EP has a market cap of market cap today of less than 3B.
The company has over 50B in assets and only a nominal amount of goodwill.
In 2001 EP paid 24B for Costal.
In 1999 EP paid 7B for Sonat.
In 1996 EP paid 4B for Tenneco's energy assets.
They are the largest pipeline company in America.
Their operations include, natural gas transportation, gathering, processing and storage, natural gas and oil exploration, development and production, power generation, petroleum refining, chemicals production, and coal mining.
Proved reserves as of 12/31/01 were 6,675,168 MMcfe.
The oil and gas assets have a cost of 14.5B and the market value of the reserves in today's market would be around $10-13B.
The pipelines generate a nice stable EBIT of 1-1.3B per year. The cost of the pipeline assets as of 12/31 was 17.6B and they would be worth more than $10B in today’s market.
Refining assets cost 2.4B and they generate about 900MM in EBIT per year and the value in today’s market would be more difficult to predict as refineries are not as marketable as pipeline and oil and gas assets?
Gathering systems have a cost of 2.6B and generate 2-300MM in EBIT per year. My guess on the market value would be about 1.5-2B.
Power facilities have a cost of only 834MM, or about 2% of EP's total assets.
EP's assets are very liquid assets that can be easily converted to cash if needed.
Pipelines and oil and gas properties have an easy to determine market value bases on the discounted present value of the cash flow stream they generate.
Under the worst case scenario I can't see EP being liable for more than $200-3,000MM to settle the CA issues if they are found guilty.
All of the assets are unsecured and very liquid.
EP under $5.00 today was due to panic selling with the IPP's and was just another gift from the market gods that only comes along every several years.
EP is not an IPP.
Jim |
