El Paso shuffles execs, expands business (Corporate Dealmaker)
A reorganization of El Paso Corp s NYSE EP management and a plan to launch a new job has analysts wondering about the company s long term strategy The raw gas exploration and transportation giant announced that D Mark Leland now CFO will become president of a new midstream group which would include transportation processing and storage assets He has experience He was previously chief operating officer of GulfTerra Energy Partners LP which was El Paso s former midstream master limited partnership Chief accounting officer John Sult will takeover as CFO while Dane Whitehead CFO of El Paso Exploration amp Production Co will
ecome senior vice chairman of scheme and enterprise business development including acquisitions and divestitures Both of them will join the company s executive committee El Paso does mainly two things explore for and acquire natural gas and transport natural gas for itself and others But lately its production business has been doing worse than its pipeline business leading its net income to fall 59 in the 2nd quarter to 79 million and operating revenue to fall 16 to 973 million Lower natural gas prices and production volumes were the principal culprit In a morning note Tudor Pickering Holt amp Co Securities Inc called the creation of the new midstream business puzzling Our knee jerk reaction was this is potentially negative as El Paso already has enough capital intensive businesses that are long on investment opportunities so why add another the study said We re hoping EP s mantra will be to facilitate getting E amp P segment s gas production to market not to buy assets Lasan Johong an analyst at RBC Capital Markets in New York was also looking for more explanation We survey the establishment of midstream segment as strategically positive however we search for further clarity regarding EP s strategy for building the business including specific assets plans for capital deployment contract type timing and anticipated contribution to the overall business model Johong wrote in a report El Paso dumped its midstream assets long ago including Gulfterra when it was ailing to billionaire Dan Duncan s Enterprise Products Partners LP for 4 1 billion a paltry 2 premium Maybe now that El Paso s financial condition isn t so terrible and valuations in the midstream sector aren t so dear the society is look to get back into the business Johong noted that El Paso could acquire gathering and processing assets connected to the hot Haynesville and Eagle Ford natural gas shales in Texas If that s true hunting for the right assets to take may be high on new strategy chief Whitehead s agenda Claire PooleJoin Corporate Dealmaker s LinkedIn forum Also From Corporate Dealmaker Yahoo hires GE exec as M amp A chief United Tech earnings acquisition targets Parker Hannifin Ready to take in spring 2010 El Paso shuffles execs expands business Samsung in 2 2B China LCD JV Corporate Dealmaker Home Page From TheDeal com A nearer look at Morgan Stanley s third quarter earnings Feinberg to bailed out bankers Cut pay 90 Global Infrastructure buys Gatwick for 2 5B A nearer look at Wells Fargo s 3rd quarter earnings Vivendi coy on NBC plans TheDeal com Home
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