Audit says staff used

Audit says staff used 'unsupportable methods' on reserves:El Paso

New York (Platts)--3May2004


An independent review of the large downward revision of El Paso Corp.'s oil
and gas reserves has found certain employees "used aggressive and, at times,
unsupportable methods" to book reserves from 1999-2003, El Paso said Monday.
As a result, El Paso said it and El Paso CGP Co. and El Paso Production
Holding Co. will restate their financial statements for that five-year period,
the company said in a statement. El Paso on Feb 17 revealed it was revising
its proved oil and natural gas reserves lower by about 1.8 Tcfe. The company
launched an investigation, which was conducted by independent counsel Haynes
and Boone LLP. "...Certain employees provided proved reserve estimates that
they knew or should have known were incorrect at the time they were reported,"
El Paso's statement said. The company said it will discuss with the US
Securities and Exchange Commission its plans to restate the financials for
1999-2003. "...Investors should not rely on previously filed reports for these
registrants until further notice from the company," El Paso said.

This story was first published in Platts real-time news and market reporting
service Platts Global Alert
(http://www.platts.com/Oil/Real-Time%20Information/Global%20Alert/ ).