El Paso Corporation (EP) reported that its total proved reserves at year-end 2009 increased 8% to 2.75 trillion cubic feet equivalent (Tcfe) Incorporatedluding its 48.8% interest in Four Star Oil & Gas Company. Proved reserves at the end of 2008 totaled 2.55 Tcfe.

The company’s total reserve additions during the year were 573 billion cubic feet equivalent (Bcfe), with a reserve replacement ratio of 212%. Total company reserve replacement costs were $2.04 per million cubic feet equivalent (Mcfe). Domestic reserve replacement costs, before price-related revisions, totaled $1.57 per Mcfe.

El Paso and all other energy companies are compiling year-end reserve data using new guidelines from the U.S. Securities and Exchange Commission. The changes, meant to provide a greater clarity for investors, also afford companies an added flexibility in reporting. El Paso said the new rules had a minimal effect on its reserve reporting.

Average production in 2009 was 763 MMcfe/d, which was at the high end of its guidance of 745-765 MMcfe/d. The company’s year-end exit rate was approximately 750 MMcfe/d, driven primarily by strong production growth in the Haynesville Shale program, which had a year-end exit rate of approximately 150 MMcfe/d (gross) and 110 MMcfe/d (net).

During 2009, El Paso spent approximately $1.1 billion towards Exploration and Production (E&P) capital expenditures, which includes roughly $92 million for the acquisition of producing properties completed in late December and roughly $240 million for international expenditures.

El Paso has high-grade E&P assets and a large inventory of pipeline projects that offer significant value in the long run. The company has been able to preserve financial flexibility and drive down operating costs to retain the competitive edge under the present challenging business environment. El Paso has been continuously evaluating capital allocations to ensure that the on-track projects are value accretive.

Based in Houston, Texas, El Paso Corporation is a major player in both the natural gas transmission and exploration & production space in the U.S. The company principally operates in two business lines – Pipelines and E&P – which collectively account for the lion’s share of its revenues Incorporatedomes and cash flows.

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