El Paso cuts dividend, jobs will follow

Natural gas giant El Paso Corp. is cutting its dividend from 5 cents to 1 cent per quarter, will make operational cuts to save $150 million per year and plans to sell as much as $500 million in assets next year.
The moves are designed to help the company raise funds to expand its natural gas pipeline business and to take advantage of unconventional natural gas drilling opportunities, including prospects in the Haynesville and Eagle Ford shale formations.
“Since last summer, we’ve acted aggressively to deal with the challenges in capital and commodity markets, building liquidity significantly,” said El Paso Chairman and CEO Doug Foshee in a statement. “At the same time, we’ve continued to fund sustainable growth opportunities in both core businesses. Our actions to make significant reductions in our ongoing cost structure, streamline our organization and reduce the dividend are designed to improve the long-term returns to our shareholders.”
The $150 million in cuts will include some job eliminations. El Paso spokesman Bruce Connery said most of those savings will not come from reduced headcount but that specific numbers weren’t available.
El Paso also reported earnings this afternoon, with net income of $67 million, 8 cents per share, down sharply from $445 million, 58 cents per share in the same quarter last year.
El Paso also announced that its first Eagle Ford shale well in La Salle County recently was drilled with current flow rate about 6.1 million cubic feet per day. The company has almost doubled its lease position in the Eagle Ford in the last three months from 60,000 acres to 112,000 acres.