Filed by El Paso Energy Corporation
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: El Paso Energy Corporation/Coastal Corporation
Commission File No. 001-14365
The following presentation was given by William A. Wise to Analysts
at Paine Webber on February 15, 2000.
[Logo]
Natural Gas to Power:
El Paso Energy Corporation
- -----------------------------
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
- -----------------------------
This presentation includes forward-looking statements and
projections, made in reliance on the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995.
The companies have made every reasonable effort to ensure
that the information and assumptions on which these
statements and projections are based are current,
reasonable, and complete. However, a variety of factors
could cause actual results to differ materially from the
projections, anticipated results or other expectations
expressed in this presentation, including, without
limitation, oil and gas prices; general economic and weather
conditions in geographic regions or markets served by El
Paso Energy and Coastal and their affiliates, or where
operations of the companies and their affiliates are
located; inability to realize anticipated synergies and cost
savings on a timely basis; difficulty in integration of
operations; and competition. While the companies makes
these statements and projections in good faith, neither
company nor its managements can guarantee that the
anticipated future results will be achieved. Reference
should be made to the companies' (and their affiliates')
Securities and Exchange Commission filings for additional
important factors that may affect actual results.
<PAGE>
INVESTOR NOTICE
- ---------------
Investors are urged to read the proxy statement/prospectus
which will be included in the Registration Statement on Form
S-4 to be filed with the SEC in connection with the proposed
merger because it will contain important information. After
it is filed with the SEC, the proxy statement/prospectus
will be available for free on the SEC's web site
(www.sec.gov), from El Paso Energy Corporation's office of
Investor Relations and from Coastal's office of the
Corporate Secretary.
In addition, the identity of the people who, under SEC
rules, may be considered "participants in the solicitation"
of El Paso Energy shareholders in connection with the
proposed merger, and a description of their interests, is
available in an SEC filing under Schedule 14A made by El
Paso Energy Corporation on January 18, 2000.
<PAGE>
[LOGO] EL PASO ENERGY
Asset Profile
---------------------------
2000E EBIT CONTRIBUTION
$ Millions
El Paso
Stand-alone
-----------
[Pie graph]
58% Natural Gas Transmission
11% Field Services
17% Merchant Energy & Power
14% Production
------
$1,400
------
Coastal
Stand-alone
-----------
[Pie graph]
35% Natural Gas Transmission
6% Field Services
18% Merchant Energy & Power
27% Production
14% Refining & Other
-------
$1,200
-------
Combined*
Company
-----------
[Pie graph]
47% Natural Gas Transmission
12% Field Services
17% Merchant Energy & Power
19% Production
5% Refining & Other
--------
$2,700
--------
* Includes PG&E-GTT Assets
<PAGE>
COMBINED COMPETITIVE POSITION
Pro Forma 2000
Domestic Natural Gas Value Chain
----------
Production BP/Amoco |
Exxon/Mobil |
#3 El Paso Burlington |
|
|
Processing Duke |
#2 El Paso THE ONLY
Williams TOP TIER
PLAYER IN
Transmission #1 El Paso Enron EVERY SEGMENT
Williams Columbia |
Duke CMS |
|
Storage #2 El Paso NGPL |
Columbia NIGas |
|
Wholesale Enron |
Marketing #2 El Paso Duke |
Southern Dynegy |
|
|
Merchant Power Southern AES |
Edison El Paso #5 |
Duke PG&E |
|
|
|
___________
<PAGE>
COMBINED FINANCIAL STATISTICS
- ----------------------------------
$ Millions
Pro Forma
1999 El Paso Coastal Combined
__________________________________________________________________________
Revenues $10,600 $7,600 $18,200
EBIT 1,100 990 2,090
EBITDA 1,700 1,500 3,200
Net income 420 500 920
Year-end 1999
__________________________________________________________________________
Total assets $16,800 $14,700 $31,500
Total debt 6,340 5,020 11,360
Preferred & minority int. 1,690 750 2,440
Common equity* 8,520 7,700 18,525
-------------------------------------------------
$16,550 $13,470 $32,325
1999 YE shares outstanding 230 214 499
* Based on 1/14/00 closing prices of $37.125 for EPG and $36 for CGP
<PAGE>
Leading Natural Gas Franchise
______________________
[Graphic Map of the United States showing location of assets]
Coastal El Paso
_______ -----------
0 Production 0 Production
* Gathering/Processing * Gathering/Processing
- - Gas Transmission - Gas Transmission
o Power Plants o Power Plants
PG&E
- -------
- - PG&E Gathering
* PG&E Processing Plants
<PAGE>
Leading Natural Gas Franchise
- ------------------------------
Gross Power (MW)
---------------------------------------
EL Paso Coastal Combined
Domestic 5,420 2,040 7,460
International 7,710 1,850 9,560
Total 13,130 3,890 17,020
<PAGE>
Combined International Operations
_________________________________
[Graphic Map of the World showing location of assets]
El Paso Coastal
- -------- -------
o E&P Assets o E&P Assets
= Power Plants * Terminaling
+ Pipelines = Power Plants
+ Pipelines
<PAGE.
Strategic Position
- ------------------
* Strong competitive profile-best markets and best supply access
* Assets integrated from wellhead to electron
* Merchant opportunities across value chain
* Scale and market reach to lead industry
* Extremely favorable macro trends
* P/E multiple upside
* Immediate earnings accretion
<PAGE>
COST SAVING COMPARISON
- ----------------------
Percent of Total O&M
$ Millions
[Chart]
El Paso Restructuring
$100 Synergies
$300 Total O&M 33%
Tenneco
$150 Synergies
$600 Total O&M 25%
Sonat
$100 Synergies
$300 Total O&M 33%
Coastal
$200 Syneries
$1,200 Total O&M 17%
PG&E-GTT
$40
$ 130 O&M 31%
<PAGE>
[LOGO] EL PASO ENERGY
Industry Fundamentals
---------------------------------
Industry Macro Trends
- -------------------------
* Power rapidly becoming largest natural gas consumer
* Tight gas supply
* Power deregulation
* Reallocation of market risks
* Increasing volatility in power and gas markets
<PAGE>
Proposed Power Projects Required Delivered Gas
- -----------------------------------------------
[ Graphic Map of the United States with points of projects]
Total Generation 165,000 MW
Gas Fired 98%
Up to 27 Bcf of gas per day
El Paso Coastal
- -------- ---------
- - Pipelines = Pipelines
<PAGE>
Projected Gas Consumption
[Graphic Chart of Industrial and Electric Generation]
2000 12 Tcf
7.16 Industrial
4.95 Electric Generation
2005 13 Tcf
7.11 Industrial
6.12 Electric Generation
2010 16 Tcf
7.26 Industrial
8.41 Electric Generation
2015 18 Tcf
7.28 Industrial
10.73 Electric Generation
Source: Internal estimates
<PAGE>
Excess Natural Gas Deliverability
U. S. and Canada
_________________________________
[Graphic Chart]
TCF per year
1982 2.7
1983 4.5
1984 3.3
1985 4.1
1986 4.5
1987 3.6
1988 2.6
1989 1.5
1990 1.8
1991 1.8
1992 1.5
1993 1.9
1994 1.4
1995 1.2
1996 0.4
1997 0.8
1998 0.9
1999P 0.6
2000E 0.2
<PAGE>
NEPOOL Daily Power Prices
- -------------------------
Power Markets Weekly On-peak Daily Index
[Graphic Chart of On-Peak Daily Index]
01/02/98 $33.25
02/04/98 27.23
03/09/98 24.72
04/09/98 24.97
05/12/98 27.5
06/15/98 27.13
07/16/98 34.25
08/18/98 29.06
09/21/98 23.57
10/22/98 23.79
11/24/98 23.65
12/29/98 24.66
02/01/99 22.78
03/05/99 19.78
04/07/99 22.88
05/10/99 32.55
06/11/99 31.7
07/16/99 57
08/18/99 34.01
09/21/99 31.4
10/22/99 31.81
11/24/99 29.79
12/28/99 29.54
02/02/00 47.93
<PAGE>
Conclusions
- -------------
* Firm gas prices
* Pipelines full at or near maximum tariffs
* Increased demand for firm delivered gas supplies
* Huge option value embedded in El Paso Energy's asset base
<PAGE>
[Logo]
Strategy
- ----------
Asset Based Strategy
* Three dominant themes:
* Economies of scale
* Portfolio of identified investments
* Capturing optionality
* Sustain high growth at attractive returns
* Apply merchant skills to capture value
* Actively manage portfolio of assets
<PAGE>
Natural Gas to Power Opportunities Unprecedented
- ------------------------------------------------
$ Millions
* Identified growth opportunities by segment for next five years:
* Pipelines $2.1
* Midstream 1.2
* Production 3.2
----
$6.5
====
* Increasingly available merchant opportunities
<PAGE>
Superior Commercial Skills
- ---------------------------
* Regulated operations
* Proven consolidation capabilities
* Customer orientation
* Successfully manage complex regulatory environment
* Unregulated businesses
* Strong merchant culture
* Focus on building superior intellectual capital
<PAGE>
Merchant Culture
- ----------------
* Complete commitment to applying real options theory
* Understand the value
* Organize to capture it
* Keys to success are excellent valuation and risk
management skills
* Highly incentivized, discretionary compensation scheme
<PAGE>
EBIT Growth:
An Emerging Industry Leader
___________________________
El Paso Merchant Energy
[Graphic Chart of EBIT Growth]
1997 -$ 28
1998 $ 9
1999 $ 46
200E $130
<PAGE>
EBIT Growth:
An Emerging Industry Leader
- ---------------------------
El Paso Merchant Energy
Pro Forma combined and reorganized
[Graphic chart of EBIT Growth]
1997 -$ 28
1998 $ 9
1999 $ 46 $354 $400
2000E $130 $330 $460
<PAGE>
Project Electron
- ------------------
* Innovative off-balance vehicle for selected power and
gas assets
* $2-3 billion of third party capital available
* Low cost of capital
* El Paso earns cash management fee
* Based on NPV of assets in vehicle
* Fixed annually
<PAGE>
1999 Power Transactions
- ------------------------
Transaction MW Status
- ----------------------------------------------------------------------------
Brush 50 Contract renegotiation completed
Dynegy 370 Closed
Darmouth Pawtucket 67 Closed
East Coast Power 50% of 1,037 Closed
CE Generation 50% of 897 Closed; restructuring in progress
Newark Bay 137 Closed
Bonneville Pacific 50% of 85 1st Qtr 2000 Closing
Mass Power 33% of 240 Closed
______________
Total 1,577 Net
==============
OVER $500 MM IN NPV
<PAGE>
1999 Gas Transactions
- ----------------------
1999 Transactions MTM Status
-----------------------------------------------------
Structured supply deal $ 40MM Closed
Capacity deals 40MM Closed
Asset management deals 7.5MM Closed
IPP fuel deals 10MM Closed
Storage deals 20MM Closed
--------------
Total $97.5MM
==============
<PAGE>
Value of the Identified Opportunities
- -------------------------------------
$ Millions
5-Year
Investment
Opportunity NPV
- --------------------------------------------------------------
6,000 MW $4,000-6,000 $2,400-3,000
generation capacity
Gas-based 500-1,500 1,200-2,000
capacity, storage
and fuel peaking
--------------------------------------
Total $4,500-6,500 $3,600-5,000
======================================
<PAGE>
Embedded Optionality
- ----------------------
[Graphic Map of the United States charting assets]
Dynegy Power Assets
Crystal Gas Storage
Elba Island LNG
<PAGE>
[LOGO] El Paso Energy
Summary: Natural Gas, Power,
and Continued Growth
---------------------------------
EBIT Growth
Pro Forma
Combined
Segment 2000E Growth Rate Comments
- -----------------------------------------------------------------------
Pipelines $1,240 3-5% Existing expansion
Production 520 10-12% Built-in production growth
Merchant Energy 460 20-30% Project Electron; revenue
and Power synergies; international
ramp-up
Field Services 320 20-30% Growing volumes plus
continued acquisitions
Refining and Other 160 2-5% Includes Aruba expansion
-------------------------------------------------------
$2,700 15%
<PAGE>
Continued Strong Earnings Growth
- --------------------------------
Earnings per Share
20% Growth
[Graphic chart]
1999* $2.12
2000* $2.45
2001 $3.00
* El Paso stand-alone
<PAGE>
Investment Summary
- -------------------
* Near-term EPS growth of 15%+ very solid
* Favorable industry fundamentals
* Built-in growth in Pipelines and Production
* Strong backlog in Merchant Energy and Power
* Field Services upside from MLP and PG&E-GTT transaction
* Conservative merger cost savings
* Longer-term growth prospects are also compelling
* Merchant Energy model offers breakout potential
* Telecommunications potential
* Value inherent in integrated market positions
* Opportunities for asset rationalization
<PAGE>
Stock Price Appreciation
As of December 31, 1999
[Chart] EPG 309%
S&P 500 264%
S&P Natural 226%
S&P
EPG Natural Gas S&P 500
12/31/1992 63.00% 21.00% 8.00%
12/31/1993 89.00% 39.00% 15.00%
12/31/1994 61.00% 28.00% 14.00%
12/31/1995 51.00% 76.00% 52.00%
12/31/1996 166.00% 127.00% 83.00%
12/31/1997 250.00% 162.00% 140.00%
12/31/1998 266.00% 180.00% 204.00%
12/31/1999 309.00% 226.00% 264.00%
<PAGE>
[LOGO] EL PASO ENERGY
------------------
Natural Gas to Power:
El Paso Energy Corporation
--------------------------------
Natural Gas to Power:
El Paso Energy Corporation
The following was part of a presentation given by William A Wise to GTT
Employees
_________________
[Logo] El Paso Energy
Pipelines and Power
-------------------------------
Presentation to GTT Employees
- -------------------------------
<PAGE>
Combined North American Gas and Power Operations Pipelines
________________________
[Graphic Map of United States showing locations of various assets]
El Paso
- -----------
- -- Gas Transmission
O Production
* Gathering/Processing
o Power Plants
Coastal
- -----------
- - Gas Trasmission
* Gathering/Processing
O Production
o Power Plants
<PAGE>
Pipelines
_________
* Strongest group of assets in the world-best markets and
best supply access
* Extremely favorable macro trends
* Growing power generation demand for gas
* Environmentally preferred fuel
* CIG, Southern Natural Gas and Tennessee Gas Pipelines
all essentially fully contracted
* Significant long-term upside on ANR and El Paso Natural Gas
* Growing inventory of expansion projects
* 2-5% growth plus significant free cash flow
<PAGE>
Field Services
- ---------------
* Leading asset position in the fastest growing producing
areas: Rockies, South Texas, Gulf of Mexico and
San Juan Basin
* Large combined E&P company will expand opportunity set
significantly
* Increased potential to grow El Paso Energy Partners
* Significant integration opportunities
<PAGE>
Size and Scope of Combination
- ------------------------------
$ Millions
GTT EPFS Coastal Total
- ---------------------------------------------------------------------------
Pipeline volumes (BCf/d) 2.8 4.4 1.0 8.2
Processing volumes (Bcf/d) 1.5 1.0 1.5 3.0
NGL production (MBbls/d) 90 60 55 205
Miles of pipeline 9,000 11,000 4,000 24,000
Processing plants 9 11 15 35
2000 EBIT $102* $151 $ 75 $328
2001 EBIT $127 $192 $ 90 $409
* Assumes full-year earnings
