El Paso Corp. (NYSE: EP) shares climbed 7.2% to $20.35 Tuesday, after the natural-gas producer and pipeline operator hiked its 2011 earnings forecast and announced plans to split into two publicly traded companies. Volume for the stock was 27.9 million shares, dwarfing an all-day average of 10.4 million.
El Paso Corporation announced today that it is raising its financial and operational guidance for 2011 as results to date have exceeded expectations. Among the highlights: $1.00-$1.10 adjusted diluted earnings per share (Adjusted EPS); $2.3-$2.5 billion Adjusted Segment Earnings Before Interest and Taxes; $3.4-$3.6 billion Adjusted Segment Earnings Before Interest, Taxes and Depreciation, Depletion and Amortization (Adjusted Segment EBITDA) and; $2.2-$2.4 billion cash flow from operations.
El Paso CEO Doug Foshee, commented, “El Paso is on its way to another great year with improved earnings and operating cash flow. We are particularly excited about our drilling results in the Eagle Ford shale, where our oil production will grow significantly this year. We are also very pleased with the pace of dropdowns to El Paso Pipeline Partners, L.P. (NYSE: EPB). Our MLP has already issued more equity than we anticipated for all of 2011, and we will continue to accelerate our balance sheet improvement with the proceeds from future transactions.”
Moreover, El Paso announced today that its Board of Directors has granted initial approval of a plan to separate the company into two publicly traded businesses by year end 2011.
Following the completion of the proposed spinoff, El Paso Corporation will be comprised of El Paso’s Pipeline Group, its Midstream Group, and its general and limited partner interests in El Paso Pipeline Partners, L.P. It will be the premier pipeline company in North America, uniquely integrated in the major U.S. supply and market regions. With a planned 2012 annual dividend of $0.60 per share and a targeted low double-digit dividend growth rate, it is positioned to be a very attractive corporate yield investment.