El Paso Corp said it will split into two publicly traded companies, separating its exploration and production business from its pipeline operations. The company also raised its full-year earnings outlook, saying results to date had exceeded expectations. It said oil production in the Eagle Ford shale would grow significantly this year.
Following the tax-free spinoff of the exploration and production business later this year, El Paso Corp will consist of its Pipeline Group, Midstream Group, and general and limited partner interests in El Paso Pipeline Partners LP.
"We believe that the creation of these two stand-alone public companies will result in significant and sustainable value creation," Chief Executive Officer Doug Foshee said in a statement.
El Paso competitor Williams Cos. decided to split its pipeline and exploration businesses into two separate publicly traded entities in February, and investors have been pleased with that strategy. Williams shares are up more than 12 percent since the company announced its break-up plan. Foshee will remain chairman and CEO of El Paso. At the exploration and production company, Brent Smolik, currently president of El Paso Exploration & Production Co, will become CEO, and Dane Whitehead, a senior vice president of El Paso Corp, will be chief financial officer.
El Paso said the split would give its pipeline business a better credit profile. That business will have a planned 2012 dividend of 60 cents a share and is targeting a double-digit dividend growth rate.
The separation will allow the exploration and production business to focus and re-invest capital into assets like its fields in the liquids-rich Eagle Ford and Wolfcamp shales in Texas.
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