Filed Purusant to
Rule 425
EL PASO ENERGY CORPORATION AND THE COASTAL CORPORATION
ANNOUNCE MERGER AGREEMENT
HOUSTON, TEXAS, JANUARY 18, 2000-El Paso Energy Corporation (NYSE:EPG)
and The Coastal Corporation (NYSE:CGP) announced today the execution
of definitive agreements for the merger of El Paso Energy and Coastal.
The total value of the transaction is approximately $16 billion,
including $6 billion of assumed debt and preferred equity. Each
share of Coastal common stock and Class A common stock will be
converted on a tax-free basis into 1.23 shares of El Paso Energy
common stock. The outstanding convertible preferred stock of
Coastal will be exchanged for El Paso Energy common stock on the
same basis as if the preferred stock had been converted into
Coastal common stock immediately prior to the merger. It is
expected that the merger will be completed during the fourth
quarter of 2000 and be accounted for as a pooling of interests.
The total enterprise value of the combined company will exceed $32
billion, with an equity value of approximately $19 billion.
Ronald L. Kuehn, Jr., chairman of El Paso Energy Corporation,
said, "This exciting combination of two strong companies will
create a world-scale, integrated gas and power company which will
clearly benefit from the convergence of these two industries."
"The merger is expected to be accretive to El Paso's earnings
per share immediately and add more than five percent to EPS in both
2001 and 2002," said William A. Wise, president and chief executive
officer of El Paso Energy. "With this merger, El Paso Energy will
become the only company that is one of the top five companies in
every sector of the wholesale natural gas and power arena,
including natural gas transmission, production, gathering and
processing, marketing, and power generation. As power generation
becomes the largest consumer of natural gas, we believe integration
along the full value chain will enhance profitability in each
segment of our business."
"Coastal's growth strategies are in place to deliver double-
digit earnings growth for the next several years," said David A.
Arledge, chairman, president, and chief executive officer of The
Coastal Corporation. "This transaction will provide the foundation
of assets, personnel and financial strength to accelerate this
growth and create a truly unique company which is a major player in
all aspects of the converging North American natural gas and power
markets."
Mr. Wise added, "Our two companies complement each other in
strategically compelling ways. El Paso Energy's coast-to-coast
pipeline system reaches from the west coast to the southeastern
United States and then moves upward along the eastern seaboard to
key markets in the Northeast; Coastal's ANR pipeline system covers
strategic areas across the Midwest and Great Lakes regions, and its
Colorado Interstate Gas system traverses the Rockies. The combined
interstate transmission system of the new company will consist of
over 58,000 miles of pipeline reaching all the major growth areas
in the country, accessing every key supply source in North America,
and moving more gas than any other energy company in the world.
The combined company will be the second largest gatherer of natural
gas in the United States and the third largest U.S. producer of
natural gas-after BP Amoco and ExxonMobil-with over 5 trillion
cubic feet of proved gas equivalent reserves. Together the
companies control over 12,000 net megawatts of power generation
worldwide. This breakout move assures greater growth opportunities
for each of our business units.
"This merger is consistent with the strategy we have had in
place for the past five years. We have acquired strategic assets,
combined them efficiently, enhanced their presence in the
marketplace, effectively managed commodity volatility, and utilized
our expanded platform to develop new growth opportunities," Mr.
Wise said. "Our track record of successfully combining and
operating large energy organizations is second to none. After
today's announcement, we will begin immediately assembling
transition teams with key personnel from both organizations. This
process has proven effective in our previous mergers, ensuring that
we capture the best ideas, practices, and personnel from each
organization and achieve a smooth transition to a single
organization immediately upon closing. We expect to realize at
least $200 million in cost savings annually when the two companies
are merged into one.
"We believe the increased size, scope, and scale of the
combined company will enhance our ability to continue delivering
double-digit earnings growth and provide additional opportunities
in the telecommunications and power transmission arenas. The
58,000 mile pipeline system will access over 70 percent of the U.S.
population and provide secure, readily available pathways for data,
voice, and power transmission," Mr. Wise continued.
The combined company will be headquartered in Houston, Texas.
Ronald L. Kuehn, Jr. will remain chairman of the board of El Paso
Energy Corporation until December 31, 2000. At that time, William
A. Wise-the current president and chief executive officer of
El Paso Energy-will assume the position of chairman in addition to
continuing as president and chief executive officer of the new
combined company. David A. Arledge, who is currently the chairman,
president, and chief executive officer of The Coastal Corporation,
will become the vice chairman and will oversee the non-regulated
operations of the combined company. The Board of Directors for the
combined company will consist of twelve directors-seven designated
by El Paso Energy and five designated by Coastal.
The merger is subject to customary conditions, including
approval by the stockholders of both companies and receipt of
certain required governmental approvals. The merger agreement
includes customary and reciprocal provisions regarding stock
options, non-solicitation, termination fees, and expense
reimbursements.
Donaldson, Lufkin & Jenrette Securities Corporation is acting
as El Paso Energy's financial advisor for the transaction, while
Merrill Lynch & Co. is advisor to The Coastal Corporation. The law
firm of Fried, Frank, Harris, Shriver & Jacobson is El Paso
Energy's legal advisor, and Coastal is represented by the law firm
of Skadden, Arps, Slate, Meagher & Flom, LLP.
With over $16 billion in assets, El Paso Energy Corporation
provides comprehensive energy solutions through its strategic
business units: El Paso Natural Gas Company, Tennessee Gas Pipeline
Company, Southern Natural Gas Company, El Paso Field Services
Company, El Paso Merchant Energy Company, El Paso Production
Company, and El Paso Energy International Company. The company
owns North America's largest natural gas pipeline system, both in
terms of throughput and miles of pipeline, and has operations in
natural gas transmission, gas gathering and processing, gas and oil
production, power generation, merchant energy services, and
international project development. Visit El Paso Energy's web site
at www.epenergy.com.
The Coastal Corporation is a Houston-based energy holding
company with consolidated assets of more than $14 billion and
subsidiary operations in natural gas transmission, storage,
gathering/processing and marketing; oil and gas exploration and
production; petroleum refining, marketing and distribution;
chemicals; power production; and coal. Coastal's World Wide Web
site at www.coastalcorp.com provides additional information on the
company.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This release 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 release, including, without limitation, oil and gas prices;
general economic and weather conditions in geographic regions or
markets served by El Paso Energy and The Coastal Corporation 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 make these
statements and projections in good faith, neither company nor their
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 (SEC) filings for
additional important factors that may affect actual results.
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 cleared
with the SEC, the proxy statement/prospectus will be available free
of charge on the SEC's web site (www.sec.gov), from El Paso Energy
Corporation's office of Investor Relations, and from Coastal's
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.
# # #
Contacts:
El Paso Energy Corporation
Public Relations Investor Relations
Norma F. Dunn Bruce L. Connery
Senior Vice President Vice President
Office: (713) 420-3750 Office: (713) 420-5855
Fax: (713) 420-3632 Fax: (713) 420-4417
The Coastal Corporation
Media Relations Investor Relations
Greg Clock Stirling D. Pack
Director Vice President
Office: (713) 877-3993 Office: (713) 877-6924
Fax: (713) 877-3299 Fax: (713) 297-1102
* Merger Presskit
(http://www.epenergy.com/merger2/presskit2.asp)
* Map of Assets
* Press Release
* Fact Sheet
* El Paso Energy Corporate Profile
* Coastal Corporate Profile
* Ronald Kuehn, Jr. - Bio
* William A. Wise - Bio
* David A. Arledge - Bio
* El paso Energy Growth
* Stock Price Appreciation
* El Paso Energy Logo
Merger Presskit
El Paso Energy Corporation (NYSE:EPG) and The Coastal Corporation (NYSE:CGP)
announced today the execution of definitive agreements for the merger of El
Paso Energy and Coastal.
As a service to our shareholders, investors and customers, we have made our
press kit available online. The list of links on the left connects you with
the latest information about the El Paso Energy/Coastal Corporation. As you
can see, you have instant access to the merger press release, the corporate
profiles, a map of assets and much more.
<PAGE>
[Press Release dated January 18, 2000 filed as Exhibit 99.1]
<PAGE>
El Paso Energy Corporation Merger with Coastal Corporation
Map of Assets
Combined U.S. Operations: El Paso Energy and Coastal
[Graphic Map of United States]
- -----------------------------------------------
- - Gas Transmission O Production
* Gathering/Processing o Power Plants
________________________________________________
Fact Sheet
Financial Statistics ($ Millions)
El Paso Coastal Combined
1999 est. 1999 est. 1999 Pro Forma est.
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
Total Assets $16,800 $ 14,700 $ 31,500
Shares
outstanding (MM) 230 214 499
Strategic Benefits of Combination
* Creates North American gas and power industry leader.
* Creates the only company that is one of the top five
companies in every sector of the wholesale natural gas and
power arena.
* Creates well-positioned convergence player, integrated
from wellhead to electron, with the scale and market reach
to lead the industry.
* Will be immediately accretive to earnings per share in
2001 and 2002 as well as balance sheet and credit enhancing.
* Provides the scale needed to build break out businesses
such as telecommunications and electric transmission.
* Improves growth prospects for all business segments
through additional scale, skills, geographic reach and
opportunity sets.
El Paso Energy Corporation Merger with Coastal Corporation
El Paso Energy Highlights
* The largest natural gas company in North America. Owns
North America's largest natural gas pipeline system, both in
terms of throughput and miles of pipeline. One of the
fastest growing companies in America, with an asset value in
excess of $16 billion.
* Employs approximately 4,700 people and is headquartered
in Houston, Texas.
* Provides comprehensive energy solutions through its
strategic business units: El Paso Natural Gas Company,
Tennessee Gas Pipeline Company, Southern Natural Gas
Company, El Paso Field Services Company, El Paso Merchant
Energy Company, El Paso Production Company, and El Paso
Energy International Company. Has operations in natural gas
transmission, gas gathering and processing, gas and oil
production, power generation, merchant energy services, and
international project development.
Coastal Highlights
* A Fortune 500 energy holding company with assets of
more than $12 billion and subsidiary operations across the
energy industry.
* Employs approximately 13,200 people and is
headquartered in Houston, Texas.
* Offers a complete line of energy services-natural gas
gathering, marketing, processing, storage and transmission;
petroleum refining, marketing and distribution and
chemicals; gas and oil exploration and production; coal
mining; and power-to natural gas transporters, producers,
electric generators and a variety of end-users.
* Coastal's ANR pipeline system covers strategic areas
across the Midwest and Great Lakes regions, and its Colorado
Interstate Gas system traverses the Rockies.
Comparative Ranking of Combined Company
Interstate Power
Interstate Transportation Marketed
Miles (Bcf/d) (MM MWh)
El Paso/Coastal 56,600 20.7 89.9
El Paso Energy 38,600 12.7 79.4
Coastal 18,000 8.0 10.5
Duke Energy 11,500 3.9 98.9
Enron 32,000 9.0 402.4
Williams 27,000 10.1 16.9
Source: DLJ Research
<PAGE>
El Paso Energy Corporate Profile
El Paso Energy Corporation is one of the fastest growing companies in
America today, with an asset value in excess of $16 billion. The
company provides comprehensive energy solutions through its strategic
business units: Tennessee Gas Pipeline Company, El Paso Natural Gas
Company, Southern Natural Gas Company, El Paso Field Services
Company, El Paso Merchant Energy Company, El Paso Production Company,
and El Paso Energy International Company. The company owns North
America's largest natural gas pipeline system, both in terms of
throughput and miles of pipeline, and has operations in natural gas
transmission, gas gathering and processing, gas and oil production,
power generation, merchant energy services, and international project
development. El Paso Energy is traded on the New York Stock Exchange
under the symbol EPG and is headquartered in Houston, Texas. Ronald
L. Kuehn, Jr. is chairman of the board of directors. William A. Wise
is president and chief executive officer of El Paso Energy. Other
senior officers of the holding company include H. Brent Austin,
executive vice president and chief financial officer; Joel Richards
III, executive vice president, Human Resources and Administration;
Britton White, Jr., executive vice president, General Counsel and
Governmental Affairs; and William A. Smith, executive vice president,
Business Development.
Business Units
Natural Gas Transmission
El Paso Energy Corporation's pipeline system spans the United States
from coast to coast and border to border and extends into Mexico. The
company's pipeline systems collectively comprise 38,600 miles of the
best-run, safest, most reliable natural gas transmission pipeline in
the business. John W. Somerhalder II is president of the Pipeline
Group.
Tennessee Gas Pipeline-The assets of Tennessee Gas Pipeline
Company include two separate interstate pipeline systems,
Tennessee Gas Pipeline and Midwestern Gas Transmission. These
pipelines are powered by 100 compressor stations transport natural
gas from supply regions in Texas, Louisiana and the Gulf of Mexico
to key markets in 19 eastern and midwestern states as well as major
metropolitan areas including New York City, Boston and Chicago.
John W. Somerhalder II is president of Tennessee Gas Pipeline.
El Paso Natural Gas-Two interstate pipeline systems, El Paso
Natural Gas and Mojave Pipeline Operating Company, comprise El Paso
Natural Gas Company. El Paso Natural Gas serves important market
regions in the western half of the United States.
Patricia A. Shelton is president of El Paso Natural Gas.
Southern Natural Gas Pipeline-Southern Natural Gas is the major
pipeline system serving the Southeast including high growth market
areas from Florida to East Texas. The system's pipeline transports
natural gas across seven states powered by nearly half a million
horsepower of compression. James C. Yardley is president of
Southern Natural Gas.
Production and Merchant Energy
El Paso Energy's production, power generation, and marketing services
are integrated within the Production and Merchant Energy group. Ralph
Eads is the group executive vice president of this organization.
El Paso Merchant Energy Company-El Paso Energy's marketing and
power generation activities are managed by El Paso Merchant
Energy. This group provides natural gas transportation
management, storage, and integrated price risk management to
wholesale customers throughout North America. El Paso Merchant
Energy also develops and invests in power generation facilities.
The company owns or has interests in 5,500 megawatts of
generation, is a top-ranked power marketer, and has 24-hour-a-day
electric dispatch capability. Greg G. Jenkins is president of El
Paso Merchant Energy.
El Paso Production Company-Operating primarily in the Gulf of
Mexico, Texas, Louisiana, Oklahoma, and Alabama, El Paso
Production is focused on profitably managing the company's oil and
natural gas reserves. El Paso Production currently has an active
leasehold interest in approximately 421 offshore blocks, totaling
approximately 1.7 million net acres. With over 1.4 trillion cubic
feet equivalent of reserves, El Paso is the largest leaseholder in
the shallow-water area of the Gulf of Mexico. John B. Holmes, Jr.
is the president of El Paso Production.
El Paso Field Services Company
Through its interests in El Paso Energy Partners, L.P., El Paso Field
Services Company has become the largest gatherer of offshore Gulf of
Mexico natural gas and the second largest natural gas gatherer
industry wide. Field Services provides gathering, treating,
processing, compression, and intrastate transmission services to
producers throughout the southern United States and the Gulf of
Mexico. The company also provides producer-financing services through
EnCap Investments L.C. The company owns and operates $1.7 billion in
assets including 60 pipeline systems, 16 processing and treating
plants, and 8 offshore platforms. Robert G. Phillips is president of
El Paso Field Services.
El Paso Energy International Company
Developing energy infrastructure projects around the world is the
focus of El Paso Energy International Company. The company currently
holds interests in assets on five continents, including 5,000 miles
of pipeline and 6,600 megawatts of power generation. El Paso Energy
International offers financing, project development, construction and
operation services. John D. Hushon is president of El Paso Energy
International.
For more information:
El Paso Energy can be found on the Internet at www.epenergy.com.
<PAGE>
Coastal Corporate Profile
[Logo]
The Coastal Corporation
Coastal is a Houston-based Fortune 500 energy holding company with
consolidated assets of more than $14 billion and subsidiary
operations in natural gas gathering, storage, gathering/processing
and marketing; oil and gas exploration and production; petroleum
refining, marketing and distribution; chemicals; power production;
and coal. Coastal's World Wide Web site at www.coastalcorp.com
provides additional information on the company.
Natural Gas
Coastal handles about 13 percent of all gas consumed in the United
States. The company's extensive natural gas business includes
domestic gathering, processing, storage and transportation
operations, ownership interests in almost 18,000 miles of domestic
pipelines, and an international gas project development company.
Coastal's gas storage facilities are the second largest in the United
States. Unregulated natural gas marketing is performed by the 50-
percent owned ventures, Engage Energy U.S., L.P. and Engage Energy
Canada, L.P., positioned as one of the largest marketers of natural
gas and electricity in North America.
Refining, Marketing and Chemicals
Coastal's four refineries have the capacity to process 468,000
barrels of crude oil per day to produce a range of gasolines and
diesel fuels, jet fuels, asphalt, industrial lubricants, and a host
of quality automotive products. Coastal also produces agricultural
and industrial chemicals and petrochemicals at several facilities in
the United States and Canada. Coastal moves products to market
through an efficient transportation network, including crude oil and
product pipelines, truck fleets, tugs and barges and railroad tank
cars.
Exploration and Production
With primary operations in the Gulf of Mexico, South Texas and Utah,
and with exploration and production rights in a number of foreign
countries, Coastal's exploration and production division is its most
rapidly expanding business. From 1994 through 1997, E&P increased
production 80 percent, reduced cash production costs more than 25
percent, and increased total reserves 143 percent. In 1997, for the
third consecutive year, E&P added proved reserves that were more than
three times the volumes produced.
Power
Coastal's successful electric power production subsidiary now
operates plants in the United States, China, El Salvador, and the
Dominican Republic and has projects in various stages of development
in Pakistan, Nicaragua, and Guatemala. The company seeks
opportunities in the United States to complement its upstream and
downstream gas assets with gas-fired power projects.
Coal
Coastal's coal business in the eastern United States is substantially
low-sulfur and is transforming its operations from processing and
marketing into an integrated company that mines, processes, and sells
its own coal. Among other things, it operates a business that blends
and mixes custom-made fuel to meet the specific needs of its
customers, most of which are large power plants
<PAGE>
Ronald Kuehn, Jr. Bio
[Picture of Ronald Kuehn, Jr.]
Ronald Kuehn, Jr. is chairman of the Board of Directors of El Paso
Energy Corporation. He was chairman, president, and chief executive
officer of Sonat Inc. before joining El Paso following the merger
of the two companies in 1999.
He joined Sonat in July of 1970, serving in various positions with
Southern Natural Gas Company including senior vice president,
general counsel and secretary. He became executive vice president
of Sonat Inc. in 1981; president and chief operating officer in
1982; president and chief executive officer in 1984; and assumed
the additional title of chairman in April of 1986.
Before joining Sonat, he was executive vice president and general
counsel for Allied Artists Pictures. He was also an associate
attorney at Hughes Hubbard & Reed.
Mr. Kuehn has a bachelor of science degree from Fordham University
and received his law degree from Fordham Law School.
He is a member of the board of directors of AmSouth
Bancorporation-Birmingham, Alabama; Dun & Bradstreet
Corporation-Murray Hill, New Jersey; Protective Life
Corporation-Birmingham, Alabama; Praxair, Inc.-Danbury,
Connecticut; Transocean Offshore Inc.-Houston, Texas, and Union
Carbide Corporation-Danbury, Connecticut. He also serves on the
Board of Trustees for Tuskegee University and Southern Research
Institute.
He serves on the boards of the Birmingham Area Chamber of Commerce,
United Way of Jefferson-Shelby-Walker Counties and National Boys &
Girls Clubs of America. He is a past president of the Birmingham
Area Council of Boy Scouts of America. Additionally, he is a member
of the National Petroleum Council, the Bretton Woods Committee,
Newcomen Society of the United States, Newcomen Society of North
America, Birmingham Rotary Club, Leadership Birmingham, Leadership
Alabama, and Business Leadership.
He is a former chairman of the Interstate Natural Gas Association
of America as well as the Gas Research Institute.
He and his family reside in Birmingham, Alabama.
<PAGE>
William A. Wise Bio
[Picture of William A. Wise]
William A. Wise is president and chief executive officer and a
member of the board of directors of El Paso Energy Corporation. He
is chairman and chief executive officer and a member of the board
of directors of El Paso Natural Gas Company.
Mr. Wise has been with the company since 1970, becoming counsel,
senior counsel and principal counsel of the El Paso Company in
1980. He became vice president and assistant general counsel of
that company in May 1982, general counsel in May 1983, and senior
vice president in August 1983. In January 1984, he became senior
vice president of El Paso Natural Gas Company and became executive
vice president in May 1987. Mr. Wise became president and chief
operating officer in April 1989, chief executive officer in January
1990, chairman in January 1994, and assumed the title of chairman,
president and chief executive officer of El Paso Energy Corporation
in April 1996.
Mr. Wise has a bachelor of arts degree from Vanderbilt University
and received his law degree from the University of Colorado School
of Law, where he was an editor of the University of Colorado Law
Review.
He is a member of the Colorado Bar Association, the Natural Gas
Council, the New York Mercantile Exchange Natural Gas Futures
Advisory Committee, the Tri-Regional Committee, the National
Petroleum Council, the Texas Governors Business Council, the
Business Roundtable and Team 100. He is a member of the board of
directors of Battle Mountain Gold Company; Chase Bank of Texas -
Houston, the Greater Houston Partnership; the Interstate Natural
Gas Association of America and the Sam Houston Area Council for the
Boy Scouts of America. Mr. Wise serves as chairman of the Charter
School Task Force for the Texas Governor's Business Council and is
on the board of governors for the Houston Forum. He is also a
member of the board of trustees of the Museum of Fine Arts in
Houston and co-chairman of the board of directors of the Houston
Music Hall Foundation.
Mr. Wise is a former chairman of the board of the Interstate
Natural Gas Association of America.
He and his family reside in Houston, Texas.
<PAGE>
David A. Arledge Bio
The Coastal Corporation
[Logo]
[Photo of David A. Arledge]
David A. Arledge
DAVID A. ARLEDGE is chairman, president and chief executive officer
of The Coastal Corporation, a Houston-based energy holding company
with consolidated assets of more than $12 billion and subsidiary
operations in natural gas transmission, storage,
gathering/processing and marketing; oil and gas exploration and
production; petroleum refining, marketing and distribution;
chemicals; power production; and coal.
Mr. Arledge graduated with honors from the University of Texas,
Austin, where he earned a bachelor's degree in business
administration. He received a law degree from the University of
Texas Law School and attended New York University's Graduate Tax
Law Program.
Mr. Arledge was appointed chief operating officer of The Coastal
Corporation in July 1993 and elected senior executive vice
president the following month. He was elected president in March
1994, appointed to the Executive Committee in December, and assumed
the additional post of chief executive officer in October 1995. On
July 15, 1997, he was elected chairman of the board, becoming the
second chairman in the company's 42-year history.
Mr. Arledge was recruited to Coastal to head the corporate tax
department. He was elected a vice president of the company in 1982
and was given the additional responsibilities of treasury and
corporate finance functions the following year. He was elected
senior vice president, Finance in January 1984 and was named to the
additional post of chief financial officer later the same year. In
1988, Mr. Arledge was elected to the board of directors. He was
elected executive vice president the following year.
Mr. Arledge is chairman of the board of the Interstate Natural Gas
Association of America, a member of the 25 Year Club of the
Petroleum Industry, the Natural Gas Council, and a member of the
State Bar of Texas. He also serves as a member of the board of the
Greater Houston Partnership and participates in the Chairman's Club
of the United Way.
He and his family reside in the Houston area.
<PAGE>
El Paso Energy Growth
Eight Years of Accelerating El paso Energy Growth
($ and Shares Outstanding in Millions)
Post
Post Post Sonat Pro Forma
IPO Tenneco Merger Coastal
3/31/92 12/31/96 12/31/99E Merger
---------------------------------------------
Total assets $ 2,081 $ 8,843 $16,800 $31,500
Shares outstanding 74 111 230 499
Equity market value $ 844 $ 2,791 $ 8,520 $18,525
Total enterprise value $ 1,481 $ 6,182 $16,550 $32,325
<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>
Script of Video to Employees
William A. Wise
Good morning.
I wish I could speak with each one of you in
person today; however, since the need to
provide a timely account of today's events is
critical, I'm using this video as a way to
get information to you as quickly as
possible.
I have exceptional news to share with you.
As you may have already heard by now, we
issued a press release this morning
announcing a new transaction that will have a
significant impact on the future of our
company.
El Paso Energy Corporation and The Coastal
Corporation have entered into a strategic
merger agreement. Under the terms of this
agreement, El Paso and Coastal will combine
to form a new company, one that will be, by
any measure, the leading natural gas and
power franchise in North America. Last
year's merger with Sonat solidified our core
base in all the strategic segments of the
natural gas industry. Today's transaction
vaults us into the top tier of energy majors.
The total value of this deal is approximately
$16 billion, including $6 billion of assumed
debt and preferred equity. It is a stock
transaction and will be accounted for as a
pooling of interests. Each share of Coastal
stock will be exchanged for 1.23 shares of El
Paso stock.
The new combined company will become the only
company to have a top tier presence in every
sector of the natural gas and power arena,
including natural gas transmission,
production, gathering and processing,
marketing, and power generation. Our combined
interstate transmission systems will consist
of 60,000 miles of pipeline and will move
more gas than any natural gas company in the
world. We will have 16,000 miles of
gathering systems, 22 processing plants, and
we will process over one and a half billion
cubic feet per day of gas in our midstream
business. Together the companies control over
12,000 MW of power generation worldwide. The
new company will have proven reserves in
excess of five trillion cubic feet equivalent
and based on our for the combined company's
production for this year, we will be among
the top three U.S. producers of natural gas,
immediately behind Exxon and BP/Amoco. In
addition, we will be adding some new
businesses to our current portfolio of energy
services, including the refining, retail
marketing, and terminaling of refined
products.
As we discussed at our recent employee
meetings, one of our key strategies for
continued future growth has been to seek
significant acquisitions and mergers within
our industry. The merger between El Paso and
Tenneco Energy is generally perceived to be
one of the most successful mergers in the
energy industry. The El Paso/Sonat merger
has been equally successful. I believe that
this merger will set still a new standard,
not only for our company, but also for the
energy industry. As you may recall from one
of my slides in the employee meeting, the
total enterprise value of this company at the
end of 1995 was $2 billion. In 1997, after
the Tenneco merger, we more than doubled the
enterprise value of the company to $7
billion. Then at the end of 1999, after we
closed the merger with Sonat, the enterprise
value of the company more than doubled again
to over $16 billion. With this deal, in just
one year, we have the opportunity to double
the total enterprise value of this company
once again to over $32 billion.
What does achieving size, scale, and scope of
this magnitude mean to us? It most certainly
means we will have access to opportunities
that are unprecedented in this industry. We
will be uniquely positioned to take advantage
of emerging opportunities as the gas and
power arenas continue to converge.
Furthermore, we will be integrated from
wellhead to electron with the scale and
market reach to lead both the gas industry
and the power industry in North America.
I know that many of you have questions about
this merger and how it will impact you. I'd
like to take a few minutes now to try to
address some of these questions.
Let me begin by telling you about The Coastal
Corporation. Coastal is a Fortune 500 energy
company with assets of more than $14 billion
and subsidiary operations in natural gas
gathering, marketing, processing, storage and
transmission; petroleum refining, marketing,
distribution and chemicals; gas and oil
exploration and production; coal mining; and
power. The company's headquarters are in
Houston.
Coastal has 2 large regulated pipeline
systems: ANR pipeline and Colorado Interstate
Gas Company. The regulated pipelines
transport 8 billion cubic feet of gas per day
through 18,000 miles of pipeline, principally
located in strategic regions throughout the
central and Midwestern portion of the United
States. The company also has interests in
the Great Lakes, Wyoming and the Alliance
pipelines.
Coastal has 4,000 miles of gathering systems
in its midstream business and 10 processing
plants, 7 of which it operates. Coastal has
entered into a partnership with a large
Canadian energy company to form a company
called Engage Energy, which markets natural
gas and provides energy management services.
Coastal also has significant exploration and
production assets that include 3.6 Tcfe of
proven reserves, the vast majority of which
are natural gas. Coastal oil and gas has been
one of the most successful oil and gas
companies achieving top quartile performance
in both finding costs and production growth.
In addition to these assets, which are a
natural fit with our existing assets, Coastal
has 3 principal refineries, which have the
capacity to process 520,000 barrels of crude
oil per day and produce a range of fuels,
lubricants, and automotive products. They
also have chemical operations, terminal
facilities, and about 400 company-owned
retail stores.
This is a giant move for our company, but we
feel this is the right time and the right
opportunity for us. Let me describe for you
some of the key strategic benefits of this
merger. We believe the scale, the skills,
the opportunity sets, and the geographic
reach of each business unit will benefit from
this merger. The merger will be accretive to
our earnings and it will enhance our credit
rating. We will have access to capital at a
lower cost and we believe that, over time, we
will become the energy company of choice for
institutional investors.
I want to take this opportunity to emphasize
that we believe that El Paso Energy on a
standalone basis remains on target for
meeting our stated goal of 10 to 15 percent
earnings growth for the next few years.
However, the financial community and our
investors expect us to continue to increase
earnings and shareholder value. We believe
that this merger will help us meet those
expectations through growth in both the
regulated and non-regulated sides of our
business-the combination should enhance the
performance of all our business units. In
fact, we expect the merger to add more than 5
percent to our earnings in 2001 and 2002.
Now, let me tell you about the company that
will be formed when the merger is complete.
The company will be headquartered in Houston.
Ronald L. Kuehn, Jr. will remain chairman of
the board of El Paso Energy until December
31, 2000. At that time, I will become
chairman, president and chief executive
officer of the combined company. David A.
Arledge, who is currently the chairman,
president and chief executive officer of The
Coastal Corporation, will become vice-
chairman and will oversee the non-regulated
operations of the combined company. The
Board of Directors for the combined company
will consist of 12 directors-seven designated
by El Paso and five designated by Coastal.
Now here's the sequence of events for this
transaction. First, the Securities and
Exchange Commission must review the merger
disclosure documents. This will take about 60
to 90 days. During this time, we will also
seek to obtain any regulatory approvals that
are required. Once the SEC review is
complete, shareholder approvals from both
companies will be sought. We expect to
complete this approval process and close the
deal by year-end 2000.
I'd like to stress again what an important
opportunity this transaction provides for all
of us. The challenge before us now is to
apply our proven experience to realize the
full potential of this new merger. We will
begin immediately assembling transition teams
with key personnel from both organizations.
This process has proved effective in our
previous mergers, ensuring that we capture
the best ideas and practices from each
company and achieve a smooth transition to a
single organization immediately upon closing.
I hope my discussion today has helped you
understand the strategic reasons for the
merger and how it will help ensure the
continued growth of El Paso Energy
Corporation. You can look for further
communications about this merger in the very
near future. We welcome your questions and
are committed to doing everything we can to
answer them.
In closing I would also like to thank each of
you for the tremendous job you have done in
completing the Sonat merger. That success has
positioned us to take this next step to
becoming the clear leader in our industry.
Thank you.
[The following information inserted as
a graphic on video image]
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
This release 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 release, including, without
limitation, oil and gas prices; general
economic and weather conditions in geographic
regions or markets served by El Paso 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 make these statements and
projections in good faith, neither company
nor their 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.
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) and from El Paso Energy
Corporation's office of Investor Relations.
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 [Logo] The Coastal Corporation
EL PASO ENERGY CORPORATION/
COASTAL CORPORATION MERGER
---------------------------------
January 2000
<PAGE>
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 make these statements and
projections in good faith, neither company
nor their 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) and from El Paso Energy
Corporation's office of Investor Relations
and 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>
AGENDA
* Transaction Overview
* Strategic Benefits
* Combined Operations Review
* Financal Review
* Summary
<PAGE>
[Logo] El Paso Energy [Logo] The Coastal Corporation
TRANSACTION OVERVIEW
------------------------------------
<PAGE>
TRANSACTION SUMMARY
* Stock-for-stock exchange
* 1.23 El Paso common shares for each Coastal share
* Pooling of interests accounting
* 12 member combined Board of Directors,
7 from El Paso and 5 from Coastal
* $16 billion transaction value
* $10 billion equity issued
* $6 billion debt and preferred equity assumed
<PAGE>
COMBINED NORTH AMERICAN GAS AND POWER OPERATIONS
[Graphic Map of United States]
- --------------------------------------------
El Paso
- --------------------------------------------
- - Gas Transmission O Production
* Gathering/Processing o Power Plants
- --------------------------------------------
<PAGE>
COMBINED NORTH AMERICAN GAS AND POWER OPERATIONS
[Graphic Map of United States]
- --------------------------------------------
El Paso
- --------------------------------------------
- - Gas Transmission O Production
* Gathering/Processing o Power Plants
- --------------------------------------------
- --------------------------------------------
Coastal
- --------------------------------------------
- - Gas Transmission O Production
* Gathering/Processing o Power Plants
- --------------------------------------------
<PAGE>
RELATIVE SIZE OF COMBINED COMPANY
$ Millions
Equity
1999E Net 1999E Market Enterprise
Income EBITDA Value Value
---------------------------------------------
Gas companies:
El Paso/Coastal $ 920 $ 3,200 $ 18,525 $ 32,325
Coastal 500 1,500 7,700 13,470
El Paso 420 1,700 8,520 16,550
Enron 902 2,965 40,343 49,422
Williams Cos. 179 1,717 15,189 23,623
Utilities:
Duke Energy 1,297 3,982 19,907 30,849
PG&E 723 3,936 8,376 19,588
Southern Co. 1,337 5,110 16,238 34,277
Source: DLJ Research, enterprise value (other than EPG and CGP) based on 3Q99.
<PAGE>
[Logo] El Paso Energy [Logo] The Coastal Corporation
STRATEGIC BENEFITS
_______________________________________
<PAGE>
STRATEGIC BENEFITS
* Creates North American gas and power industry leader
* Well-positioned convergence player
* Integrated from wellhead to electron
* Scale and market reach to lead industry
* Immediately accretive to EPS in 2001 and 2002; balance sheet and credit
enhancing
<PAGE>
STRATEGIC BENEFITS
* Enchances P/E multiple
* Scale to build break out businesses
* Demand for world scale, large cap companies - the "must own" energy company
* Cost of capital advantage
<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 |
|
Wholesale Enron |
Marketing #2 El Paso Duke |
Southern Dynegy |
|
|
Merchant Power Southern AES |
Edison El Paso #5 |
Duke PG&E |
|
|
|
___________
<PAGE>
RELATIVE VALUATION DATA
$ Millions
Equity Projected
Market 5-year EPS Dividend 2000 P/E
Value Growth Rate Yield Multiple
- -------------------------------------------------------------------------
El Paso/Coastal Pro Forma $ 18,525 Over 15% 2.2% 15.1x
Super Majors
Exxon Mobil $289,042 10% 2.1% 25.7x
Royal Dutch Shell 218,609 8 2.5 24.9
BP Amoco 183,668 5 2.5 23.6
Majors
Chevron $ 56,931 11% 2.9% 19.5x
Texaco 31,836 7 3.1 17.4
Conoco 15,750 9 3.0 16.1
Power and Gas
Enron $ 40,343 15% 1.3% 38.1x
Duke Energy 19,907 8 4.1 13.4
AES 15,995 20 0.0 24.6
<PAGE>
[Logo] El Paso Energy [Logo] The Coastal Corporation
COMBINED OPERATIONS REVIEW
----------------------------------------------
<PAGE>
HIGHER GROWTH PROSPECTS FOR EVERY BUSINESS SEGMENT
* Scale
* Skills
* Geographic reach
* Opportunity set
<PAGE>
2000E EBIT CONTRIBUTION
$ Millions
El Paso
Stand-alone
-----------
[Pie graph]
58% Natural Gas Transmission
11% Field Services
18% 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
9% Field Services
18% Merchant Energy & Power
20% Production
6% Refining & Other
--------
$2,600
--------
<PAGE>
OPERATIONS OVERVIEW
* Natural gas transmission
* Field services
<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>
COMBINED PIPELINES
[Map of United States showing El Paso pipelines]
<PAGE>
COMBINED PIPELINES
[Map of United States showing El Paso and Coastal pipelines]
<PAGE>
CURRENTLY PROPOSED PROJECTS
[Map of United States showing El Paso and Coastal pipelines]
Total Generation 165,000 MW
Gas Fired 98%
<PAGE>
NERC REGION COVERAGE
PRESENCE IN ALL NERC REGIONS
[Map of United States showing coverage]
[Regions listed]
WSCC MAPP MAIN
NPCC ECAR MAAC
SPP SERC ERCOT
FRCC
<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>
COMBINED FIELD SERVICES
[Map of United States showing El Paso coverage]
El Paso
- - Gathering --- Offshore
* Processing
<PAGE>
COMBINED FIELD SERVICES
[ Map of United States showing Coastal and El Paso coverage]
- - Gathering --- Offshore
* Processing
<PAGE>
1999E FIELD SERVICES PROFILE
El Paso Coastal Combined
-----------------------------------
Miles of gathering 11,000 4,000 15,000
Gathering throughput (BBTu/d) 4,420 1,000 5,420
Processing and treating plants 11 15 26
Processing throughput (BBTU/d) 1,030 525 1,555
Total throughput (BBTu/d) 5,450 1,525 6,975
NGL production (Bbls/d) 60,000 55,000 115,000
<PAGE>
OPERATING REVIEW
* PRODUCTION
* MERCHANT ENERGY AND POWER
* REFINING
<PAGE>
1999E COMBINED U.S. RESERVE PROFILE
Bcfe
El Paso Coastal Combined % of Total
_______________________________________________
Gulf Coast Onshore 1,130 1,340 2,470 49
Offshore 275 810 1,085 22
Rockies - 1,460 1,460 29
________________________________________________
Total 1,405 3,610 5,015 100%
================================================
2000E production 240 375 615 --
% hedged 90% 20% 48% --
<PAGE>
PROFILE
* Key areas of technical leadership
* Deep drilling
* Completion procedures
* Seismic processing and interpretation
* Strong positions in highest growth areas - South Texas, Rockies, and
coalbed methane
* Huge backlog of development projects
* Several large emerging plays - Gulf of Mexico tight sands, James Lime,
Big Ticket, horizontal Castlegate, Bossier sand
<PAGE>
E&P STRATEGY
* Manage for value creation and return
* Strict criteria
* Earnings focus
* Aggressively hedge price risk
* Build synergies with other El Paso segments
<PAGE>
E&P/FIELD SERVICES SYNERGIES
$ Millions
Annual Revenue
Potential
_______________________________________________________________
Raton Basin Pipeline $ 5-10
James Lime Gathering 6-8
CBM Gathering/Pipeline 5-7
Alabama Intrastate 2-5
______________
$18 - $30
<PAGE>
OUTLOOK
* Sustainable production growth at attractive finding and development costs
* Free cash flow generator
* Limit earnings volatility
* Price hedging
* Maintain large project inventory
<PAGE>
MERCHANT ENERGY AND POWER
* Expanded asset base for Project Electron
* Combines El Paso gas and power marketing with strong, asset-based
crude oil operation
* Significant equity gas position
* Scale of company will enhance growth
* Over $50 MM in identified incremental revenues
<PAGE>
MERCHANT ENERGY REVENUE SYNERGIES
$ Millions
Annual Revenue
Potential
_________________
Power plant restructuring $ 10 - 15
Structured gas transaction 10 - 20
Equity gas marketing/hedging 10 - 25
Long fuel supply transactions 20 - 30
Incremental power marketing 20 - 40
(Tolling, financing, and reverse NUG)
----------------
$ 70 - 130
<PAGE>
INTERNATIONAL
* Highly complementary asset positions
* Fuel terminals provide strong potential synergies
* Southeast Asia
* Latin America
* Advances strategy to build regional businesses
<PAGE>
COMBINED POWER GENERATION PROFILE
El Paso Coastal Combined
___________________________________
Number of plants 50 18 68
Gross power (MW)
Domestic 5,420 2,040 7,460
International 7,710 1,850 9,560
___________________________________
Total 13,130 3,890 17,020
===================================
Net power (MW)
Domestic 3,520 1,130 4,650
International 2,450 890 3,340
-----------------------------------
Total 5,970 2,020 7,990
===================================
<PAGE>
COMBINED OPERATIONS
[Graphic of Map of World with El Paso operations]
El Paso
o E&P Assets
[] Power Plants
+ Pipelines
<PAGE>
[Graphic of Map of World with El Paso and Coastal operations]
El Paso
o E&P Assets
[] Power Plants
+ Pipelines
Coastal
o E&P Assets
^ Terminaling
[] Power Plants
+ Pipelines
<PAGE>
COASTAL REFINING
* Three principal refineries with 540,000 BOPD capacity (2000E)
* 6% of combined company EBIT
* Ability to process heavier crude oils provides cost advantage
* Successful program to enhance profitability and reduce volatility
* Aruba expansion
* Crude supply agreements at Aruba and Eagle Point
* Aggressively hedge price risk
<PAGE>
[Logo] El Paso Energy [Logo] The Coastal Corporation
FINANCIAL REVIEW
----------------------------------------------
COMBINED FINANCIAL STATISTICS
$ Millions
Pro Forma
1999E 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 1999E
__________________________________________________________________________
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>
POSITIVE PRO FORMA CREDIT IMPACT
El Paso Combined Company
Stand-alone Pro Forma
_______________________________________________________________________
Total Debt/Total Capital 57.8% 54.9%
Net Debt/ EBITDA 3.8x 3.6x
EBITDA/Interest 3.7x 3.9x
<PAGE>
COST SAVING COMPARISON
Synergies as 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%
<PAGE>
COMMODITY PRICE SENSITIVITY:
EPS SENSITIVITY ANALYSIS
2001E Target (Hedged Basis)
________________________________________
$ % $ %
__________________________________________________________________________
El Paso stand-alone
$0.10/McF natural gas +$0.05 +1.8% - -
- -
Combined company
$0.10/Mcf natural gas +$0.08 +2.7% +$0.04 +1.3%
- - - -
$0.25/Bbl 2-1-1 crack spread +$0.05 +1.6% +$0.025 +0.8%
- - - -
<PAGE>
[Logo] El Paso Energy [Logo] The Coastal Corporation
SUMMARY
----------------------------------------------------
<PAGE>
EIGHT YEARS OF ACCELERATING
EL PASO ENERGY GROWTH
$ and Shares Outstanding in Millions
Post
Post Post Sonat Pro Forma
IPO Tenneco Merger Coastal
3/31/92 12/31/96 12/31/99E Merger
- ----------------------------------------------------------------------------
Total assets $ 2,081 $ 8,843 $16,800 $31,500
Shares outstanding 74 111 230 499
Equity Market value $ 844 $ 2,791 $ 8,520 $18,525
Total enterprise value $ 1,481 $ 6,182 $16,550 $32,325
<PAGE>
STOCK PRICE APPRECIATION
As of December 31, 1999
[Graph]
EPG 309%
S&P 500 264%
S&P Natural 226%
S&P Natural
EPNG Gas S&P 500
0.00% 0.00% 0.00%
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>
EBIT GROWTH
Pro Forma 2000-
Combined 2001
Segment 2000E Growth Rate Comments
- ------------------------------------------------------------------------------
Pipelines $1,240 3-5% Existing expansion
Production 520 12-16% Built-in production growth
Merchant Energy
and Power 460 20-30% Project Electron: revenue
synergies; international
ramp-up
Field Services 220 20-30% Growing volumes plus
continued acquisitions and
revenue synergies
Refining and Other 160 20-25% Full year of Aruba expansion
------------------------------------------------------------
$2,600 15-20% Includes full-year synergies
<PAGE>
SIGNFICANT ACCRETION
FROM COMBINATION
- ---------------------------------------------------------------------------
OVER 5% EPS ACCRETION IN 2001 AND 2002
VERSUS EL PASO STAND-ALONE
- ---------------------------------------------------------------------------
<PAGE>
[Logo] El Paso Energy
EL PASO ENERGY CORPORATION/
COASTAL CORPORATION MERGER
---------------------------------
January 2000
