NEW YORK (CNN/Money) - El Paso Corp. sharply cut its earnings guidance for the next two years Wednesday as it disclosed plans to cut its energy trading business significantly and increase investment in natural gas.

Shares of El Paso (EP: Research, Estimates) tumbled more than 20 percent Wednesday to a new 52-week low of $28.08 following news of the restructuring.

El Paso is trying to reposition itself amid the recent turmoil in the industry over fuzzy accounting touched off by the collapse of Enron Corp.

Earlier this month, El Paso said it had not participated in the types of energy trades some of its rivals engaged in, including Reliant Resources Inc. (RRI: down $0.48 to $9.51, Research, Estimates) and CMS Energy Corp. (CMS: down $0.51 to $18.03, Research, Estimates), as well as Enron.

"Investors have made it very clear that they don't believe the merchant companies really are going to continue to have significant returns to corporations," El Paso spokeswoman Norma Dunn said. "I think that's a major driving force that has had the ratings agencies rethink how they want to view these companies."

Shortly after El Paso's warning, UBS Warburg lowered its rating on the stock to "hold" from "strong buy."

The Houston-based company said it will cut its energy trading work force in half to save $150 million a year and limit its working capital investment in trading activities to $1 billion. Additionally, El Paso said it will break the unit into three separate divisions.

El Paso did not say how many jobs would be cut, but the energy trading division employs a total of 600-to-700 people out of a company-wide work force of 15,000, Dunn said. She added that a number of corporate jobs outside energy trading would also likely be affected by the restructuring.

"What we want to do is have the trading business support the hard assets we have, and not have trading just for trading's sake," Dunn said.

The company also said it will increase capital spending on natural gas production to $2.3 billion.

El Paso also plans to issue $1.5 billion in securities, and sell its San Juan Basin natural gas assets in northern New Mexico to El Paso Energy Partners for about $800 million. It also plans to reduce annual operating expenses by at least $300 million and decrease its net debt to about 49 percent of total capitalization.

El Paso now expects to earn $2.60-to-$2.75 a share in 2002 and $2.75-to-$2.90 a share in 2003 as a result of implementing its plan. Analysts polled by earnings tracker First Call expected 2002 earnings of $3.33 a share and 2003 earnings of $3.70 a share.