##### Table of Contents









UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-Q


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
    THE SECURITIES EXCHANGE ACT OF 1934 
|          
|           |  | For the quarterly period ended June 30, 2006                                                
|          
|           |  | or                                                                                          
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|          
|           |  | For the transition period
    from          to                                              

Commission File Number 333-106586


El Paso Exploration & Production Company




|                                                                   |  |                                         
|------------------------------------------------------------------ |  | ----------------------------------------
|Delaware                                                           |  | 76-0659544                              
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification No.)
|                                                                  
|El Paso Building
    1001 Louisiana Street
    Houston, Texas      |  | 77002(Zip Code)                         
|(Address of principal executive offices)                           |  |                                         

Telephone Number: (713) 420-2600




þ o






|                           |                      |                         
|-------------------------- | -------------------- | ------------------------
|Large accelerated filer  o | Accelerated filer  o | Non-accelerated filer  þ

o þ






EL PASO EXPLORATION & PRODUCTION COMPANY MEETS THE
CONDITIONS OF GENERAL INSTRUCTION H(1)(a) AND (b) TO
FORM 10-Q AND IS
THEREFORE FILING THIS REPORT WITH A REDUCED DISCLOSURE FORMAT AS
PERMITTED BY SUCH INSTRUCTION.










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##### 










EL PASO EXPLORATION & PRODUCTION COMPANY


TABLE OF CONTENTS


|                                             |  |                                                                                                                                    |  |      |    | 
|-------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|Caption                                      |  |                                                                                                                                    |  | Page
|                                             |  |                                                                                                                                    |  |     
|PART I  Financial
    Information          
|Item 1.                                      |  | Financial Statements                                                                                                               |  |      | 1  | 
|Item 2.                                      |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                                          |  |      | 10 | 
|Item 3.                                      |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                                     |  |      | *  | 
|Item 4.                                      |  | Controls and Procedures                                                                                                            |  |      | 16 | 
|PART II  Other
    Information             
|Item 1.                                      |  | Legal Proceedings                                                                                                                  |  |      | 17 | 
|Item 1A.                                     |  | Risk Factors                                                                                                                       |  |      |    | 
|                                             |  | Cautionary Statements for Purposes of the
    Safe Harbor Provisions of the Private Securities
    Litigation Reform Act of 1995 |  |      | 17 | 
|Item 2.                                      |  | Unregistered Sales of Equity Securities and
    Use of Proceeds                                                                    |  |      | *  | 
|Item 3.                                      |  | Defaults Upon Senior Securities                                                                                                    |  |      | *  | 
|Item 4.                                      |  | Submission of Matters to a Vote of Security
    Holders                                                                            |  |      | *  | 
|Item 5.                                      |  | Other Information                                                                                                                  |  |      | 18 | 
|Item 6.                                      |  | Exhibits                                                                                                                           |  |      | 18 | 
|                                             |  | Signatures                                                                                                                         |  |      | 19 | 
|Fifth Supplemental Indenture                
|Certification of CEO Pursuant to Section 302
|Certification of CFO Pursuant to Section 302
|Certification of CEO Pursuant to Section 906
|Certification of CFO Pursuant to Section 906








|  |                                                                                                                                                                                                   
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | We have not included a response to this item in this document
    since no response is required pursuant to the reduced disclosure
    format permitted by General Instruction H to
    Form 10-Q.



|      |  |   |  |                                                |  |       |  |   |  |                                              
|----- |  | - |  | ---------------------------------------------- |  | ----- |  | - |  | ---------------------------------------------
|/d    |  | = |  | per day                                        |  | MMBtu |  | = |  | million British thermal units                
|Bbl   |  | = |  | barrels                                        |  | MMcf  |  | = |  | million cubic feet                           
|Bcfe  |  | = |  | billion cubic feet of natural gas equivalents  |  | MMcfe |  | = |  | million cubic feet of natural gas equivalents
|MBbls |  | = |  | thousand barrels                               |  | NGL   |  | = |  | natural gas liquids                          
|Mcf   |  | = |  | thousand cubic feet                            |  | TBtu  |  | = |  | trillion British thermal units               
|Mcfe  |  | = |  | thousand cubic feet of natural gas equivalents |  |       |  |   |  |                                              





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PART I  FINANCIAL INFORMATION





Item 1.  Financial Statements


EL PASO EXPLORATION & PRODUCTION COMPANY


CONDENSED CONSOLIDATED STATEMENTS OF INCOME


(In millions)


(Unaudited)


|                                        |                                          |               |     |     |                  |   |     |      |  |   |      |     |  |   |     |     | 
|--------------------------------------- | ---------------------------------------- | ------------- | --- | --- | ---------------- | - | --- | ---- |  | - | ---- | --- |  | - | --- | --- | 
|                                        |                                          | Quarter Ended |     |     | Six Months Ended |  
|                                        |                                          | June 30,      |     |     | June 30,         |  
|                                        |                                          |               |     |     |                  |  
|                                        |                                          | 2006          |     |     | 2005             |   |     | 2006 |  |   | 2005 |    
|                                        |                                          |               |     |     |                  |   |     |      |  |   |      |    
|Operating revenues                      |                                          | $             | 399 |     |                  | $ | 380 |      |  | $ | 774  |     |  | $ | 728 |    
|Operating expenses                      |                                          |               |     |     |                  |   |     |      |  |   |      |     |  |   |     |    
|                                        | Operation and maintenance                |               |     | 92  |                  |   |     | 94   |  |   |      | 175 |  |   |     | 175 | 
|                                        | Depreciation, depletion and amortization |               |     | 158 |                  |   |     | 155  |  |   |      | 305 |  |   |     | 298 | 
|                                        | Cost of products and services            |               |     | 23  |                  |   |     | 13   |  |   |      | 44  |  |   |     | 28  | 
|                                        | Taxes, other than income taxes           |               |     | 23  |                  |   |     | 10   |  |   |      | 40  |  |   |     | 25  | 
|                                        |                                          |               |     |     |                  |   |     |      |  |   |      |    
|                                        |                                          |               | 296 |     |                  |   | 272 |      |  |   | 564  |     |  |   | 526 |    
|                                        |                                          |               |     |     |                  |   |     |      |  |   |      |    
|Operating income                        |                                          |               | 103 |     |                  |   | 108 |      |  |   | 210  |     |  |   | 202 |    
|Earnings from unconsolidated affiliates |                                          |               | 1   |     |                  |   |    |      |  |   | 8    |     |  |   |    |    
|Other income, net                       |                                          |               | 1   |     |                  |   |    |      |  |   | 2    |     |  |   | 3   |    
|Affiliated interest expense             |                                          |               | (1  | )   |                  |   | (11 | )    |  |   | (3   | )   |  |   | (18 | )  
|Interest expense                        |                                          |               | (24 | )   |                  |   | (19 | )    |  |   | (50  | )   |  |   | (38 | )  
|                                        |                                          |               |     |     |                  |   |     |      |  |   |      |    
|Income before income taxes              |                                          |               | 80  |     |                  |   | 78  |      |  |   | 167  |     |  |   | 149 |    
|Income taxes                            |                                          |               | (34 | )   |                  |   | (29 | )    |  |   | (62  | )   |  |   | (55 | )  
|                                        |                                          |               |     |     |                  |   |     |      |  |   |      |    
|Net income                              |                                          | $             | 46  |     |                  | $ | 49  |      |  | $ | 105  |     |  | $ | 94  |    
|                                        |                                          |               |     |     |                  |   |     |      |  |   |      |    



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EL PASO EXPLORATION & PRODUCTION COMPANY


CONDENSED CONSOLIDATED BALANCE SHEETS


(In millions, except share amounts)


(Unaudited)


|                                       |                                                                                   |                                                          |                                            |        |              |       |        |        |        |       | 
|-------------------------------------- | --------------------------------------------------------------------------------- | -------------------------------------------------------- | ------------------------------------------ | ------ | ------------ | ----- | ------ | ------ | ------ | ----- | 
|                                       |                                                                                   | June 30,                                                 |                                            |        | December 31, |      
|                                       |                                                                                   | 2006                                                     |                                            |        | 2005         |      
|                                       |                                                                                   |                                                          |                                            |        |              |      
|ASSETS                                
|Current assets                         |                                                                                   |                                                          |                                            |        |              |       |        |       
|                                       | Cash and cash equivalents                                                         |                                                          | $                                          | 94     |              |       | $      | 46     |       
|                                       | Accounts receivable                                                               |                                                          |                                            |        |              |       |        |        |       
|                                       |                                                                                   | Customer, net of allowance of $9 in 2006 and $10 in 2005 |                                            |        | 42           |       |        |        | 53     |      
|                                       |                                                                                   | Affiliates                                               |                                            |        | 241          |       |        |        | 355    |      
|                                       |                                                                                   | Other                                                    |                                            |        | 95           |       |        |        | 81     |      
|                                       | Deferred income taxes                                                             |                                                          |                                            | 57     |              |       |        | 221    |       
|                                       | Assets from price risk management activities                                      |                                                          |                                            | 37     |              |       |        |       |       
|                                       | Other                                                                             |                                                          |                                            | 49     |              |       |        | 69     |       
|                                       |                                                                                   |                                                          |                                            |        |              |      
|                                       |                                                                                   |                                                          | Total current assets                       |        |              | 615   |        |        |        | 825   | 
|                                       |                                                                                   |                                                          |                                            |        |              |      
|Property, plant and equipment, at cost |                                                                                   |                                                          |                                            |        |              |       |        |       
|                                       | Natural gas and oil properties                                                    |                                                          |                                            |        |              |       |        |        |       
|                                       |                                                                                   | Proved properties-full cost method                       |                                            |        | 15,174       |       |        |        | 14,762 |      
|                                       |                                                                                   | Unevaluated costs excluded from amortization             |                                            |        | 359          |       |        |        | 384    |      
|                                       | Other                                                                             |                                                          |                                            | 153    |              |       |        | 141    |       
|                                       |                                                                                   |                                                          |                                            |        |              |      
|                                       |                                                                                   |                                                          | 15,686                                     |        |              |       | 15,287 |       
|                                       | Less accumulated depreciation, depletion and amortization                         |                                                          |                                            | 11,066 |              |       |        | 10,809 |       
|                                       |                                                                                   |                                                          |                                            |        |              |      
|                                       |                                                                                   |                                                          | Total property, plant and equipment, net   |        |              | 4,620 |        |        |        | 4,478 | 
|                                       |                                                                                   |                                                          |                                            |        |              |      
|Other assets                           |                                                                                   |                                                          |                                            |        |              |       |        |       
|                                       | Investments in unconsolidated affiliates                                          |                                                          |                                            | 760    |              |       |        | 761    |       
|                                       | Deferred income taxes                                                             |                                                          |                                            | 8      |              |       |        | 38     |       
|                                       | Assets from price risk management activities                                      |                                                          |                                            | 45     |              |       |        |       |       
|                                       | Other                                                                             |                                                          |                                            | 27     |              |       |        | 30     |       
|                                       |                                                                                   |                                                          |                                            |        |              |      
|                                       |                                                                                   |                                                          | 840                                        |        |              |       | 829    |       
|                                       |                                                                                   |                                                          |                                            |        |              |      
|                                       |                                                                                   |                                                          | Total assets                               |        | $            | 6,075 |        |        | $      | 6,132 | 
|                                       |                                                                                   |                                                          |                                            |        |              |      
|                                      
|LIABILITIES AND STOCKHOLDERS EQUITY  
|Current liabilities                    |                                                                                   |                                                          |                                            |        |              |       |        |       
|                                       | Accounts payable                                                                  |                                                          |                                            |        |              |       |        |        |       
|                                       |                                                                                   | Trade                                                    |                                            | $      | 88           |       |        | $      | 97     |      
|                                       |                                                                                   | Affiliates                                               |                                            |        | 31           |       |        |        | 32     |      
|                                       |                                                                                   | Other                                                    |                                            |        | 162          |       |        |        | 167    |      
|                                       | Note payable to affiliate                                                         |                                                          |                                            | 59     |              |       |        | 125    |       
|                                       | Liabilities from price risk management activities                                 |                                                          |                                            | 178    |              |       |        | 621    |       
|                                       | Other                                                                             |                                                          |                                            | 77     |              |       |        | 73     |       
|                                       |                                                                                   |                                                          |                                            |        |              |      
|                                       |                                                                                   |                                                          | Total current liabilities                  |        |              | 595   |        |        |        | 1,115 | 
|                                       |                                                                                   |                                                          |                                            |        |              |      
|Long-term debt                         |                                                                                   |                                                          | 1,200                                      |        |              |       | 1,700  |       
|                                       |                                                                                   |                                                          |                                            |        |              |      
|Other                                  |                                                                                   |                                                          |                                            |        |              |       |        |       
|                                       | Liabilities from price risk management activities                                 |                                                          |                                            | 93     |              |       |        | 111    |       
|                                       | Deferred income taxes                                                             |                                                          |                                            | 325    |              |       |        | 305    |       
|                                       | Asset retirement obligations                                                      |                                                          |                                            | 179    |              |       |        | 158    |       
|                                       | Other                                                                             |                                                          |                                            | 51     |              |       |        | 53     |       
|                                       |                                                                                   |                                                          |                                            |        |              |      
|                                       |                                                                                   |                                                          | 648                                        |        |              |       | 627    |       
|                                       |                                                                                   |                                                          |                                            |        |              |      
|Commitments and contingencies          |                                                                                   |                                                          |                                            |        |              |       |        |       
|Stockholders equity                   |                                                                                   |                                                          |                                            |        |              |       |        |       
|                                       | Common stock, par value $1 per share; 1,000 shares
    authorized and outstanding |                                                          |                                            |       |              |       |        |       |       
|                                       | Additional paid-in capital                                                        |                                                          |                                            | 3,910  |              |       |        | 3,410  |       
|                                       | Accumulated deficit                                                               |                                                          |                                            | (171   | )            |       |        | (276   | )     
|                                       | Accumulated other comprehensive loss                                              |                                                          |                                            | (107   | )            |       |        | (444   | )     
|                                       |                                                                                   |                                                          |                                            |        |              |      
|                                       |                                                                                   |                                                          | Total stockholders equity                 |        |              | 3,632 |        |        |        | 2,690 | 
|                                       |                                                                                   |                                                          |                                            |        |              |      
|                                       |                                                                                   |                                                          | Total liabilities and stockholders equity |        | $            | 6,075 |        |        | $      | 6,132 | 
|                                       |                                                                                   |                                                          |                                            |        |              |      



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EL PASO EXPLORATION & PRODUCTION COMPANY


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(In millions)


(Unaudited)


|                                     |                                                                               |                                                                              |                                                     |      |      |      |     |      |      |      |  
|------------------------------------ | ----------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | --------------------------------------------------- | ---- | ---- | ---- | --- | ---- | ---- | ---- | -
|                                     |                                                                               | Six Months                                                                   |                                                    
|                                     |                                                                               | Ended June 30,                                                               |                                                    
|                                     |                                                                               |                                                                              |                                                    
|                                     |                                                                               | 2006                                                                         |                                                     |      | 2005 |     
|                                     |                                                                               |                                                                              |                                                     |      |      |     
|Cash flows from operating activities |                                                                               |                                                                              |                                                     |      |      |      |     |     
|                                     | Net income                                                                    |                                                                              | $                                                   | 105  |      |      | $   | 94   |     
|                                     | Adjustments to reconcile net income to net cash from operating
    activities |                                                                              |                                                     |      |      |      |     |      |     
|                                     |                                                                               | Depreciation, depletion and amortization                                     |                                                     |      | 305  |      |     |      | 298  |     
|                                     |                                                                               | Deferred income tax expense                                                  |                                                     |      | 13   |      |     |      | 113  |     
|                                     |                                                                               | Earnings from unconsolidated affiliates, adjusted for cash
    distributions |                                                     |      | 3    |      |     |      |     |     
|                                     |                                                                               | Asset and liability changes                                                  |                                                     |      | 64   |      |     |      | (141 | )   
|                                     |                                                                               |                                                                              |                                                     |      |      |     
|                                     |                                                                               |                                                                              | Net cash provided by operating activities           |      |      | 490  |     |      |      | 364  |  
|                                     |                                                                               |                                                                              |                                                     |      |      |     
|Cash flows from investing activities |                                                                               |                                                                              |                                                     |      |      |      |     |     
|                                     | Capital expenditures                                                          |                                                                              |                                                     | (452 | )    |      |     | (455 | )   
|                                     | Net proceeds from the sale of assets                                          |                                                                              |                                                     | 76   |      |      |     | 4    |     
|                                     | Cash paid for acquisitions, net of cash acquired                              |                                                                              |                                                     |     |      |      |     | (178 | )   
|                                     |                                                                               |                                                                              |                                                     |      |      |     
|                                     |                                                                               |                                                                              | Net cash used in investing activities               |      |      | (376 | )   |      |      | (629 | )
|                                     |                                                                               |                                                                              |                                                     |      |      |     
|Cash flows from financing activities |                                                                               |                                                                              |                                                     |      |      |      |     |     
|                                     | Payment to retire long-term debt                                              |                                                                              |                                                     | (500 | )    |      |     |     |     
|                                     | Dividends to parent                                                           |                                                                              |                                                     |     |      |      |     | (95  | )   
|                                     | Contributions from parent                                                     |                                                                              |                                                     | 500  |      |      |     | 79   |     
|                                     | Change in note payable with affiliate                                         |                                                                              |                                                     | (66  | )    |      |     | 257  |     
|                                     |                                                                               |                                                                              |                                                     |      |      |     
|                                     |                                                                               |                                                                              | Net cash provided by (used in) financing activities |      |      | (66  | )   |      |      | 241  |  
|                                     |                                                                               |                                                                              |                                                     |      |      |     
|Change in cash and cash equivalents  |                                                                               |                                                                              | 48                                                  |      |      |      | (24 | )   
|Cash and cash equivalents            |                                                                               |                                                                              |                                                     |      |      |      |     |     
|                                     | Beginning of period                                                           |                                                                              |                                                     | 46   |      |      |     | 127  |     
|                                     |                                                                               |                                                                              |                                                     |      |      |     
|                                     | End of period                                                                 |                                                                              | $                                                   | 94   |      |      | $   | 103  |     
|                                     |                                                                               |                                                                              |                                                     |      |      |     



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EL PASO EXPLORATION & PRODUCTION COMPANY


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


(In millions)


(Unaudited)


|                                                      |                                                                                                                                                           |                                   |     |    |                  |   |     |      |    |   |      |     |     |   |    |      |     |  
|----------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------- | --- | -- | ---------------- | - | --- | ---- | -- | - | ---- | --- | --- | - | -- | ---- | --- | -
|                                                      |                                                                                                                                                           | Quarter Ended                     |     |    | Six Months Ended |  
|                                                      |                                                                                                                                                           | June 30,                          |     |    | June 30,         |  
|                                                      |                                                                                                                                                           |                                   |     |    |                  |  
|                                                      |                                                                                                                                                           | 2006                              |     |    | 2005             |   |     | 2006 |    |   | 2005 |    
|                                                      |                                                                                                                                                           |                                   |     |    |                  |   |     |      |    |   |      |    
|Net income                                            |                                                                                                                                                           | $                                 | 46  |    |                  | $ | 49  |      |    | $ | 105  |     |     | $ | 94 |     
|                                                      |                                                                                                                                                           |                                   |     |    |                  |   |     |      |    |   |      |    
|Net gains (losses) from cash flow hedging activities: |                                                                                                                                                           |                                   |     |    |                  |   |     |      |    |   |      |     |     |   |    |     
|                                                      | Unrealized mark-to-market gains (losses) arising during period
    (net of income taxes of $46 and $125 in 2006 and $8 and $101 in
    2005)              |                                   |     | 85 |                  |   |     | 18   |    |   |      | 222 |     |   |    | (174 | )  
|                                                      | Reclassification adjustments for changes in initial value to
    settlement date (net of income taxes of $26 and $67 in 2006 and
    $28 and $45 in 2005) |                                   |     | 43 |                  |   |     | 47   |    |   |      | 115 |     |   |    | 76   |    
|                                                      |                                                                                                                                                           |                                   |     |    |                  |   |     |      |    |   |      |    
|                                                      |                                                                                                                                                           | Other comprehensive income (loss) |     |    | 128              |   |     |      | 65 |   |      |     | 337 |   |    |      | (98 | )
|                                                      |                                                                                                                                                           |                                   |     |    |                  |   |     |      |    |   |      |    
|Comprehensive income (loss)                           |                                                                                                                                                           | $                                 | 174 |    |                  | $ | 114 |      |    | $ | 442  |     |     | $ | (4 | )   
|                                                      |                                                                                                                                                           |                                   |     |    |                  |   |     |      |    |   |      |    



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EL PASO EXPLORATION & PRODUCTION COMPANY


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




|   |                                                                         
|-- | ------------------------------------------------------------------------
|1. | Basis of Presentation and Summary of Significant Accounting
    Policies



| |                      
| | ---------------------
| | Basis of Presentation

10-Q 10-Q 10-K, 10-K.


10-K.




| |                                
| | -------------------------------
| | Significant Accounting Policies

10-K.




| |                                                         
| | --------------------------------------------------------
| | New Accounting Pronouncements Issued But Not Yet Adopted

Accounting for Uncertainty in Income Taxes. Accounting
for Uncertainty in Income Taxes. Accounting for Income Taxes, more-likely-than-not more-likely-than-not




|   |                              
|-- | -----------------------------
|2. | Acquisitions and Divestitures

Medicine Bow.


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EL PASO EXPLORATION & PRODUCTION COMPANY


NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)






|           |  |               |     |  |                  |   |     | 
|---------- |  | ------------- | --- |  | ---------------- | - | --- | 
|           |  | Quarter Ended |     |  | Six Months Ended |  
|           |  | June 30, 2005 |     |  | June 30, 2005    |  
|           |  |               |     |  |                  |  
|           |  | (In millions) |    
|Revenues   |  | $             | 395 |  |                  | $ | 756 | 
|Net income |  |               | 53  |  |                  |   | 104 | 

GMT Energy Corp (GMT).


Divestitures.




|   |     
|-- | ----
|3. | Debt





|   |                              
|-- | -----------------------------
|4. | Commitments and Contingencies

Legal Proceedings and Other Contingencies


Gas Measurement Cases. re: Natural Gas Royalties Qui Tam Litigation, Will Price, et al.


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EL PASO EXPLORATION & PRODUCTION COMPANY


NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


v. Gas Pipelines and Their Predecessors, et al.,


Reserve Revisions.




Environmental Matters






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EL PASO EXPLORATION & PRODUCTION COMPANY


NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




|   |                                                                                              
|-- | ---------------------------------------------------------------------------------------------
|5. | Investments in and Earnings from Unconsolidated Affiliates
    and Related Party Transactions

Investments in Unconsolidated Affiliates


Four Star.


|                        |                    |               |   |                  |  |  |   |    | 
|----------------------- | ------------------ | ------------- | - | ---------------- |  |  | - | -- | 
|                        |                    | Quarter Ended |   | Six Months Ended
|                        |                    | June 30, 2006 |   | June 30, 2006   
|                        |                    |               |   |                 
|                        |                    | (In millions)
|Operating results data: |                    |               |   |                  |  |  |   |   
|                        | Operating revenues |               | $ | 34               |  |  | $ | 81 | 
|                        | Operating expenses |               |   | 13               |  |  |   | 30 | 
|                        | Net
    income(1)  |               |   | 14               |  |  |   | 35 | 






|    |                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Our proportionate share for the quarter and six months ended
    June 30, 2006 does not reflect $13 million and
    $27 million of expense recorded to amortize our investment
    in excess of the underlying equity in the net assets of Four
    Star.

Related Party Transactions


Cash Management Program.


Capital Contributions and Dividends.


Other Affiliated Transactions.


|                                                           |  |               |     |                  |  |      |     |      |  |   |     |  |  |   |     | 
|---------------------------------------------------------- |  | ------------- | --- | ---------------- |  | ---- | --- | ---- |  | - | --- |  |  | - | --- | 
|                                                           |  | Quarter Ended |     | Six Months Ended
|                                                           |  | June 30,      |     | June 30,        
|                                                           |  |               |     |                 
|                                                           |  | 2006          |     | 2005             |  | 2006 |     | 2005
|                                                           |  |               |     |                  |  |      |     |     
|                                                           |  | (In millions)
|Operating revenues                                         |  | $             | 161 |                  |  | $    | 205 |      |  | $ | 426 |  |  | $ | 476 | 
|Operating expenses from affiliates                         |  |               | 30  |                  |  |      | 26  |      |  |   | 56  |  |  |   | 55  | 
|Reimbursements of operating expenses charged to affiliates |  |               | 6   |                  |  |      | 4   |      |  |   | 13  |  |  |   | 8   | 



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | El Paso. El Paso bills us directly for certain
    general and administrative costs and allocates a portion of its
    general and administrative costs to us. This allocation is based
    on the estimated level of resources devoted to our operations
    and the relative size of our EBIT, gross property and payroll.
    These expenses are primarily related to management, legal,
    financial, tax, consultative, administrative and other services,
    including employee benefits, annual incentive bonuses, rent,
    insurance and information technology.

8



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##### Table of Contents



EL PASO EXPLORATION & PRODUCTION COMPANY


NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | We also have a service agreement with El Paso that provides
    for a reimbursement of 2.5 cents per MMBtu in 2006 and 2005
    for our expected administrative costs associated with hedging
    transactions we entered into in December 2004.                                                                                                                                                                                                                                                                                       
|
| |  | El Paso Marketing. We sell our natural gas primarily
    to El Paso Marketing, L.P. at spot market prices. At
    June 30, 2006 and December 31, 2005, substantially all
    of our affiliated accounts receivable related to sales of
    natural gas to El Paso Marketing. We are also a party to a
    master hedging contract with El Paso Marketing whereby we
    hedge a portion of our natural gas production with El Paso
    Marketing. Realized gains and losses on these hedges are
    included in our operating revenues.
|
| |  | El Paso Pipelines. We contract for services with
    El Pasos regulated interstate pipelines that provide
    transportation and related services for our natural gas
    production. At June 30, 2006 and
    December 31, 2005, we had contractual deposits of
    $6 million with El Pasos regulated interstate
    pipelines.                                                                                                                                                                                                    

Taxes.


9



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##### Table of Contents








|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 2. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

10-Q. 10-K 10-Q.




Overview




high-return


Significant Operational Factors Since December 31,
2005




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Higher realized prices. We continued to benefit from a
    strong commodity pricing environment in the first six months of
    2006. Realized natural gas prices, which include the impact of
    our hedges, increased four percent, while oil, condensate
    and NGL prices increased 37 percent compared to the first
    six months of 2005.                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | Average daily production of 679 MMcfe/d (excluding
    68 MMcfe/d from our equity investment in Four Star).
    Our consolidated average daily equivalent production volumes
    have been lower than expected due to continued shut-in
    production volumes in our Gulf of Mexico and south Louisiana
    region caused by hurricanes in the Gulf of Mexico during 2005 as
    well as delays in the installation of new facilities. However,
    when including our proportionate share of the production volumes
    from our equity investment in Four Star, average daily
    equivalent production volumes increased when compared to the
    first six months of 2005. Our production results by region were
    as follows during the first six months of 2006:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Onshore. We have continued to increase production volumes
    as a result of our successful drilling and acquisition programs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | Gulf of Mexico and south Louisiana. Since the end of
    2005, production in the Gulf of Mexico and south Louisiana
    region has increased as we brought on-line several new
    discoveries and continued to bring shut-in volumes from the
    hurricanes back on-line. During the first six months of 2006,
    the negative impact of shut-in volumes from the hurricanes was
    approximately 21 MMcfe/d. Approximately 13 MMcfe/d
    remains shut-in, which we expect to bring back on-line during
    the remainder of 2006. In addition, our new discoveries at West
    Cameron Blocks 75 and 62 came on-line later than expected
    which also negatively impacted our anticipated first quarter
    volumes by an estimated 20 MMcfe/d and our anticipated
    second quarter volumes by an estimated 13 MMcfe/d.
|
| | Texas Gulf Coast. Our capital program in this region has
    stabilized production volumes over the last three quarters. In
    the second quarter of 2006, we completed the sale of certain
    non-strategic                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

10



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##### Table of Contents



| |                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | south Texas natural gas and oil properties for approximately
    $74 million. These properties had an average daily
    production of approximately 5 MMcfe/d and remaining
    reserves of approximately 16 Bcfe at the time of the sale.



| |   |                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------
| |  | Capital expenditures. Our capital expenditures totaled
    $499 million, which includes $47 million of accrued
    capital expenditures.
|
| |  | Drilling results. Our drilling results by region in 2006
    were as follows:                                                           



| |                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Onshore. We experienced a 100 percent success rate
    on 214 gross wells drilled resulting in production growth
    in the Rockies, Black Warrior Basin, Arklatex and Arkoma
    operating areas.                                                                                                                                                                                                                     
|
| | Gulf of Mexico and south Louisiana. Overall, we
    experienced a 100 percent success rate on eight gross wells
    drilled. In May 2006, we brought our West Cameron Blocks 75
    and 62 discoveries in the Gulf of Mexico and our two Long
    Point wells in Vermillion Parish, Louisiana on-line.                                                                                                                 
|
| | Texas Gulf Coast. We experienced a 90 percent
    success rate on 20 gross wells drilled. Continued success
    with the Wilcox (Renger Field) exploitation program in Lavaca
    County, Texas, saw the development of additional pay zones
    within the field area. The shallow Vicksburg development program
    in Starr and Hidalgo Counties, Texas provided consistent results
    on existing base properties.

Outlook for 2006






| |   |                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Capital expenditures between $380 million and
    $410 million for the remainder of the year;                                                                                                                                   
|
| |  | Average daily production volumes for the year to average at the
    low end of the range of approximately 730 MMcfe/d to
    755 MMcfe/d, which excludes approximately 70 MMcfe/d
    from our equity interest in Four Star;    
|
| |  | Average cash operating costs of approximately $1.67/Mcfe to
    $1.74/Mcfe for the year;                                                                                                                                        
|
| |  | A unit of production depletion rate between $2.35 and $2.40/Mcfe
    in the third quarter of 2006 compared with $2.34/Mcfe in the
    second quarter of 2006; and                                                               
|
| |  | Continued industry-wide increases in drilling and oilfield
    service costs that will require constant monitoring of capital
    spending programs and a mitigation effort designed to manage and
    improve field efficiency.

Price Risk Management Activities




|            |           |             |  |    |           |  |   |             |  |  |                   |     |  |         |   |      |       |  |  |        |  |  |   |       |  |  |  |     | 
|----------- | --------- | ----------- |  | -- | --------- |  | - | ----------- |  |  | ----------------- | --- |  | ------- | - | ---- | ----- |  |  | ------ |  |  | - | ----- |  |  |  | --- | 
|            |           | Fixed Price |  |    |           |  |   |             | 
|            |           | Swaps(1)    |  |    | Floors(1) |  |   | Ceilings(1) |  |  | Basis Swaps(1)(2) |    
|            |           |             |  |    |           |  |   |             |  |  |                   |    
|            |           | Volumes     |  |    | Price     |  |   | Volumes     |  |  | Price             |     |  | Volumes |   |      | Price |  |  | Volume | 
|            |           |             |  |    |           |  |   |             |  |  |                   |     |  |         |   |      |       |  |  |        | 
|Natural Gas |           |             |  |    |           |  |   |             |  |  |                   |     |  |         |   |      |       |  |  |        |  |  |   |       |  |  |  |    
|            | 2006      |             |  | 43 |           |  | $ | 3.33        |  |  |                   |    |  |         |   |     |       |  |  |       |  |  |   |      |  |  |  | 49  | 
|            | 2007      |             |  | 5  |           |  | $ | 3.56        |  |  |                   | 130 |  |         | $ | 8.00 |       |  |  | 130    |  |  | $ | 16.02 |  |  |  | 110 | 
|            | 2008      |             |  | 5  |           |  | $ | 3.42        |  |  |                   |    |  |         |   |     |       |  |  |       |  |  |   |      |  |  |  |    | 
|            | 2009-2012 |             |  | 16 |           |  | $ | 3.74        |  |  |                   |    |  |         |   |     |       |  |  |       |  |  |   |      |  |  |  |    | 






|    |                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Volumes presented are TBtu for natural gas. Prices presented are
    per MMBtu of natural gas.                                              
|   
|(2) | Our basis swaps effectively lock-in locational price
    differences on a portion of our natural gas production in Texas
    and Oklahoma.

11



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##### Table of Contents



marked-to


Results of Operations


Overview






|                                        |                  |               |      |     |      |   |      |     | 
|--------------------------------------- | ---------------- | ------------- | ---- | --- | ---- | - | ---- | --- | 
|                                        |                  | Six Months    |     
|                                        |                  | Ended         |     
|                                        |                  | June 30,      |     
|                                        |                  |               |     
|                                        |                  | 2006          |      |     | 2005 |  
|                                        |                  |               |      |     |      |  
|                                        |                  | (In millions) |     
|Operating revenues                      |                  | $             | 774  |     |      | $ | 728  |    
|Operating expenses                      |                  |               | (564 | )   |      |   | (526 | )  
|                                        |                  |               |      |     |      |  
|                                        | Operating income |               |      | 210 |      |   |      | 202 | 
|Earnings from unconsolidated affiliates |                  |               | 8    |     |      |   |     |    
|Other income, net                       |                  |               | 2    |     |      |   | 3    |    
|                                        |                  |               |      |     |      |  
|                                        | EBIT             |               |      | 220 |      |   |      | 205 | 
|Affiliated interest expense             |                  |               | (3   | )   |      |   | (18  | )  
|Interest expense                        |                  |               | (50  | )   |      |   | (38  | )  
|Income taxes                            |                  |               | (62  | )   |      |   | (55  | )  
|                                        |                  |               |      |     |      |  
|Net income                              |                  | $             | 105  |     |      | $ | 94   |    
|                                        |                  |               |      |     |      |  

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Operating Results and Variance Analysis




|                         |                                          |                          |     |     |      |   |     |     |     | 
|------------------------ | ---------------------------------------- | ------------------------ | --- | --- | ---- | - | --- | --- | --- | 
|                         |                                          | 2006                     |     |     | 2005 |  
|                         |                                          |                          |     |     |      |  
|                         |                                          | (In millions,            |    
|                         |                                          | except volumes           |    
|                         |                                          | and prices)              |    
|Operating revenues:      |                                          |                          |     |     |      |   |     |    
|                         | Natural gas                              |                          | $   | 544 |      |   | $   | 545 |    
|                         | Oil, condensate and NGL                  |                          |     | 201 |      |   |     | 169 |    
|                         | Other                                    |                          |     | 29  |      |   |     | 14  |    
|                         |                                          |                          |     |     |      |  
|                         |                                          | Total operating revenues |     |     | 774  |   |     |     | 728 | 
|                         |                                          |                          |     |     |      |  
|Operating expenses:      |                                          |                          |     |     |      |   |     |    
|                         | Depreciation, depletion and amortization |                          |     | 305 |      |   |     | 298 |    
|                         | Production
    costs(1)                  |                          |     | 139 |      |   |     | 111 |    
|                         | General and administrative expenses      |                          |     | 73  |      |   |     | 80  |    
|                         | Cost of products and
    services(2)     |                          |     | 44  |      |   |     | 28  |    
|                         | Other                                    |                          |     | 3   |      |   |     | 9   |    
|                         |                                          |                          |     |     |      |  
|                         |                                          | Total operating expenses |     |     | 564  |   |     |     | 526 | 
|                         |                                          |                          |     |     |      |  
|                         | Operating income                         |                          |     | 210 |      |   |     | 202 |    
|Other income,
    net(3) |                                          |                          | 10  |     |      |   | 3   |    
|                         |                                          |                          |     |     |      |  
|EBIT                     |                                          | $                        | 220 |     |      | $ | 205 |    
|                         |                                          |                          |     |     |      |  

|                                                    |                                                      |                                                         |                               |       |         |         |   |          |         |      |  |    |     |    |  
|--------------------------------------------------- | ---------------------------------------------------- | ------------------------------------------------------- | ----------------------------- | ----- | ------- | ------- | - | -------- | ------- | ---- |  | -- | --- | -- | -
|                                                    |                                                      |                                                         |                               |       |         | Percent |  
|                                                    |                                                      | 2006                                                    |                               |       | 2005    |         |   | Variance |        
|                                                    |                                                      |                                                         |                               |       |         |         |   |          |        
|Consolidated volumes, prices and costs per unit:    |                                                      |                                                         |                               |       |         |         |   |          |         |      |  |   
|                                                    | Natural gas                                          |                                                         |                               |       |         |         |   |          |         |      |  |    |    
|                                                    |                                                      | Volumes (MMcf)                                          |                               |       | 101,606 |         |   |          | 105,944 |      |  |    | (4  | )%
|                                                    |                                                      | Average realized prices including
    hedges ($/Mcf)(4) |                               | $     | 5.35    |         |   | $        | 5.15    |      |  |    | 4   | % 
|                                                    |                                                      | Average realized prices excluding
    hedges ($/Mcf)(4) |                               | $     | 7.22    |         |   | $        | 6.32    |      |  |    | 14  | % 
|                                                    |                                                      | Average transportation costs ($/Mcf)                    |                               | $     | 0.24    |         |   | $        | 0.19    |      |  |    | 26  | % 
|                                                    | Oil, condensate and NGL                              |                                                         |                               |       |         |         |   |          |         |      |  |    |    
|                                                    |                                                      | Volumes (MBbls)                                         |                               |       | 3,560   |         |   |          | 4,089   |      |  |    | (13 | )%
|                                                    |                                                      | Average realized prices
    ($/Bbl)(4)                  |                               | $     | 56.59   |         |   | $        | 41.16   |      |  |    | 37  | % 
|                                                    |                                                      | Average transportation costs ($/Bbl)                    |                               | $     | 1.05    |         |   | $        | 0.72    |      |  |    | 46  | % 
|                                                    | Total equivalent volumes                             |                                                         |                               |       |         |         |   |          |         |      |  |    |    
|                                                    |                                                      | MMcfe                                                   |                               |       | 122,967 |         |   |          | 130,476 |      |  |    | (6  | )%
|                                                    |                                                      | MMcfe/d                                                 |                               |       | 679     |         |   |          | 721     |      |  |    | (6  | )%
|                                                    | Production costs ($/Mcfe)                            |                                                         |                               |       |         |         |   |          |         |      |  |    |    
|                                                    |                                                      | Average lease operating costs                           |                               | $     | 0.83    |         |   | $        | 0.71    |      |  |    | 17  | % 
|                                                    |                                                      | Average production taxes                                |                               |       | 0.30    |         |   |          | 0.14    |      |  |    | 114 | % 
|                                                    |                                                      |                                                         |                               |       |         |         |   |          |        
|                                                    |                                                      |                                                         | Total production
    costs(1) |       | $       | 1.13    |   |          | $       | 0.85 |  |    |     | 33 | %
|                                                    |                                                      |                                                         |                               |       |         |         |   |          |         |      |  |   
|                                                    | Average general and administrative expenses ($/Mcfe) |                                                         | $                             | 0.59  |         |         | $ | 0.61     |         |      |  | (3 | )% 
|                                                    | Unit of production depletion cost ($/Mcfe)           |                                                         | $                             | 2.33  |         |         | $ | 2.13     |         |      |  | 9  | %  
|Unconsolidated affiliate volumes (Four
    Star)(3) |                                                      |                                                         |                               |       |         |         |   |          |         |      |  |   
|                                                    | Natural Gas (MMcf)                                   |                                                         |                               | 8,963 |         |         |   |          |         |      |  |    |    
|                                                    | Oil, condensate and NGL (MBbls)                      |                                                         |                               | 569   |         |         |   |          |         |      |  |    |    
|                                                    | Total equivalent volumes                             |                                                         |                               |       |         |         |   |          |         |      |  |    |    
|                                                    |                                                      | MMcfe                                                   |                               |       | 12,375  |         |   |          |         |      |  |    |     |   
|                                                    |                                                      | MMcfe/d                                                 |                               |       | 68      |         |   |          |         |      |  |    |     |   






|    |                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Production costs include lease operating costs and production
    related taxes (including ad valorem and severance taxes).                                                                                     
|(2) | Includes transportation costs.                                                                                                                                                                                  
|(3) | Includes equity earnings and volumes for our investment in Four
    Star. Our equity interest in Four Star was acquired in
    connection with our acquisition of Medicine Bow in the third
    quarter of 2005.
|(4) | Prices are stated before transportation costs.                                                                                                                                                                  

13



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|                                                 |                                       |                         |   |     |           |  |   |       |     |   |      |    |   |  |   |     |    | 
|------------------------------------------------ | ------------------------------------- | ----------------------- | - | --- | --------- |  | - | ----- | --- | - | ---- | -- | - |  | - | --- | -- | 
|                                                 |                                       | Variance                |  
|                                                 |                                       |                         |  
|                                                 |                                       | Operating               |   |     | Operating |  |   |      
|                                                 |                                       | Revenue                 |   |     | Expense   |  |   | Other |     |   | EBIT |   
|                                                 |                                       |                         |   |     |           |  |   |       |     |   |      |   
|                                                 |                                       | Favorable/(Unfavorable) |  
|                                                 |                                       | (In millions)           |  
|Natural Gas Revenue                              |                                       |                         |   |     |           |  |   |       |     |   |      |    |   |  |   |    
|                                                 | Higher realized prices in 2006        |                         | $ | 92  |           |  | $ |      |     |   | $    |   |   |  | $ | 92  |   
|                                                 | Impact of hedges                      |                         |   | (66 | )         |  |   |      |     |   |      |   |   |  |   | (66 | ) 
|                                                 | Lower volumes in 2006                 |                         |   | (27 | )         |  |   |      |     |   |      |   |   |  |   | (27 | ) 
|Oil, Condensate and NGL Revenue                  |                                       |                         |   |     |           |  |   |       |     |   |      |    |   |  |   |    
|                                                 | Higher realized prices in 2006        |                         |   | 54  |           |  |   |      |     |   |      |   |   |  |   | 54  |   
|                                                 | Lower volumes in 2006                 |                         |   | (22 | )         |  |   |      |     |   |      |   |   |  |   | (22 | ) 
|Depreciation, Depletion and Amortization Expense |                                       |                         |   |     |           |  |   |       |     |   |      |    |   |  |   |    
|                                                 | Higher depletion rate in 2006         |                         |   |    |           |  |   | (25   | )   |   |      |   |   |  |   | (25 | ) 
|                                                 | Lower production volumes in 2006      |                         |   |    |           |  |   | 16    |     |   |      |   |   |  |   | 16  |   
|Production Costs                                 |                                       |                         |   |     |           |  |   |       |     |   |      |    |   |  |   |    
|                                                 | Higher lease operating costs in 2006  |                         |   |    |           |  |   | (9    | )   |   |      |   |   |  |   | (9  | ) 
|                                                 | Higher production taxes in 2006       |                         |   |    |           |  |   | (19   | )   |   |      |   |   |  |   | (19 | ) 
|General and administrative expenses              |                                       |                         |  |     |           |  | 7 |       |     |   |     |    |   |  | 7 |    
|Other                                            |                                       |                         |   |     |           |  |   |       |     |   |      |    |   |  |   |    
|                                                 | Earnings from investment in Four Star |                         |   |    |           |  |   |      |     |   |      | 8  |   |  |   | 8   |   
|                                                 | Processing plants                     |                         |   | 11  |           |  |   | (13   | )   |   |      |   |   |  |   | (2  | ) 
|                                                 | Change in fair value of basis swaps   |                         |   | 5   |           |  |   |      |     |   |      |   |   |  |   | 5   |   
|                                                 | Other                                 |                         |   | (1  | )         |  |   | 5     |     |   |      | (1 | ) |  |   | 3   |   
|                                                 |                                       |                         |   |     |           |  |   |       |     |   |      |   
|                                                 |                                       | Total Variances         |   | $   | 46        |  |   | $     | (38 | ) |      | $  | 7 |  |   | $   | 15 | 
|                                                 |                                       |                         |   |     |           |  |   |       |     |   |      |   

Operating Revenues.


Depreciation, depletion and amortization expense.


Production costs.


General and administrative expenses.


Other




Affiliated Interest Expense




14



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##### Table of Contents



short-term


Interest Expense




Income Taxes


|                   |  |                   |    |   |      |   |    |  
|------------------ |  | ----------------- | -- | - | ---- | - | -- | -
|                   |  | Six Months Ended  |   
|                   |  | June 30,          |   
|                   |  |                   |   
|                   |  | 2006              |    |   | 2005 |  
|                   |  |                   |    |   |      |  
|                   |  | (In millions,     |   
|                   |  | except for rates) |   
|Income taxes       |  | $                 | 62 |   |      | $ | 55 |  
|Effective tax rate |  |                   | 37 | % |      |   | 37 | %



Liquidity






15



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##### Table of Contents



Commitments and Contingencies









|        |                                                           
|------- | ----------------------------------------------------------
|Item 3. | Quantitative and Qualitative Disclosures About Market Risk

10-Q.







|        |                        
|------- | -----------------------
|Item 4. | Controls and Procedures

Evaluation of Disclosure Controls and Procedures






Changes in Internal Control Over Financial Reporting




16



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##### Table of Contents






PART II  OTHER INFORMATION







|        |                  
|------- | -----------------
|Item 1. | Legal Proceedings

10-K


Environmental Proceedings


Air Permit Violation.







|         |             
|-------- | ------------
|Item 1A. | Risk Factors




CAUTIONARY STATEMENTS FOR PURPOSES OF THE SAFE
HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995











|        |                                                                
|------- | ---------------------------------------------------------------
|Item 2. | Unregistered Sales of Equity Securities and Use of
    Proceeds

10-Q.







|        |                                
|------- | -------------------------------
|Item 3. | Defaults Upon Senior Securities

10-Q.







|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders

10-Q.


17



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##### Table of Contents








|        |                  
|------- | -----------------
|Item 5. | Other Information








|        |         
|------- | --------
|Item 6. | Exhibits





|        |     |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------- | --- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |     |            
|Number  |     | Description
|        |     |            
|        | *4  | .A          |  | Fifth Supplemental Indenture, dated as of June 30, 2006,
    among El Paso Exploration & Production Company, MBOW Four
    Star Corporation, El Paso
    Exploration & Production, Management, Inc.,
    El Paso E&P Holding, Inc., El Paso E&P Company,
    L.P., El Paso Production Resale Company, El Paso Energy Oil
    Transmission, L.L.C. and El Paso Production Oil & Gas
    Gathering, L.P., as Subsidiary Guarantors, and Wilmington Trust
    Company, as Trustee.
|        | *31 | .A          |  | Certification of Chief Executive Officer pursuant to
    sec. 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                           
|        | *31 | .B          |  | Certification of Chief Financial Officer pursuant to
    sec. 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                           
|        | *32 | .A          |  | Certification of Chief Executive Officer pursuant to
    18 U.S.C. sec. 1350 as adopted pursuant to
    sec. 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                            
|        | *32 | .B          |  | Certification of Chief Financial Officer pursuant to
    18 U.S.C. sec. 1350 as adopted pursuant to
    sec. 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                            

Undertaking


S-K,


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##### Table of Contents






SIGNATURES






| |                                         
| | ----------------------------------------
| | EL PASO EXPLORATION & PRODUCTION COMPANY

|                     |  |                                                                                                                                      
|-------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------
|Date: August 7, 2006 |  | By: /s/ LISA A. STEWARTLisa
    A. StewartPresident
    (Principal Executive Officer)                                                
|                    
|Date: August 7, 2006 |  | By: /s/ DANE E. WHITEHEADDane
    E. WhiteheadSenior Vice President and
    Chief Financial Officer
    (Principal Financial Officer)

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##### Table of Contents



EL PASO EXPLORATION & PRODUCTION COMPANY


EXHIBIT INDEX




|        |     |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------- | --- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |     |            
|Number  |     | Description
|        |     |            
|        | *4  | .A          |  | Fifth Supplemental Indenture, dated as of June 30, 2006,
    among El Paso Exploration & Production Company, MBOW Four
    Star Corporation, El Paso Exploration & Production
    Management, Inc., El Paso E&P Holding, Inc., El
    Paso E&P Company, L.P., El Paso Production Resale Company,
    El Paso Energy Oil Transmission, L.L.C. and El Paso Production
    Oil & Gas Gathering, L.P., as Subsidiary Guarantor, and
    Wilmington Trust Company, as Trustee.
|        | *31 | .A          |  | Certification of Chief Executive Officer pursuant to
    sec. 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                     
|        | *31 | .B          |  | Certification of Chief Financial Officer pursuant to
    sec. 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                     
|        | *32 | .A          |  | Certification of Chief Executive Officer pursuant to
    18 U.S.C. sec. 1350 as adopted pursuant to
    sec. 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                      
|        | *32 | .B          |  | Certification of Chief Financial Officer pursuant to
    18 U.S.C. sec. 1350 as adopted pursuant to
    sec. 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                      

20