Phoenix Due Diligence

Joe, per our discussions, here are some items we want to be sure to
cover/assign in our initial due diligence check list:

1. Purchase And Sale Agreement preparation and negotiation (using Rodeo PSA
as template since Equilon is already familiar with said document, which was
highly negotiated). This effort will include any needed side agreements.

2. Review any "corporate" or "partnership" ownership issues affecting any
pipelines or segments within the assets.

3. Review of rights-of-way, easements, real property licenses, fees lands,
leaseholds and other real property interests comprising the assets (explore
possibility of obtaining help from ROW people within GPG). Analysis must
include right-to-assign and no-conversion- of-
common-carrier-assets-to-private-use issues, as well as other standard
issues, including telecommunication rights, etc.

4. Physical inspection of real and personal property in the deal for
safety/environmental/operating issues.

5. Tariff/FERC/regulatory/property tax issues affecting the assets. (Need
to be sure that assets have been properly listed & reported to taxing
authorities. Need to "assume" existing tariffs where required.)

6. HSR (antitrust) and "shop closing" issues. SEC disclosure issues, and
relationship b/w Phoenix and Koch S-1.

7. Employee/benefit/organized labor issues (three unions/collective
bargaining agreements involved).

8. Existing commercial contracts and "shipper" issues. Any long-term or
"out- of- the- money" situations?

9. Any outstanding claims, assessments, levies, penalties, protests or
litigation (both environmental and non-environmental).

10. Completion of any remaining business due diligence needed to
confirm/justify purchase price.

11. Environmental review---with emphasis on "pricing" existing enviro
matters we would be assuming/undertaking.

12. UCC lien search and any bulk sales issues.

Of course, the list above is just for openers. There are a number of things
I have undoubtedly missed. We have our standard check list that we use on
these deals, and I know you will have a number of additional items you will
want to include in the overall list. We should probably compare notes on the
initial master list before the "kick-off" meeting on 7/26. Thanks. SWD