El Paso (NYSE:EP) reported on Thursday a sharp drop in fourth-quarter profit, hurt by charges and lower prices for commodities that sent its exploration and production unit to a loss.
The Houston-based company posted net income of $71 million, or 9 cents a share, compared with $274, or 36 cents a share, in the same quarter last year. Excluding certain one-time items, the company earned 20 cents a share, missing average analyst estimates polled by Thomson Reuters of 24 cents.
El Paso’s exploration and production unit swung to a loss year-over-year. The segment reported a loss of $27 million from a profit of $187 million in the same quarter last year. Declines were caused by changes in the mark-to-market impact of financial derivatives and lower realized commodity prices, partially offset by increased production.
Despite the weaker performance, El Paso CEO Doug Foshee said the company believes 2010 ranked as one of its best years ever.
“We delivered full-year financial results at the high end of our targeted range and had solid execution in each of our business units as well as the funding of our capital program,” he said.
The natural gas explorer saw its pipeline group rise to $374 million from $376 million in the year-earlier period, helped by the benefit of expansion projects that went into service during 2010 and an increase in allowance for funds used during construction on expansion projects that are not yet in service.
The results were partially offset by lower revenues in its El Paso Natural Gas and Tennessee Gas Pipeline systems.