Re: Platform Lease -Reply -Reply

Gerald,

I would suggest you try to steer the conference described below to a lawyer
only conference call on the document review (of our draft of the Lease and
any specific problems they might have with it). If you would like me to sit
in on other otherwise help with that call I would be glad to. My view is
that Mariner is liable to Marathon for all manner of issues under the PHA and
that MEGS wants Marathon to "substitute" those liability and indemnity rights
for the ones typically running against a Lessee in a Platform Lease
Agreement. I don't exactly follow the privity agrument he that Brad makes
below, but if he's right, there's no problem in removing references to the
MEGS/Mariner O&M Agreement from the Lease--The fundamental principal remains:
Marathon should look tom Mariner and to Burlington (as a PHA ratifier) for
relief.

Steve

Gerald Nemec
06/02/2000 09:46 AM

To: Steve Van Hooser/HOU/ECT@ECT, Barbara N Gray/HOU/ECT@ECT, Ted C
Bland/HOU/ECT@ECT
cc:
Subject: Re: Platform Lease -Reply -Reply

Attached is Marathon's response to our email. I will call Brad to set up a
telephone conference.

Ted, Steve asked that I forward this information to a lawyer at Burlington,
but couldn't recall the name. Do you have any contact information for
Burlington. Thanks.
----- Forwarded by Gerald Nemec/HOU/ECT on 06/02/2000 09:38 AM -----

"Bradley G Penn" <bgpenn@marathonoil.com<
06/01/2000 09:17 AM

To: Gerald.Nemec@enron.com
cc: ERGetz@GROUPWISE.MarathonOil.com, RAHernandez@GROUPWISE.MarathonOil.com
Subject: Re: Platform Lease -Reply -Reply

Gerald, It seems that the drafts that have been sent back to Marathon have
confused the relationships of Marathon, Mariner and MEGS. As an example you
have requested that the LOPSA rely on the O&M Agreement between Mariner and
MEGS, which Marathon is not a party. We would rather that agreement remain
between MEGS and Mariner and be the basis for your resolution of disputes.
The legal capacities presented in your response to the LOPSA draft are
confusing. All rights seem to flow to MEGS, yet the obligations seem to be on
Mariner, we do not believe the division of rights and obligations in this
manner are a good situation. By example the Indemnity provisions have been
altered to have Mariner indemnify the Owners and Operator (no mention of
MEGS)and then further change the indemnity to a negligence based indemnity
(of Platform Operator). The PHA is a unilateral indemnity to Platform
Operator and Platform Owners and we must insist on this same level of
protection with MEGS.
If you would like to make another attempt at either a ratification or LOPSA
that addresses MEGS as Lessee and Mariner as its operator and provide for any
resolution between those two in the O&M Agreement we would be happy to
discuss this further. If you would like to go through the LOPSA line by line
please call and we can set up a teleconference with our legal department to
do so.
BGP

<<< <Gerald.Nemec@enron.com< 05/31/00 01:04pm <<<

I have reviewed your response and disagree with the characterization of our
modification the documents. I would like to clarify our reasons for the
modifications to avoid any further miscommunications.

MEGS' alteration of the documents do not impair the protections afforded to
Marathon under the Production Handling Agreement. Our modifications were
simply intended to allocate certain risks between MEGS and Mariner with
respect to Marathon (as operator of the South Pass 89 B Platform) as such
risks were intended to be allocated by MEGS and Mariner. Mariner's
transfer of interest in the flowline to MEGS introduces a new party which
Marathon can look to for certain obligations with respect to the platform.
The alterations do not remove Mariner from its current role as operator and
maintainer of the flowline and owner of the hydrocarbons. For these
reasons, I would disagree with your response that the draft alterations do
not provide the intended protections that Marathon would expect absent such
a transfer to MEGS. Mariner still shoulders these risks and expenses under
the Production Handling Agreement.

Having MEGS fully ratify the Production Handling Agreement and becoming
jointly and severally liable to Marathon is not appropriate. MEGS does
not hold title to any hydrocarbon production or operate the facilities and
should not be liable for all risks and expenses associated therewith.
Mariner should continue to shoulder those risks and as before.

I would be happy to discuss your issues with our Platform Lease revisions
at your convenience or to discuss the above further.

"Bradley G
Penn" To: Gerald.Nemec@enron.com
<bgpenn@marath cc:
ERGetz@GROUPWISE.MarathonOil.com,
onoil.com< JCAlbert@GROUPWISE.MarathonOil.com
Subject: Platform Lease -Reply
05/26/2000
10:00 AM

Attached are our response and ratification agreement.
BGP

<<< "Gerald Nemec" <Gerald.Nemec@enron.com< 05/25/00 04:49pm <<<

Brad, Can you give me a status on where you are at with the review of the
Lease
Docs for the MEGS Facilities? I forward those documents about a month back.

Gerald Nemec
Enron North America Corp. - Legal
(See attached file: MEGS.DOC)
(See attached file: MEGSRAT.DOC)