NEW YORK – El Paso Corp. (EP) on Monday reported a loss for the second quarter on large charges from international assets in its nonregulated power business.
The company posted a net loss after preferred dividends of $238 million, or 38 cents a share, compared with a year-earlier profit of $5 million, or 1 cent a share, the company said in a regulatory filing.
It reported a segment loss of $381 million before interest and tax in its nonregulated power business in the quarter, compared with a profit of $102 million last year.
The power business recorded a $294 million impairment at its Macae plant in Brazil, $11 million in impairments on its Central American power assets and $34 million in asset impairments in Asia.
El Paso said the charges in Brazil stemmed from a dispute with Petrobras (search) over capacity payments. The Brazilian company has halted those payments and the two were in arbitration to resolve the issue, which could lead to the power plant's sale.
"We may sell our investment in the Macae power facility to Petrobras in connection with the eventual resolution of this dispute, or exchange our interest in the plant for Brazilian production properties owned by Petrobras," El Paso said in a filing to the Securities and Exchange Commission (search).
El Paso, which has undergone a massive restructuring in the past three years, has sold several power plants in Asia this year and moved to focus on its core natural gas production and pipelines businesses.
Total operating revenues at El Paso's natural gas production arm rose, helped by stronger energy prices, although earnings before interest and taxes slipped to $176 million compared with $204 million in the year-ago quarter because of higher operating costs.
Those costs reached 83 cents per thousand cubic feet versus 80 cents in the first quarter and 60 cents in the year- ago quarter.
Average daily natural gas production for the quarter was about 775 million cubic feet per day equivalent, up about 2 percent from the first quarter, but down from last year's levels.
For the rest of the year the company said it expects daily production volumes to average more than 810 million cubic feet equivalent per day, including about 34 million cfe from its recent acquisition of Medicine Bow and related affiliates.
The company also said it believes previously disclosed material weaknesses in its accounting have been resolved and said its executives deemed its disclosure controls and procedures effective as of June 30.
El Paso shares fell more than 3 percent, but partly pared those losses in afternoon trading to down 1.1 percent, or 13 cents, at $12.16 per share on the New York Stock Exchange (search).