KCS VPP

---------------------- Forwarded by George Weissman/HOU/ECT on 01/25/2001
10:05 AM ---------------------------

Linda Roberts@ENRON
01/19/2001 05:28 PM
To: George Weissman/HOU/ECT@ECT, Jill T Zivley/HOU/ECT@ECT, Gary
Bryant/ENRON@enronxgate, Melissa Graves/HOU/ECT@ECT, John
Grass/Corp/Enron@ENRON
cc:
Subject: KCS VPP

---------------------- Forwarded by Linda Roberts/NA/Enron on 01/19/2001
05:21 PM ---------------------------
From: Joan Quick@ECT on 01/19/2001 04:45 PM
To: Brian Otis/NA/Enron@Enron, Larry Lewis/HOU/ECT@ECT, Phillip
Ballard/NA/Enron@Enron, Ryan Synnott/HOU/ECT@ECT, Avinash
Jain/NA/Enron@Enron, Teresa G Bushman/HOU/ECT@ECT, Scott
Josey/Corp/Enron@ENRON, Bob Devine/NA/Enron@Enron, C John
Thompson/Corp/Enron@ENRON, Arvel Martin/HOU/ECT@ECT, Merrill W
Haas/HOU/ECT@ECT, Bradford Larson/HOU/ECT@ECT, Tricia Spence/HOU/ECT@ECT,
Marshall Eubank/HOU/ECT@ECT, Don Schroeder/HOU/ECT@ECT, Linda
Roberts/NA/Enron@Enron, Gary Bryan/HOU/ECT@ECT
cc:

Subject: KCS VPP

Per Schroeder, a good number to use for crude basis is the $3.00. H is
meeting with Tom [mid con properties] on Tues, and Sam [GC properties] on Wed.

Regarding BTU factors on the gas spreadsheet for the midcon area, these
factors are all wellhead. Randy will be providing the tailgate factors to me.

Regarding missing marketing info: MELP has been deleted from the deal and
South Drew is a PUD, not yet drilled.

---------------------- Forwarded by Joan Quick/HOU/ECT on 01/19/2001 04:38 PM
---------------------------
From: Joan Quick on 01/19/2001 03:27 AM
To: Brian Otis/NA/Enron@Enron, Larry Lewis/HOU/ECT@ECT, Phillip
Ballard/NA/Enron@Enron, Ryan Synnott/HOU/ECT@ECT, Avinash
Jain/NA/Enron@Enron, Teresa G Bushman/HOU/ECT@ECT, Scott
Josey/Corp/Enron@ENRON, Bob Devine/NA/Enron@Enron, C John
Thompson/Corp/Enron@ENRON, Arvel Martin/HOU/ECT@ECT, Merrill W
Haas/HOU/ECT@ECT, Bradford Larson/HOU/ECT@ECT, Tricia Spence/HOU/ECT@ECT,
Marshall Eubank/HOU/ECT@ECT, Don Schroeder/HOU/ECT@ECT
cc:
Subject: KCS VPP

GAS
The below spreadsheet has all my info re the gas marketing [still not
"pretty"] for all the fields except MEPLP & South Drew. I have an email to
Harry to find out whom I am to talk to about these 2 fields.

So far, there are 39 delivery points in the mid continent/Michigan area, 25
delivery points in the gulf coast area [including the 7 VPP points], approx
20 points go thru plants, 24 go thru gathering lines. There is a lot going
on here. I know we have not discussed what we might want to take physically
[and I have not discussed this with anyone on the trading or wellhead desks],
but my gut feel and recommendation is to take all the crude physically, and
re gas, take the bigger receipt points that flow directly to a mainline
connection, and the VPP vols.

I have updated the basis numbers, updated all the gathering fees, fuel ...
and using vols that I have been given by KCS, the weighted average basis
number is around $0.25 [$0.2443, go figure]. I still need MI basis numbers,
but these s/b positive to NYMEX, which should bring the wtd average down. I
think everyone knows this, but keep in mind, I have not read any of the
contracts, all information is hearsay, all numbers are assuming that the
current prices and fees are to remain constant for the next 5 yrs, but for
now, this the best we have, especially since I was given this information
less than 48 hrs ago - the information received originally from the Houston
office was incorrect.

In my email yesterday, I wrote that there are several delivery points where
the pricing is POP. My initial thinking and concern with this, was that if
KCS had, let's say, an 80/80 deal, and the marketer sold the gas and the
NGL's for whatever price(s), then, KCS would get 80% of that amount. which
makes it impossible to do a clean hedge. However, the deals KCS has, is that
they receive [in this instance, in general] 80% of the residue gas, at a set
IFGMR price. Thus, we can decide on a volume, we know the pricing, and we
can hedge. No issue.

I did receive a binder today with all the gulf coast gas marketing contracts
[and briefs]. I have not looked at any of this so I am not sure what all is
in there, but I do not think gathering, processing... contracts are
included. Merrill - by chance, have you reviewed any of these?

I s/b receiving the mid con contracts/briefs on Friday.

OIL

Getting the crude info has been harder than the gas. There are about 14
fields in the gulf coast area - totaling a little under 500 BOPD. There are
about 16 fields in the mid con/Michigan area - totaling a little over 2,300
BOPD, of which, 1,440 b/d is sour, and 530 is in Michigan. For the fields
Mills Ranch, Oak Hill and Pittsburg, the operator markets the crude under
their JOA. Thus, I have no information re these fields. All the crude is
termed up for the next month or so, so it will soon be available for you to
take in kind. There is no crude under the Hall Houston VPP.

Don - I have highlighted in bold the field where Randy [KCS Tulsa] said the
oil is, for sure, obviously, sour. At first he was telling me that what
deemed 40' means is that the crude is sour, but he's really getting a sweet
price. Needless to say, he is checking with their crude oil marketing
person - Tom Kivisto, whom I know you know, to find out what field(s) really
are sour. On your chair are the two spreadsheets for each region. The mid
con spreadsheet is also below, the gulf coast spreadsheet is only a hard
copy. Give me a call and let's discuss. We are currently using a basis of
$3.00, and any notional basis number would greatly be appreciated.

Larry - call me and let's talk about what you need.