2.09

$0.06

$0.71

$0.28

$1.04 $0.88

$0.31

$0.64

$0.05

$1.88

$1.50$1.81 $1.57

$0.90

$0.44

$0.59

$0.04

$1.97

$1.53

35

FY 2008 Production

FY 2007 FY 2008

Note: Includes proportionate share of Four Star equity volumesAppendix includes details on non-GAAP terms*Excludes volumes from domestic assets sold in 2008, adjusts volumes for the effects of the hurricanes in 2008, and assumes full year of Peoples volumes in 2007

MMcfe/d

As Reported Pro Forma*

FY 2007 FY 2008

297

213

191

147

312

225

114

154 148 154

305 310

196

135

215

102

14 11 14 11

862 816 798 817

Central Western TGC GOM/SLA Intl Hurricane Volumes

25 792without

hurricanes

36

YE 2008 Reserves

YE 2007 Extensions &Discoveries

Production Purchases &Sales

Revisions YE 2008

Commodity Prices Henry Hub WTIYE07 $6.80/MMbtu $95.98/BblYE08 $5.71/MMbtu $44.60/Bbl

Approx.3.0 Tcfe at

$7/$70

582

2992851

5602

3,109 2,547

Bcfe

Note: Includes proportionate share of Four Star equity volumes1Includes (303) Bcfe of sales and 18 Bcfe of acquisitions2Includes (490) Bcfe of price-related revisions and (70) Bcfe of performance-related revisions

37

Domestic Reserve Metrics

2006 2007 2008 2006 2007 2008

$3.92

$3.26

$2.87

109%

255%

195%

Reserve Replacement Costs(RRC, $/Mcfe)

Reserve Replacement Ratio(RRR)

Note: 2008 RRC and RRR do not include price revisions. Prior years RRC and RRR include proved reserves additions, acquisitions, price, and performance revisions. Results do not include Four Star

$3.22

129%

Reflects acquisitions

38

27% Unproven Inventory GrowthNet Risked Resource Inventory (Bcfe)

2006 YE 2007 YE 2008 YE

Unconventional Conventional Low Risk Conventional Higher Risk

385 4951,080

1,1801,460

1,770

700

835985

2,550 2,790

3,550

2009 budget preserves future inventory

39

2009 Capital Program

$0.9 billion–$1.3 billioncapital program

Flexible capital programfocusing on value creation

Increased focus on low-risk programs with significantinventory and repeatability

HaynesvilleCotton Valley HorizontalAltamont OilBlack Warrior CBM

International focused onBrazil’s Camarupim, ES-5 block and Egypt exploration

2008 2009

Central Western TGCGOM Intl Acq.

$1,742

$1,300

Capital Spending ($ MM)

40

Declining Domestic Drilling Activity

1Q2007

2Q2007

3Q2007

4Q2007

1Q2008

2Q2008

3Q2008

4Q2008

1Q2009E

2Q2009E

Operated Drilling Rig CountEnd of Period

2024

19 2125

28 27

19

8 6

41

Arklatex Programs Progressing

4 Wells Producing IP (MMcfe/d)

Miller Land Co 10H #1 4.5

Travis Lynch GU #4-H 8.0

RF Gamble 24H #1 14.6

Blake 10H #1 20.3

2009 Activity

Spud in March: Hamilton 12H #1 and Annette Green 22H #1

J R Gamble will TD in March with first sales in April

2–4 rigs running during 2009

Haynesville Shale(currently producing 27 MMcfe/d

as of February 21, 2009)

0

20

40

60

80

100

120

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

MillerLand Co.10H #1

TravisLynch

GU #4-H

R.F.Gamble24H #1

Blake10H #1

Spud

to F

irst S

ales

(Day

s)

$/Lateral Ft.

Drilling Completion $/Lateral Ft.

42

Arklatex Programs Progressing

6 Wells Producing IP (MMcfe/d)

Lindy Britton #2H 7.0

Sample H #5 3.2

Weyerhauser 15H #1 9.6

Lindy Britton #4H 4.2

Means Family Trust #26H 6.4

Malone H #1* 3.0

2009 Activity

1Q wells: Shadowens 4H#1 and KMI Continental Royalty H#1

1–2 rigs running during 2009

Cotton Valley Horizontal(currently producing 10 MMcfe/d

as of February 21, 2009)

*Well is still cleaning up from hydraulic fracturing

43

South MariutSwapped 40% of our WI for an equal interest in RWE’s Tanta block located east of South MariutPlan to drill 3 to 4 exploratory wells in 2009; first well spud January 31, 2009

Tanta ExplorationSame plays as South MariutFirst well late 2009 / early 2010

Egypt UpdateFields

GasOil

SouthMariut

EP 60%, RWE 40%Tanta

RWE 60%, EP 40%

44

Brazil Update

CamarupimFirst gas in second quarter of 2009Commercial agreements executedUnitization agreement and development plan approvalexpected March 2009Currently drilling second and third horizontal gas development wells

TotDrilled and currently testing

CAMARUPIM

BM-ES-5 1 KM

1 MILE

TOT

45

E&P Summary

2009 capital program focused onlow-risk, value-adding programs

Maintain capital discipline while seekingto capture lower service costs

Maintain flexibility while preserving inventory and advancing key programs

46

Summary

Solid results in volatile market

Balancing growth with financial stability

Managing business for future successDeliver pipeline backlogPreserve E&P opportunities

El Paso Corporation

Fourth Quarter 2008Financial & Operational Update

February 26, 2009

48

Appendix

49

Disclosure of Non-GAAPFinancial Measures

The SEC’s Regulation G applies to any public disclosure or release of material information that includes a non-GAAP financial measure. In the event of such a disclosure or release, Regulation G requires (i) the presentation of the most directly comparable financial measure calculated and presented in accordance with GAAP and (ii) a reconciliation of the differences between the non-GAAP financial measure presented and the most directly comparable financial measure calculated and presented in accordance with GAAP. The required presentations and reconciliations are attached. Additional detail regarding non-GAAP financial measures can be reviewed in El Paso’s full operating statistics, which will be posted at www.elpaso.com in the Investors section.

El Paso uses the non-GAAP financial measure “earnings before interest expense and income taxes” or “EBIT” to assess the operating results and effectiveness of the company and its business segments. The company defines EBIT as net income (loss) adjusted for (i) items that do not impact its income (loss) from continuing operations, such as extraordinary items and discontinued operations; (ii) income taxes; and (iii) interest and debt expense. The company excludes interest and debt expense so that investors may evaluate the company’s operating results without regard to its financing methods or capital structure. EBITDA is defined as EBIT excluding depreciation, depletion and amortization. El Paso’s business operations consist of both consolidated businesses as well as investments in unconsolidated affiliates. As a result, the company believes that EBIT, which includes the results of both these consolidated and unconsolidated operations, is useful to its investors because it allows them to evaluate more effectively the performance of all of El Paso’s businesses and investments. Adjusted EBITDA is defined as EBITDA including the proportional share of EBITDA less our recorded equity earnings from our equity investments in Citrus and Four Star. The company believes that adjusted EBITDA is useful to its investors because it allows them to evaluate more effectively the performance of our businesses regardless of the type of ownership structure. Exploration and Production per-unit total cash costs or cash operating costs equal total operating expenses less DD&A, cost of products and services, transportation costs, and ceiling test charges divided by total production. It is a valuable measure of operating efficiency. For 2008, Adjusted EPS is earnings per share from continuing operations excluding the gain or loss related to the change in fair value of an indemnification from the sale of an ammonia plant in 2005, the gain related to an adjustment of the liability for indemnification of medical benefits for retirees of the Case Corporation, the gain related to the disposition of a portion of the company’s investment in its telecommunications business, changes in fair value of power contracts, changes in fair value of the production-related derivatives in Marketing, impact of mark-to-market E&P derivatives, ceiling test charges and Four Star impairment, other legacy litigation adjustments, legal restructuring benefit, and the effect of the change in the number of diluted shares. For 2007, Adjusted EPS is earnings per share from continuing operations excluding changes in fair value of production-related derivatives in Marketing, the loss related to Brazilian power impairments, the gain related to the crude oil trading liability, changes in the fair value of power contracts, the loss related to an adjustment of the liability for indemnification of medical benefits for retirees of the Case Corporation, debt repurchase costs, and the effect of the change in the number of diluted shares. Adjusted EPS is useful in analyzing the company’s on-going earnings potential.

El Paso believes that the non-GAAP financial measures described above are also useful to investors because these measurements are used by many companies in the industry as a measurement of operating and financial performance and are commonly employed by financial analysts and others to evaluate the operating and financial performance of the company and its business segments and to compare the operating and financial performance of the company and its business segments with the performance of other companies within the industry.

These non-GAAP financial measures may not be comparable to similarly titled measurements used by other companies and should not be used as a substitute for net income, earnings per share or other GAAP operating measurements.

52

Financial Results

EBITInterest and debt expenseIncome (loss) before income taxesIncome taxes Income (loss) from continuing operationsDiscontinued operations, net of income taxes

Net income (loss)Preferred stock dividends

Net income (loss) available tocommon stockholders

Diluted EPS from continuing operationsDiluted EPS from discontinued operations

Total diluted EPS

Diluted shares (millions)

2007


2008($ Millions, Except EPS) 2007


$ (2,134)(239)

(2,373)(695)

(1,678)–

(1,678)9

$ (1,687)

$ (2.43)–

$ (2.43)

694

2008

$ 483(252)23171

160–

1609

$ 151

$ 0.21–

$ 0.21

759

$ (154)(914)

(1,068)(245)(823)

–(823)

37

$ (860)

$ (1.24)–

$ (1.24)

696

$ 1,652(994)658222436674

1,11037

$ 1,073

$ 0.570.96

$ 1.53

699

53

2008 Analysis ofWorking Capital and Other Changes

$ 24

(189)

(272)

(16)

(85)

(169)

$(707)

Margin collateral

Changes in price risk management activities

Settlements of derivative instruments

Net changes in trade receivable/payable

Settlement of liabilities

Other

Total working capital changes & other

Twelve Months EndedDecember 31, 2008

$ Millions

54

Items Impacting YTD 2008 Results

Net income (loss) available to common stockholders

Adjustments1

Ceiling test charges and Four Star impairmentChange in fair value of power contractsChange in fair value of legacy indemnificationCase Corporation indemnificationOther legacy litigation adjustmentsGain on sale of portion of telecommunications businessLegal restructuring benefitEffect of change in number of diluted shares


MTM impact of E&P derivatives2


$ 2,7944630

(65)(23)(18)

––

50(287)

Pre-tax

$ (860)

2,0242919

(27)(26)(12)(40)

–

32(183)

After-tax

$(1.24)

2.900.040.03

(0.04)(0.03)(0.01)(0.06)(0.06)

0.04(0.26)

$ 1.31

Diluted EPS

1All adjustments assume a 36% tax rate, except the International portion of the ceiling test charges, the Case Corporation indemnification and other legacy litigation adjustments, and 696 MM diluted shares

2Includes $305 MM of MTM gains on derivatives adjusted for $18 MM of realized gains from cash settlements3Reflects fully diluted shares of 766 MM and includes income impact from dilutive securities


55

Items Impacting 4Q 2007 Results

Net income available to common stockholders

Adjustments1

Change in fair value of power contractsBrazilian power impairments



$ 348

26

Pre-tax$151

228

17

After-tax$ 0.21

0.030.01

0.02

$ 0.27

Diluted EPS

1All adjustments assume a 36% tax rate, except for Brazilian power impairments, and 759 MM diluted shares2Reflects diluted shares of 759 MM and includes income impact from dilutive securities


56

Items Impacting YTD 2007 Results

Net income available to common stockholders

Adjustments1

Sale of ANR and related assetsCrude oil trading liabilityBrazilian power impairmentsChange in fair value of power contractsCase Corporation indemnificationDebt repurchase costsEffect of change in number of diluted shares2



$(1,043)(77)727711

291–

89

Pre-tax$1,073

(674)(49)7249

7186

–

57

After-tax$ 1.53

(0.96)(0.07)0.100.070.010.27

(0.03)

0.08$ 1.00

Diluted EPS

1Adjustments assume 36% tax rate, except for Brazilian power impairments and sale of ANR and related assets, and 699 MM diluted shares

2Based upon 757 MM diluted shares and includes the income impact from dilutive securities


57


Core BusinessesPipelinesE&P before ceiling test charges & Four Star impairment

Core business subtotalCeiling test charges & Four Star impairment



Total



*Adjusted Pipeline EBITDA for 50% interest in Citrus and adjusted E&P EBITDA for 49% interest in Four Star, ceiling test charges, and Four Star impairment

($ Millions)

$ 1,2731,3462,619

(2,794)

$ (175)

(104)1

124

$ (154)

$ 395799

1,194–

$ 1,194

–1

10

$ 1,205

$ 1,6682,1453,813

(2,794)

$ 1,019

(104)2

134

$ 1,051

$ 1,7982,2674,065

–

$ 4,065

(104)2

134

$ 4,097

58


Core BusinessesPipelinesE&P



Total


$1,265909

$2,174

$ (202)(37)

(283)

$1,652


*Adjusted Pipeline EBITDA for 50% interest in Citrus and adjusted E&P EBITDA for 49% interest in Four Star

$ 373780

$1,153

$ 31

19

$1,176

$1,6381,689

$3,327

$ (199)(36)

(264)

$2,828

$1,7691,803

$3,572

$ (199)(36)

(264)

$3,073

($ Millions)

59


Core BusinessesPipelines E&P



Total

Quarter EndedDecember 31, 2007

$ 308263

$ 571

(64)(4)

(20)

$ 483


*Adjusted Pipeline EBITDA for 50% interest in Citrus and adjusted E&P EBITDA for 49% interest in Four Star

($ Millions)

$ 94227

$321

1–4

$326

$402490

$892

(63)(4)

(16)

$809

$430525

$955

(63)(4)

(16)

$872

60

Reconciliation of EBIT/EBITDA

EBITDALess: DD&AEBITInterest and debt expenseIncome (loss) before income taxesIncome taxes Income (loss) from continuing operationsDiscontinued operations, net of taxes

Net income (loss)Preferred stock dividends

Net income (loss) available tocommon stockholders

$(1,832)302

(2,134)(239)

(2,373)(695)

(1,678)–

(1,678)9

$(1,687)

Quarters EndedDecember 31, 2008 2007

Twelve Months EndedDecember 31, 2008 2007

$ 809326483

(252)231

71160

–160

9

$ 151

$ 1,0511,205(154)(914)

(1,068)(245)(823)

–(823)

37

$ (860)

$2,8281,1761,652(994)658222436674

1,11037

$1,073

($ Millions)

61

Reconciliation ofAdjusted Pipeline EBITDA

$ 121413

5(1)

$ 43

$4194312

$450

Citrus equity earnings50% Citrus DD&A50% Citrus interest50% Citrus income taxesOther*

50% Citrus EBITDA

El Paso Pipeline EBITDAAdd: 50% Citrus EBITDALess: Citrus equity earnings

Adjusted Pipeline EBITDA

Citrus debt at December 31 (50%)

Quarters EndedDecember 31,2008 2007

*Other represents the excess purchase price amortization and differences between the estimated andactual equity earnings on our investment


2008 2007$ 16

1397

(1)$ 44

$ 4024416

$ 430

$ 64534137(1)

$ 194

$1,668194

64$1,798

$ 689

$ 81503746(2)

$ 212

$1,638212

81$1,769

$ 477

($ Millions)

62

Committed Projects In-Service Timeline

Note: $ in each column represents total costs for each project, shown in year placed in service (actual spend over multiple years). WIC is owned by El Paso Pipeline Partners

WIC System ExpansionElba ExpressTGP Carthage

$6.5$1.1$0.2Net project cost

Cypress III

SNG SESH Phase II

SNG South System III

Gulf LNG (50%)Elba III Phase B

FGT Phase VIII (50%)CIG Totem (50%)

TGP 300 Line ProjectCIG Raton 2010TGP Concord

RubyElba III Phase AWIC Piceance2011 & Beyond20102009$ Billions

63

Reconciliation ofAdjusted E&P EBITDA

$ (129)6–

(3)138

$ 12

$ (2,327)2,660

12 (129)

$ 474

Four Star equity earningsProportionate share of Four Star DD&AProportionate share of Four Star interestProportionate share of Four Star income taxesOther*

Proportionate share of Four Star EBITDA

El Paso E&P EBITDAAdd: Ceiling test chargesAdd: Proportionate share of Four Star EBITDALess: Four Star equity earnings

Adjusted E&P EBITDA


2008 2007

*Represents impairment charge of $125 MM in 2008 and the excess purchase price amortizationNote: In the third quarter of 2007, E&P increased its interest in Four Star from 43% to 49%


2008 2007$ 8

6–

1316

$ 43

$ 490–

438

$ 525

$ (93)23

–46

178$ 154

$ (649)2,669

154(93)

$ 2,267

$ 12 22

–3953

$ 126

$1,689–

12612

$1,803

($ Millions)

64

($150)

($125)

($100)

($75)

($50)

($25)

$0

$25

$50

$75

Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408

PJM Basis MTM Impact & Cash Settlements

MTM impactCash settlements

65

Per Unit($/Mcfe)

4Q 2007

$ 5.04

(2.91)

(0.24)

(0.06)

–

$ 1.83

$ 393

(227)

(19)

(5)

–

E&P Cash Costs

Total operating expense

Depreciation, depletion and amortization

Transportation costs

Costs of products

Ceiling test charges

Per unit cash costs*

Total equivalent volumes (MMcfe)*

*Excludes volumes and costs associated with equity investment in Four Star

Total($ MM)

Total($ MM)

$ 1,414

(780)

(72)

(20)

–

$ 4.89

(2.70)

(0.24)

(0.07)

–

$ 1.88

Per Unit($/Mcfe)

FY 2007

$ 3,016

(199)

(16)

(10)

(2,660)

$48.25

(3.19)

(0.26)

(0.16)

(42.55)

$ 2.09

Total($ MM)

Per Unit($/Mcfe)

4Q 2008

Total($ MM)

$ 4,120

(799)

(79)

(38)

(2,669)

$15.16

(2.94)

(0.29)

(0.14)

(9.82)

$ 1.97

Per Unit($/Mcfe)

FY 2008

77,914 62,513 289,242 271,673

66

Production-Related Derivatives Schedule

Note: Positions are as of February 23, 2009 (Contract months: Jan 2009–Forward)

Economic—EPEPFixed price—LegacyFixed priceCeilingFloor

Avg. ceilingAvg. floor

Economic—EPEPFixed price

4.63.6

142.9167.7

151.1175.9

1.50

$ 3.56$12.06$15.41$ 9.10

$14.97$ 9.02

$45.00

NotionalVolume(TBtu)

Avg. HedgePrice

($/MMBtu)


Avg. HedgePrice

($/MMBtu)


Avg. HedgePrice

($/MMBtu)

4.620.1

21.9

24.746.6

$3.70$7.28

$7.00

$6.61$6.79

6.8

6.86.8

$3.88

$3.88$3.88

Natural Gas

NotionalVolume

(MMBbls)

Avg. HedgePrice

($/Bbl)Crude Oil

2009 2010 2011–2012

2009

67

Production-Related Derivatives Schedule

Economic—EPEPFixed price—LegacyFixed priceCeilingFloor

Avg. ceilingAvg. floor

Economic—EPEPFixed price

4.63.6

142.9167.7

151.1175.9

3.43

$ 3.56$ 12.06$ 15.41$ 9.10

$ 14.97$ 9.02

$109.93


Avg. HedgePrice

($/MMBtu)


Avg. HedgePrice

($/MMBtu)


Avg. HedgePrice

($/MMBtu)

4.620.1

24.724.7

$3.70$7.28

$6.61$6.61

6.8

6.86.8

$3.88

$3.88$3.88

Natural Gas

NotionalVolume

(MMBbls)

Avg. HedgePrice

($/Bbl)Crude Oil

2009 2010 2011–2012

2009

Note: Positions are as of December 31, 2008 (Contract months: Jan 2009–Forward)

68

Central Western TGC GOM/SLA Intl Hurricane Volumes

As Reported Pro Forma*

4Q 2008 Production Update

Note: Includes proportionate share of Four Star equity volumesAppendix includes details on non-GAAP terms.*Excludes volumes from domestic assets sold in 2008, adjusts volumes for the effects of the hurricanes in 2008, and assumes full year of Peoples volumes in 2007

MMcfe/d

4Q 2007 4Q 2008 4Q 2007 4Q 2008

329

254

175

153

309

22057

157 148 157

318 309

212

123

22057

13

9 13 9

924752 814 805

752without

hurricanes

53

69

Reconciliation ofPro Forma Production Volumes—4Q

Equivalents (MMcfe/d)

*Excludes volumes from domestic assets sold in 2008 and adjusts volumes for the effects of the hurricanes in 2008 and assumes full year of Peoples volumes in 2007

4Q 20084Q 2007

53

–

53

–

53

–

–

–

Add: Hurricane

Impact

814

77

737

13

123

212

148

241

Pro Forma*

–

–

–

–

–

–

–

–

–

–

Add: Peoples

–

–

–

–

–

–

–

–

–

–

Less: Domestic Assets Sold

752

73

679

9

57

220

157

236

Reported

805

73

732

9

110

220

157

236

Pro Forma*

110

–

110

–

52

42

5

11


–

–13International

–77Proportionate share of Four Star

924

847

175

254

153

252

Reported

–Western

–Total with Four Star

–

–Total Consolidated

–GOM/SLA

–TGC

–Central

Add: Peoples

70

Reconciliation ofPro Forma Production Volumes—YTD

Equivalents (MMcfe/d)

*Excludes volumes from domestic assets sold in 2008 and adjusts volumes for the effects of the hurricanes in 2008 and assumes full year of Peoples volumes in 2007

20082007

25

–

25

–

23

2

–

0

Add: Hurricane

Impact

798

70

728

14

135

196

148

235

Pro Forma*

–

–

–

–

–

–

–

–

Add: Peoples

24

–

24

–

12

10

–

2


816

74

742

11

114

225

154

238

Reported

817

74

743

11

125

217

154

236

Pro Forma*

116

–

116

–

57

40

5

14


–14International

–70Proportionate share of Four Star

862

792

191

213

147

227

Reported

6Western

52Total with Four Star

52Total Consolidated

1GOM/SLA

23TGC

22Central

Add: Peoples

71

Reserves Update

1/1/08

ProductionExtensions & DiscoveriesPurchasesSalesPrice RevisionsPerform. Revisions

12/31/08

2,606

(268)57718

(303)(299)(72)

2,259

247

(4)–––

(177)–

66

2,853

(272)57718

(303)(476)(72)

2,325

256

(27)5––

(14)2

222

3,109

(299)58218

(303)(490)(70)

2,547

Domestic Int’l Subtotal Four Star Total E&P(Bcfe)

72

Non-GAAP Reconciliation2009 EBIT & EBITDA

EBITDA

Less: DD&A

EBIT

Less: Interest

Less: Taxes

Net Income

EPS

3.1–3.3

1.0-1.1

2.0–2.3

1.0

0.4 – 0.5

0.6–0.8

$0.85–$1.05

$ Billions, Except EPS

Note: Numbers may not foot due to rounding

el paso d7a9d355-197f-480a-8ff4-86834b0dd876_ep_4q_2008_earnings_final(colorprint)

Economy & Finance