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El Paso Corporation (SWOT Analysis) - April 2012

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“SWOT is an acronym for the internal Strengths and Weaknesses of a firm and the environmental Opportunities and Threats facing that firm. SWOT analysis is a widely used technique through which managers create a quick overview of a company’s strategic situation. The technique is based on the assumption that an effective strategy derives from a sound “fit” between a firm’s internal resources (strengths and weaknesses) and its external situation (opportunities and threats). A good fit maximizes a firm’s strengths and opportunities and minimizes its weaknesses and threats. Accurately applied, this simple assumption has powerful implications for the design of a successful strategy.”

El Paso Corporation 

El Paso (or the company) is an energy company primarily engaged in the transportation, gathering, processing, and marketing of natural gas. The company is one of the largest independent natural gas producers in North America. It also owns North America’s largest natural gas pipeline system. The company has operations in the US, Brazil, Mexico, and Egypt. It is headquartered in Houston, Texas and employs about 4,900 people.

Strengths, Weaknesses, Opportunities and Threats (SWOT)

Location of Factor

TYPE OF FACTOR

Favorable

Unfavorable

Internal

Strengths

  • Extensive pipeline network
  • Robust operational performance
  • Strong Brazilian and Egyptian operations

Weaknesses

  • Long-term, fixed-price negotiated rate contracts for transportation services
  • Dependence on certain key customers and producers

External

Opportunities

  • Proposed merger with Kinder Morgan
  • Increasing demand for natural gas in the US
  • Demand for shale gas

Threats

  • Intense competition from third parties
  • Fluctuations in energy commodity prices
  • Environmental regulations
  • Drilling risk
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