RE: EPNG Proposal II

I had not heard that there was a discussion today. However, since we ran the economics for Huber and discovered that Enron's books do not appropriately value the Permian capacity, we have been trying to convince BP that the value of the capacity is greater than the basis spread becase of the optionality associated with the variable costs of fuel and commodity. We used to have a model that the transport group used to use to value that optionality based upon the volatility of the basis spreads and the variable costs. Steph and Phil are running numbers to determine Enron's "extrinsic value". We need to discuss how and what information we share with BP in order to convince them that the capacity is worth more than the value than that the outright basis markets .

-----Original Message-----
From: Tycholiz, Barry
Sent: Wednesday, October 31, 2001 2:19 PM
To: Whitt, Mark
Subject: RE: EPNG Proposal II

that was today... I had heard they were sniffing around about optionality values?

It is not in the agreement. just a question.

-----Original Message-----
From: Whitt, Mark
Sent: Wednesday, October 31, 2001 3:18 PM
To: Tycholiz, Barry
Subject: RE: EPNG Proposal II

We decide to leave out the $ value in order to focus them on the structure. I do not see the conversation about option values on the pipe?

-----Original Message-----
From: Tycholiz, Barry
Sent: Wednesday, October 31, 2001 2:10 PM
To: Whitt, Mark
Subject: FW: EPNG Proposal II

I thought we were going to show them a number to work with.... What is this conversation about option values on the pipe?

BT

-----Original Message-----
From: Nemec, Gerald
Sent: Monday, October 29, 2001 4:37 PM
To: Fuller, Dave; Whitt, Mark
Cc: Miller, Stephanie; Tycholiz, Barry
Subject: RE: EPNG Proposal II

Attached is the document with one change.

<< File: EPNG Capacity Proposal II1.doc <<

-----Original Message-----
From: Fuller, Dave
Sent: Monday, October 29, 2001 2:56 PM
To: Whitt, Mark
Cc: Nemec, Gerald; Miller, Stephanie; Tycholiz, Barry
Subject: EPNG Proposal II

All,

Here is a draft document for BP, please review and comment.

Dave

<< File: EPNG Capacity Proposal II.doc <<