1066107--3/7/2006--EL_PASO

related topics

{gas, price, oil}

{loss, insurance, financial}

{financial, litigation, operation}

{debt, indebtedness, cash}

{capital, credit, financial}

{cost, regulation, environmental}

{operation, natural, condition}

{control, financial, internal}

{operation, international, foreign}

{investment, property, distribution}

The revenues of our pipeline businesses are generated under contracts that must be renegotiated periodically. Fluctuations in energy commodity prices could adversely affect our pipeline businesses. The expansion of our pipeline systems by constructing new facilities subjects us to construction and other risks that may adversely affect the financial results of our pipeline businesses. Natural gas and oil prices are volatile. A substantial decrease in natural gas and oil prices could adversely affect the financial results of our exploration and production business. The success of our exploration and production business is dependent, in part, on factors that are beyond our control. Our natural gas and oil drilling and producing operations involve many risks and may not be profitable. Estimating our reserves, production and future net cash flow is difficult. The success of our exploration and production business depends upon our ability to replace reserves that we produce. We face competition from third parties to acquire and develop natural gas and oil reserves. Our use of derivative financial instruments could result in financial losses. Our businesses are subject to the risk of payment defaults by our counterparties. Our foreign operations and investments involve special risks. Retained liabilities associated with businesses that we have sold could exceed our estimates and we could experience difficulties in managing these liabilities. Risks Related to Legal and Regulatory Matters The outcome of pending governmental investigations could be materially adverse to us. The agencies that regulate our pipeline businesses and their customers affect our profitability. Environmental compliance and remediation costs and the costs of environmental liabilities could exceed our estimates. Costs of litigation matters and other contingencies could exceed our estimates. Our system of internal controls is designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes. A loss of public confidence in the quality of our internal controls or disclosures could have a negative impact on us. Risks Related to Our Liquidity We have significant debt and below investment grade credit ratings, which have impacted and will continue to impact our financial condition, results of operations and liquidity. We may not achieve our targeted level of debt reduction or complete our asset sales in a timely manner or at all. A breach of the covenants applicable to our debt and other financing obligations could affect our ability to borrow funds and could accelerate our debt and other financing obligations and those of our subsidiaries.

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1066107--3/7/2006--EL_PASO_CORP/DE