2008-08-30-2008-01-16-2008-03-25

Four companies acquired 309 Bcfe proved in GOM, TX.

Houston-based privately held Smith Production Inc. is among the four buyers to acquire certain Gulf of Mexico and Texas Gulf Coast properties from El Paso Corp., Houston, (NYSE: EP) in separate deals for a total of $752 million. Smith paid $312 million for 250 operated wells in South Texas with daily production of 50 million cubic feet equivalent. Financing was provided by Union Bank of California, BNP Paribas and Fortis Capital. Smith currently holds 250,000 acres along the Texas Gulf Coast primarily in the Vicksburg and Wilcox trends with more than 700 miles of proprietary 3-D seismic. Its drilling budget for 2008 is $100 million. Total assets sold by El Paso in the four deals include an estimated 309 billion cubic feet equivalent proved reserves. The purchase includes assumption of future plugging and abandonment liabilities with final cash proceeds expected to be approximately $650 million. El Paso will use the proceeds to pay debt incurred in the acquisition of Peoples Energy Production Co. in September. El Paso previously announced the pending sale of 191 billion cubic feet equivalent of proved reserves for $517 million for properties in its Texas Gulf Coast and onshore regions with three buyers. The final sale includes additional Gulf of Mexico properties with proved reserves of an estimated 118 billion cubic feet equivalent for $235 million. El Paso Exploration & Production Co. president Brent Smolik says, "The sale of these properties, together with the Peoples acquisition, reduces our per-unit lease operating costs, increases our future production growth rate and increases the onshore U.S. weighting of our inventory of future capital projects. We will continue to look for opportunities to…further high grade our portfolio." Jefferies Randall & Dewey was advisor to El Paso. The effective date for all is Nov. 1, 2007.