Houston, Texas, January 24, 2000—El Paso Energy Corporation (NYSE:EPG) announced today that full year 1999 diluted earnings per share rose 20 percent to $1.80, up from $1.50 in 1998. These results include the impact of El Paso's merger with Sonat Inc., which closed in October 1999 and was accounted for as a pooling-of-interests. The results for all prior periods have been revised accordingly. The results also exclude the impact of merger-related and other non-recurring charges in 1999, as well as ceiling test and other non-recurring charges in the 1998 period. Consolidated earnings before interest expense and taxes (EBIT), adjusted for merger-related and other charges, increased to $1,098 million in 1999 from an adjusted $998 million in the year-ago period.

"Last year was an extraordinary year for our company," said William A. Wise, president and chief executive officer of El Paso Energy Corporation. "The company continued its several-year track record of double-digit earnings growth while completing the strategically important $6 billion merger with Sonat. Successfully and seamlessly combining Sonat's businesses into El Paso's confirms El Paso's core competency of integrating assets while maintaining solid earnings performance. Each business segment contributed to another year of record performance with our non-regulated businesses growing 38 percent year to year."

Full Year Results

The company's natural gas transmission segment is comprised of the Tennessee Gas Pipeline, El Paso Natural Gas, and Southern Natural Gas pipeline systems. This segment reported adjusted EBIT of $794 million in 1999, compared to $811 million in 1998, primarily reflecting lower throughput on the Tennessee system as a result of continued mild weather conditions in its market areas. Total throughput for the natural gas segment averaged 12.7 trillion Btu per day (TBtu/d), up 2 percent from the year-ago period.

Total adjusted EBIT from the company's non-regulated businesses—El Paso Merchant Energy Company, El Paso Energy International Company, El Paso Field Services Company, and El Paso Production Company—totaled $300 million. This represented a 38-percent growth from the 1998 level of $218 million, with every business unit contributing to the increase. The company's merchant energy and international segments had the largest percentage increases in adjusted EBIT in 1999, with Merchant Energy rising from $3 million in 1998 to $46 million in 1999 and International increasing from $25 million in 1998 to $45 million in 1999. Full year EBIT for the field services segment totaled $81 million, compared to $76 million in 1998, while the production segment reported $128 million versus $114 million in the year-ago period. Combined, El Paso's non-regulated operations contributed 27 percent of the total consolidated EBIT in 1999.

Fourth Quarter Results

Fourth quarter 1999 diluted earnings per share, adjusted for merger-related and other non-recurring charges, increased 45 percent to $0.48 per share in 1999, compared to $0.33 per share in 1998. Consolidated EBIT, adjusted for these charges, rose to $295 million in 1999, up from $229 million in 1998.

The natural gas transmission segment reported fourth quarter adjusted EBIT of $184 million, compared to $206 million in 1998, primarily due to higher operating expenses versus the year-ago period. Total pipeline throughput for the quarter averaged 12.9 TBtu/d, up 3 percent from the fourth quarter 1998.

Adjusted EBIT for the merchant energy segment totaled $26 million compared to an EBIT loss of $4 million in the fourth quarter of 1998 due to significantly higher contributions from power and natural gas transactions completed in the quarter. Physical natural gas marketed volumes averaged 6,323 BBtu/d, while marketed power volumes rose over 75 percent to 18.1 million megawatt hours.

Fourth quarter 1999 adjusted EBIT for the international segment totaled $14 million versus $2 million during the same period in 1998, primarily due to increased earnings from Latin American projects.

Adjusted EBIT for the field services segment totaled $25 million, up from $21 million in 1998, primarily due to increased equity earnings from El Paso Energy Partners, L.P. Gathering and treating volumes averaged 3,873 BBtu/d for the quarter, while processing volumes averaged 1,022 BBtu/d.

The production segment reported a significant increase in EBIT due to higher realized gas and oil prices during the period. Fourth quarter 1999 EBIT totaled $46 million versus $18 million in the year-ago period. In terms of production volumes, natural gas sales totaled 45.3 billion cubic feet; while oil, condensate, and liquids sales totaled 1.5 million barrels.

With over $16 billion in assets, El Paso Energy Corporation provides comprehensive energy solutions through its strategic business units: Tennessee Gas Pipeline Company, El Paso Natural Gas Company, Southern Natural Gas Company, El Paso Merchant Energy Company, El Paso Energy International Company, El Paso Field Services Company, and El Paso Production Company. The company owns North America's largest natural gas pipeline system, both in terms of throughput and miles of pipeline, and has operations in natural gas transmission, merchant energy services, power generation, international project development, gas gathering and processing, and gas and oil production. On January 18, 2000, El Paso Energy announced that it has agreed to merge with The Coastal Corporation in a deal valued at $16 billion, including approximately $6 billion of assumed debt and preferred equity. Visit El Paso Energy's web site at www.epenergy.com.

View the attached table of additional financial information by clicking here.

This release includes forward-looking statements and projections, made in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The company has made every reasonable effort to ensure that the information and assumptions on which these statements and projections are based are current, reasonable, and complete. However, a variety of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this release. While the company makes these statements and projections in good faith, neither the company nor its management can guarantee that the anticipated future results will be achieved. Reference should be made to the company's (and its affiliates') Securities and Exchange Commission filings for additional important factors that may affect actual results.