##### 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 March 31, 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                                          |  |      | 9  | 
|Item 3.                                       |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                                     |  |      | *  | 
|Item 4.                                       |  | Controls and Procedures                                                                                                            |  |      | 15 | 
|PART II  Other
    Information              
|Item 1.                                       |  | Legal Proceedings                                                                                                                  |  |      | 16 | 
|Item 1.A                                      |  | Risk Factors                                                                                                                       |  |      |    | 
|                                              |  | Cautionary Statements for Purposes of the
    Safe Harbor Provisions of the Private Securities
    Litigation Reform Act of 1995 |  |      | 16 | 
|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                                                                                                                  |  |      | 17 | 
|Item 6.                                       |  | Exhibits                                                                                                                           |  |      | 17 | 
|                                              |  | Signatures                                                                                                                         |  |      | 18 | 
|First Amendment to Amended Credit Agreement  
|Certification of CEO Pursuant to Section 302 
|Certification of CFO Pursuant to Section 302 
|Certification of CEO Pursuant to Section 1350
|Certification of CFO Pursuant to Section 1350








|  |                                                                                                                                                                                                   
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | 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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##### Table of Contents






PART I  FINANCIAL INFORMATION





Item 1.  Financial Statements


EL PASO EXPLORATION & PRODUCTION COMPANY


CONDENSED CONSOLIDATED STATEMENTS OF INCOME


(In millions)


(Unaudited)


|                                        |                                          |               |     |     |      |   |     |     | 
|--------------------------------------- | ---------------------------------------- | ------------- | --- | --- | ---- | - | --- | --- | 
|                                        |                                          | Quarter Ended |    
|                                        |                                          | March 31,     |    
|                                        |                                          |               |    
|                                        |                                          | 2006          |     |     | 2005 |  
|                                        |                                          |               |     |     |      |  
|Operating revenues                      |                                          | $             | 375 |     |      | $ | 348 |    
|Operating expenses                      |                                          |               |     |     |      |   |     |    
|                                        | Cost of products and services            |               |     | 21  |      |   |     | 15  | 
|                                        | Operation and maintenance                |               |     | 83  |      |   |     | 81  | 
|                                        | Depreciation, depletion and amortization |               |     | 147 |      |   |     | 143 | 
|                                        | Taxes, other than income taxes           |               |     | 17  |      |   |     | 15  | 
|                                        |                                          |               |     |     |      |  
|                                        |                                          |               | 268 |     |      |   | 254 |    
|                                        |                                          |               |     |     |      |  
|Operating income                        |                                          |               | 107 |     |      |   | 94  |    
|Earnings from unconsolidated affiliates |                                          |               | 7   |     |      |   |    |    
|Other income, net                       |                                          |               | 1   |     |      |   | 3   |    
|Affiliated interest expense             |                                          |               | (2  | )   |      |   | (7  | )  
|Interest expense                        |                                          |               | (26 | )   |      |   | (19 | )  
|                                        |                                          |               |     |     |      |  
|Income before income taxes              |                                          |               | 87  |     |      |   | 71  |    
|Income taxes                            |                                          |               | (28 | )   |      |   | (26 | )  
|                                        |                                          |               |     |     |      |  
|Net income                              |                                          | $             | 59  |     |      | $ | 45  |    
|                                        |                                          |               |     |     |      |  



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EL PASO EXPLORATION & PRODUCTION COMPANY


CONDENSED CONSOLIDATED BALANCE SHEETS


(In millions, except share amounts)


(Unaudited)


|                                       |                                                                                   |                                                          |                                            |        |              |       |        |        |        |       | 
|-------------------------------------- | --------------------------------------------------------------------------------- | -------------------------------------------------------- | ------------------------------------------ | ------ | ------------ | ----- | ------ | ------ | ------ | ----- | 
|                                       |                                                                                   | March 31,                                                |                                            |        | December 31, |      
|                                       |                                                                                   | 2006                                                     |                                            |        | 2005         |      
|                                       |                                                                                   |                                                          |                                            |        |              |      
|ASSETS                                
|Current assets                         |                                                                                   |                                                          |                                            |        |              |       |        |       
|                                       | Cash and cash equivalents                                                         |                                                          | $                                          | 122    |              |       | $      | 46     |       
|                                       | Accounts receivable                                                               |                                                          |                                            |        |              |       |        |        |       
|                                       |                                                                                   | Customer, net of allowance of $9 in 2006 and $10 in 2005 |                                            |        | 33           |       |        |        | 53     |      
|                                       |                                                                                   | Affiliates                                               |                                            |        | 253          |       |        |        | 355    |      
|                                       |                                                                                   | Other                                                    |                                            |        | 74           |       |        |        | 81     |      
|                                       | Deferred income taxes                                                             |                                                          |                                            | 108    |              |       |        | 221    |       
|                                       | Other                                                                             |                                                          |                                            | 52     |              |       |        | 69     |       
|                                       |                                                                                   |                                                          |                                            |        |              |      
|                                       |                                                                                   |                                                          | Total current assets                       |        |              | 642   |        |        |        | 825   | 
|                                       |                                                                                   |                                                          |                                            |        |              |      
|Property, plant and equipment, at cost |                                                                                   |                                                          |                                            |        |              |       |        |       
|                                       | Natural gas and oil properties                                                    |                                                          |                                            |        |              |       |        |        |       
|                                       |                                                                                   | Proved properties-full cost method                       |                                            |        | 14,969       |       |        |        | 14,762 |      
|                                       |                                                                                   | Unevaluated costs excluded from amortization             |                                            |        | 369          |       |        |        | 384    |      
|                                       | Other                                                                             |                                                          |                                            | 149    |              |       |        | 141    |       
|                                       |                                                                                   |                                                          |                                            |        |              |      
|                                       |                                                                                   |                                                          | 15,487                                     |        |              |       | 15,287 |       
|                                       | Less accumulated depreciation, depletion and amortization                         |                                                          |                                            | 10,949 |              |       |        | 10,809 |       
|                                       |                                                                                   |                                                          |                                            |        |              |      
|                                       |                                                                                   |                                                          | Total property, plant and equipment, net   |        |              | 4,538 |        |        |        | 4,478 | 
|                                       |                                                                                   |                                                          |                                            |        |              |      
|Other assets                           |                                                                                   |                                                          |                                            |        |              |       |        |       
|                                       | Investments in unconsolidated affiliates                                          |                                                          |                                            | 760    |              |       |        | 761    |       
|                                       | Deferred income taxes                                                             |                                                          |                                            | 32     |              |       |        | 38     |       
|                                       | Other                                                                             |                                                          |                                            | 29     |              |       |        | 30     |       
|                                       |                                                                                   |                                                          |                                            |        |              |      
|                                       |                                                                                   |                                                          | 821                                        |        |              |       | 829    |       
|                                       |                                                                                   |                                                          |                                            |        |              |      
|                                       |                                                                                   |                                                          | Total assets                               |        | $            | 6,001 |        |        | $      | 6,132 | 
|                                       |                                                                                   |                                                          |                                            |        |              |      
|                                      
|LIABILITIES AND STOCKHOLDERS EQUITY  
|Current liabilities                    |                                                                                   |                                                          |                                            |        |              |       |        |       
|                                       | Accounts payable                                                                  |                                                          |                                            |        |              |       |        |        |       
|                                       |                                                                                   | Trade                                                    |                                            | $      | 79           |       |        | $      | 97     |      
|                                       |                                                                                   | Affiliates                                               |                                            |        | 15           |       |        |        | 32     |      
|                                       |                                                                                   | Other                                                    |                                            |        | 171          |       |        |        | 167    |      
|                                       | Note payable to affiliate                                                         |                                                          |                                            | 50     |              |       |        | 125    |       
|                                       | Liabilities from price risk management activities                                 |                                                          |                                            | 306    |              |       |        | 621    |       
|                                       | Other                                                                             |                                                          |                                            | 96     |              |       |        | 73     |       
|                                       |                                                                                   |                                                          |                                            |        |              |      
|                                       |                                                                                   |                                                          | Total current liabilities                  |        |              | 717   |        |        |        | 1,115 | 
|                                       |                                                                                   |                                                          |                                            |        |              |      
|Long-term debt                         |                                                                                   |                                                          | 1,700                                      |        |              |       | 1,700  |       
|                                       |                                                                                   |                                                          |                                            |        |              |      
|Other                                  |                                                                                   |                                                          |                                            |        |              |       |        |       
|                                       | Liabilities from price risk management activities                                 |                                                          |                                            | 94     |              |       |        | 111    |       
|                                       | Deferred income taxes                                                             |                                                          |                                            | 318    |              |       |        | 305    |       
|                                       | Asset retirement obligation                                                       |                                                          |                                            | 162    |              |       |        | 158    |       
|                                       | Other                                                                             |                                                          |                                            | 52     |              |       |        | 53     |       
|                                       |                                                                                   |                                                          |                                            |        |              |      
|                                       |                                                                                   |                                                          | 626                                        |        |              |       | 627    |       
|                                       |                                                                                   |                                                          |                                            |        |              |      
|Commitments and contingencies          |                                                                                   |                                                          |                                            |        |              |       |        |       
|Stockholders equity                   |                                                                                   |                                                          |                                            |        |              |       |        |       
|                                       | Common stock, par value $1 per share; 1,000 shares
    authorized and outstanding |                                                          |                                            |       |              |       |        |       |       
|                                       | Additional paid-in capital                                                        |                                                          |                                            | 3,410  |              |       |        | 3,410  |       
|                                       | Accumulated deficit                                                               |                                                          |                                            | (217   | )            |       |        | (276   | )     
|                                       | Accumulated other comprehensive loss                                              |                                                          |                                            | (235   | )            |       |        | (444   | )     
|                                       |                                                                                   |                                                          |                                            |        |              |      
|                                       |                                                                                   |                                                          | Total stockholders equity                 |        |              | 2,958 |        |        |        | 2,690 | 
|                                       |                                                                                   |                                                          |                                            |        |              |      
|                                       |                                                                                   |                                                          | Total liabilities and stockholders equity |        | $            | 6,001 |        |        | $      | 6,132 | 
|                                       |                                                                                   |                                                          |                                            |        |              |      



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EL PASO EXPLORATION & PRODUCTION COMPANY


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(In millions)


(Unaudited)


|                                     |                                                                               |                                                                              |                                                     |      |      |      |      |      |     |      |  
|------------------------------------ | ----------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | --------------------------------------------------- | ---- | ---- | ---- | ---- | ---- | --- | ---- | -
|                                     |                                                                               | Quarter Ended                                                                |                                                    
|                                     |                                                                               | March 31,                                                                    |                                                    
|                                     |                                                                               |                                                                              |                                                    
|                                     |                                                                               | 2006                                                                         |                                                     |      | 2005 |     
|                                     |                                                                               |                                                                              |                                                     |      |      |     
|Cash flows from operating activities |                                                                               |                                                                              |                                                     |      |      |      |      |     
|                                     | Net income                                                                    |                                                                              | $                                                   | 59   |      |      | $    | 45   |    
|                                     | Adjustments to reconcile net income to net cash from operating
    activities |                                                                              |                                                     |      |      |      |      |      |    
|                                     |                                                                               | Depreciation, depletion and amortization                                     |                                                     |      | 147  |      |      |      | 143 |     
|                                     |                                                                               | Deferred income tax expense                                                  |                                                     |      | 8    |      |      |      | 46  |     
|                                     |                                                                               | Earnings from unconsolidated affiliates, adjusted for cash
    distributions |                                                     |      | 3    |      |      |      |    |     
|                                     |                                                                               | Asset and liability changes                                                  |                                                     |      | 95   |      |      |      | 74  |     
|                                     |                                                                               |                                                                              |                                                     |      |      |     
|                                     |                                                                               |                                                                              | Net cash provided by operating activities           |      |      | 312  |      |      |     | 308  |  
|                                     |                                                                               |                                                                              |                                                     |      |      |     
|Cash flows from investing activities |                                                                               |                                                                              |                                                     |      |      |      |      |     
|                                     | Capital expenditures                                                          |                                                                              |                                                     | (163 | )    |      |      | (245 | )  
|                                     | Net proceeds from the sale of assets                                          |                                                                              |                                                     | 2    |      |      |      | 1    |    
|                                     | Cash paid for acquisitions, net of cash acquired                              |                                                                              |                                                     |     |      |      |      | (173 | )  
|                                     |                                                                               |                                                                              |                                                     |      |      |     
|                                     |                                                                               |                                                                              | Net cash used in investing activities               |      |      | (161 | )    |      |     | (417 | )
|                                     |                                                                               |                                                                              |                                                     |      |      |     
|Cash flows from financing activities |                                                                               |                                                                              |                                                     |      |      |      |      |     
|                                     | Dividends to parent                                                           |                                                                              |                                                     |     |      |      |      | (52  | )  
|                                     | Contributions from parent                                                     |                                                                              |                                                     |     |      |      |      | 79   |    
|                                     | Change in note payable with affiliate                                         |                                                                              |                                                     | (75  | )    |      |      | (26  | )  
|                                     |                                                                               |                                                                              |                                                     |      |      |     
|                                     |                                                                               |                                                                              | Net cash provided by (used in) financing activities |      |      | (75  | )    |      |     | 1    |  
|                                     |                                                                               |                                                                              |                                                     |      |      |     
|Change in cash and cash equivalents  |                                                                               |                                                                              | 76                                                  |      |      |      | (108 | )   
|Cash and cash equivalents            |                                                                               |                                                                              |                                                     |      |      |      |      |     
|                                     | Beginning of period                                                           |                                                                              |                                                     | 46   |      |      |      | 127  |    
|                                     |                                                                               |                                                                              |                                                     |      |      |     
|                                     | End of period                                                                 |                                                                              | $                                                   | 122  |      |      | $    | 19   |    
|                                     |                                                                               |                                                                              |                                                     |      |      |     



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EL PASO EXPLORATION & PRODUCTION COMPANY


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


(In millions)


(Unaudited)


|                                                      |                                                                                                                                            |                                   |     |     |      |   |      |      |      |  
|----------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------ | --------------------------------- | --- | --- | ---- | - | ---- | ---- | ---- | -
|                                                      |                                                                                                                                            | Quarter Ended                     |    
|                                                      |                                                                                                                                            | March 31,                         |    
|                                                      |                                                                                                                                            |                                   |    
|                                                      |                                                                                                                                            | 2006                              |     |     | 2005 |  
|                                                      |                                                                                                                                            |                                   |     |     |      |  
|Net income                                            |                                                                                                                                            | $                                 | 59  |     |      | $ | 45   |     
|                                                      |                                                                                                                                            |                                   |     |     |      |  
|Net gains (losses) from cash flow hedging activities: |                                                                                                                                            |                                   |     |     |      |   |      |     
|                                                      | Unrealized mark-to-market gains (losses) arising during period
    (net of income taxes of $79 and $109 in 2006 and 2005)                  |                                   |     | 137 |      |   |      | (192 | )   
|                                                      | Reclassification adjustments for changes in initial value to
    settlement date (net of income taxes of $41 and $17 in 2006 and
    2005) |                                   |     | 72  |      |   |      | 29   |     
|                                                      |                                                                                                                                            |                                   |     |     |      |  
|                                                      |                                                                                                                                            | Other comprehensive income (loss) |     |     | 209  |   |      |      | (163 | )
|                                                      |                                                                                                                                            |                                   |     |     |      |  
|Comprehensive income (loss)                           |                                                                                                                                            | $                                 | 268 |     |      | $ | (118 | )   
|                                                      |                                                                                                                                            |                                   |     |     |      |  



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EL PASO EXPLORATION & PRODUCTION COMPANY


NOTES TO 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.




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

Medicine Bow.




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EL PASO EXPLORATION & PRODUCTION COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




|           |  |                |     |  |  |  |  | 
|---------- |  | -------------- | --- |  |  |  |  | 
|           |  | Quarter Ended  |     |  | 
|           |  | March 31, 2005 |     |  | 
|           |  |                |     |  | 
|           |  | (In millions)  |     |  | 
|Revenues   |  | $              | 361 |  |  |  |  | 
|Net income |  |                | 51  |  |  |  |  | 

GMT Energy Corp (GMT).


Divestitures.




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

Credit Facilities. 10-K.




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

Legal Proceedings and Other Contingencies


Gas Measurement Cases. re: Natural Gas Royalties Qui Tam Litigation, Will
Price, et al. v. Gas Pipelines and Their Predecessors, et
al.,


Reserve Revisions.


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EL PASO EXPLORATION & PRODUCTION COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)






Environmental Matters








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

Investments in Unconsolidated Affiliates


Four Star.


|                        |                    |             |   |    | 
|----------------------- | ------------------ | ----------- | - | -- | 
|                        |                    | In millions
|                        |                    |            
|Operating results data: |                    |             |   |   
|                        | Operating revenues |             | $ | 47 | 
|                        | Operating expenses |             |   | 17 | 
|                        | Net
    income(1)  |             |   | 21 | 




(1)


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EL PASO EXPLORATION & PRODUCTION COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


Related Party Transactions


Cash Management Program.


Capital Contributions and Dividends.


Other Affiliated Transactions.


|                                                           |  |               |     |      |  |   |     | 
|---------------------------------------------------------- |  | ------------- | --- | ---- |  | - | --- | 
|                                                           |  | 2006          |     | 2005
|                                                           |  |               |     |     
|                                                           |  | (In millions)
|Operating revenues                                         |  | $             | 265 |      |  | $ | 271 | 
|Operating expenses from affiliates                         |  |               | 26  |      |  |   | 29  | 
|Reimbursements of operating expenses charged to affiliates |  |               | 7   |      |  |   | 4   | 



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.
|
| |   | 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
    March 31, 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 also contract for services
    with El Pasos regulated interstate pipelines that
    provide transportation and related services for our natural gas
    production. At March 31, 2006 and
    December 31, 2005, we had contractual deposits of
    $6 million with El Pasos regulated interstate
    pipelines.                                                                                                                                                                                                                                  

Taxes.


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

10-K 10-Q.




Overview






Significant Operational Factors Since December 31,
2005




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Higher realized prices. We continued to benefit from a
    strong commodity pricing environment in the first quarter of
    2006. Realized natural gas prices, which include the impact of
    our hedges, increased 10 percent while oil, condensate and
    NGL prices increased 32 percent compared to the first
    quarter of 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Average daily production of 662 MMcfe/d (excluding
    71 MMcfe/d from our equity investment in Four Star).
    Our consolidated average daily equivalent production volumes
    were 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. Consolidated
    production volumes for the first quarter of 2006 were six
    percent below the comparable period in 2005. 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 quarter
    of 2005. Our production results by region are as follows:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Onshore. We have continued to increase production volumes
    as a result of our successful drilling and acquisition programs.                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | Gulf of Mexico and south Louisiana. In our Gulf of Mexico
    and south Louisiana region, production increased during the
    quarter as we continued to bring shut-in volumes from the
    hurricanes back on-line. During the first quarter of 2006, the
    negative impact of shut-in volumes was approximately
    40 MMcfe/d and at April 30, 2006, approximately
    24 MMcfe/d remained shut-in, which we expect to bring back
    on-line during the remainder of 2006.                                                                              
|
| | Texas Gulf Coast. First quarter of 2006, production
    volumes were 14 percent lower than the comparable period in
    2005. However, our capital program in this region has stabilized
    production volumes over the last three quarters. In April 2006,
    we completed the sale of certain non-strategic south Texas
    natural gas and oil properties for approximately
    $67 million. These properties had an average daily
    production of approximately 5 MMcfe/d and remaining
    reserves of approximately 13 Bcfe at the time of the sale.

9



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| |   |                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Capital expenditures. During the first quarter of 2006,
    our capital expenditures totaled $212 million, which
    includes $49 million of accrued capital expenditures.
|
| |  | Drilling results. During the first quarter of 2006 our
    drilling results by region were as follows:                                                                    



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Onshore. We experienced a 100 percent success rate
    on 71 gross wells drilled resulting in production growth in
    the Rockies, Raton, north Louisiana and Arkoma operating areas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | Gulf of Mexico and south Louisiana. Overall, we
    experienced a 100 percent success rate on four gross wells
    drilled. In early May 2006, we expect to bring on-line our two
    deep shelf discovery wells at West Cameron Blocks 75 and 62
    in the Gulf of Mexico. In addition, we drilled our second Long
    Point well in Vermillion Parish, Louisiana in the first quarter
    of 2006. This well, along with the initial discovery well
    drilled in 2005, is expected to come on-line in May 2006. The
    Long Point wells, in which we own a 25 percent working interest,
    tested at a combined rate of approximately 75 MMcfe/d.
|
| | Texas Gulf Coast. We experienced a 90 percent
    success rate on 10 gross wells drilled. Additional Wilcox
    production was established from exploration at the Renger Field
    in Lavaca County, Texas. The shallow Vicksburg development
    program in Starr and Hidalgo Counties, Texas continued to
    provide consistent results adding production on existing base
    properties.                                                                                                                                                                                                                                                          

Outlook for 2006






| |   |                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Capital expenditures of approximately $675 million for the
    remainder of the year;                                                                                                                                           
|
| |  | Average daily production volumes for the year to average
    approximately 730 MMcfe/d to 755 MMcfe/d, which
    excludes approximately 70 MMcfe/d from our equity interest
    in Four Star;                                   
|
| |  | Cash operating costs to average approximately $1.67/Mcfe to
    $1.74/Mcfe for the year;                                                                                                                                        
|
| |  | Unit of production depletion rate of $2.34/Mcfe in the second
    quarter of 2006 compared to $2.32/Mcfe in the first 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.

Production Hedge Position


10-K.


marked-to


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Results of Operations


Overview






|                                        |                  |               |     |     |      |   |     |    | 
|--------------------------------------- | ---------------- | ------------- | --- | --- | ---- | - | --- | -- | 
|                                        |                  | 2006          |     |     | 2005 |  
|                                        |                  |               |     |     |      |  
|                                        |                  | (In millions) |    
|Operating revenues                      |                  | $             | 375 |     |      | $ | 348 |   
|Operating expenses                      |                  |               | 268 |     |      |   | 254 |   
|                                        |                  |               |     |     |      |  
|                                        | Operating income |               |     | 107 |      |   |     | 94 | 
|Earnings from unconsolidated affiliates |                  |               | 7   |     |      |   |    |   
|Other income, net                       |                  |               | 1   |     |      |   | 3   |   
|                                        |                  |               |     |     |      |  
|                                        | EBIT             |               |     | 115 |      |   |     | 97 | 
|Affiliated interest expense             |                  |               | (2  | )   |      |   | (7  | ) 
|Interest expense                        |                  |               | (26 | )   |      |   | (19 | ) 
|Income taxes                            |                  |               | (28 | )   |      |   | (26 | ) 
|                                        |                  |               |     |     |      |  
|Net income                              |                  | $             | 59  |     |      | $ | 45  |   
|                                        |                  |               |     |     |      |  

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Operating Results and Variance Analysis




|                         |                                          |                          |     |     |      |   |    |     |     | 
|------------------------ | ---------------------------------------- | ------------------------ | --- | --- | ---- | - | -- | --- | --- | 
|                         |                                          | 2006                     |     |     | 2005 |  
|                         |                                          |                          |     |     |      |  
|                         |                                          | (In millions, except     |    
|                         |                                          | volumes and prices)      |    
|Operating revenues:      |                                          |                          |     |     |      |   |    |    
|                         | Natural gas                              |                          | $   | 280 |      |   | $  | 264 |    
|                         | Oil, condensate and NGL                  |                          |     | 86  |      |   |    | 78  |    
|                         | Other                                    |                          |     | 9   |      |   |    | 6   |    
|                         |                                          |                          |     |     |      |  
|                         |                                          | Total operating revenues |     |     | 375  |   |    |     | 348 | 
|                         |                                          |                          |     |     |      |  
|Operating expenses:      |                                          |                          |     |     |      |   |    |    
|                         | Depreciation, depletion and amortization |                          |     | 147 |      |   |    | 143 |    
|                         | Production
    costs(1)                  |                          |     | 62  |      |   |    | 55  |    
|                         | General and administrative expenses      |                          |     | 37  |      |   |    | 39  |    
|                         | Cost of products and
    services(2)     |                          |     | 21  |      |   |    | 15  |    
|                         | Other                                    |                          |     | 1   |      |   |    | 2   |    
|                         |                                          |                          |     |     |      |  
|                         |                                          | Total operating expenses |     |     | 268  |   |    |     | 254 | 
|                         |                                          |                          |     |     |      |  
|                         | Operating income                         |                          |     | 107 |      |   |    | 94  |    
|Other income,
    net(3) |                                          |                          | 8   |     |      |   | 3  |    
|                         |                                          |                          |     |     |      |  
|EBIT                     |                                          | $                        | 115 |     |      | $ | 97 |    
|                         |                                          |                          |     |     |      |  

|                                                    |                                                      |                                                         |                               |       |        |         |   |          |        |      |  |    |     |    |  
|--------------------------------------------------- | ---------------------------------------------------- | ------------------------------------------------------- | ----------------------------- | ----- | ------ | ------- | - | -------- | ------ | ---- |  | -- | --- | -- | -
|                                                    |                                                      |                                                         |                               |       |        | Percent |  
|                                                    |                                                      | 2006                                                    |                               |       | 2005   |         |   | Variance |       
|                                                    |                                                      |                                                         |                               |       |        |         |   |          |       
|Consolidated volumes, prices and costs per unit:    |                                                      |                                                         |                               |       |        |         |   |          |        |      |  |   
|                                                    | Natural gas                                          |                                                         |                               |       |        |         |   |          |        |      |  |    |    
|                                                    |                                                      | Volumes (MMcf)                                          |                               |       | 49,658 |         |   |          | 51,837 |      |  |    | (4  | )%
|                                                    |                                                      | Average realized prices including
    hedges ($/Mcf)(4) |                               | $     | 5.63   |         |   | $        | 5.10   |      |  |    | 10  | % 
|                                                    |                                                      | Average realized prices excluding
    hedges ($/Mcf)(4) |                               | $     | 8.02   |         |   | $        | 6.02   |      |  |    | 33  | % 
|                                                    |                                                      | Average transportation costs ($/Mcf)                    |                               | $     | 0.25   |         |   | $        | 0.19   |      |  |    | 32  | % 
|                                                    | Oil, condensate and NGL                              |                                                         |                               |       |        |         |   |          |        |      |  |    |    
|                                                    |                                                      | Volumes (MBbls)                                         |                               |       | 1,657  |         |   | $        | 1,971  |      |  |    | (16 | )%
|                                                    |                                                      | Average realized prices
    ($/Bbl)(4)                  |                               | $     | 52.16  |         |   | $        | 39.64  |      |  |    | 32  | % 
|                                                    |                                                      | Average transportation costs ($/Bbl)                    |                               | $     | 1.32   |         |   | $        | 0.81   |      |  |    | 63  | % 
|                                                    | Total equivalent volumes                             |                                                         |                               |       |        |         |   |          |        |      |  |    |    
|                                                    |                                                      | MMcfe                                                   |                               |       | 59,602 |         |   |          | 63,662 |      |  |    | (6  | )%
|                                                    |                                                      | MMcfe/d                                                 |                               |       | 662    |         |   |          | 707    |      |  |    | (6  | )%
|                                                    | Production costs ($/Mcfe)                            |                                                         |                               |       |        |         |   |          |        |      |  |    |    
|                                                    |                                                      | Average lease operating costs                           |                               | $     | 0.77   |         |   | $        | 0.67   |      |  |    | 15  | % 
|                                                    |                                                      | Average production taxes                                |                               |       | 0.28   |         |   |          | 0.21   |      |  |    | 33  | % 
|                                                    |                                                      |                                                         |                               |       |        |         |   |          |       
|                                                    |                                                      |                                                         | Total production
    costs(1) |       | $      | 1.05    |   |          | $      | 0.88 |  |    |     | 19 | %
|                                                    |                                                      |                                                         |                               |       |        |         |   |          |        |      |  |   
|                                                    | Average general and administrative expenses ($/Mcfe) |                                                         | $                             | 0.62  |        |         | $ | 0.61     |        |      |  | 2  | %  
|                                                    | Unit of production depletion cost ($/Mcfe)           |                                                         | $                             | 2.32  |        |         | $ | 2.10     |        |      |  | 10 | %  
|Unconsolidated affiliate volumes (Four
    Star)(3) |                                                      |                                                         |                               |       |        |         |   |          |        |      |  |   
|                                                    | Natural Gas (MMcf)                                   |                                                         |                               | 4,507 |        |         |   |          |        |      |  |    |    
|                                                    | Oil, condensate and NGL (MBbls)                      |                                                         |                               | 309   |        |         |   |          |        |      |  |    |    
|                                                    | Total equivalent volumes                             |                                                         |                               |       |        |         |   |          |        |      |  |    |    
|                                                    |                                                      | MMcfe                                                   |                               |       | 6,360  |         |   |          |        |      |  |    |     |   
|                                                    |                                                      | MMcfe/d                                                 |                               |       | 71     |         |   |          |        |      |  |    |     |   






|    |                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 2005.
|(4) | Prices are stated before transportation costs.                                                                                                                                                               

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|                                                 |                                       |                         |   |     |           |  |   |       |     |   |      |    |   |  |   |     |    | 
|------------------------------------------------ | ------------------------------------- | ----------------------- | - | --- | --------- |  | - | ----- | --- | - | ---- | -- | - |  | - | --- | -- | 
|                                                 |                                       | Variance                |  
|                                                 |                                       |                         |  
|                                                 |                                       | Operating               |   |     | Operating |  |   |      
|                                                 |                                       | Revenue                 |   |     | Expense   |  |   | Other |     |   | EBIT |   
|                                                 |                                       |                         |   |     |           |  |   |       |     |   |      |   
|                                                 |                                       | Favorable/(Unfavorable) |  
|                                                 |                                       | (In millions)           |  
|Natural Gas Revenue                              |                                       |                         |   |     |           |  |   |       |     |   |      |    |   |  |   |    
|                                                 | Higher realized prices in 2006        |                         | $ | 100 |           |  | $ |      |     |   | $    |   |   |  | $ | 100 |   
|                                                 | Impact of hedges                      |                         |   | (71 | )         |  |   |      |     |   |      |   |   |  |   | (71 | ) 
|                                                 | Lower volumes in 2006                 |                         |   | (13 | )         |  |   |      |     |   |      |   |   |  |   | (13 | ) 
|Oil, Condensate and NGL Revenue                  |                                       |                         |   |     |           |  |   |       |     |   |      |    |   |  |   |    
|                                                 | Higher realized prices in 2006        |                         |   | 21  |           |  |   |      |     |   |      |   |   |  |   | 21  |   
|                                                 | Lower volumes in 2006                 |                         |   | (13 | )         |  |   |      |     |   |      |   |   |  |   | (13 | ) 
|Depreciation, Depletion and Amortization Expense |                                       |                         |   |     |           |  |   |       |     |   |      |    |   |  |   |    
|                                                 | Higher depletion rate in 2006         |                         |   |    |           |  |   | (13   | )   |   |      |   |   |  |   | (13 | ) 
|                                                 | Lower production volumes in 2006      |                         |   |    |           |  |   | 9     |     |   |      |   |   |  |   | 9   |   
|Production Costs                                 |                                       |                         |   |     |           |  |   |       |     |   |      |    |   |  |   |    
|                                                 | Higher lease operating costs in 2006  |                         |   |    |           |  |   | (4    | )   |   |      |   |   |  |   | (4  | ) 
|                                                 | Higher production taxes in 2006       |                         |   |    |           |  |   | (3    | )   |   |      |   |   |  |   | (3  | ) 
|General and administrative expenses              |                                       |                         |  |     |           |  | 2 |       |     |   |     |    |   |  | 2 |    
|Other                                            |                                       |                         |   |     |           |  |   |       |     |   |      |    |   |  |   |    
|                                                 | Earnings from investment in Four Star |                         |   |    |           |  |   |      |     |   |      | 7  |   |  |   | 7   |   
|                                                 | Other                                 |                         |   | 3   |           |  |   | (5    | )   |   |      | (2 | ) |  |   | (4  | ) 
|                                                 |                                       |                         |   |     |           |  |   |       |     |   |      |   
|                                                 |                                       | Total Variances         |   | $   | 27        |  |   | $     | (14 | ) |      | $  | 5 |  |   | $   | 18 | 
|                                                 |                                       |                         |   |     |           |  |   |       |     |   |      |   

Operating Revenues.


Depreciation, depletion and amortization expense.


Production costs.


General and administrative expenses.


Other Income




13



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##### Table of Contents



Affiliated Interest Expense


short-term


Interest Expense




Income Taxes


|                   |  |                   |    |   |      |   |    |  
|------------------ |  | ----------------- | -- | - | ---- | - | -- | -
|                   |  | Quarter Ended     |   
|                   |  | March 31,         |   
|                   |  |                   |   
|                   |  | 2006              |    |   | 2005 |  
|                   |  |                   |    |   |      |  
|                   |  | (In millions,     |   
|                   |  | except for rates) |   
|Income taxes       |  | $                 | 28 |   |      | $ | 26 |  
|Effective tax rate |  |                   | 32 | % |      |   | 37 | %



Liquidity






14



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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




15



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##### Table of Contents






PART II  OTHER INFORMATION







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

10-K




| |                          
| | -------------------------
| | Environmental Proceedings

Air Permit Violation.







|         |             
|-------- | ------------
|Item 1.A | 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.


16



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##### Table of Contents








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








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





|        |     |             |  |                                                                                                                                                                                                                                                                                                                                                
|------- | --- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |     |            
|Number  |     | Description
|        |     |            
|        | *10 | .A          |  | First Amendment, dated as of March 27, 2006, among
    El Paso Exploration & Production Company,
    El Paso Production Company, and El Paso E&P
    Company, L.P. and Fortis Capital Corp., as administrative agent
    for the Lenders party to the Credit Agreement to the Amended and
    Restated Credit Agreement dated October 19, 2005.
|        | *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,


17



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##### Table of Contents






SIGNATURES






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

|                  |  |                                                                                                                                                                                 
|----------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Date: May 5, 2006 |  | By: /s/ LISA A. STEWARTLisa
    A. StewartPresident
    (Principal Executive Officer)                                                                                           
|                 
|Date: May 5, 2006 |  | By: /s/ GENE T. WAGUESPACKGene
    T. WaguespackSenior Vice President
    Chief Financial Officer,
    Treasurer and Controller
    (Principal Accounting and Financial Officer)

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EL PASO EXPLORATION & PRODUCTION COMPANY


EXHIBIT INDEX




|        |     |             |  |                                                                                                                                                                                                                                                                                                                                                
|------- | --- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |     |            
|Number  |     | Description
|        |     |            
|        | *10 | .A          |  | First Amendment, dated as of March 27, 2006, among
    El Paso Exploration & Production Company,
    El Paso Production Company, and El Paso E&P
    Company, L.P. and Fortis Capital Corp., as administrative agent
    for the Lenders party to the Credit Agreement to the Amended and
    Restated Credit Agreement dated October 19, 2005.
|        | *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.                                                                                                                                                                                            

19