##### 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, 2009
 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 1-14365
 El Paso Corporation
 (Exact Name of Registrant as Specified in Its Charter)
 Delaware
    
    76-0568816(State or Other Jurisdiction of
    
    (I.R.S. EmployerIncorporation or Organization)
    
    Identification No.)El Paso Building
    
    770021001 Louisiana Street
    
    (Zip Code)Houston, Texas(Address of Principal Executive Offices)
 Telephone Number: (713) 420-2600
Internet Website: www.elpaso.com
  þ o
  o o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ
 Indicate the number of shares outstanding of each of the issuers classes of common stock, as
of the latest practicable date.




---



##### 



EL PASO CORPORATION
TABLE OF CONTENTS
 Caption
    
    PagePART I  FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    29Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    49Item 4. Controls and Procedures
    
    
    50PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    51Item 1A. Risk Factors
    
    
    51Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    52Item 3. Defaults Upon Senior Securities
    
    
    52Item 4. Submission of Matters to a Vote of Security Holders
    
    
    52Item 5. Other Information
    
    
    52Item 6. Exhibits
    
    
    52Signatures
    
    
    53EX-12EX-31.AEX-31.BEX-32.AEX-32.B
   /d
    
    = per day
    
    MMBtu
    
    = million British thermal unitsBbl
    
    = barrels
    
    MMcf
    
    = million cubic feetBBtu
    
    = billion British thermal units
    
    MMcfe
    
    = million cubic feet of natural gas equivalentsBcf
    
    = billion cubic feet
    
    GWh
    
    = thousand megawatt hoursLNG
    
    = liquefied natural gas
    
    GW
    
    = gigawattsMBbls
    
    = thousand barrels
    
    NGL
    
    = natural gas liquidsMcf
    
    = thousand cubic feet
    
    TBtu
    
    = trillion British thermal unitsMcfe
    
    = thousand cubic feet of natural gas equivalents
   2




---



##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 EL PASO CORPORATION
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per common share amounts)
(Unaudited)
 Quarter EndedMarch 31,2009
    
    
    2008Operating revenues
    
    $
    1,484
    
    
    $
    1,269Operating expensesCost of products and services
    
    
    61
    
    
    
    56Operation and maintenance
    
    
    300
    
    
    
    271Ceiling test charges
    
    
    2,068
    
    
    
    Depreciation, depletion and amortization
    
    
    256
    
    
    
    313Taxes, other than income taxes
    
    
    68
    
    
    
    792,753
    
    
    
    719Operating income (loss)
    
    
    (1,269
    )
    
    
    550Earnings from unconsolidated affiliates
    
    
    19
    
    
    
    37Other income, net
    
    
    22
    
    
    
    22Interest and debt expense
    
    
    (255
    )
    
    
    (233
    )Income (loss) before income taxes
    
    
    (1,483
    )
    
    
    376Income tax expense (benefit)
    
    
    (526
    )
    
    
    148Net income (loss)
    
    
    (957
    )
    
    
    228Net income attributable to noncontrolling interests
    
    
    (12
    )
    
    
    (9
    )Net income (loss) attributable to El Paso Corporation
    
    
    (969
    )
    
    
    219Preferred stock dividends
    
    
    9
    
    
    
    19Net income (loss) attributable to El Paso Corporations common stockholders
    
    $
    (978
    )
    
    $
    200Basic and diluted earnings per common shareNet income (loss) attributable to El Paso Corporations common stockholders
    
    $
    (1.41
    )
    
    $
    0.29Dividends declared per El Paso Corporations common share
    
    $
    0.05
    
    
    $
    0.08
  3




---



##### Table of Contents



EL PASO CORPORATION
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share amounts)
(Unaudited)
 March 31,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent assetsCash and cash equivalents
    
    $
    1,841
    
    
    $
    1,024Accounts and notes receivableCustomers, net of allowance of $9 in 2009 and 2008
    
    
    360
    
    
    
    466Affiliates
    
    
    127
    
    
    
    133Other
    
    
    193
    
    
    
    217Materials and supplies
    
    
    192
    
    
    
    187Assets from price risk management activities
    
    
    678
    
    
    
    876Other
    
    
    159
    
    
    
    148Total current assets
    
    
    3,550
    
    
    
    3,051Property, plant and equipment, at costPipelines
    
    
    18,301
    
    
    
    18,042Natural gas and oil properties, at full cost
    
    
    20,328
    
    
    
    20,009Other
    
    
    345
    
    
    
    34238,974
    
    
    
    38,393Less accumulated depreciation, depletion and amortization
    
    
    22,899
    
    
    
    20,535Total property, plant and equipment, net
    
    
    16,075
    
    
    
    17,858Other assetsInvestments in unconsolidated affiliates
    
    
    1,764
    
    
    
    1,703Assets from price risk management activities
    
    
    195
    
    
    
    201Deferred income taxes
    
    
    145
    
    
    
    2Other
    
    
    695
    
    
    
    8532,799
    
    
    
    2,759Total assets
    
    $
    22,424
    
    
    $
    23,668
  4




---



##### Table of Contents



EL PASO CORPORATION
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except for share amounts)
(Unaudited)
 March 31,
    
    
    December 31,2009
    
    
    2008LIABILITIES AND EQUITYCurrent liabilitiesAccounts payableTrade
    
    $
    265
    
    
    $
    372Affiliates
    
    
    11
    
    
    
    6Other
    
    
    477
    
    
    
    674Short-term financing obligations, including current maturities
    
    
    961
    
    
    
    1,090Liabilities from price risk management activities
    
    
    194
    
    
    
    250Accrued interest
    
    
    260
    
    
    
    192Other
    
    
    674
    
    
    
    659Total current liabilities
    
    
    2,842
    
    
    
    3,243Long-term financing obligations, less current maturities
    
    
    13,541
    
    
    
    12,818OtherLiabilities from price risk management activities
    
    
    646
    
    
    
    767Deferred income taxes
    
    
    182
    
    
    
    565Other
    
    
    1,687
    
    
    
    1,6792,515
    
    
    
    3,011Commitments and contingencies (Note 9)EquityEl Paso Corporation stockholders equity:Preferred stock, par value $0.01 per share; authorized 50,000,000 shares; issued
750,000 shares of 4.99% convertible perpetual stock; stated at liquidation value
    
    
    750
    
    
    
    750Common stock, par value $3 per share; authorized 1,500,000,000 shares; issued
712,760,115 shares in 2009 and 712,628,781 shares in 2008
    
    
    2,138
    
    
    
    2,138Additional paid-in capital
    
    
    4,582
    
    
    
    4,612Accumulated deficit
    
    
    (3,622
    )
    
    
    (2,653
    )Accumulated other comprehensive loss
    
    
    (605
    )
    
    
    (532
    )Treasury stock (at cost); 14,106,447 shares in 2009 and 14,061,474 shares in 2008
    
    
    (280
    )
    
    
    (280
    )Total El Paso Corporation stockholders equity
    
    
    2,963
    
    
    
    4,035Noncontrolling interests
    
    
    563
    
    
    
    561Total equity
    
    
    3,526
    
    
    
    4,596Total liabilities and equity
    
    $
    22,424
    
    
    $
    23,668
  5




---



##### Table of Contents



EL PASO CORPORATION
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 Quarter EndedMarch 31,2009
    
    
    2008Cash flows from operating activitiesNet income (loss)
    
    $
    (957
    )
    
    $
    228Adjustments to reconcile net income (loss) to net cash from operating activitiesDepreciation, depletion and amortization
    
    
    256
    
    
    
    313Ceiling test charges
    
    
    2,068
    
    
    
    Deferred income tax expense (benefit)
    
    
    (528
    )
    
    
    146Earnings from unconsolidated affiliates, adjusted for cash distributions
    
    
    (8
    )
    
    
    23Other non-cash income items
    
    
    14
    
    
    
    6Asset and liability changes
    
    
    (36
    )
    
    
    (82
    )Net cash provided by operating activities
    
    
    809
    
    
    
    634Cash flows from investing activitiesCapital expenditures
    
    
    (759
    )
    
    
    (531
    )Cash paid for acquisitions, net of cash acquired
    
    
    
    
    
    
    (295
    )Net proceeds from the sale of assets and investments
    
    
    210
    
    
    
    598Other
    
    
    13
    
    
    
    37Net cash used in investing activities
    
    
    (536
    )
    
    
    (191
    )Cash flows from financing activitiesNet proceeds from issuance of long-term debt
    
    
    842
    
    
    
    1,240Payments to retire long-term debt and other financing obligations
    
    
    (244
    )
    
    
    (1,430
    )Dividends paid
    
    
    (44
    )
    
    
    (38
    )Distributions to noncontrolling interest holders
    
    
    (10
    )
    
    
    (4
    )Other
    
    
    
    
    
    
    2Net cash provided by (used in) financing activities
    
    
    544
    
    
    
    (230
    )Change in cash and cash equivalents
    
    
    817
    
    
    
    213Cash and cash equivalentsBeginning of period
    
    
    1,024
    
    
    
    285End of period
    
    $
    1,841
    
    
    $
    498
  6




---



##### Table of Contents



EL PASO CORPORATION
 CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In millions)
(Unaudited)
 Quarter EndedMarch 31,2009
    
    
    2008El Paso Corporation stockholders equity:Preferred stock:Balance at beginning and end of period
    
    $
    750
    
    
    $
    750Common stock:Balance at beginning of period
    
    
    2,138
    
    
    
    2,128Other, net
    
    
    
    
    
    
    1Balance at end of period
    
    
    2,138
    
    
    
    2,129Additional paid-in capital:Balance at beginning of period
    
    
    4,612
    
    
    
    4,699Dividends
    
    
    (44
    )
    
    
    (75
    )Other, including stock-based compensation
    
    
    14
    
    
    
    15Balance at end of period
    
    
    4,582
    
    
    
    4,639Accumulated deficit:Balance at beginning of period
    
    
    (2,653
    )
    
    
    (1,834
    )Net income (loss) attributable to El Paso Corporation
    
    
    (969
    )
    
    
    219Cumulative effect of adopting SFAS No. 158, net of income tax of $2
    
    
    
    
    
    
    5Balance at end of period
    
    
    (3,622
    )
    
    
    (1,610
    )Accumulated other comprehensive income (loss):Balance at beginning of period
    
    
    (532
    )
    
    
    (272
    )Other comprehensive loss
    
    
    (73
    )
    
    
    (118
    )Cumulative effect of adopting SFAS No. 158, net of income tax of $2
    
    
    
    
    
    
    3Balance at end of period
    
    
    (605
    )
    
    
    (387
    )Treasury stock, at cost:Balance at beginning of period
    
    
    (280
    )
    
    
    (191
    )Stock-based and other compensation
    
    
    
    
    
    
    (1
    )Balance at end of period
    
    
    (280
    )
    
    
    (192
    )Total El Paso Corporation stockholders equity at end of period
    
    
    2,963
    
    
    
    5,329Noncontrolling interests:Balance at beginning of period
    
    
    561
    
    
    
    565Distributions paid to noncontrolling interests
    
    
    (10
    )
    
    
    (4
    )Net income attributable to noncontrolling interests
    
    
    12
    
    
    
    9Other
    
    
    
    
    
    
    (23
    )Balance at end of period
    
    
    563
    
    
    
    547Total equity at end of period
    
    $
    3,526
    
    
    $
    5,876
  7




---



##### Table of Contents



EL PASO CORPORATION
 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
 Quarter EndedMarch 31,2009
    
    
    2008Net income (loss)
    
    $
    (957
    )
    
    $
    228Pension and postretirement obligations:Unrealized actuarial losses arising during period (net of income taxes of $1 in 2008)
    
    
    
    
    
    
    (2
    )Reclassification of actuarial gains and losses during period (net of income taxes of
$4 in 2009 and $2 in 2008)
    
    
    7
    
    
    
    5Cash flow hedging activities:Unrealized mark-to-market gains (losses) arising during period (net of income taxes
of $1 in 2009 and $70 in 2008)
    
    
    2
    
    
    
    (123
    )Reclassification adjustments for changes in initial value to the settlement date
(net of income taxes of $46 in 2009 and $1 in 2008)
    
    
    (82
    )
    
    
    2Other comprehensive loss
    
    
    (73
    )
    
    
    (118
    )Comprehensive income (loss)
    
    
    (1,030
    )
    
    
    110Comprehensive income attributable to noncontrolling interests
    
    
    (12
    )
    
    
    (9
    )Comprehensive income (loss) attributable to El Paso Corporation
    
    $
    (1,042
    )
    
    $
    101
  8




---



##### Table of Contents



EL PASO CORPORATION
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. Basis of Presentation and Significant Accounting Policies
 Basis of Presentation
 Noncontrolling Interests in Consolidated Financial Statements
 Significant Accounting Policies
  Fair Value Measurements. Fair
Value Measurements,
 Issuers Accounting for Liabilities Measured at Fair Value with a Third-Party Credit
Enhancement.
 Business Combinations. Business Combinations
 9




---



##### Table of Contents



Noncontrolling Interests.
 New Accounting Pronouncements Issued But Not Yet Adopted
  Oil and Gas Reserves Reporting.
 2. Acquisitions and Divestitures
 Acquisitions
 Gulf LNG.
 Divestitures
  3. Ceiling Test Charges
  10




---



##### Table of Contents



4. Income Taxes
  2009
    
    2008(In millions, except rates)Income tax (benefit) expense
    
    $
    (526
    )
    
    $
    148Effective tax rate
    
    
    35
    %
    
    
    39
    %
 Effective Tax Rate.
  Deferred Tax Asset.
 5. Earnings Per Share
  2009
    
    
    2008Basic
    
    
    Diluted
    
    
    Basic
    
    
    Diluted(In millions, except per share amounts)Net income (loss) attributable to El Paso Corporation
    
    $
    (969
    )
    
    $
    (969
    )
    
    $
    219
    
    
    $
    219Convertible preferred stock dividends
    
    
    (9
    )
    
    
    (9
    )
    
    
    (19
    )(1)
    
    
    (19
    )(1)Net income (loss) attributable to El PasoCorporations
 common stockholders
    
    $
    (978
    )
    
    $
    (978
    )
    
    $
    200
    
    
    $
    200Weighted average common shares outstanding
    
    
    695
    
    
    
    695
    
    
    
    697
    
    
    
    697Effect of dilutive securities:Options and restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4Weighted average common shares outstanding and
dilutive securities
    
    
    695
    
    
    
    695
    
    
    
    697
    
    
    
    701Basic and diluted earnings per common share:Net income (loss) attributable to El PasoCorporations  common stockholders
    
    $
    (1.41
    )
    
    $
    (1.41
    )
    
    $
    0.29
    
    
    $
    0.29
 
 (1)
    
    Includes dividends declared in February 2008 and March 2008.  11




---



##### Table of Contents



6. Fair Value Measurements
 Fair Value Measurements
   
    
    Level 1 instruments fair values are based on quoted prices for the instruments in
actively traded markets. Included in this level are our marketable securities invested in
non-qualified compensation plans whose fair value is determined using the quoted prices of
these instruments.
    
    Level 2 instruments fair values are primarily based on pricing data representative of
quoted prices for similar assets and liabilities in active markets (or identical assets and
liabilities in less active markets). Included in this level are our foreign currency and
interest rate swaps. Also included in this level are our production-related natural gas and
oil derivatives and certain of our other natural gas derivatives (such as natural gas
supply arrangements) whose fair values are based on commodity pricing data obtained from
third party pricing sources and our creditworthiness or that of our counterparties
(adjusted for collateral related to our asset positions).
    
    Level 3 instruments fair values are partially calculated using pricing data that is
similar to Level 2 above, but their fair value also reflects adjustments for being in less
liquid markets or having longer contractual terms. For these instruments, we obtain pricing
data from third party pricing sources, adjust this data based on the liquidity of the
underlying forward markets over the contractual terms and use the adjusted pricing data to
develop an estimate of forward price curves that market participants would use. The curves
are then used to estimate the value of settlements in future periods based on contractual
settlement quantities and dates. Our valuation of these instruments considers specific
contractual terms, statistical and simulation analysis, present value concepts and other
internal assumptions related to (i) contract maturities that extend beyond the periods in
which quoted market prices are available; (ii) the uniqueness of the contract terms; (iii)
the limited availability of forward pricing information in markets where there is a lack of
viable participants, such as in the PJM forward power market and the forward market for
ammonia; and (iv) our creditworthiness or that of our counterparties (adjusted for
collateral related to our asset positions). Since a significant portion of the fair value
of our power-related derivatives and certain of our remaining natural gas derivatives with
longer terms or in less liquid markets than similar Level 2 derivatives, rely on the
techniques discussed above, we classify these instruments as Level 3 instruments.
 12




---



##### Table of Contents



Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAssetsCommodity-based derivativesProduction-related natural gas and oil derivatives
    
    $
    
    
    
    $
    625
    
    
    $
    
    
    
    $
    625Other natural gas derivatives
    
    
    
    
    
    
    82
    
    
    
    26
    
    
    
    108Power-related derivatives
    
    
    
    
    
    
    
    
    
    
    53
    
    
    
    53Interest rate and foreign currency derivatives
    
    
    
    
    
    
    87
    
    
    
    
    
    
    
    87Marketable securities invested in non-qualified compensation plans
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    19Total assets
    
    
    19
    
    
    
    794
    
    
    
    79
    
    
    
    892
 LiabilitiesCommodity-based derivativesProduction-related natural gas and oil derivatives
    
    
    
    
    
    
    (52
    )
    
    
    
    
    
    
    (52
    )Other natural gas derivatives
    
    
    
    
    
    
    (167
    )
    
    
    (158
    )
    
    
    (325
    )Power-related derivatives
    
    
    
    
    
    
    
    
    
    
    (445
    )
    
    
    (445
    )Interest rate derivatives
    
    
    
    
    
    
    (18
    )
    
    
    
    
    
    
    (18
    )Other
    
    
    
    
    
    
    
    
    
    
    (56
    )
    
    
    (56
    )Total liabilities
    
    
    
    
    
    
    (237
    )
    
    
    (659
    )
    
    
    (896
    )Total
    
    $
    19
    
    
    $
    557
    
    
    $
    (580
    )
    
    $
    (4
    )
   Change in fair
    
    
    Change in fairBalance at
    
    
    value reflected in
    
    
    value reflected inBeginning of
    
    
    operating
    
    
    operating
    
    
    Settlements,
    
    
    Balance at End ofPeriod
    
    
    revenues(1)
    
    
    expenses(2)
    
    
    net
    
    
    PeriodAssets
    
    $
    103
    
    
    $
    (21
    )
    
    $
    
    
    
    $
    (3
    )
    
    $
    79Liabilities
    
    
    (751
    )
    
    
    62
    
    
    
    (1
    )
    
    
    31
    
    
    
    (659
    )Total
    
    $
    (648
    )
    
    $
    41
    
    
    $
    (1
    )
    
    $
    28
    
    
    $
    (580
    )
 
 (1)
    
    Includes approximately $37 million of net gains that had not been realized
through settlements as of March 31, 2009.(2)
    
    Includes approximately $1 million of net losses that had not been realized
through settlements as of March 31, 2009. 13




---



##### Table of Contents



7. Price Risk Management Activities
  Production-Related Derivatives.
 Other Commodity-Based Derivatives.
 Interest Rate and Foreign Currency Derivatives.
 
 14




---



##### Table of Contents



Balance Sheet Presentation.
 Fair Value of Asset Derivatives
    
    
    Fair Value of Liability DerivativesMarch 31, 2009
    
    
    December 31, 2008
    
    
    March 31, 2009
    
    
    December 31, 2008(In millions)Derivatives Designated as Hedges:Cash flow hedgesInterest rate derivatives
    
    $
    
    
    
    $
    
    
    
    $
    (18
    )
    
    $
    (21
    )Fair value hedgesInterest rate derivatives
    
    
    11
    
    
    
    12
    
    
    
    
    
    
    
    Cross-currency derivatives
    
    
    76
    
    
    
    94
    
    
    
    
    
    
    
    Total derivatives designated as hedges
    
    
    87
    
    
    
    106
    
    
    
    (18
    )
    
    
    (21
    )Derivatives not Designated as Hedges:Commodity-based derivativesProduction-related
    
    
    643
    
    
    
    738
    
    
    
    (70
    )
    
    
    (56
    )Other natural gas
    
    
    667
    
    
    
    853
    
    
    
    (884
    )
    
    
    (1,122
    )Power-related
    
    
    80
    
    
    
    111
    
    
    
    (472
    )
    
    
    (549
    )Total commodity-based derivatives
    
    
    1,390
    
    
    
    1,702
    
    
    
    (1,426
    )
    
    
    (1,727
    )Interest rate derivatives
    
    
    12
    
    
    
    12
    
    
    
    (12
    )
    
    
    (12
    )Total derivatives not designated as hedges
    
    
    1,402
    
    
    
    1,714
    
    
    
    (1,438
    )
    
    
    (1,739
    )Impact of master netting arrangements (1)
    
    
    (616
    )
    
    
    (743
    )
    
    
    616
    
    
    
    743Total assets (liabilities) from price risk
management activities
    
    
    873
    
    
    
    1,077
    
    
    
    (840
    )
    
    
    (1,017
    )Other derivatives(2)
    
    
    
    
    
    
    
    
    
    
    (56
    )
    
    
    (55
    )Total derivatives
    
    $
    873
    
    
    $
    1,077
    
    
    $
    (896
    )
    
    $
    (1,072
    )
 
 (1)
    
    Includes adjustments to net assets or liabilities to reflect master netting
arrangements we have with our counterparties.(2)
    
    Included in other current and noncurrent liabilities in our balance
sheets. 15




---



##### Table of Contents



Statements of Income, Comprehensive Income and Cash Flow Presentation.
  Operating
    
    
    Interest
    
    
    Other
    
    
    Other ComprehensiveRevenues
    
    
    Expense
    
    
    Income
    
    
    Income (Loss)Commodity-based derivativesProduction-related derivatives (1)
    
    $
    394
    
    
    $
    
    
    
    $
    
    
    
    $
    (128
    )Other natural gas and power derivatives not designated as hedges
    
    
    55
    
    
    
    
    
    
    
    
    
    
    
    Total commodity-based derivatives
    
    
    449
    
    
    
    
    
    
    
    
    
    
    
    (128
    )Interest rate derivatives(2)Designated as cash flow hedges(3)
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    3Designated as fair value hedges(4)
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    Cross-currency derivatives designated as fair value hedges(4)
    
    
    
    
    
    
    2
    
    
    
    (24
    )
    
    
    Total interest rate and foreign currency derivatives
    
    
    
    
    
    
    4
    
    
    
    (24
    )
    
    
    3Total price risk management activities (5)
    
    $
    449
    
    
    $
    4
    
    
    $
    (24
    )
    
    $
    (125
    )
 
 (1)
    
    Included in operating revenues in 2009 is $128 million representing the amount
of accumulated other comprehensive income that was reclassified into income related to
commodity-based derivatives for which we removed the hedging designation during the fourth
quarter of 2008. We anticipate that approximately $275 million of our accumulated other
comprehensive income will be reclassified to operating revenues during the next twelve
months.(2)
    
    We have not reflected in this table approximately $2 million of losses
recognized for the quarter ended March 31, 2009 related to interest rate derivatives not
designated as hedges that were offset completely by the impact of
certain swaps.
Settlements related to these swaps were not material for the quarter ended March 31,
2009.(3)
    
    Included in these amounts is less than $1 million representing the amount of
accumulated other comprehensive income that was reclassified into income related to these
hedges. We anticipate that less than $2 million of our accumulated other comprehensive income
will be reclassified to interest expense during the next twelve months. No ineffectiveness
was recognized on our interest rate cash flow hedges for the quarter ended March 31, 2009.(4)
    
    Amounts only reflect the financial statement impact of these derivative
contracts. The table does not reflect the offsetting impact of changes to the carrying value
of the underlying debt hedged by these derivative instruments as a result of changes in fair
value attributable to the risk being hedged, which is also recorded in other income and
interest expense and substantially offsets the financial statement impact of these
derivatives. We also recorded a decrease to interest expense of approximately $1 million
during the quarter ended March 31, 2009 as a result of converting the interest rate on the
underlying debt from a fixed rate to a floating rate. No
ineffectiveness was recognized on our fair value hedges for the quarter ended March 31,
2009.(5)
    
    We also had approximately $1 million of losses for the quarter ended March 31,
2009 recognized in operating expenses related to other derivative instruments not associated
with our price risk management activities. 16




---



##### Table of Contents



8. Debt, Other Financing Obligations and Other Credit Facilities
 March 31,
    
    
    December 31,2009
    
    
    2008(In millions)Short-term financing obligations, including current maturities
    
    $
    961
    
    
    $
    1,090Long-term financing obligations
    
    
    13,541
    
    
    
    12,818Total
    
    $
    14,502
    
    
    $
    13,908
 Changes in Long-Term Financing Obligations.
 CashBook Value
    
    
    Received /Company
    
    Interest Rate
    
    
    Increase (Decrease)
    
    
    (Paid)IssuancesEl Paso Notes due 2016(1)
    
    
    8.25
    %
    
    $
    478
    
    
    $
    473Tennessee Gas Pipeline (TGP) notes due 2016(1)
    
    
    8.00
    %
    
    
    237
    
    
    
    235Southern LNG notes due 2014 and 2016
    
    
    9.60
    %
    
    
    135
    
    
    
    134Increases through March 31, 2009
    
    
    
    
    
    $
    850
    
    
    $
    842Repayments, repurchases, and otherEl Paso CorporationNotes due 2009
    
    
    6.375
    %
    
    $
    (112
    )
    
    $
    (112
    )Revolving credit facilities
    
    variable
    
    
    (97
    )
    
    
    (97
    )El Paso Pipeline Partners, L.P. (EPB) revolving credit
facilities
    
    variable
    
    
    (10
    )
    
    
    (10
    )El Paso Exploration and Production Company (EPEP)
revolving credit facility
    
    variable
    
    
    (20
    )
    
    
    (20
    )Other
    
    variable
    
    
    (17
    )
    
    
    (5
    )Decreases through March 31, 2009
    
    
    
    
    
    $
    (256
    )
    
    $
    (244
    )
 
 (1)
    
    Principal amount of the notes is $500 million for El Paso Corporation and
$250 million for TGP. Credit Facilities.
   Letters of Credit.
 17




---



##### Table of Contents



9. Commitments and Contingencies
 Legal Proceedings
 ERISA Class Action Suit. William
H. Lewis, III v. El Paso Corporation, et al.
 Cash Balance Plan Lawsuit. Tomlinson, et al. v. El Paso Corporation and El Paso Corporation Pension Plan
 Retiree Medical Benefits Matters. Yolton et al. v. El Paso
Tennessee Pipeline Co. and Case Corporation .
 Price Reporting Litigation. In re: Western States Wholesale Natural Gas
Antitrust Litigation Farmland Industries v. Oneok Inc., et al. Missouri Public Service Commission v. El Paso Corporation, et al. Leggett, et al. v. Duke Energy Corporation, et al. Ever-Bloom Inc., et al. v. AEP Energy Services
Inc., et al. Learjet, Inc., et al. v. Oneok Inc., et al. Breckenridge, et al. v. Oneok Inc., et al. Arandell, et al. v. Xcel Energy, et al. Heartland, et al. v. Oneok Inc., et al. Newpage Wisconsin System, Inc., et al. Leggett Missouri Public Service Newpage Breckenridge Case Western States Ever-Bloom
 18




---



##### Table of Contents



Gas Measurement Cases. In re: Natural Gas Royalties Qui
Tam Litigation,
 Will Price, et al. v.
Gas Pipelines and Their Predecessors, et al.,
 MTBE
  19




---



##### Table of Contents



Rates and Regulatory Matters
 EPNG Rate Case.
 SNG Rate Case.
 Notice of Proposed Rulemaking.
 Other Matter
 Navajo Nation
 Environmental Matters
  20




---



##### Table of Contents



March 31, 2009Sites
    
    Expected
    
    
    High(In millions)Operating
    
    $
    17
    
    
    $
    23Non-operating
    
    
    165
    
    
    
    318Superfund
    
    
    19
    
    
    
    42Total
    
    $
    201
    
    
    $
    383
  Balance as of January 1, 2009
    
    $
    204Additions/adjustments for remediation activities
    
    
    6Payments for remediation activities
    
    
    (9
    )Balance as of March 31, 2009
    
    $
    201
  CERCLA Matters.
 21




---



##### Table of Contents



Greenhouse Gas (GHG) Emissions.
 Guarantees and Other Contractual Commitments
 Guarantees and Indemnifications.
  22




---



##### Table of Contents



Commitments,
Purchase Obligations and Other Matters.
 10. Retirement Benefits
 Net Benefit Cost (Income).
 OtherPension
    
    
    PostretirementBenefits
    
    
    Benefits2009
    
    
    2008
    
    
    2009
    
    
    2008(In millions)Service cost
    
    $
    4
    
    
    $
    4
    
    
    $
    
    
    
    $
    Interest cost
    
    
    30
    
    
    
    30
    
    
    
    9
    
    
    
    7Expected return on plan assets
    
    
    (43
    )
    
    
    (47
    )
    
    
    (3
    )
    
    
    (4
    )Amortization of net actuarial loss (gain)
    
    
    11
    
    
    
    6
    
    
    
    
    
    
    
    (1
    )Amortization of prior service credit(1)
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    Net benefit cost (income)
    
    $
    2
    
    
    $
    (8
    )
    
    $
    6
    
    
    $
    2
 
 (1)
    
    As permitted, the amortization of any prior service credit is determined using
a straight-line amortization of the credit over the average remaining service period of
employees expected to receive benefits under the plan, or in the case of retired participants,
over the average remaining life. Other Matter.
  23




---



##### Table of Contents



11. Equity
 Common and Preferred Stock Dividends.
 Common Stock
    
    Convertible Preferred Stock($0.05/Share)
    
    (4.99%/Year)Amount paid through March 31, 2009
    
    $
    35
    
    
    $
    9Amount paid in April 2009
    
    $
    34
    
    
    $
    9Declared in May 2009:Date of declaration
    
    May 6, 2009
    
    May 6, 2009Payable to shareholders on record
    
    June 5, 2009
    
    June 15, 2009Date payable
    
    July 1, 2009
    
    July 1, 2009
   Noncontrolling Interests.
 12. Business Segment Information
  Pipelines.
 Exploration and Production.
 Marketing.
 Power.
 24




---



##### Table of Contents



2009
    
    
    2008(In millions)Segment EBIT
    
    $
    (1,233
    )
    
    $
    561Corporate and other
    
    
    (7
    )
    
    
    39Interest and debt expense
    
    
    (255
    )
    
    
    (233
    )Income taxes
    
    
    526
    
    
    
    (148
    )Net income (loss) attributable to El Paso Corporation
    
    
    (969
    )
    
    
    219Net income attributable to noncontrolling interests
    
    
    12
    
    
    
    9Net income (loss)
    
    $
    (957
    )
    
    $
    228
  SegmentsExplorationand
    
    
    
    
    
    
    
    
    
    
    CorporatePipelines
    
    
    Production
    
    
    Marketing
    
    
    Power
    
    
    and Other(1)
    
    
    Total(In millions)2009Revenue from external customers
    
    $
    721
    
    
    $
    574
    (2)
    
    $
    188
    
    
    $
    
    
    
    $
    1
    
    
    $
    1,484Intersegment revenue
    
    
    12
    
    
    
    126
    (2)
    
    
    (135
    )
    
    
    
    
    
    
    (3
    )
    
    
    Operation and maintenance
    
    
    183
    
    
    
    109
    
    
    
    1
    
    
    
    2
    
    
    
    5
    
    
    
    300Ceiling test charges
    
    
    
    
    
    
    2,068
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,068Depreciation, depletion and amortization
    
    
    104
    
    
    
    150
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    256Earnings (losses) from unconsolidated
affiliates
    
    
    21
    
    
    
    (9
    )
    
    
    
    
    
    
    6
    
    
    
    1
    
    
    
    19EBIT
    
    
    396
    
    
    
    (1,685
    )
    
    
    52
    
    
    
    4
    
    
    
    (7
    )
    
    
    (1,240
    )2008Revenue from external customers
    
    $
    707
    
    
    $
    83
    (2)
    
    $
    469
    
    
    $
    
    
    
    $
    10
    
    
    $
    1,269Intersegment revenue
    
    
    13
    
    
    
    520
    (2)
    
    
    (526
    )
    
    
    
    
    
    
    (7
    )
    
    
    Operation and maintenance
    
    
    195
    
    
    
    108
    
    
    
    2
    
    
    
    5
    
    
    
    (39
    )
    
    
    271Depreciation, depletion and amortization
    
    
    99
    
    
    
    212
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    313Earnings from unconsolidated affiliates
    
    
    21
    
    
    
    10
    
    
    
    
    
    
    
    5
    
    
    
    1
    
    
    
    37EBIT
    
    
    381
    
    
    
    242
    
    
    
    (60
    )
    
    
    (2
    )
    
    
    39
    
    
    
    600
 
 (1)
    
    Includes eliminations of intercompany transactions. Our intersegment revenues,
along with our intersegment operating expenses, were incurred in the normal course of business
between our operating segments. During the quarters ended March 31, 2009 and 2008, we recorded
an intersegment revenue elimination of $3 million and $6 million in the Corporate
and Other column to remove intersegment transactions.(2)
    
    Revenues from external customers include gains and losses related to our
hedging of price risk associated with our natural gas and oil production. Intersegment
revenues represent sales to our Marketing segment, which is responsible for marketing our
production to third parties. 25




---



##### Table of Contents



March 31,
    
    
    December 31,2009
    
    
    2008(In millions)Pipelines
    
    $
    15,504
    
    
    $
    15,121Exploration and Production
    
    
    4,070
    
    
    
    6,142Marketing
    
    
    303
    
    
    
    465Power
    
    
    313
    
    
    
    417Total segment assets
    
    
    20,190
    
    
    
    22,145Corporate and Other
    
    
    2,234
    
    
    
    1,523Total consolidated assets
    
    $
    22,424
    
    
    $
    23,668
 13. Investments in, Earnings from and Transactions with Unconsolidated Affiliates
  Earnings (Losses) fromInvestment
    
    
    Unconsolidated AffiliatesMarch 31,
    
    
    December 31,
    
    
    Quarter Ended March 31,2009
    
    
    2008
    
    
    2009
    
    
    2008(In millions)
    
    
    (In millions)Net Investment and Earnings (Losses)Four Star (1)
    
    $
    512
    
    
    $
    525
    
    
    $
    (10
    )
    
    $
    10Citrus
    
    
    578
    
    
    
    564
    
    
    
    14
    
    
    
    13Gulf LNG(2)
    
    
    278
    
    
    
    279
    
    
    
    
    
    
    
    Gasoductos de Chihuahua
    
    
    180
    
    
    
    174
    
    
    
    6
    
    
    
    7Porto Velho(3)
    
    
    
    
    
    
    (64
    )
    
    
    
    
    
    
    Bolivia-to-Brazil Pipeline
    
    
    113
    
    
    
    119
    
    
    
    4
    
    
    
    3Argentina to Chile Pipeline
    
    
    29
    
    
    
    27
    
    
    
    2
    
    
    
    1Other
    
    
    74
    
    
    
    79
    
    
    
    3
    
    
    
    3Total
    
    $
    1,764
    
    
    $
    1,703
    
    
    $
    19
    
    
    $
    37
 
 (1)
    
    Amortization of our purchase cost in excess of the underlying net assets of
Four Star was $12 million and $14 million for the quarters ended March 31, 2009 and
2008.(2)
    
    In February 2008, we acquired a 50 percent interest in Gulf LNG. See Note
2.(3)
    
    As of December 31, 2008, we had outstanding advances and receivables of $242
million, not included above, related to our investment in Porto Velho. In February 2009, we
completed the sale of our investment in and receivables from Porto Velho as further discussed
in Other Investment-Related Mattersbelow. Quarter EndedMarch 31,2009
    
    
    2008(In millions)Summarized Financial InformationOperating results data:Operating revenues
    
    $
    123
    
    
    $
    186Operating expenses
    
    
    68
    
    
    
    93Income from continuing operations and net income
    
    
    35
    
    
    
    56
  26




---



##### Table of Contents



Accounts Receivable Sales Program. Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities .
 Other Investment-Related Matters
 Porto Velho.
 Manaus/Rio Negro.
  27




---



##### Table of Contents



Investment in Bolivia and Argentina.
 28




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview and Outlook
     Liquidity and Capital
Resources)
 29




---



##### Table of Contents




    
    Capital Expenditures.Planned 2009 capital expenditures between approximately $2.7
billion to $3.0 billion, with $1.7 billion of capital being spent in our pipeline business
and $0.9 billion to $1.2 billion in our exploration and production business. Our $1.7
billion of planned pipeline capital reflects equity partnering on one or more of our
expansion projects. In our exploration and production business, although it will also
impact our near-term growth profile in this business, the objective of reductions in our
capital program is to retain substantially all of our existing natural gas and oil resource
positions for future exploration and production when commodity prices and oilfield service
costs return to more favorable levels.
    
    Asset Sales.We have sold or are evaluating the sale of several non-core assets
generating cash proceeds of approximately $0.4 billion in 2009, of which approximately $0.2
billion have already been completed.
    
    Other Liquidity Sources.We will continue to be opportunistic in generating additional
liquidity, which may include additional asset sales or partnering opportunities on
expansion projects. To the extent these opportunities are delayed or cannot be completed,
there is a further decline in commodity prices or we experience other major disruptions in
the financial markets, we could also pursue other alternatives, including additional
reductions in our discretionary capital program, further reductions in operating and
general and administrative expenses, additional secured financing arrangements, seeking
additional partners for one or more of our other growth projects or selling additional
non-core assets.
  
    
    Debt Capital Structure.Our debt capital structure is 82 percent fixed interest rates
and 18 percent floating interest rates. Accordingly, we believe we have lessened exposure
to market changes in interest rates on our existing debt which impact our interest costs.
    
    Revenue and Price Sensitivities. As previously discussed, we have mitigated our
sensitivity to commodity prices with approximately three-fourths of our pipeline revenues collected in
the form of demand or reservation charges and derivative contracts in our exploration and
production business. As noted above, we have significant derivative contracts in place
for our 2009 natural gas and oil production.

We have also entered into derivative contracts on a substantial portion of our anticipated 2010
natural gas production and a portion of our 2011 natural gas production to mitigate exposure to low
commodity prices;



however, we continue to have some commodity price exposure in 2010 and beyond. Finally, in
the event of lower oil or natural gas prices, we currently have unencumbered exploration
and production properties and reserves that we could pledge as collateral to maintain our
current available borrowing base under the revolving credit facilities at our exploration
and production subsidiary.
    
    Counterparty Risk.We continue to monitor the financial situation of our major lenders,
derivative counterparties, customers, joint interest partners, vendors and suppliers, and
enforce our contractual rights with regard to obtaining collateral or providing credit.
    
    Lending Institutions.As of March 31, 2009, we have determined the potential exposure
to a loss of available capacity under our credit agreements, due to our assessment of our
lenders ability to fund, to be approximately $30 million from El Pasos $1.5 billion
revolving credit facility, approximately $2 million from EPEPs $1.0 billion revolving
credit facility, and approximately $15 million under EPBs $750 million credit facility.
 30




---



##### Table of Contents



Segment Results
    2009
    
    
    2008(In millions)SegmentPipelines
    
    $
    396
    
    
    $
    381Exploration and Production
    
    
    (1,685
    )
    
    
    242Marketing
    
    
    52
    
    
    
    (60
    )Power
    
    
    4
    
    
    
    (2
    )Segment EBIT
    
    
    (1,233
    )
    
    
    561Corporate and other
    
    
    (7
    )
    
    
    39Consolidated EBIT
    
    
    (1,240
    )
    
    
    600Interest and debt expense
    
    
    (255
    )
    
    
    (233
    )Income taxes
    
    
    526
    
    
    
    (148
    )Net income (loss) attributable to El Paso Corporation
    
    
    (969
    )
    
    
    219Net income attributable to noncontrolling interests
    
    
    12
    
    
    
    9Net income (loss)
    
    $
    (957
    )
    
    $
    228
 31




---



##### Table of Contents



Pipelines Segment
 Overview and Operating Results.
 2009
    
    
    2008(In millions,except for volumes)Operating revenues
    
    $
    733
    
    
    $
    720Operating expenses
    
    
    (366
    )
    
    
    (363
    )Operating income
    
    
    367
    
    
    
    357Other income, net
    
    
    41
    
    
    
    33EBIT before adjustment for noncontrolling interests
    
    
    408
    
    
    
    390Net income attributable to noncontrolling interests
    
    
    (12
    )
    
    
    (9
    )EBIT
    
    $
    396
    
    
    $
    381Throughput volumes (BBtu/d)(1)
    
    
    19,704
    
    
    
    19,321
 
 (1)
    
    Throughput volumes include our proportionate share of unconsolidated affiliates
and exclude intrasegment activities. VarianceOperatingRevenue
    
    
    OperatingExpense
    
    
    Other
    
    
    EBITImpactFavorable/(Unfavorable)(In millions)Expansions
    
    $
    19
    
    
    $
    (5
    )
    
    $
    8
    
    
    $
    22Reservation and usage revenues
    
    
    27
    
    
    
    
    
    
    
    
    
    
    
    27Gas not used in operations and revaluations
    
    
    1
    
    
    
    (6
    )
    
    
    
    
    
    
    (5
    )Calpine bankruptcy settlement
    
    
    (29
    )
    
    
    
    
    
    
    
    
    
    
    (29
    )Loss on long-lived assets
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    16Hurricanes
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    (4
    )Net income attributable to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    (3
    )Other(1)
    
    
    (5
    )
    
    
    (4
    )
    
    
    
    
    
    
    (9
    )Total impact on EBIT
    
    $
    13
    
    
    $
    (3
    )
    
    $
    5
    
    
    $
    15
 
 (1)
    
    Consists of individually insignificant items on several of our pipeline
systems. Expansions.
   32




---



##### Table of Contents



Reservation and Usage Revenues. Other Regulatory Matters
 Gas Not Used in Operations and Revaluations.
 Calpine Bankruptcy Settlement.
 Loss on Long-Lived Assets.
 Hurricanes. Liquidity and Capital Resources
 Noncontrolling Interests.
 Other Regulatory Matters.
   33




---



##### Table of Contents



Exploration and Production Segment
 Overview and Strategy
     Operating Results and Variance
Analysis .
 Significant Operational Factors Affecting the Quarter Ended March 31, 2009
 Production.
 2009
    
    
    2008MMcfe/dUnited StatesCentral
    
    
    245
    
    
    
    241Western
    
    
    164
    
    
    
    149Texas Gulf Coast
    
    
    203
    
    
    
    236Gulf of Mexico and south Louisiana
    
    
    110
    
    
    
    173InternationalBrazil
    
    
    9
    
    
    
    12Total Consolidated
    
    
    731
    
    
    
    811Four Star
    
    
    72
    
    
    
    75
 34




---



##### Table of Contents



2009 Drilling Results
  Central.
 Western.
 Texas Gulf Coast.
 Gulf of Mexico and south Louisiana.
 Brazil.
 
    
    Camamu Basin.During the first quarter of 2009, we continued the process of obtaining
regulatory and environmental approvals that are required to enter the next phase of
development in the Pinauna Field. The timing of the Pinauna Field development will be
dependent on the receipt of these approvals and either the recovery of commodity prices
or cost reductions that reflect the current low commodity price environment.In the BM-CAL-6 block, following the drilling of an unsuccessful exploratory well in
2008 and further evaluation, we have decided to relinquish our interest in this block. In
the BM-CAL-5 block, we continue to evaluate the results and appraisal options on a well
where hydrocarbons were discovered in 2008 and plan to participate in drilling a second
exploratory well to evaluate another prospect in the block during the second quarter of
2009.
    
    Espirito Santo Basin.We continue to execute the plan of development for the
Camarupim Field which includes drilling four horizontal natural gas wells. As of March
31, 2009, one well has been drilled and tested and three additional wells have been spud
and are nearing completion. Petrobras, the operator, estimates it will complete all
drilling operations and begin production from the field in late June or early July 2009.In 2008, we also participated with Petrobras in drilling an exploratory well in the ES-5
block in the Espirito Santo Basin in which we own a 35 percent working interest.
Hydrocarbons were found in the well and we are now evaluating the results. During the
second quarter of 2009, we plan to participate with Petrobras in drilling another
exploratory well to evaluate an additional prospect in the ES-5 block.
  Egypt.
 35




---



##### Table of Contents



Cash Operating Costs.
  Capital Expenditures.
 Outlook for 2009
  
    
    Capital expenditures, excluding acquisitions, of $0.9 billion to $1.2 billion. Of this
total, we expect to spend $0.7 billion to $1.0 billion on our domestic program and
approximately $250 million in Brazil and Egypt. Brazil capital expenditures include the
costs to complete development of our Camarupim project in late June or early July 2009.
    
    Average daily production volumes for the year of approximately 665 MMcfe/d to 730
MMcfe/d, which does not include approximately 65 MMcfe/d to 70 MMcfe/d from our equity
investment in Four Star. Production volumes from our Brazil operations are expected to
increase from an average of about 11 MMcfe/d in 2008 to between 30 MMcfe/d and 40 MMcfe/d
in 2009, with production volumes from the Camarupim Field expected to commence in late June or early July 2009.
    
    Average cash operating costs which include production costs, general and administrative
expenses and other expenses of approximately $2.05/Mcfe to $2.35/Mcfe for the year.
    
    Depreciation, depletion and amortization rate of between $1.70/Mcfe and $1.90/Mcfe,
which includes the impact of our first quarter 2009 ceiling test charges.
 Price Risk Management Activities
  36




---



##### Table of Contents



Fixed PriceSwaps(1)
    
    
    Floors(1)
    
    
    Ceilings(1)
    
    
    Basis Swaps(1)(2)Western
    
    
    CentralTexas Gulf Coast
    
    
    Raton
    
    
    Rockies
    
    
    Mid-ContinentAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageVolumes
    
    
    Price
    
    
    Volumes
    
    
    Price
    
    
    Volumes
    
    
    Price
    
    
    Volumes
    
    
    Price
    
    
    Volumes
    
    
    Price
    
    
    Volumes
    
    
    Price
    
    
    Volumes
    
    
    PriceNatural Gas2009
    
    
    6
    
    
    $
    7.40
    
    
    
    114
    
    
    $
    9.11
    
    
    
    89
    
    
    $
    14.83
    
    
    
    43
    
    
    $
    (0.34
    )
    
    
    18
    
    
    $
    (0.96
    )
    
    
    10
    
    
    $
    (2.01
    )
    
    
    7
    
    
    $
    (1.04
    )2010
    
    
    25
    
    
    $
    6.61
    
    
    
    42
    
    
    $
    7.00
    
    
    
    20
    
    
    $
    9.45
    
    
    
    47
    
    
    $
    (0.40
    )
    
    
    11
    
    
    $
    (0.80
    )
    
    
    9
    
    
    $
    (1.93
    )
    
    
    9
    
    
    $
    (0.74
    )2011-2012
    
    
    7
    
    
    $
    3.88
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Oil2009
    
    
    1,348
    
    
    $
    45.00
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Volumes presented are TBtu for natural gas and MBbl for oil. Prices presented
are per MMBtu of natural gas and per Bbl of oil.(2)
    
    Our basis swaps effectively limit our exposure to differences between the NYMEX
gas price and the price at the location where we sell our gas. The average prices listed above
are the amounts we will pay per MMBtu relative to the NYMEX price to lock-in these
locational price differences.  Fixed PriceSwaps(1)
    
    
    Floors(1)
    
    
    Ceilings(1)
    
    
    Basis Swaps(1)(2)Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    AverageVolumes
    
    
    Price
    
    
    Volumes
    
    
    Price
    
    
    Volumes
    
    
    Price
    
    
    Volumes
    
    
    PriceNatural Gas2010
    
    
    27
    
    
    $
    5.80
    
    
    
    81
    
    
    $
    6.25
    
    
    
    41
    
    
    $
    7.50
    
    
    
    9
    
    
    $
    0.752011
    
    
    11
    
    
    $
    6.88
    
    
    
    110
    
    
    $
    6.00
    
    
    
    110
    
    
    $
    9.00
    
    
    
    
    
    
    $
    
 
 (1)
    
    Volumes presented are TBtu for natural gas. Prices presented are per MMBtu of
natural gas.(2)
    
    Our basis swaps effectively limit our exposure to differences between the NYMEX
gas price and the price at the location where we sell our gas. The average prices listed above
are the amounts we will pay per MMBtu relative to the NYMEX price to lock-in these
locational price differences.  37




---



##### Table of Contents



Operating Results and Variance Analysis
  Quarter EndedMarch 31,2009
    
    
    2008(In millions)Physical sales:Natural gas
    
    $
    252
    
    
    $
    476Oil, condensate and NGL
    
    
    46
    
    
    
    166Total physical sales
    
    
    298
    
    
    
    642Realized and unrealized gains (losses) on financial derivatives(1)
    
    
    394
    
    
    
    (50
    )Other revenues
    
    
    8
    
    
    
    11Total operating revenues
    
    
    700
    
    
    
    603Operating expenses:Cost of products
    
    
    5
    
    
    
    5Transportation costs
    
    
    20
    
    
    
    19Production costs
    
    
    78
    
    
    
    91Depreciation, depletion and amortization
    
    
    150
    
    
    
    212General and administrative expenses
    
    
    50
    
    
    
    47Ceiling test charges
    
    
    2,068
    
    
    
    Other
    
    
    4
    
    
    
    3Total operating expenses
    
    
    2,375
    
    
    
    377Operating income (loss)
    
    
    (1,675
    )
    
    
    226Other income (expense)(2)
    
    
    (10
    )
    
    
    16EBIT
    
    $
    (1,685
    )
    
    $
    242
 
 (1)
    
    Includes $128 million and $(15) million in 2009 and 2008, of amounts
reclassified from accumulated other comprehensive income associated with accounting
hedges.(2)
    
    Other income (expense) includes equity earnings (losses) from our investment
in Four Star. 38




---



##### Table of Contents



Quarter Ended March 31,Percent2009
    
    
    2008
    
    
    VarianceConsolidated volumes, prices and costs per unit:Natural gasVolumes (MMcf)
    
    
    56,862
    
    
    
    61,810
    
    
    
    (8
    )%Average realized price on physical sales ($/Mcf)
    
    $
    4.43
    
    
    $
    7.72
    
    
    
    (43
    )%Average realized price, including financial
derivative settlements ($/Mcf)(1)
    
    $
    8.52
    
    
    $
    7.60
    
    
    
    12
    %Average transportation costs ($/Mcf)
    
    $
    0.34
    
    
    $
    0.28
    
    
    
    21
    %Oil, condensate and NGLVolumes (MBbls)
    
    
    1,477
    
    
    
    1,992
    
    
    
    (26
    )%Average realized price on physical sales ($/Bbl)
    
    $
    31.29
    
    
    $
    83.06
    
    
    
    (62
    )%Average realized price, including financial
derivative settlements ($/Bbl)(1) (2)
    
    $
    70.14
    
    
    $
    80.14
    
    
    
    (12
    )%Average transportation costs ($/Bbl)
    
    $
    0.93
    
    
    $
    0.71
    
    
    
    31
    %Total equivalent volumesMMcfe
    
    
    65,700
    
    
    
    73,762
    
    
    
    (11
    )%MMcfe/d
    
    
    731
    
    
    
    811
    
    
    
    (10
    )%Production costs and other cash operating costs ($/Mcfe)Average lease operating expenses
    
    $
    0.89
    
    
    $
    0.82
    
    
    
    9
    %Average production taxes(3)
    
    
    0.29
    
    
    
    0.42
    
    
    
    (31
    )%Total production costs
    
    $
    1.18
    
    
    $
    1.24
    
    
    
    (5
    )%Average general and administrative expenses
    
    
    0.76
    
    
    
    0.64
    
    
    
    19
    %Average taxes, other than production and income taxes
    
    
    0.06
    
    
    
    0.04
    
    
    
    50
    %Total cash operating costs
    
    $
    2.00
    
    
    $
    1.92
    
    
    
    4
    %Depreciation, depletion and amortization ($/Mcfe)
    
    $
    2.28
    
    
    $
    2.87
    
    
    
    (21
    )%Unconsolidated affiliate volumes (Four Star):Natural gas (MMcf)
    
    
    4,860
    
    
    
    5,121Oil, condensate and NGL (MBbls)
    
    
    276
    
    
    
    285Total equivalent volumesMMcfe
    
    
    6,516
    
    
    
    6,832MMcfe/d
    
    
    72
    
    
    
    75
 
 (1)
    
    Premiums related to natural gas derivatives settled during the quarter ended
March 31, 2008 were $5 million. Had we included these premiums in our natural gas average
realized price in 2008, our realized price, including financial derivative settlements, would
have decreased by $0.08/Mcf. We had no premiums related to natural gas derivatives settled
during the quarter ended March 31, 2009 or related to oil derivatives settled during the
quarters ended March 31, 2009 and 2008.(2)
    
    Does not include approximately $149 million received in the first quarter of
2009 related to the early settlement of oil derivative contracts originally scheduled to settle April through
December of 2009. These amounts will be included in our average realized price over the
remainder of the year based on when the contracted settlements were originally scheduled to
occur.(3)
    
    Production taxes include ad valorem and severance taxes. 39




---



##### Table of Contents



Quarter Ended March 31, 2009 Compared to Quarter Ended March 31, 2008
  VarianceOperating
    
    
    OperatingRevenue
    
    
    Expense
    
    
    Other
    
    
    EBITFavorable/(Unfavorable)(In millions)Physical salesNatural gasLower realized prices in 2009
    
    $
    (187
    )
    
    $
    
    
    
    $
    
    
    
    $
    (187
    )Lower volumes in 2009
    
    
    (37
    )
    
    
    
    
    
    
    
    
    
    
    (37
    )Oil, condensate and NGLLower realized prices in 2009
    
    
    (77
    )
    
    
    
    
    
    
    
    
    
    
    (77
    )Lower volumes in 2009
    
    
    (43
    )
    
    
    
    
    
    
    
    
    
    
    (43
    )Realized and unrealized gains/(losses) on financial derivatives
    
    
    444
    
    
    
    
    
    
    
    
    
    
    
    444Other RevenuesOther
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    (3
    )Depreciation, Depletion and Amortization ExpenseLower depletion rate in 2009
    
    
    
    
    
    
    40
    
    
    
    
    
    
    
    40Lower production volumes in 2009
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    22Production CostsLower lease operating expenses in 2009
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    2Lower production taxes in 2009
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    11Ceiling Test Charges
    
    
    
    
    
    
    (2,068
    )
    
    
    
    
    
    
    (2,068
    )OtherEarnings from investment in Four Star
    
    
    
    
    
    
    
    
    
    
    (20
    )
    
    
    (20
    )Other
    
    
    
    
    
    
    (5
    )
    
    
    (6
    )
    
    
    (11
    )Total Variances
    
    $
    97
    
    
    $
    (1,998
    )
    
    $
    (26
    )
    
    $
    (1,927
    )
 Physical sales.
 Realized and unrealized gains/(losses) on financial derivatives.
 Depreciation, depletion and amortization expense.
 Production costs.
 Ceiling test charges.
 Other.
 40




---



##### Table of Contents



Marketing Segment
 Overview.
  Operating Results.
 2009
    
    
    2008(In millions)Revenue by Significant Contract Type:Production-Related Natural Gas and Oil Derivative Contracts:Changes in fair value of options and swaps
    
    $
    
    
    
    $
    (21
    )Contracts Related to Legacy Trading Operations:Changes in fair value of power contracts
    
    
    34
    
    
    
    (41
    )Natural gas transportation-related contracts:Demand charges
    
    
    (9
    )
    
    
    (9
    )Settlements, net of termination payments
    
    
    7
    
    
    
    14Changes in fair value of other natural gas derivative contracts
    
    
    21
    
    
    
    Total revenues
    
    
    53
    
    
    
    (57
    )Operating expenses
    
    
    (1
    )
    
    
    (3
    )Operating income (loss) and EBIT
    
    $
    52
    
    
    $
    (60
    )
 Production-related Natural Gas and Oil Derivative Contracts
 41




---



##### Table of Contents



Contracts Related to Legacy Trading Operations
 Power contracts.
  Natural gas transportation-related contracts.
 Other natural gas derivative contracts.
 42




---



##### Table of Contents



Power Segment
 Overview.
 AreaSouth AmericaPorto Velho  note receivable from buyer
    
    $
    78Manaus & Rio Negro
    
    
    42Bolivia-to-Brazil Pipeline
    
    
    135Argentina-to-Chile Pipeline
    
    
    29Asia
    
    
    12Total
    
    $
    296
  Operating Results.
 Corporate and Other Expenses, Net
  2009
    
    
    2008(In millions)Change in litigation, insurance and other reserves
    
    $
    (3
    )
    
    $
    11Foreign currency fluctuations on Euro-denominated debt
    
    
    
    
    
    
    (6
    )Gain on disposition of a portion of our telecommunications business
    
    
    
    
    
    
    18Other
    
    
    (4
    )
    
    
    16Total EBIT
    
    $
    (7
    )
    
    $
    39
 Litigation, Insurance, and Other Reserves.
 43




---



##### Table of Contents



Interest and Debt Expense
  Income Taxes
 Quarter Ended March 31,2009
    
    2008(In millions, except for rates)Income taxes
    
    $
    (526
    )
    
    $
    148Effective tax rate
    
    
    35
    %
    
    
    39
    %
  Commitments and Contingencies
  44




---



##### Table of Contents



Liquidity and Capital Resources
   Available Liquidity and Liquidity Outlook for 2009.
  Quarter Ended
    
    
    2009March 31, 2009
    
    
    Remaining
    
    
    Total(In billions)PipelinesMaintenance
    
    $
    0.1
    
    
    $
    0.3
    
    
    $
    0.4Growth
    
    
    0.3
    
    
    
    1.0
    
    
    
    1.3Exploration and Production(1)
    
    
    0.4
    
    
    
    0.8
    
    
    
    1.2Other
    
    
    
    
    
    
    0.1
    
    
    
    0.1$
    0.8
    
    
    $
    2.2
    
    
    $
    3.0
 
 (1)
    
    For 2009, our planned cash capital expenditures, excluding
acquisitions, are expected to range from $0.9 billion to $1.2 billion.  45




---



##### Table of Contents



Additional Factors That Could Impact Our Future Liquidity.
 Price Risk Management Activities and Margining Requirements
 Hurricanes Ike and Gustav.
 46




---



##### Table of Contents



Overview of Cash Flow Activities.
 2009(In billions)Cash Flow from OperationsContinuing operating activitiesNet loss
    
    $
    (1.0
    )Ceiling test charges
    
    
    2.1Other income adjustments
    
    
    (0.3
    )Total cash flow from operations
    
    $
    0.8Other Cash InflowsContinuing investing activitiesNet proceeds from the sale of assets and investments
    
    $
    0.2Other
    
    
    0.10.3Continuing financing activitiesNet proceeds from the issuance of long-term debt
    
    
    0.8Total other cash inflows
    
    $
    1.1Cash OutflowsContinuing investing activitiesCapital expenditures
    
    $
    0.8Continuing financing activitiesPayments to retire long-term debt and other financing obligations
    
    
    0.2Dividends and other
    
    
    0.10.3Total cash outflows
    
    $
    1.1Net change in cash
    
    $
    0.8
 47




---



##### Table of Contents



Contractual Obligations
  Commodity-Based Derivative Contracts
  Maturity
    
    
    Maturity
    
    
    Maturity
    
    
    Maturity
    
    
    TotalLess Than
    
    
    1 to 3
    
    
    4 to 5
    
    
    6 to 10
    
    
    Fair1 Year
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    Value(In millions)Assets
    
    $
    601
    
    
    $
    153
    
    
    $
    18
    
    
    $
    14
    
    
    $
    786Liabilities
    
    
    (189
    )
    
    
    (368
    )
    
    
    (160
    )
    
    
    (105
    )
    
    
    (822
    )Total commodity-based derivatives
    
    $
    412
    
    
    $
    (215
    )
    
    $
    (142
    )
    
    $
    (91
    )
    
    $
    (36
    )
  Commodity-BasedDerivatives(In millions)Fair value of contracts outstanding at January 1, 2009
    
    $
    (25
    )Fair value of contract settlements during the period(1)
    
    
    (395
    )Changes in fair value of contracts during the period
    
    
    321Premiums paid during the period
    
    
    63Net changes in contracts outstanding during the period
    
    
    (11
    )Fair value of contracts outstanding at March 31, 2009
    
    $
    (36
    )
 
 (1)
    
    Includes amounts received related to the early settlement of production-related
oil derivative contracts prior to their scheduled maturity. 48




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
   Commodity Price Risk
 Production-Related Derivatives
 Other Commodity-Based Derivatives.
 Sensitivity Analysis.
 Change in Market Price10 Percent Increase
    
    
    10 Percent DecreaseFair Value
    
    
    Fair Value
    
    
    Change
    
    
    Fair Value
    
    
    Change(In millions)Production-related derivatives  net assetsMarch 31, 2009
    
    $
    573
    
    
    $
    497
    
    
    $
    (76
    )
    
    $
    652
    
    
    $
    79December 31, 2008
    
    $
    682
    
    
    $
    582
    
    
    $
    (100
    )
    
    $
    785
    
    
    $
    103Other commodity-based derivatives  net liabilitiesMarch 31, 2009
    
    $
    (609
    )
    
    $
    (620
    )
    
    $
    (11
    )
    
    $
    (598
    )
    
    $
    11December 31, 2008
    
    $
    (707
    )
    
    $
    (719
    )
    
    $
    (12
    )
    
    $
    (695
    )
    
    $
    12
 49




---



##### Table of Contents



Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  50




---



##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  Latigo Natural Gas Storage
 
 Item 1A. Risk Factors
 CAUTIONARY STATEMENTS FOR PURPOSES OF THE SAFE HARBOR PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
  
    
    earnings per share;
    
    capital and other expenditures;
    
    dividends;
    
    financing plans;
    
    capital structure;
    
    liquidity and cash flow;
    
    pending legal proceedings, claims and governmental proceedings, including environmental
matters;
    
    future economic and operating performance;
    
    operating income;
    
    managements plans; and
    
    goals and objectives for future operations.
  51




---



##### Table of Contents



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
  
 Item 6. Exhibits
   
    
    should not in all instances be treated as categorical statements of fact, but rather
as a way of allocating the risk to one of the parties if those statements prove to be
inaccurate;
    
    may have been qualified by disclosures that were made to the other party in connection
with the negotiation of the applicable agreement, which disclosures are not necessarily
reflected in the agreement;
    
    may apply standards of materiality in a way that is different from what may be viewed
as material to certain investors; and
    
    were made only as of the date of the applicable agreement or such other date or dates
as may be specified in the agreement and are subject to more recent developments.
  52




---



##### Table of Contents



SIGNATURES
  EL PASO CORPORATIONDate:
May 11, 2009
    
    /s/ D. Mark Leland

D. Mark LelandExecutive Vice President and Chief Financial Officer(Principal Financial Officer)Date:
May 11, 2009
    
    /s/ John R. Sult

John R. SultSenior Vice President and Controller(Principal Accounting Officer)
 53




---



##### Table of Contents



EL PASO CORPORATION
EXHIBIT INDEX
  ExhibitNumber
    
    Description4
    
    Fifteenth Supplemental Indenture, dated as of February 9, 2009 between El Paso Corporation and
HSBC Bank USA, National Association, as trustee, to Indenture dated as of May 10, 1999 (Exhibit
4.I to our Annual Report on Form 10-K for the year ended December 31, 2008, filed with the SEC on
March 2, 2009).*12
    
    Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.*31.A
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*31.B
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*32.A
    
    Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*32.B
    
    Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 54