El Paso Corp., which is still grappling to right itself two years after Enron Corp. collapsed, on Monday set a plan that includes reducing its debt by nearly one third and selling as much as $3.9 billion in assets by the end of 2005.
The Houston company also said it will raise about $1 billion in cash from the sale of a 50 percent stake in natural gas pipeline and processing company GulfTerra Energy Partners, L.P. to Enterprise Products Partners L.P.. The deal will form a $13 billion midstream energy partnership.
El Paso -- which announced a similar plan to cut debt and sell assets shortly after energy trader Enron Corp. filed for bankruptcy in December 2001 -- will now have three primary businesses: U.S. and Mexico natural gas pipelines, U.S. and Brazil oil and natural gas production, and marketing and trading.
As part of the reorganization, El Paso expects to sell an additional $3.3 billion to $3.9 billion of assets, sell restructured power contracts, and recover $500 million to $600 million of working capital.
Some of the assets to be sold include exploration and production holdings in Hungary, Indonesia and Canada, with the exception of Nova Scotia. It will also sell the majority of its domestic power business by the middle of next year.
These moves will reduce El Paso’s total debt to about $15 billion at the end of 2005 from about $22 billion as of Sept. 30, 2003, the company said in a statement.
On the assumption that it successfully completes this plan by the end of 2005, El Paso forecast 2006 net income of $500 million to $725 million, or 75 cents to $1.10 a share. It also forecast cash flow from operations of $1.9 billion to $2.2 billion.