Page 5 of

One explanation for this contraction in open interest was that Enron was unwinding positions to boost cash on hand,
‘The one-to-many brokering structure of the company's EnronOnline platform makes liquidity particularly critical, said
analysts,

"It's an effect that they are a dealer that creates all the counterparty credit exposure,” said Randall Dodd,
director of the Derivatives Study Center at the Washington, D.C.-based Economic Strategy Institute. "If they're
the dealer then they are the liquidity.”

If Enron were net short on Nymex and began unwinding contracts, the effect would be to spark a price rally as those
shorts were covered. A rally is precisely what transpired. To the surprise of many market watchers, the fron-month
November Henry Hub futures contract shot up nearly 20% over the span of a week, from $2.68/million Btu on Oct. 23
to $3.20 on Oct. 29, when it went off the board.

Jetf Gosmano, Andrew Ware,
(c) Copyright 2001. The Oil Daily Co.

i602 01264

01200000000620


began on March 1, 1995. After construction had begun, and following elections to the Maharashtra
Legislative Assembly, a new coalition government took office in the State of Maharashtra. The new
coalition government appointed a review committee to study the Project, and on August 3, 1995,
announced the State government's intention to terminate the Project. Work on the Project was
ordered stopped by the MSEB, and construction ceased on August 8, 1995. Enron believes that
such actions were in clear violation of the contract and in response to these actions, Dabho! Power
Company is pursuing two courses of action. First, cursuant to Dabhol Power Company's remedies
in the agreements with the State government, arbitration has commenced in London against the
State government for the actions it has taken to terminate the Project. Dabhol Power Company
seeks to recover all of iis construction and other expenses, in addition to lost profits, The arbitration
tribunal has been appointed and one arbitration hearing has occurred in London. Second, Dabho!
Power Company has both orally and in writing communicated to the Maharashtra State government
its desire to go forwarc with construction of the Project and its willingness to resolve any outstand-
ing issues, and discussions to resolve outstanding issues have begun. Although the outcome of
neither te arbitration nor the renegotiation process can be predicted with certainty, based on
currently available information, Enron believes that the ultimate outcome of the Project will not have
@ materially adverse effect on its financial position.

In March 1993, Enron entered into long-term gas contracts with Phillips Petroleum Company
United Kingdom Limited, British Gas Exploration and Production Limited and Agip (U.K.) Limited to
Purchase all of the future gas production from the J-Block field which is located in the North Sea
offshore the United Kingdom (the “J-Block Contracts"). Such agreements provide for Enron to take
or pay for the gas at a fixed price (with possible escalations throughout the contract period). Gas
paid for, but not taken, may be recovered in tater contract years. The J-Block Contracts provide for a
first delivery date of not later than October 1, 1996. The contract price for such natural gas is in
excess of current spot market prices in the United Kingdom. In September 1995, Enron announced
that, in accordance with its contractual rights, it had notified the J-Block sellers that Enron's
Nominations for gas from the J-Biock field were estimated to be zero from the first delivery date
through September 30, 1997. In addition, in accordance with its contractual rights, Enron has made
No estimated nominations for J-Block gas to date under the J-Block Contracts for the contract year
ending September 30, 1998. Enron continues its good faith efforts to develop mutually beneficial
solutions regarding pricing terms so that production from J-Block can begin as soon as possible.
Enron believes that there are many commercial reasons for the parties to resotve any contract
issues, but efforts have not been successful to date. Enron has advised the J-Block sellers that it
intends to assert all legal rights, exercise all available commercial flexibility and pursue all available
commercial and legal remedies under the J-Block Contracts, and stands ready and able to perform
all legal obligations under the J-Block Contracts, including potential prepayments for gas to be taken
in later years. The long-term market demand for J-Block gas supply remains favorable and Enron
anticipates being able to meet all of its various short- and long-term market commitments. Although
no assurances can be given, based upon the foregoing and other information currently available,
Enron does not at this time anticipate that the J-Block Contracts will have a materially adverse effect
on Enron's financial position.

00900000000255


InternetWeek > InternetWeek 100 > Services > Trader Reaps Benefits Of E-Market Leade..: Page | of 7

Get the most out of COMDEX without leaving your desk!

cumpypsassaapasapamumsameal
The Nation's Top E-Businesses
———oiEoooo—_H~~_“H;~ «  ''TO

Services

Trader Reaps Benefits Of E-Market
|Search
© iuarpcerok Leadership
© Techie

‘Liquidity’ is the key to Enron's position at the center

— of online value chains Yc
<
By JADE BOYD ~
‘Sections Uncertainty has debilitated many e- ENRON
Greolese Nowe businesses, with staffers and
Rewews managers alike wondering when Headquarters:Houston
eee things will pick up. But optimism is Line of business: Energy
Soveg Customer still in the air at Enron Net Works, the Priawe exchenge operator
rerrotng Supnere e-business arm of Fortune 7 energy 2999 Revenue: $100.79 bition
Resewenand Anais coOMpany Enron Corp., which 2000 Net Income: $979 million
Water Cooler continues to expand its electronic Percentage of revenue from
Resources trading model into all manner of Caer oe ann
‘About InternatWeai commodity markets. J » Oki
Top e-business executive:
Rules of Engagement n 4
We win . Philippe B&i, president and
imamnatWack Net Works oversees EnronOnline, CEO. Enron Net Works
Veni Somes Pegs where Enron buys and sells more E-business
+o than $4 billion a day of mostly natural highlights:EnronOnline
Dest Coverage gas and electric power, plus steel, conduciedits Mop bal trade
Services coal, telecom bandwidth, data volumes on the commodity-
tial Newser storage, freight services and 1,500 trading site have exceeded
hexiptons other products. $550 billion since it was
by vets be established in November 1999
Aderigng
2002 Eatonal Net Works is also a new-business Enron Broadband Services
sopaetatscncom incubator, repackaging applications transactions in the first quarter,
TechCareers Enron originally developed for compared with 321 for alll of
Care Deck Onine internal use into revenue-generating 2000
privacy Statement online services. For example, E-business challenges:Re-
EnronCredit.com, an offshoot of creaming Ns 5
Spornored by
http://www.internctweek.com/100-01/serv.htm 12/4/01

01200000000758


The Honorable Lloyd Bentsen

February 28, 1994
Page Two

activity will result in significant exports from the United States as well as assist the
Indian Government in its efforts to privatize and liberalize their economy. This is

clearly a win-win proposition for both countries.

Sincerely,
nR0

fer
Attachments

¢: The Honorable Warren Christopher, Secretary of State
The Honorable Ronald H. Brown, Secretary of Commerce
The Honorable Thomas F. McLarty, Chief of Staff
The Honorable Robert E. Rubin, Chairman - National Economic Council

01000000000890


DEPARTMENT OF THE TREASURY
WASHINGTON, D.C. 20220

License No. IA- [(b)(2)]

TRANIAN TRANSACTIONS REGULATIONS

LICENSE

(Granted under the authority of Section 505 of the International Security and Development Cooperation
Act Of 1985 (22 U.S.C. § 2349aa-9), Section 263 of the U.S. International Bmergency Economic Powers
Act ($0 U.S.c. § 1702), the National Emergencies Act (50 U.S.C. § 1601 et #€q.) Executive Orders
12613, 12957, 12959, and 13059, and 32 C.F.R. Parts 501 and S60.)

To: Enron Capital and Trade Resources Corp.
c/o: Sutherland, Asbill and Brennan, L.L.P.
1725 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404 Attn: Beverly J. Rudy, Esq.

3. Based on the February 20, 1998, letter to the Office of Foreign Assets Control from or on behalf
of Enron Capital and Trade Resources Corp. ithe "Application"}, 31 C.F.R. § 560((b)(4)pnd information
otherwise available to the Office of Foreign Assets Control, the transaction(s) and activitylies! on
the reverse hereof are hereby authorized.

2. This license is granted upon the statements and representations made in the Application, otherwise
filed with or made to the Treasury Department as a supplement to the Application, or based on
information available to the Treasury Department, and ia subject to the condition, among others, that
the lLicensee(s) hereunder comply in all respects with all regulations, rulings, orders, and
instructions issued by the Secretary of the Treasury under the authority of Section 505 of the
International Security and Development Cooperation Act of 1985, Section 203 of the U.S, International
Emergency Economic Powers Act {$0 U.S.C. § 1702}, the National Emergencies Act (50 U.S.C. § 1702),
and the terms of this license.

3. The lice: (g) shall furnish and make available for inspection any relevant information, records,
or reports requested by che Secretary of the Treasury, or any other duly authorized officer or agency.

4. This License ia not traneferable, and is subject to the provisions of Executive Orders 12613,
32957, 12959, 13059 and any regulations and rulings issued pursuant thereto. It may be revoked or
modified at any time at the discretion of the Secretary of the Treasury. [f this License waa issued
as 4 result of willful misrepresentation on the part of the applicant, it may, at the discretion of
the Secretary of the Treasury, be declared void from the date of ics issuance, or fron any other date.

$. This license does not excuse compliance with any law or regulation administered by the Office of
Foreign Aasets Control or ancther agency jincluding reporting requiremwats! applicable to che
transaction(s) herein licensed, nor does it release Licenseeis) or third parties from civil or
criminal liability for violation of any law or requlation

Issued by direction and on behalf of the Secretary of the Treasury:

OFFICE OF FOREIGN ASSETS CONTROL

eM a/eoffe

v= Richard Newcomb
Director

Attention is directed to, inter alia, 18 U.S.C. § 545, 18 U.S.C. 1001, 19 .S.C. 1592, and 19 U.S.C.
1595a, 50 U.S.C, § 1705, and 31 C.F.R. Part 560 for provisions relating to penalties.

00400000000062


WSJ.com Page 4 of 6

as a bid to expand her agency's authority.

At the industry's urging, then-House Banking Chairman Jim Leach, an lowa Republican, called a private
emergency meeting of the regulators in late June 1998, summoning Ms. Born from Georgetown
University Hospital, where her daughter was undergoing knee surgery. The regulatory staff and
lawmakers berated Ms. Born for more than two hours in a fruitless effort to persuade her to stop her
campaign.

Three months later, the Long-Term Capital Management crisis erupted. "You are welcome to claim
some vindication," Mr. Leach told Ms. Bom at an October 1998 congressional hearing.

In the subsequent months, Ms. Born intensified her campaign for greater derivatives regulation. And she
appeared to be gaining support. Several studies, task forces and panels were formed, recommending
lenders perform better due-diligence when dealing with high-risk traders and that trading firms improve
risk-management models.

A coalition of regulators, including the Fed, Treasury, CFTC and SEC, meanwhile, wanted to force
hedge funds to make public more information about their holdings, a recommendation Rep, Richard
Baker, a Louisiana Republican, incorporated into a proposed law. They also recommended extending the
powers of both the SEC and the CFTC over unregulated affiliates used by regulated firms to conduct
particularly risky trades, That could have brought Enron under the CFTC's jurisdiction, since Enron had
a futures brokerage affiliate that was already registered with the agency.

An industry panel with Gerald Corrigan, a former president of the Federal Reserve Bank of New York
and now a managing director at Goldman Sachs Group Inc., acting as co-chairman made several
recommendations, One called on banks and Wall Street dealers to make a quarterly disclosure to their
regulators of their 10 biggest exposures in each of several categories of risk. It also called for them to
identity the parties on the opposite sides of those transactions.

No Consensus

Though some Wall Street firms, including Goldman, now meet informally with regulators to discuss
their exposures, the panel's recommendations were never formally implemented. "There simply was not
a consensus” among either regulators or dealers "that it was worth the time, energy and cost to do it,"
says Mr. Corrigan.

Meanwhile, the derivatives industry was fighting the push for more regulation. The effort was
spearheaded by trade groups like the International Swaps and Derivatives Association and the Managed
Funds Association, which represents hedge funds, Enron also joined the battle.

Over the years, the company had built a formidable lobbying machine, with a staff of 28 in Washington
alone, most of whom have been laid off since the company’s recent collapse. Enron also paid $2,1
million last year to about a dozen Washington lobbying firms to work on a range of energy and financial
issues, more than double the fees it paid in 1997, according to the Center for Responsive Politics, a
nonprofit group that studies the role of money in politics.

To date, the only significant changes in OTC derivatives laws have been those largely endorsed by the
industry, such as removing legal obstacles to the creation of common clearing corporations for settling

derivative trades among multiple parties. Another change, removing legal obstacles to two participants
treating offsetting contracts with each other as a single position, is expected to be part of new

http://interactive.wsj.com/archive/retrieve.cgi?id~SB 1008202066979356000.djm&templates.... 12/1/01

01545

01200000000199


Nickoloff, Peter
se

From: Wiedman, Mark

Sent: Monday, January 07, 2002 10:27 AM

To: Bitsberger, Timothy, Carleton, Norman; Schultheiss, Heidilynne; Nickoloff, Peter
Subject: FW: SECRETARY ON ENRON

From meet the press.

----Original Message-=--

From: ‘Wiedman, Mark

‘Sent: Monday, January 07, 2002 10:21 AM
Tor ‘Wiedman, Mark

‘Subject: ‘SECRETARY ON ENRON

MR. RUSSERT: Enron, the biggest bankruptcy in our nation’s history-people at the top were able to trade out
their stock and bring home some money. People at the bottom were not able to do that because of some of the
regulations imposed upon them. As secretary of Treasury, will you investigate Enron?

SEC'Y O'NEILL: You know, I think what we've been doing and what we'll do going forward is look and see if
there are regulatory actions or rules that could be put in place that would avoid this kind of situation. I think the
dust hasn't cleared yet on this case and it's not clear whether the company fulfilled all of its obligations under
the existing rules. If they did, it suggests that we need rule change. If, on the contrary, it turns out that they
didn’t fully comply with all the rules, we have a different issue on our hands.

MR. RUSSERT: That’s criminal behavior.
SEC’Y O'NEILL: Well, I don’t know. You're jumping to a conclusion. I wouldn't do that.
MR. RUSSERT: If they don’t comply with the rules.

SEC’Y O'NEILL: I would tell you from my own experience, again, having run a Fortune 50 corporation, that I
thought the rules were very clear on what's required for reporting. And I think we'll see fairly soon from the
work that’s being done by the SEC and others whether or not the corporation fully complied with its reporting
responsibilities.

MR. RUSSERT: Are you going to look into some of the offshore investments?

SEC’Y O°NEILL: Well, I think we need to look at their compliance with rules, and to the extent that takes us to
that issue, yes,

MR. RUSSERT: Do you believe the Treasury Department should look at this aggressively because of the
political considerations that some are suggesting?

SEC'Y O'NEILL: I think we need to be constantly looking at the rules and the schemes that exist for the way
private enterprise operates. With this in mind, investors and the general public need to be able to rely on the
truthfulness and completeness of what enterprises report, It’s a critical aspect of why our economy has done so
much better than the rest of the world. It’s because capital believes, people who invest believe, that they can rely
on information that’s provided to them and the U.S. economy. It's a principle we need to protect and cherish and
extend because it is so important to the fundamental operation of our kind of economy.

MR. RUSSERT: Do you think that Enron is a big story, a serious story?
22

01520

01200000000174


0zz0z 9g ‘voyBulyseny,

gzee wooY

MN ‘onuany eluenjAsuusd OOSE
funseas jo wawpedeq
Aunseasy oy) jo Aueyaseg Ayndag
SJ@WWNS "} SOUBIMET “I

30008 J'g "woulaysM
G08 RRS MN “Hans Ag Sze

|
Hy

00100000000090


Backup withholding is not an additional tax. Any amounts withheld under the backup withhold-
ing rules will be refunded or credited against the Non-United States Holder's United States federal
income tax {iabitity. Provided that required information is furnished to the United States Internal
Revenue Service.

PLAN OF DISTRIBUTION

This Prospectus relates to the 11,000,000 shares of Common Stock that may be delivered by
Enron Corp, pursuant to the Exchangeable Notes and is Appendix A to the Enron Corp. Exchange-
able Notes Prospectus. At maturity of the Exchangeable Notes, the Principal amount of each such
Note will be mandatorily exchanged by Enron Corp. for shares of Common Stock or, at the option of
Enron Corp., cash in feu of such mandatory exchange. For a description of the Exchangeable
Notes, see “Description of the Exchangeable Notes" in the Enron Corp. Exchangeable Notes
Prospeqws.

Enron Corp., the Company and the Company's Chief Executive Officer have agreed that during
the period beginning from the date of this Prospectus and continuing to and including the date 270
days after the date of this Prospectus, subject to certain exceptions set forth in the underwriting
agreements, they will not offer, sell, contract to sell or otherwise dispose of Common Stock, any
securities of the Company which are substantially similar to shares of Common Stock or any
Securities which are convertible into or exchangeable for Common Stock or such substantially
similar securities without the prior written consent of Goldman, Sachs & Co., except for the shares
‘of Common Stock offered in connection with the concurrent Stock Offerings.

i
i
|
i
:
|

including
under the Securities Act, or to contribute to payments the Underwriters may be required to make in
respect thereof.

The validity of the shares of Common Stock deliverable upon exchange of the Exchangeable
Notes will be passed upon for the Company by Dennis M. Ulak, Esq., Vice President and General
Counsel of the Company, and for the Underwriters by Bracewell & Patterson, L.L.P. Certain matters
will be passed upon for Enron Corp. by Vinson & Elkins L.L.P. Mr. Ulak owns substantially jess than
1% of the outstanding shares of Common Stock of the Company or common stock of Enron Corp.
Bracewell & Patterson, L.L.P. provides services to Enron Corp. and certain of its subsidiaries
{including the Company) and affiliates on matters unrelated to the offering of the Exchangeable
Notes, the delivery of the Common Stock upon exchange thereof and the Stock Offerings.

The consolidated financial statements and schedule included in the Company's Annual Report
‘on Form 10-K for the year ended December 31, 1994, incorporated by reference in this Prospectus,
have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts In accounting and auditing in giving sald report.

The letter report of DeGolyer and MacNaughton, independent petroleum consultants, included
as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1994,
and the estimates from the reports of that firm appearing in such Annual Report, are incorporated by
reference herein on the authority of said firm as experts in petroleum engineering and in giving such
reports. +

a

00900000000315 _


Common Stock pursuant to a plan for the reinvestment of dividends or interest); or (vi) pay a
Gividend or make a distribution to ali holders of EOG Common Stock of evidences of indebtedness
or other assets (excluding any dividends or distributions referred to in clause (i) above or any cash
Gividends other than any Extraordinary Cash Dividends {as defined below) or issue to all holders of
EOG Common Stock rights or warrants to subscribe for or purchase any of its securities (other than
those referred to in clause (v) above), In the case of the events referred to in clauses (i), (), (ui) and
{iv) above, the Exchange Rate in effect immediately prior to such event shail be adjusted so that the
holder of any Exchangeable Note shall thereafter be entitled to receive, upon mandatory exchange
of the principal amount of the Exchangeable Note at Maturity, the number of shares of EOG
Common Stock that such holder would have owned or been entitled to receive immediately following
any event described above had such Exchangeable Note been exchanged immediately prior to such
event On any record date with respect thereto. In the case of the event referred to in clause
(v) above, the Exchange Rate shall be adjusted by multiplying the Exchange Rate in effect immedi-
Stely prior to the date of issuance of the rights or warrants referred to in clause (v) above, by a
fraction. the numerator of which shail be the number of shares of EOG Common Stock outstanding
on the date of issuance of such rights or warrants, immediately prior to such issuance, plus the
number of additional shares of EOG Common Stock offered for subscription or purchase pursuant
fo such rights or warrants, and the denominator of which shall be the number of shares of EOG
Common Stock outstanding on the date of issuance of such rights or warrants, immediately prior to
Such issuance, plus the number of additional shares of EOG Common Stock that the
offering price of the total number of shares of EOG Common Stock so offered for subscription or
Purchase pursuant to such rights or warrants would purchase at the market price (determined as the
average Closing Price per share of EOG Common Stock for the 20 Trading Days immediately prior
to the date such rights or warrants are Issued), which shall be determined by multiplying such total
humber of shares by the exercise price of such rights or warrants and dividing the product so
Obtained by such market price. To the extent that shares of EOG Common Stock are not delivered
after the expiration of such rights or warrants, the Exchange Rate shall be readjusted to the
Exchange Rate which would then be in effect had such adjustments tor the issuance of such rights
or warrants been made upon the basis of delivery of only the number of shares of EOG Common
Stock actually delivered. in the case of the event referred to in clause (vi) above, the Exchange Rate
Shall be adjusted by multiplying the Exchange Rate in effect on the record date by a fraction, the
numerator of which shail be the market price per share of the EOG Common Stock on the record
date for the determination of stockholders entitled to receive the dividend or distribution referred to
in clause (vi) above (such market price being determined as the average Ciosing Price per share of
such record date), and the
denominator of which shail be such market price per share of EOG Common Stock less the fair
Board of Enron, whose determination shall be
conclusive, and described in a resolution adopted with respect thereto) as of such record date of the
Portion of the assets or evidences of indebtedness so distributed or of such subscription rights or
warrants applicable to one share of EOG Common Stock. An “Extraordinary Cash Dividend”
means, with respect to any 365-day period, all cash dividends on EOG Common Stock during
such period to the extent such dividends exceed on a per share basis 10% of the average Closing
Price of the EOG Common Stock over such period (less any such dividends for which a prior
adjustment to the Exchange Rate was previously made). Ail adjustments to the Exchange Rate will
be calculated to the nearest 1/10,000th of a share of EOG Common Stock (or if there is not a nearest
1/10,000th of a share to the next lower 1/10,000th of a share). No adjustment in the Exchange Rate
shail be required unless such adjustment would require an increase or decrease of at least one
Percent therein; provided, however, that any adjustments which by reason of the foregoing are not
required to be made shall be carried forward and taken into account in any subsequent adjustment.

In the event of (i) any consolidation or merger of EOG, or any surviving entity or subsequent
Surviving entity of EOG (an “EOG Successor’), with or into another entity (other than a merger or
Cotohaning ime dhnoty prot ee eee corpczation and 'p whikh be COG Common Stock
Outstanding immediately prior to the merger or consolidation Is not exchanged for cash, securities or
other property of EOG or another Person), (ii) any sale, transfer, lease or conveyance to another

18

;
|
i
j
:
i
:

z

00900000000264


BEETO

TOySL/L

WosYsURmUOdIS pews oseard ‘soyeb yoddes jeoUyTe 304

78502 Cf HUH RR OGD “DUOWESEC INGA VEBOEIO| BABY NOK 1

abessou mig paNaoa Rod GIy SSSUNPE FELD DY) % QWIELIOER INO, ZUNEOIE NOK SBBODE 'equERGRSUN OL
“BUEGOM 470 UO J9yF a) BETAS UH EMU ERE OF OQUDEGNE OL

WOT SHS Aa Mepis Aimee paayngane se SyrNee HERS OL

Woe FELETOIU Je SM peu “WY YEG PINTO aGeSseW uNEK Moy jNO PUY o1 Youu Arona peUve s1yy BnOsm SHUGHSEA WSU DOOR: Ley aaoyy

“80884 816) 944 Jo JePURSE J0}Des eOURURSLE SROAlELNO FOL Bip FE YOO Ae] E FAYE xCOG PAINTED JNO ' ALNRERY Ul SIUMYLEYY PEZIEGNG ISH BUI JO BU 210384009
UO Spay BY] POT PUE PHIM) /EDUEULY SY) PBIOO3 NUE UIEYY MOH, PERING JOPURAAY OL, B S/CTEPOOR 4HRIS Os UI YIUCYY 348 7 YOOG Wayey UL

“embenmus y 09 9B © nd evoRngyguto BUReTENS "TOKE Jo waNe NO
iageyenc

“suogryy sul jeroutus Ag aarEOpsp wi Joy aiNnssesd Guymou6 ey) PUB SEAeUE AUEd-puin OF aunyeag
‘SHE YUES MOY SOBErONID OUE W419 JO SUEUEGWOD Aay 4) JO MBA HAY RIEYO BAINES FACPHAA| = APOOYy Jo zAknchy SESUEYS *SuoAMEASU] /EYUEUE JO}
WRUAORURW 45}) So yCURILER, “GUN}EAY ISOPE; JNO Ul “MUaLOdWOD jryBEN so! &I UD SOnyDodSaed MoU 59yO O} PUB YVOM [ES) BINH & Hud O} NEE GARY
sepuebe Suzes pve s/0jenSer se Yons seqied aus “suosmiAL /EDUELY a Aqoe PUsip © se Gut.cwe wou (Wyy7g) FOWobeLeU you osudleque Lon

“SONIEA ERY JO SIBCORMMAD IY) KEIM WED AO
SAIBENE WIS
“puodsas PINOYS IUSWABEUR MOY Syse PUR ‘OYE IBS Ue EICNpNE “REhyeue WO quyodmai,

Paces ur Anu yeum pe syDo) AuNypNoYysy Meg FUUNS 5.45043 "SULITYOO DORIC Mau INO 70 1HIy OLA Ui "ZOOL Ue AugTIS GND) ApiUIERA.OUr OF PUBMACY YOO}
VED 61208 [2 JO BUECUUOD - 884 1S) SUNY AQ PROLeKadeS SUImQOUC SRIURIP SSet “JAYJO ay JO SWOS SE jam se ~ AoyninqUeg LOIUZ Oe 70 O¥EM Oy LE

“SIFE PN 05 SUFEWON LORENyS OYSOWOp oY) Se Bud} se
quaWUsAADS 319 204 QuoUd mo & UAE Cy pong] Que JOS SulyURG By JO Spee sep “SSAPEUE 6 y8EM 81 UI BOGS! Poo) UEDUNG Se Ing ‘Coy “swAIqaUC sishjeuy
10 Awue}d Qnby stUsNGAAW SugUEtlY JeY) Wog ABeyRgs Wxe Ue ]NOQM sxURG UOeUC} pUE - VOREros wjevodsup & u) ave syURG ONSewWOP ReUNUOEAy

“SUBUNBU! SI} 20) BUH Gus UO 4OR 8! WRUCUIR 10) @DENANCO FERDAY ‘sULIO;ON ROE sosodoud LopUo? 7o spMof) ‘sacyEin OD melneyn
JQ UNOD PS60P 4URG LOWE “S958; saPENd-upNE, Ag py @SEUD UEEIO;y “SoWOM eUqUedsy Pu VOVUS B)d8ep synss) Bunas sodas dnoutgD
‘eBujusee ayBvOdICO UO SGU Peru LUORSAyOAd |IDNE Guy Ay SAU PRG caAnIedsJad puaWACRURW SU esucuepUS Ue WoW Saou JO dN-DUNG) syoem muy UH Apream

2007 AuENUEr gy - Woo" WERE TE MON VEU
woo sue wah —

syequess3 y¥smy3 9eMgns

A08 seey opDyojoyau seyed sOL

We Zpizt Zo0z ‘at Venuer ‘Aepug = ques
(woo'sysqye weweBysrya) ysyS wold

4939 ‘HO|O¥9IN

Z Jo | aeg spenuassy 4sTaa

01200000000694


WSJ.com Page 2 of 6

Hearings.com. You will companies' accounting policies. And federal energy regulators said they are
heed RealPlayer, available | planning new mules for energy-derivatives accounting.

The Enron debacle spotlights an enormous void in the nation's system of
te financial regulation, and it is rekindling a difficult debate over just how that
gap should be filled.

ye Enron Unveils
Restructuring Plan — || Tnnovations in technology and finance have helped obliterate clear
santered on Pipeline, distinctions between banks, brokerage firms and newer hybrids, such as
Enron, which built a privately run online trading empire that handled huge

be SEnron Could Spark volumes of electricity and natural gas.

New Attention to
Accounting Multiple Standards

These days, it's possible for exchanges, which once required centralized trading floors crowded with
traders, to spring up overnight in cyberspace. Meanwhile, financial regulators, hewing to decades-old
divisions of authority, continue to keep a close watch on banks, brokerage firms and conventional
exchanges, while leaving new entrants such as Enron to police themselves,

There now is a widespread consensus among policy makers that, at the very least, the nation needs
Stricter accounting rules that would force companies such as Enron to do a better job of disclosing their
financial conditions. Other industry watchers would go further. Enron, they say, was one of the country's
leading commodities markets. It had amassed a $19 billion portfolio of derivatives.

In many ways, the Enron debacle raises the same questions that arose three years ago, after the near-
failure of hedge fund Long-Term Capital Management -- a private investment fund for wealthy
individuals that made leveraged bets on financial markets. Long-Term Capital's misplaced wagers, many
based on derivatives, almost triggered a meltdown in global markets during 1998.

In the months following that near-calamity, many policy makers, such as then-Treasury Secretary
Robert Rubin, vowed to change the regulatory system to avert similar risks in the future. While they
opposed tighter regulation for derivatives trading, they argued there was at least a need for greater
disclosure in the derivatives market.

Since then, however, a broad industry coalition including Enron has worked with sympathetic regulators
and legislators to beat back pressure for more oversight of over-the-counter derivatives. And in some
cases, they have rolled back powers that regulators had had,

Most regulators and financial-industry executives insist that the financial system remains sound. The
fact that Enron's collapse doesn't as yet appear to have been caused by its derivatives trading, or to have
triggered a broader crisis, seems to bolster their argument.

Advocates of derivatives say the instruments give companies, investors and lenders a way to reduce their
exposure to many kinds of financial risks, Indeed, that's the main reason for their popularity.

New types of derivatives have emerged in recent years, allowing traders to bet on electricity prices,
telecommunications bandwidth and the influence of the weather, all of which Enron dominated. Enron

also was a big player in credit derivatives, which act as an insurance policy against corporate bankruptcy
by promising to pay back a lender's money in exchange for a premium.

http://interactive.wsj.com/archive/retrieve.cgi?id=SB 1008202066979356000.djm&template=,.. 12/13/01

01543

01200000000197


2Eg SUBJECT TO COMPLETION. DATED NOVEMBER 14, 1995

State.

APPENDIX A |

Enron Oil & Gas Company

Common Stock
{par value $.01 per share)

ities laws of any such

>

=
2
2
&

This Prospectus relates to up to 11,000,000 shares of common stock, par value $.01 per share
(the “Common Stock"), of Enron Oii & Gas Company (the Company”), which may be delivered by
Enron Corp. upon mandatory exchange of the % Exchangeable Notes due . 1998 (the
“Exchangeable Notes”) of Enron Corp., subject to Enron Corp.'s right to deliver cash in lieu of such
shares. This Prospectus is Appendix A to a prospectus of Enron Corp, covering the sale of the
Exchangeable Notes (the "Exchangeable Notes Prospectus”). The Company will not receive any of
the proceeds from the sale of the Exchangeable Notes or the detivery of shares of Common Stock
upon mandatory exchange of the Exchangeable Notes at maturity.

Enron Corp. has granted the underwriters of the Exchangeable Notes a 30-day option to
Purchase up to an additional 1,000,000 Exchangeable Notes at the initial offering price per
Exchangeable Note, tess the underwriting discount, which may be exchangeable at their maturity for |
additional shares of Common Stock. Such option has been granted solely to cover over-allotments,
if any.

Concurrently with the offering of the Exchangeable Notes made by the Exchangeable Notes
Prospectus (the “Exchangeable Notes Otfering"), Enron Corp. is offering for sate 27,000,000 shares
of Common Stock (31,050,000 shares if the underwriters’ Over-allotment options in such offerings

3
z
z
2

i
buy
aon under Ihe secur il

y offers to buy be acce;

epsirahon statement relat

solicitation of an offer to

MOF mma
or sale would be unlawtul prior to regstration or qualific

are exercised in full) in concurrent U.S, and international offerings (collectively, the “Stock Offer-
ings"). The consummation of the Exchangeable Notes Offering is not contingent upon the consum-
mation of the Stock Offerings, or vice versa.

plebon or amenument A fF
nues May Nol be sok m
constitute an otfer to sell or the

On November 13, 1995, the last reported sale price of Common Stock on the New York Stock
Exchange Composite Tape was $20% per share. See “Price Range of Common Stock and Cash
Dividends’.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
ANO EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES

COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE,

The date of this Prospectus is , 1995.

00900000000275 —


10/e/Z1 /PUIUQUOIUT NOG Y ZUyaxLeW/S90p/LIOs"auNjuOUOTEA MAM)/:dy

“Ope} 0} PEZUOUINE eu heyy SaRIPOWIOD YoRyrn

g2UGrsep ‘pure ‘suo_sesUey ay2exe UES Joy JeyjeuM Ayseds “euyuQuauy

ses008 UBD SeeAOjdwe 2NOK JO YO!YM }OJLICD UBAB UBD MOA "8OU0 Je VOGEULO;LE

anok ye Avjdsip 0) sMopum dn-dod opdgmus ez}se1 pue yeoy UED NO, “esnoWw

JNOA fO YOY}D B UM YOeS 0} SSD wWEySuE Ue PUe NOA ysovepU! yeUY S}OMposd

Oy} 20) Squy oBed prose B]E9I9 UED NOA ‘seyy|!\Qedeo Bupsyy PeoUeYyUE

JNO UI, "89S 0) ]UEM NOX jeym AByiSIp PUE WOM O} }) PUEM NOK ABM GUE YOM OF

MUUQUAIU JO Podse AsEKe o7LWOYENS UD NOK ‘BSP @1QnEay 4NO OF UL
Senmgeden UoNEZWWOYSND 476)

“seGesane 2/pousd Woy SEQUaaYIP GuNVeIoduis} pue peaye shep vores oO} dn
SPREDAI0) JOYIBAM 196 OBIE ILNOA “eqo/6 ay] DUNCIE WOW ByEp euNjesoduse, pUe
Siew JoypEeM GUIPNAUE ‘SQUAPYLICD YMA SPEH 0} POU NOA VOULO]UL 94M,
ap NOK sauG sUyUQUOIUZ “SeTypPCMAWCO BAg|sUas—JOLyEaM BU/pER G1NOA 4)
‘SHyBy su) seupeerA

"BU)/UQUOIUZ LO NOK G} BGuEYo-yo-Gay ajqepene ity “Q20W pus Aye feOD,

“4800 WIpUApURR “xepUl doug S¥=) AyeQ $,/ON Woy sMaU “AjUDEI UBedaNS Enbiy ‘sep jeuNjeN UBEdaINS
sndiy se yons suOgeoygnd 2yoeds-Aysnpu! jo eGues opin e YGnoxy spuay Agsnpul um dn deay UES NOA
suoTBa1qng Aysnpuy

(PuUOM a4) PUNde SefuEYSXe sofew Woy sayONb so;s se jem se ‘Bugeodau jeUEUy PUB sseuNsNG

U! SIGPRRy PLOM “SaUISMaN SALT MOG PUR suaINeY Woy SMU SLOds pue AQSNpuT ‘oUMpeeY jseye] oy)
Ply |, 90, “GUJUQUAIUT YyM JOA2 UBL) sISeO $1 NOA PUNCUe Ppom oY) UE FRYEW BIA Moge PaUuOsu| BUIER
SO]ONT PUR SMO JEW

“SBYPOWULCO BPE 0} UB|UBAUCO auOW Jey y GUM ‘dopesop anak Uo

yuu seoud Aypowiwos je;sueUy pue jersAyd Yyoq JO aA y2TMNb & YB UES NO, ~s~RAQUCO UORdO AypoUaAWOO JO}

seoud Gtuag 78a) SePlAdUd SUUQUOIU "JExJEW BIJEIOA B UI SaqIPOUWOS BuNpeL) Us ApNqMey gow LEAe a
BuO]

NOK Aq POPOURD 20 AgeogewwoNe peynoexe eve Aaig [Wun Wwaysks au)

Ul ado UJBWeU SYBPUO YUU) GY, "S}aNe| PeyDeds JNOK URQIM BRQEWEAR aWODEq
@WNOA PUL Goud e4y |}! @POeXe ApeoquUvOINE Jey sva—O d/ yes UBD NOK “sUapIO
Juul] GON S,SUIUQUOIUS WAIN "OAGEPEAE SewWCdeG JEM Nok e2Ud a4) SE UORS

750 7 eg ‘ SUTUQUOLUY ;hogy - oUUCY

01200000000768

01412


OPA asrincvow.oc-2ceeo = SUL 19 2000

OFFICE OF FOREIGN ASSETS CONTROL
CORRESPONDENCE ACKNOWLEDGEMENT

Orlando Puig Tel. 713-345-6336
Enron Caribean Basin Fax

323 Clay Street

Suite 2600

Houston, TX 77002-7362

LICENSING DIVISION Pax: (202) 622-1657
OFFICE OF FOREIGN ASSETS CONTROL ("OFAC")

U.S. DEPARTMENT OF THE TREASURY

1800 PENNSYLVANIA AVENUE, N.W.

WASHINGTON, DC 20220

RE: FAC No. CU- [(b}(2), (6)(7)(c)]

This is to acknowledge receipt of your correspondence
dated 07/11/00. Please refer to the PAC number cited above and
the date of your original correspondence if you need to contact us

or send supplemental information.

Please note that filing an application for a license or
requesting information about the transaction prohibitions contained
in Executive orders or requlationa administered by OFAC dors not
suspend or excuse compliance with the prohibitions or requirements

contained therein.

We look forward to serving you.

Hote: Information on sanctions programs administered by OFAC can te retrieved at any
time from our automated fax-on-denand system by dialing {202) 622-0077, or trom
our World Wide Web hone page on the internet at wnv.treas.gov/ofac.

Fax to:

Page 1 of 1

0400000000011


sariua Page | of
Schultheiss, Heidilynne

From: Randall Dodd [RDodd@Econstrat.org}

Sent: Tuesday, January 15, 2002 1:03 PM

To: Randall Dodd

Subject: Derivatives Study Center — A Message on

Derivatives Study Center

Randall Dodd 1401 H Street, NW, Suite 560
Director Washington, D.C. 20006
202 326 8555 sdoddgpeconstratang

January 15, 2002

Dear friends and colleagues,

I wanted to take the opportunity to send you a copy of a recent newspaper article in which the
Derivatives Study Center is helping to understand the story of Enron’s failure. The article appeared in the
Washington Post last Friday, and it is pasted into this message below, In addition, I wanted to notify you that
the DSC website has been updated with a couple of Primers on employee stock option programs, and a Special
Report on International Commodity Risk Management programs. You can visit the site by clicking on the
following www.econstrat.org/dse.htm

| also wanted to announce that the Center is working on a policy briefing paper on Enron's failure.
While that is being completed, I wanted to offer the following facts in order to clarify a few important points
about Enron and the regulatory environment in which it operated.

« Enron Corporation was not only an energy supply company, but it was also a major financial institution
that acted as a derivatives dealer. The financial institution included Enron Online and served a central
role in energy markets as a market maker or dealer.

* Asa major dealer, and presumably the largest dealer, in derivatives and whole transactions, Enron was
central to the orderly functioning of a variety of energy and other commodity markets.

* Due to the deregulation of derivatives markets in December of 2000, these transactions were non-
transparent in both price discovery and the risk of default by trading counterparties and their
counterparties. And although it acted like a financial institution, Enron was not regulated under any law
as a financial institution and its over-the-counter derivatives transactions were not under the authority of
any financial regulation.

« — The deregulation of derivatives occurred when the Commodity Futures Modemization Act passed
thirteen months ago in December of 2000, As a result, Enron had no reporting requirements as a
derivatives dealer and no capital requirement as a financial institution.

+ Enron's derivatives dealing business was not separately capitalized, and therefore when its energy
supply operations suffered from loses and (potentially criminal) mismanagement, it undermined the
legitimacy and creditworthiness of its derivatives dealing. Other market participants declined to trade
with Enron, and without trading counterparties Enron's market making went broke.

1/15/02 01 2 70

01200000000626


Enron execs saw controversial deals as key to maintaining firm’s growth Page 2 of 4

company, which just a year ago had a market
capitalization of over $60 billion. Enron filed last
month for Chapter I] bankruptey-court protection,
which shields the company from creditors while it
seeks to reorganize.

An Enron spokeswoman said the company didn’t
have any comment on the documents. Among these
are an internal memorandum from an Enron attorney
to Skilling regarding procedures for monitoring
transactions with the partnerships. The documents
also include excerpts of minutes from meetings of
Enron’s board and the board’s finance committee.

Enron and Lay have consistently said that the

company’s dealings with the partnerships, which
ee ee nee aowee involved joint investments as well as asset sales, were
home page. aimed at helping the company, were carefully
reviewed to prevent conflicts of interest and were
adequately disclosed. The partnership dealings are the
subject of a Securities and Exchange Commission
probe and are being looked into by Congress.
The Enron
a
indicate that in
« Sign up for a two-week free trial mid-1999 the
of The Online Journal. company began
using the
partnerships to
confront changing business conditions.

A document excerpting a June 1999 board
mecting cited Skilling as saying that because of
changing accounting mules affecting off-balance-sheet
transactions, Enron had been analyzing new types of
financing vehicles. Though the document doesn’t
provide further explanation, the statement would
appear to be a reference to a concem at Enron about
trying to keep as much debt as possible off the
company’s balance sheet. Too much debt lowers a
company’s credit rating, which was a particular
worry for Enron, whose vast energy-trading
operations relied heavily on its credit standing.

Live Quote wy In the June 1999 document, Lay and Skilling
CNBC m mesa” money were identified as being designated by Enron's board
to help ensure that the company received fair

by consideration in one of the early partnership deals.

Enron Corp. (ENE) A draft version of minutes from an October 2000
ivy Senge meeting of the Enron board finance committee cites

‘Add this stock to your Fastow speaking of the need for outside private

MSNBC homepage partnerships to help manage the company’s finances
f MSMBCINTERACTIVE so that Enron could “continue to grow.” Enron
Data; CNBC on. MSN Monay planned to continue making “significant capital
+ - 7 * investments. ... some of which would not generate

http://www.msnbc.com/news/680656.asp?0si=- 0 1 4 3 9 1/3/02

01200000000795


‘Godal Eeverping Markets Performer

war Tas AM

Currencies
Percent Dollars

Jen itewoek = Thiz month
Japan 3% “ 25%
Euro om a own
fureYen 12% orm 1%
UK at “a —
Ausraba 9% oat 11%
Carat Ot um I%
Got ast out at
‘Thailand 11 dhs I as% OS% ast
Indonesia leas 0% ass a 4%
Mabeynin 340 0% ons ont ans,
Philigpanes 51.70 Oa 4% Ltt ant
South Koren ims IN +m a2% as
Taiwan ee on% 43% as ont
Sapper: aes Ort ani 4% om
China a as, Py own 0%
Bauil 1G 20% 1 “2%
Mexico 21908 LEM ASM ad 08%
Chile wus 8 1% 2% A
Colombia 21100 OMG Ss nat As
Vencesele MSD 1% 0% am Ait
Poland 39618 NM Las 2% ard
Hoarypary 273300 AI 43% La ast
‘Caech 110 AIM a% 1a 15%
Russia 30622 O3% 29% ons 02%
‘South Aftica 1210 nt 04% 4a% 55%
Turkey 1392800 LSM 0% 1% 40%
Dow
Nandy
Niet
FI-SE 109
DAX
CACAO
Thailand
Indore 31 MR
Malaysia 700 ost
Philippines 1k 1087
Hong Keng iat 74
Sout Koren 782 ms
Taiwan si0s a0
Singapore 106 i704
China 156 6h
Brasil® 14168 14168
Angereina* Ms Mo
Mexico® tai 641
trite ” ”
Cotoenbsia 1089 1059
Vetemucta wit 6612
Poland isses 1si49
Mengary m9 126
Cocch aay 40t
Ressia mw 2
‘South Africa 10683 10767
Terkey at 148%
Grasse 1878 2nd

TinDodaney, Qirecaoe
east

Li%
a

2%
Am

an

am
an%
on%
os
oat
on
o9%
1%
as
ae
Pos
tte

De
Ost
Aas
1%
S5%
0%

ASIN
Ast
aa
26%

a
3%

ah

56%
45%
nts

18s%
5%
182%
19%
43%

40%
20%
51%
+o
S79
A

WI%
7%

O.%
a
S1%
ae
2%

= Feputan nage sading Bruck Peyerinn, ed Maio af 00 am 207 an, ans 99 Ae Caste fe reap

01742

01200000000398


Nickoloff, Peter

From: ERisk [ERisk@email.eRisks.com)
Sent: Friday, November 09, 2001 12:48 PM
To: peter.nickoloff@do.treas.gov
Subject: ERisk Essentials
<http: .com/images/essential_logo.qif> ship

We've changed our home page! Naw, when you type in waw.erisk.com, youl get @ Detter ides of all a activites. You'f find all our usual
editorially indeperxient news, community and reference resources Under the ‘Portal tab.

Und : AM
pa ah ih rn Saar aa aos tooel norkals, bet eonemic news contraies to be oom: Enron faces takeover by
competior, the strange case of the mystery credit crunch; tough tmas for the mortgage industry: legal action continues over World Trade Center

Trade Center losses and to bane® from a stronger market,

Viewpoint
WIE Oynegy clinch a cut-rate acquisition of its troubled arch-ivall, Enron? You can catch up on some of the background with ERisk’s exclusive
interdews with their chief risk officers: we spoke to Eneon’s Rick Buy <http:(/email.eRisks.com/agi-bin 10a? y=hMSRODNMMZOCjEUDNZDAO> earier
this year, while Dynegy CRO Gienn Lathart <htip.iiemeil.eRisks, comiagi-bin 10)flo?yhMiSROONMM20CE0MdedAa> was the subject of our CRO Profile
in August. Find out what bath men had to say about risk management at their firms ~ aed keep checking out the site for ongoing coverage of what is
sure to be a major risk management story.
‘Si avavatve: Proies of FleetBoston CRO Paul Kogan <http:iemall. eRisks. com/agi-bin 10a ?y"hMSRODNeM20CjE0OtadA0> and Swiss Re

America’s Wemer Schaad <hitp-iemail.eRisks.comog-bint Dific?y*hMSRODNIM20Cj/ EDOM OAy>

Feature

Rank coectt proceseee cual be up to oceatch Ba Gast bs to solsta coniuel over crack Guat LL etl lamar lah ered sere ahary
Operational Risk", an exclusive new f hetp:/iemail.eRisks,com/cni-b p2yenMSRO DN 20 CiEDS for ERisk, Becky Watzak of
Penton Portis chasers locke of ee eee ering cust a foled Costs cn vm secordary crecit markt, and offers a solution
based on idees within the Basie Il raguiatory capital reform proposals.
‘Stl avavable: full-length articles on Credit Portfolio Stress Testing <hitpyiemail eRisks,comog-bin flo ?y=nMSRODNM20C/E0ssTOAs> and Real
‘Options and Strategic Business Risk <hitp:iiemail.eRisks .comag-bint Dilo?ysiMSRODNM20Ci/EDOZDAn>,

Book of the Month
‘Check out our featured Book of the Month. Operational Risk - Measurement and MModaling, by Jack King, is one of the first books dedicated to the

catian-etge prcttem cl modeling beak coeralionsl al. Wo vedanta! you can ander & rine tough ovr ae, Also available in the ERisk
to P>, books on a wide variety of risk management topics, inckading crectt

fish, Spaicnalsisk enienive tek snd inarcal cebaces. ~
= Fooled by Randomness <hitpemaileRisks.com/cg-bin 10 Mo?yshMSRODNMZ0C/E0bNaDAV>, by Nassim Taleb

iz
JT stare than 17,000 risk professionals raceive this email every Wook. To find out how your massage could resch them, mai! us at inloferisk com.

To subectbe to Gis neveloter, please repister <htz.ltenalLeRisks.comlen bin OMe?y-tMSRODNMZICIEDENILAS= on our wos.

XeDAR>. Your username is the emnuil address

For echrical suppor queries, plosse email gusnoysfp era com calls Supoori@erak oat
<http://email.eRisks.com/ i i jEH>

7

01465

01200000000119


market, perhaps Enron was too quick to eschew refineries and pipelines for the volatile, information-
based business of trading.

But it wasn't Internet that killed the beast; it was management's insatiable appetite for expansion and,
by all accounts, personal enrichment.

It's too easy to kick Enron now that it's down. It did a lot right. The competition and deregulation and
vertical "de-integration" Enron drove are the future of all industries, even energy. Enron was making
markets on the Internet well before its competitors knew what hit them,

Was Enron on to a better business model? You bet it was. But like any business model, it wasn't
impervious to rules of conduct and principles of economics.

weno

June 11, 2001
Services

Trader Reaps Benefits Of E-Market Leadership
‘Liquidity’ is the key to Enron's position at the center of online value chains

By JADE BOYD <MAILTO:jcboyd@cmp.com>

ENRON Headquarters:Houston Line of business: Energy production and marketing; online exchange operator 2000
Revenue: $100.79 bition 2000 Net Income: $979 milion Percentage of revenue from e-business activity: N/A CEO:
Jeffrey K. Skilling Top e-business executive: Philippe Bibi, president and CEO, Enron Net Works E-business
highlights:EnronOnline conducted its millionth transaction in May; total trade volumes on the commodity-trading site have
exceeded $550 billion since it was established in November 1999. Enron Broadband Services conducted 580 online
transactions in the first quarter, compared with 321 for all of 2000 E-business challenges:Re-creating its success in
online energy trading in dozens of other commodity businesses including bandwidth, data storage, forest products, metals,
coal and freight logistics Top e-business accomplishment: With EnronOniine, Enron brought immediate and transparent
pricing to energy markets; the site is one of the world’s leading e-commerce platforms, with daily trade volumes in excess

of $4 billion Services: Industry Leaders <http: com 100-01/s > Services: By The Numbers
shttpviwaw.internetweek conmv/100-0t/serv.htm> ONLINI \ Kk On
. M OF >

Uncertainty has debilitated many ¢-businesses, with staffers and managers alike wondering when things will
pick up. But optimism is still in the air at Enron Net Works, the e-business arm of Fortune 7 energy company
Enron Corp., which continues to expand its electronic trading model into all manner of commodity markets,

Net Works oversees EnronOnline, where Enron buys and sells more than $4 billion a day of mostly natural gas
and electric power, plus steel, coal, telecom bandwidth, data storage, freight services and 1,500 other products,

Net Works is also a new-business incubator, repackaging applications Enron originally developed for internal
use into revenue-generating online services. For example, it.com <http://www.E, “redit. an
offshoot of software Enron created to help its traders manage credit risk, offers a service to some 10,000
companies to quickly determine the cost of extending credit to their own trading partners. EnronCredit.com,
which broke cven in its first year, is expected to tum a profit this year.

Net Works is part software development house and part IT department, responsible for routine tasks, such as
desktop support, and critical functions, such as keeping Enron's e-business infrastructure running. The group,
with 1,500 employees, grew some 30 percent in the past year, occupying more than four floors of Enron's
downtown Houston headquarters.

"Our job is in two parts,” says Net Works COO Greg Piper. "Help Enron expand horizontally in markets for

. 01479

01200000000133


———EnronOnline - Registration & User Administration Page | of 2

Registration & User Administration

EnrenOnline Tour
Transacting Online
Pendens & Oilans 1. How do | register to become an EnronOnline User?
To register you need to complete three simple steps:
Registration su User 1, Complete the one page Registration Form
2. Complete and sign the Password Application
Techevical Questions 3. Complete optional forms
Legal Comwects 4, Mail or fax all forms to EnronOnline
Legal & Privacy Americas: Europe & Other Regions: Asia & Australia:
EnronOnline EnronOnline EnronOniine
PO Box 4656 Enron House Level 21
1400 Smith Street 40 Grosvenor Place 9 Castlereagh Street
Houston, Texas 77002 ~~ London, SW1X 7EN Sydney NSW 2000
USA UK Austrata
Fax: 713 646 6511 Fax: +44 (0) 20 7783 6281 Fax: +61 2 9229 2450

Aa forms are printable from the EnronOnline Registration screen.

2. | sent you my Password Application. How long will it take to start tr
via EnronOnline?
We try to process applications as quickly as possible. If accepted, you will normally racei
ID and,Bassword within four working days, depending on where you are located.

3. Who is a Master User? What level of access do Users have compare
Master Users? -
A Master User authorizes other Users within your company to transact via EnronOnline a
transactions completed by other Users within the company. A Master User can grant ano
access to all products and regions to which the Master User has access. However, Users
able to change other Users’ rights to transact or rights to view transactions completed by

4, How many Users can a Master User set up?
Up to ten. But f you want to set up more Users, Enron has the capability to extend this n
request that more Users be set up, please call the Help Desk:

The Americas: 713 853 HELP (4357)

Europe & Other Regions: +44 (0) 20 7783 7783
Asia & Australia; +61 2 9229 2300

Email: helpgienrononline.com

5. Can we have more than one Master User in the same company?
Yes, it is possible and is done to make it easier for you to manage Users’ authorization in

6. 1am a Master User and have forgotten my Password. What dol don
W you are @ Master User you need to Contact Us and let us knaw. You should print out th
EnronOniine web site, or we'll send it lo you upon request. After you sign and retum (by
the PA with your new requested password, we will change your password and contact yo
telephone or email to let you know that it has been activated. Please note that without a
ID and Password you will not be able to control access to EnronOnline of other Users wi

01386

http://www.enrononline.com/docs/marketing/AboutEnronOnline/Registrau...._ /4/01

01200000000742


Nickoloff, Peter

From: ERisk [ERisk@email.eRisks.com.treas.gov]
Sent: Friday, December 21, 2001 12:34 PM

To: peter nickolofi@ido.treas.gov

Subject: ERisk Essentials

The Esk Portal wil be taking a break over the holklay Season, the site wif next be updated on January 7. The Essentials will return on January 12
We wish heapy holidays and & prosperous New Yeer to all of our readers.
The Year in Review
in a departure from cur usually Weekly Review, ERisk journalists and editars tice a look back at 2001, from the Caltamia power crisis to he
September 11 attacks and Enron's tall from grace. Put the year in perspective with our Year in Review
-<htip:iwew risk, com/news/weeidyinews_weekly2001-12-21_01.asp>, induding the challenges af banking risk management in 2001
Reflections on Risk
For this spacial faalure <htto,www..risk.cominews:feahares/ERisk2001 YearinReview pdf. bank ritk managers including the presidant of a US

community bank, the CFO of a savings & loan, chief risk officers of two of fe world's largest banks, and specialists in market, credit and operating risks
told ERisk's Duncan Wood what hac preocoupied tem and their institufions in 2001. You can read what they had to say in our Reflections on Risk
feansre.

Viewpoint
After Enron's collapse, other aneepy firms came under scrutiny as investors began worrying about endemic weakness. Calpine - an ambitious
independent power producer - suffered the most, despite the company’s protestations. In our latest CRO profile
-<hatp:iwaw.erisk.cominews!iewpcintinaws_viewpointz001-12-20.asp>, ERisk talks to Enrique Mejorada, newly promoted head of Calpine’s risk
contrals function, and profiles Calpine’s turbulent year.

‘Sn avavable: NCR's lan Buxton <hitpiwww.erisk.comnews/viewpoininews_viewpoint2001-12-11.asp> om the introduction ot the euro and Deutsche
Bank's Kevin Rodgers <hitg:/iwew ensk.com/news/viewpointinews_viewpoint2001-11-21 asp> on macrosconomic derivatives and conversations with
(many mere leading figures <http:)}www.erisk com/news/news_viewpoint. aso> in risk

Feature

Itmay de years betore the problems Mat brought dawn Enron are fully understood, but some of the issu8s thet brought down ye orwe-mighty energy
giant are already becoming clear. In this exclusive ERisk Rob Jameson recounts the history
of Enron from its humble origins a8 an ambitious neturat gas trader to its derk final Gays of crisis and bankruptcy.

Other Enron coverage on ERisic Our February 2001 interview with chief risk officer Rick Buy
-shitpiwew ertsk cominaws/viewpointingws_viewpointZ00 1-02-01 asp> and our analysis of the company’s tangled web
-<hitp www. ertsik.cominews'analysis/news_enalysis2001-12-12_01.asp> of creat,

(01 More than 18,000 risk professionals receive This emaN every weak. To find aut haw your message could rach them, mal ws at IWogbarisk com

‘The ERisk Essentials Is published every Friday by ERisk com chip: iwaw.erisk.comihome.asp>.

To subscrive to this newstetier, please reqiater <hito www erisk com Al/register.asp> On our website,

To unsubscribe, access your account <hilp.www.nensk com/usllaccountasp>. Your username is the emai address where you received this message.
W you have forgotten your password, follow Bis link <hitp wwe erisk com/ublTorgot gwd.38p> 40 reset it

For tachrical support queries, please emal sunpc pris cor talto- supporteanisk..cor

01734

01200000000390


VVVVY VY YY

Federal prosecutors have expressed interest in monitoring the
investigation, a sign that they may consider filing criminal charges
against the company and its officers. And the Department of Labor has
opened an investigation into questions raised by Enron's handling of its
workers‘ retirement benefit plans.

Enron declared bankruptcy on Dec. 2 under Chapter 11 of the U.S.
bankruptcy code, which provides companies with some protection from
creditors while they prepare a repayment plan. Enron also filed a lawsuit
seeking $10 billion in damages against Dynegy, another Texas energy
company, for breaching its agreement to acquire Enron.

Enron's downward spiral began in October with a series of regulatory
filings revealing the use of questionable accounting practices to move
debt off its balance sheet and inflate profits by $586 million from 1997
to 2000.

The company reportedly is negotiating with Citigroup, UBS and J.P.
Morgan Chase about the possible sale of its trading operations, which once
accounted for roughly 25 percent of the trading in natural gas and
electricity in North America.

Details of Enron Chapter 11 Reorganization
http://www.enron.com/corp/pressroom/

Enron Presentation to Creditors Committee (powerpoint presentation)
http: //www.enron.com/corp/pressroom/chapteril/creditorpresentation.ppt

Sen. Bingaman Statement on Enron Collapse
http://energy.senate.gov/ (go to Press section)

House Financial Services Committee Press Release on Enron Hearing
http://www. house. gov/financialservices/120401pr.htm

Labor Department Statement on Enron Investigation
http: //wew.dol.gov/opa/media/press/opa/OPA2001459. htm

SEC Issues Pinancial Disclosure Cautionary Advice
http://www. sec.gov/news/headlines/fdadvice. htm

Marketplace Update

Energy Exchanges Report Surge in Trading as EnronOnline Goes Dark

With traders backing away from EnronOnline because of credit risk
concerns, two other energy exchanges--InterContinental Exchange and the
New York Mercantile Exchange--are reporting large increases in turnover.
Both exchanges are also emphasizing the differences between their market
models and Enron's.

ICE, which appears to be the main beneficiary of EnronOnline’s
decline, reported "tremendous growth" in November, with total volumes up
68 percent from the previous month and the number of users up 30 percent.
Power trading at ICE set a record of 16.7 million megawatts on December
i.

“We believe the inherent credit concerns in the OTC market have
Spawned interest in a many-to-many trading platform opposed to a
one-to-many platform," Jeffrey Sprecher, C50 of Intercontinental, said in
a@ statement Nov, 29.

The Atlanta-based exchange recently launched several additions in
the electricity complex, including power for delivery into AEP and into
Southern hubs as well as hourly, off-peak, and weekend power markets at
several hubs in the Weet and the East.

At NYMEX, natural gas futures hit a new volume record on Nov. 29 and
natural gas options hit a record the next day. NYMEX also has expanded ites
line of products in the natural gas arena, with particular emphasis on ite
clearing capabilities. The exchange has launched new products such as
cash-settled natural gas swaps and exchange of futures for swaps, and hae
begun permitting "large order execution* in natural gas futures during
certain parts of the open outcry session.

“Recent events in the natural gas market have served to reinforce
the necessity of counterparty credit risk management and have accelerated

° 01723

01200000000379


Concerning the Trustee

Harris Trust and Savings Bank is the Trustee under the Indenture. Such bank also acts as a
depository of funds for, makes loans to, and performs other services for, Enron in the normal course
of business, including acting as trustee under other indentures of Enron.

The Indenture contains the provisions required by the Trust Indenture Act of 1939 with
reference to the disqualification of the Trustee if it shall have or acquire any “conflicting interest’. as
therein defined. The indenture also contains certain limitations on the right of the Trustee, as a
creditor of Enron, to obtain payment of claims in certain cases, or to realize on certain property
received by it in respect of any such claims, as security or otherwise,

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The,foliowing is a summary of certain U.S. federal income tax consequences that may be
relevant to a.citizen or resident of the United States, a corporation, partnership or other entity
created or organized under the laws of the United States, or an estate or trust the income of which is
subject to U.S. federal income taxation regardless of its source {any of the foregoing, a “U.S.
Person”) who is the beneficial owner of Exchangeable Notes (a “U.S. Holder”), which in the og:nion
of Vinson & Elkins LLP. is accurate insofar as it expresses conclusions of law. Alt references to
“holders” (including U.S, Holders) are to beneficial owners of the Exchangeable Notes. This
discussion, which was prepared by Vinson & Elkins L.L-P., is based on current U.S. federal income
tax law and is for general information only.

‘This summary deals only with holders who are initial holders of the Exchangeable Notes and
who will hold the Exchangeable Notes as capital assets. It does not address tax considerations
applicable to investors that may be subject to special U.S. federal income tax treatment, such as
dealers in securities or persons holding the Exchangeable Notes as @ position in a “straddle” for
U.S. federal income tax purposes or as part of a “'synthetic security" or other integrated invest mont,
and does not address the consequences under state, local or foreign law.

No statutory, judicial or administrative authority directly addresses the characterization of the
Exchangeable Notes or instruments similar to the Exchangeable Notes for U.S. federal income tax
purposes. As a result, significant aspects of the U.S. federal income tax consequences of an
investment in the Exchangeable Notes are not certain. No ruling is being requested from the Internal
Revenue Service (the “IAS") with respect to the Exchangeable Notes and no assurance can be
given that the IRS will agree with the characterization and tax treatment of the Exchangeable Notes
described herein, in addition, Vinson & Efkins L.L.P. has stated in its opinion that it could give no
opinion with respect to the specific tax consequences of owning or disposing of the Exchangeable
Notes, including the characterization of the Exchangeable Notes. President Ciinton recently
announced as part of the Administration's 1996 budget, a proposal to deny the deductibility of
interest on certain debt instruments, including instruments similar to the Exchangeable Notes. This
announcement enhances the possibility that the IRS might challenge the contractually agreed upon
characterization of the Exchangeable ‘Notes described below. ACCORDINGLY, A PROSPECTIVE
INVESTOR (INCLUDING A TAX-EXEMPT INVESTOR) IN THE EXCHANGEABLE NOTES SHOULD
CONSULT ITS TAX ADVISOR IN DETERMINING THE TAX CONSEQUENCES OF AN INVESTMENT
IN THE EXCHANGEABLE NOTES, INCLUDING THE APPLICATION OF STATE, LOCAL OR OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.

Pursuant to the terms of the Indenture, Enron and all holders of the Exchangeable Notes will
agree to treat an Exchangeable Note as a unit (the “Unit") consisting of (i) an exchange note
("Exenange Note”) which is a debt obligation with a fixed principal amount unconditionally payable
‘at Maturity equal to the principal amount of the Exchangeable Note, bearing interest at the stated
interest rate on the Exchangeable Note, and (ii) a forward purchase contract (the ‘Purchase
Contract’) pursuant to which the holder agrees to use the principal payment due on the Exchange
Note to purchase at Maturity the EOG Common Stock which the holder Is entitled to receive at that
time (subject to Enron's right to deliver cash in lieu of EOG Common Stock). The Indenture will
require that a U.S. Holder include currently in income payments denominated as interest that are

24

0900000000270


Enron: #1 in internet profits

But transaction at

EnronOnline, its commodity-trading Web site,

Enron can. For every
Enron itself is the buyer or the seller, When you
show up at EnronOnline to trade one of 16 broad
commodities, Enron has a publicly posted price at

which it will buy — and a slightly higher price at

which it will sell. That price difference, the spread,
is market maker Enron's profit, It may be just 1 per.
cent of the value of the transaction, but it adds up
Enron does more than 4,000 online transactions in

an average day; deals average nearly $500,000. Last

SMARTBUSINESSMAG.COM

year it made $979 million on sales of $101 billion
Long live the middleman.

Enron has adapted its Web-based trading system
from natural gas to make new markets in electricl
ty, lumber, pulp and paper, plastics, metals, broad.
band capacity, crude oil, and other limited
resources. Where before a buyer might have need-
ed a morning's worth of phone calls to hunt down
prices, now he can go to EnronOnline and buy a
commodity instantly with no transaction fee at a

market-driven price. Easier price discovery attracts

2001

01390

01200000000746


- Fe net RITA PTET Ta?
AAR Rs A 8 AR Che ae a re

CORRESPONDENCE COVER SHEET

1
|
FAC Nos 1A ((b)(2)] Other ref |
Dated: 11/17/98
| Received: 11/20/98 }
| Due date:

From: Rudy, Beverty J.
| Org. Sutherland Asbill & Brennan LLP
Address: 1275 Pennsylvania Ave.

Washington, DC 20004 |
Actual Party: Enron Capital & Trade Resources Corp |
Subject: ((0)(4)]

DISPOSITION | CC | Special: Control Copy to Director “|

Initial assignment | Reassign 2

| Director
| Blocked Assets

| Civil Penalties | |

| Compliance

fT
1 ———_—__—|_ = = + _ OS
ce exon

Plans & Policy | \

| Chief Counsel

i _— Tt ~ . + ~
Erhard |

i - + = - —

| Stevenson |

| Notes: : / 7

‘Disposition: | File nameflocation:

Anita: “Date: ==

00400000000093


notable quctable

"I have traveled the length and breadth of this country and talked
with the best people, and I can assure you that data processing is a
fad that won't last out the year." - Prentice-Hall’s business books
editor, 1957

Copyright 2002 by InvestorGuide.com, Inc.

InvestorGuide Daily is designed to keep you informed of the latest
investing news. It includes a market summary, top news, IPOs, earnings
and more...everything you need to invest better, every day. You can
also find this newsletter every evening at

http://www, investorguide. com/daily. html

This strictly opt-in newsletter is published by InvestorGuide.com
(http://www. investerguide.com), and ig sent only to those who have
specifically requested it. No information gathered from newsletter
subscribers, including e-mail addresses, is ever shared with or sold
to any third-party. If you know othera whe might like to receive
InvestorGuide Daily, feel free to forward thie issue to them. To
subscribe, send any meseage to daily@investorguide.com. To
unsubscribe, send any message to investorguidedaily-of f@mail-liet.com.
If you would like to advertise in this newsletter or on any of the
InvestorGuide websites, please contact advertise@investorguide.com

InvestorGuide.com has no control over the sites we link to, is not
affiliated with these sites, and cannot take responsibility for their
quality or suitability. The news, earnings, and IPO information is not
meant to be comprehensive, and data provided is not guaranteed to be
accurate. We are not responsible for claims made by advertisers and
sponsors. Anyone who makes investment decisions based on what they
read here does so at their own risk and cannot hold WebPinance Inc.
(DBA InvestorGuide.com, Inc.) or its employees responsible. For the
complete disclaimer please see

http: //wew. investorquide.com/disclaimer.html

01852

01200000000508


The impact of the other marketing activitias, a substantial portion of which serve as hedges of
commodity price risks for @ portion of wallhead deliveries for the respective periods, were mora than
offset by reductions in revenues associated with market responsive prices for wellhead deliveries
during those periods.

Operating Expenses

Nine months 1995 compared to nine months 1994. During the first nine months of 1995,
Operating expenses of $338 million were $6 million lower than the $344 million incurred in the same
Period in 1994, Lease and well expenses increased approximately $8 million to $53 million primarily
due to expanded international operations including the initiation of operations in india in late
December 1994 partially offset by reductions in United States lease and well expenses, Exploration
expenses increased $2 miltion to $32 miltion due to increased exploration activities. impairment of
unproved of and gas properties for the first nine months of 1995 increased $3 million from the
comparable period a year ago primarily due to impairments associated with certain offshore Gulf of
Mexico leases. Depreciation, depletion and amortization (""DD&A") expense decreased $24 million
to $158 million reflecting @ decrease in the average DDBA rate trom $.81 per Mcfe in the first nine
months of 1994 to $.69 per Mcfe in the first nine months of 1995. The DD&A rate decrease is
Primarily attributable to increased production from international operations with lower average
DDBA rates than incurred for North America operations. General and administrative expenses
increased approximately $3 million to $41 million due to expanded international activities and overall
higher costs associated with certain employee related expenses, Taxes other than income were $4
million higher in the first nine months of 1995 compared to the same period in 1994 primarily due to a
reduction included in 1994 associated with state franchise taxes and higher production related taxes
associated with new production in India In the first nine months of 1995 partially offset by decreases
in state severance taxes due to lower taxable North America wellhead volumes and average prices
in 1995.

The Company reduced Its total per unit operating costs for lease and well expense, DD&A,
general and administrative expense, interest expense, and taxes other than income by $.06 per
Mcfe, averaging $1.25 per Mcte during the first nine months of 1995 compared to $1.31 per Mcte
during the same period in 1994. This decrease is primarily attributable to the reduction in the
average DOGA rate as noted above partially offset by increases in per unit lease and well, general
and administrative expenses, and taxes other than income.

1994 compared to 1993. During 1994, total operating expenses of $466 million were approxi-
matety $1 million higher than the $465 million incurred in 1993, Lease and well expenses of $60
million were approximately $1 million higher than 1993 primarily due to increased expenses related
to new operations offshore Trinidad partially offset by cost reductions in North America. Exploration
expenses of $42 million increased $5 million from the previous year primarily due to an increased
level Sf exploration activities. Impairment of unproved of and gas properties increased $4 million
from 1993 primarily due to impairments associated with certain offshore Gulf of Mexico leases.
DD8A expense decreased from $250 milion in 1993 to $242 million In 1994 reflecting a $.09 per
Mcfe decrease in the average DDSA rate to $.80 per Mcfe. The rate decrease Is primarily due to
increased production from offshore Trinidad at an average DD&A rate significantly less than the
North America operations DD&A rate and a $.03 per Mcfe reduction In the North America operations
DD&A rate. General and administrative expenses increased $6 million to $51 million primarily due to
overall highér costs associated with expanded international and domestic operations. Taxes other
than Income decreased approximately $7 million from 1993 primarity due to lower taxable United
States wellhead volumes and prices and reductions included in 1994 related to revisions of certain
prior year production taxes. Included in 1994 and 1993 are benefits associated with reductions in
state franchise taxes of $4 million and $3 million, respectively. The Company continues to benefit
from certain state severance tax exemptions allowed on high cost natural gas volumes.

25

00900000000299 _


{()(2)]

DEPARTMENT OF THE TREASURY
WASHINGTON, D.C, 20220

License wo. ¥«- [(b)(2)]
FEDERAL Repupnic oF YusosLavia (Sexnra xm Mowtexecao) Kosovo SANCTIONy REGULATIONS
LICENSE

(Granted under the authority of § 203 of the Intersational Brergency Economic Povere Act
c. § 2702], Executive Order 25088, 22 ¢.F.R. Parte $02 and and Executive

Tor Enron Corporation (the “Licenses*)
1775 I Street RW
Suite 800
Washington, DC 20006 Att: Thomas C. Briggs VP, Government Affairs

2. Based ce your letter of October 14, 2000 (the “Applicatica! and on inforwaticn
ciherwise available to the Office of Poreign Assers Control, the Cransacticna and
activities delineated on the reverse herecf are hereby authorized.

2. ‘Taig License ie granted upon the statements end representations rade in the Application.
ciherwise filed with or rade to the Treasury Departnent as « wupplevent to the Applicaticn,
ct baed on anfermacion available to the Treascry Department, and ig subject to che
Condition. among others. that the Licensee comply in all respecte with al] requlaticas,
Tulings, oxdexe, and instructions ismued by tht Secretary ef the Treasury under the
juthority of Section 203 cf the Internarional Beergency Econemie Powers Act, $0 0.5-C. §
1702, and the teres of this License.

3. The Licensee chall furnish and make available for inspection any relevant information,
records, or reports requestec by the Secretary of the Treasury, or any ocher duly gatherized
officer or agency-

4. TAia License de pee transtersble, and is eubseect to the provisions of Executive Order
413088 of dune 9, 1998, 31 C.P.K. Parte 501 and £66. Executive Order 13221 ef April 20, 1999.
and ralinge issued pursvant thereto, It may be revexed or modified at any time at the
Gircretion ef the Secrecary of the Treasury. If this License was issued as « result of
Willfsl sdsreprecestatice on the part of the applicant, it way. at the discretion of the
Secretary of the Treasury, be dectared void fron she dace of =ts dasuance, or fren any other
date.

5S. This License dees ret excuse compliance with any law of regulation administered by the
Office of Foreign Assets Cancrol or anther agency (including reparcing requirerencs!
applicable to the transaction(el herein licensed, nor dees if release Licensee or third
parties fron civil or eriminal liability for violaticn of any law or regubasicn-

Isaued by direction and on behalf of the Secretary of the Treasury:
ets

Attention 4s directed to, amter alia, 50 U.
28 U.S.C. § 3571, 19 U.8.C. § 1892, 19 0.g.C, § isssa, 28 ¥.8-C.
4 586.701 for provisions relating co penalties.

00400000000179


EnronOnline - Site Map Page | of |

Piaase login oF register above

v8 bast
a. Gen it
About EnronOnline V8 Vie
EnronOniine Tour Sredaston Alowsomnes
Transacting Online
Products & Prioas eee A rode
Ragistaton & User
Adiministraton us
Technical Questions
Lagal Contacte NGL, Patchams & Plastics
—_——___ Internatonal LPG
Market Presentations Petrochemicals
EnronOniine Research
Press Room
=
— _
Legal Privacy
‘Smet _
Creda Detwatives

http://www-enrononline.com/docs/marketing/SiteMap/ 12/4/01
01200000000740


ras

O8ETO

p30 7 aang

/uyUTuyoesues | oUTpUQuOITA Nog Y BUNS xeU/soop wos surTUOUOTUA MMM dy

“sunay eAjony Ul

Saxe IBM BIBPIC WI) GOL ‘OWA AU 1e PHBOUBD 6g WED SuBpIE YU!) OoUG "yNsey AeW UORDESUE e
Bue sapu0 INOA [yO] Aq AgeogeWORNe |j|M BUIUOUVOIUY “aIGeTeNe sau00Neq Pay}rads NOX soud ayy pu
“FAO TAU Goud B BIeKI NOK 4 ‘uORIeSUER JeWO KUBO} VORE|GU Lt PASM OG JOULES }! 'peyale! SI J8yO
PaHIWGNS INOA 41 “AjeanEwoIE asia) 20 peyleooe seyyo PUE Weysks eURVQUOIUZ BUy Ag passsoqid
94 1 11 “PATIWANE 8} [185 10 Ang a} say0 NOK UdYM ',UOKSBIWONS BLEED, B}Es NOA 4) VEDIO wT
SOU, JO UOISSAUGNS ayer, “UOsUS Oo} [96 20 Ang Oo} Jayo Ue Burns ay sqmOYD E BABY MOA
2OW} 1938) & ye soUe;ded0e 10

uado ulewes }! Seop ‘euyjuQuosug Aq paydeoze jou SI 18s 40 Ang 0} 490 Aw jf

“WSU [1/4 UOQIESUEY & LOY) “SYD aSaqy JO 1B S9SSEd JaYO INOA
LUIPAID 40 Sug ZK PaEoXe UOPIESUEN SRY JO UORBIGWICD PINON “E
CORBIIENE INS ALNIOA GYR 8} —Z
eee HEAR UIs Goud BYR Ss] *L
ssBujyy ayy
SBUIWEXE ¥ 48470 INOK $43949 WaYSAS BYE VEU "JOU JO 40YO OL) JGeaTeE 0] OYVEyMR BSOOYD OF HE
09] JOU [IM SenjeSWEL] SBPER LOWS "wUUgnS NOK sEyO SY} SseI0Nd AWEIHEWOWNE jj GUUQUONS

eMWIGNS | JeUR [19 40 Ang 0} Sieyo yde90e 0} poyEBy\qo UOIUy S| “|

“VOROUNY LUESS UOAIeSUeL) O19 asn aseard ‘payaydweo UoRIesUER

© 10U 40 sayjyaum INE IGNOP Ul} JEAB eae Nox j| ‘uOHOUNY YBeS UOROBSUEL, Oy; GuIsn suOgIesUER
PS}BIGWOD IIE MAJA WED NO, “paya{dusco Bq FHM UORIESUER Ou 'eseqeyEp euJUQUOIUZ oy PeyoEaN
28Y0 NOK 92079q PSLINIIO GINYE} UOYSAULCD FRUaPU] BU) JI “OAAMOL "VOYSS}WGNS INOA UO ayo

Aue @N2y JOU (UM GuNgey SiLY YOU) “PoP, UORIGUUCS ;aLZApU| INOK audyoq BsEQEVEP BUYUQUOIUZ By
PALLEas LOSSMUANS INOA 4} (UORDGULCS JOLUAIUE INOA Se BUY GES BY) UO BUCYde}a; e dn yoId Cy QUO
SUORWOS p ‘aGWEXS Oj) aud PayEURWIE, BuJeg YORI@UUCS JOLUAPU] INOK SB YOMs “SUYUQUOS
$8903 OF Age INOK Edw) OF SIO; IE) @PYS~NE sO} VEABMOY “A/QISSOd 8} | "BOUEINDDO aueL

© O28 SaINITE) WETEAS "@u]UQUOAIA oyu! NG AoUBpUNpEL AyEdED PU ABOIOUL4D9} JO [ane BY) 01 ONG

LOIN}E} WOSAS BUI|/UQUOIUZ JO JUDAS BUY UY Pa}Daye SUCH .eSUeH AW GE MOH *

“Pa_E/es aq PINOYS YORDO ,HuNOHY JO My, OY} LAY) “Yayo INOA UI payloads AyuEND oy

WEY} $89) [195 40 Ang OF JaYO 0} YS JOU OP NOX 4] -WaysAs aUUQUAIUZ By Aq ydiede UOdn AjayeEIPoUL
Parelal Jo pexdacce Ayesqeucine 51 yng BSEQEIEP euIUQUAIL 94} UI PRY JOU SI JaYO PARIWaNS
JNO, “MOPUIM UOEESILUQNS BLY Ui Paysanbes punowe aUy OF dn Aywuenb Aue 40} uasUS Aq peydeose

99 Abu 1188 40 Ang 0} s040 nox ‘vondo SRY Gunoa}es Ag “yas 20 Ang o} sao NOK BumyUqnS UeUM
Londo WhO FUE }Oe00y, 6iy GugIa\9s patifins om “Amqssod sap BZ}WIUILY OY “Ss@LWOYSND JOYYO
SU} 40 GUNOM "yy LIOYSAS OUgUQUOIUT Buy Aq Passooaid $1 yas 20 Ang Oo} JayO eSOym UO Spusdap }

2l1Rs 4Oy0 Aw [WM 231 320108 07 BujAy we | se sw ewes oy} ye AyUENb Jo ead
4ejnoqyed & ye |}8 10 Ang 0} JeyO Ue SOYEW JEWO}SND JeYyjoUR 4! SUaddeYy Jey

warshs BUyUQUaUZ 84) AQ ydreD8s Uodn Apaye|poUuU poyrofor

40 paydecae AyesqEWCENE 51 ING SSEQEVEP SuyjuQuesiy oY) UI PIBY JOU S| 480 PERRUGNS INA “~VOIUZ
4a poyd038 Bq JOU jI}M4 8S 40 Ang 64 40yO INOA YAU “NOK o) BQEJOABWUN Ss} yeu JUUEW e U! SBUEL FEY,
JO Who S1/&4 Bou OY, J! “AyeanFEN “xOq 4OBY> ,e6UEY 9oug aIGeIda2D0y, 94) LO ¥O1}9 0] PaBU NOX "YORdO
OButy Goud By BBN O4 “COL Jeig }e SERENE 8} FONPAUG yo AjUEND JeAayeYM UO Pose “Apoeds

“OL

01200000000736


Nickoloff, Peter

Neen ncn cree ne eee a EEEEEETEEE EE EIEEIEENEEIEEEESEEEEEEEEES EEE

From: Nickoloff, Peter

Sent: Friday, November 09, 2001 1:20 PM

To: Carleton, Norman, Schultheiss, Heidilynne
Subject: interview with Enron's Chief Risk Officer

From Erisk.com
CRO Profile: Rick Buy —- Enron Corporation

Asked about the biggest challenge he faces, Enron’s chief risk officer could never be accused of
aiming low: Rick Buy aims to condense all the risks of Enron Corporation into a single metric.
This would comprise operational, market and credit risk and incorporate risk- adjusted return on
capital (RAROC), value-at-risk (VaR) and extreme value theory into what Buy calls a single
“pseudo capital-at-risk figure” that can be shown to the Enron board of directors.

It’s a daunting task for the CRO of a company that encompasses business lines as diverse as
running a vast natural gas pipeline network, wholesale power marketing, energy trading, project
financing and consulting, as well as engineering and construction. That's without taking into
account new ventures such as Enron’s entry into the UK water business through Azurix; its
involvement with weather derivatives through the launch of tempcrature-linked bonds; its launch
of a B2B exchange for trading bandwidth; and its foray into online credit risk management for
third parties, Enron Credit.

Ranked 18th in the Fortune 500 index, with revenues of $100 billion in 2000 (compared with
$40 billion in 1999) Houston-based Enron is seeing its list of counterparties growing towards the
20,000 mark, a rise that Buy attributes partly to the development of the Enron Online e-trading

platform — which has reputedly tumed Enron into the world’s biggest e-commerce company
since its launch last year,

The size and complexity of Enron’s diverse business lines and counterparty list makes the idea of
asingle risk measurement for the whole firm seem almost incredible. Buy admits that one of his
other goals — of achieving enterprise risk management (ERM) across the whole group — is only
about 30 per cent complete so far, but says a lot of progress has been made in aggregating risk
across the company: “We understand that, for example, credit exposure to Shell in London has to
be added to Shell elsewhere, and we routinely assess how exposed we are in this kind of way”

Buy joined Enron from Bankers Trust in 1994, and as CRO now reports directly to president
Jeffrey Skilling as well as to the board. He is on Enron's executive committee and heads the risk
assessment and controls (RAC) group. Enron's separate risk committee was disbanded a year
ago, and the risk function now comprises Buy and his RAC group, the board and senior
management. The board sets the firm's appetite for risk, while the RAC group measures and
reports on risk throughout the company.

“The board tends to be vaguc on the details of risk positions, “says Buy. “I try to ascertain their
comfort levels with certain market moods and P&L swings. We then try to set our limits
structure to accommodate that risk appetite. You have to read between the lines of the board's
views to some extent — they know that we need to take on risk, but also they take the view that
we're not a pure trading house.” Individual transactions to the value of $750,000 and above get
referred directly to Buy’s RAC group, while anything above the value of $75 million has to be

approved by the board, 0 1 6 9 9

01200000000355


and providing, among other things, that EOG has no obligation to offer any business opportunities to

E0G and Enron and its affiliates have in the past entered into significant intercompany transac.
tions and agreements incident to their raspective businesses, and EOG and Enron and its affiliates
may be expected to enter into material transactions and agreements from time to time in the future.
Such transactions and agreements have related to, among other things, the purchase and sale ot
natural gas and crude oil, the financing of exploration and development efforts by EOG, and the
provision of certain corporate services. Enron believes that its existing transactions and agreements
with EOG have been at least as favorable to Enron as could be obtained from third parties, and
Enron intends that the terms of any future transactions and agreements between Enron and EOG
and its aftiliates will be at least as favorable to Enron as could be obtained from third parties.

USE OF PROCEEDS

Theanet proceeds from the sale of the Exchangeable Notes will be added to Enron's general
funds and are expected to be used to retire existing indebtedness and for general corporate
purposes, At December 6, 1995 the weighted average interest rate on such indebtedness was
approximately 6.0%.

RATIO OF ENRON'S EARNINGS TO FIXED CHARGES

Your Ended December 31, wine Moone
{900 WweT 1982 fons T90a _ September, 1995

Ratio of Earnings to Fixed
Charges ....2e..ecee cence 158 «#4166 0«41.74 «1.98240 2.87

The ratio of earnings to fixed charges is based on continuing operations. “Earnings"’ represent
the aggregate of (a) the pre-tax Income of Enron and its majority owned subsidiaries, (b) Enron's
share of pre-tax income of its 50% owned companies, (c) any income actually received from less
than 50% owned companies, and (d) fixed charges, net of interest capitalized. “Fixed Charges”
represent interest (whether expensed or capitalized), amortization of debt discount and expense
and that portion of rentals considered to be representative of the interest factor.

PRICE RANGE OF EOG COMMON STOCK ANO CASH DIVIDENDS

Cash
Deidente,

. . O3

an a

26.81 19.88 03

27.00 17.06 03

75 $19.31 $.03

3 $333 03

23.00 18.50 03

22.75 17.38 03

$34.88 $17.12 $.03

i 3338 300008
Third Quarter ; I d

Fourth Quarter (through 7, 1995) .. 22.75 (18.75

The last reported sale price of the EOG Common Stock on December 7, 1995 as reported on
the New York Stock Exchange Composite Tape was $22.

14

00900000000260


1o/v/Z1 (60 LLWy/mooysserg/SunayzeUl/ssop/uu09'auyuOUOZ wavy /-dyY

01410

ao pea D

«32. QUIAS
22509] St} AAPUN POPE 8} 40IS BU, "WOO"UOAIE'MMAM S} SSOUPPS FOUL $,UOIUR , EOUBWY L104 HOM OF

seeded 001 1896, 5eun}0-J Jo Jayend doy uy u| YUE! OIE 'UOQIPPE Uj .WeyeL GaAojdusy,, 204 AUEdWOD
y8eq PUCORS ayy PUE .UEWeBeUEYy Jo AyEND, 104 AUEdWIOD Gor ayy “sIBEA BAgNoeSUCD BNy 40) AUMGWOD

“

ZJO 7 aBed wOOY S$821g - autququor .
a

01200000000766


Nickoloff, Peter

———L

From: InvestorGuide Daily [daily@investorguide.com]

Sent: Friday, January 11, 2002 5:34 PM

To: peter. ni treas.gov

‘Subject: InvestorGuide Daily - January 11, 2002

InvestorGuide Daily January 11, 2002
brought to you by

InvestorGuide (portal) http: //waw. investorguide.com

InvestorWords (glossary) http://www. investorwords.com

WebFinance Consulting http: //www.webfinanceconsulting.com

If a friend forwarded you this message, get a free subscription by
sending any email message to daily@investorguide.com

Today's issue i¢ sponsored by Ameritrade:

There's a time and a place for everything. Usually it's now, Discover
the advantages of Ameritrade with convenient client services, powerful
tools and advanced trading technology. Trade Smarter. Open an
Ameritrade® account teday and receive 25 commission-free trades.

http: //wew. investorguide.com/Ameritrade.htm

Contents:
Market Summary
Business News and Analysia
Earnings
Word of the Day
On This Date
Notable Quotable

market summary

The major indices fell under selling pressure during afternoon trading
after Federal Reserve Chairman Alan Greenspan commented on the economy
when he spoke at the Bay Area Council in San Francisco. Although his
remarka were expected, they had a negative effect on stocks. The day
started with the release of the Producer Price Incex that fell 0.7% in
December, lower than the expected 0.2%. The primary reason was the
steep decline in energy prices, Although volume was low, the Dow fell
below the 10,000 mark loosing 60.33 points while the Nasdaq lost 24.78
points.

Dow Jones Industrials: 9987.53 -80.33 -0.80%
Nasdaq Composite: 2022.46 924.78 -1,.21%
S&P 500: 1145.42 711.13 -0, 96%
30-year Treasury Bond: 5.360% -0,053

Por more news and information on the market, investing, and personal
finance, please visit http://www. investorguide.com

business news and analysis

TM 01751

01200000000407



Among the collapse’s biggest casualties are the workers who lost jobs (about 5,600 so far, including 1,100 in
Europe) and had their retirement savings wiped out, Many were dangerously overinvested in the company’s
stock, About 58 percent of the assets of the company’s 4(1(k) retirement plan were invested in Enron stock,
reports a survey by DC Plan Investing, a newsletter. But Enron wasn't exceptional. The survey found that 95
percent of Procter & Gamble’s plan was in company stock, 77 percent of General Electric's and 54 percent of
Dell Computer's. No matter how well-run the companies, these high dependencies are risky. "A lot of
employees invest in the company stock if they like the company,” says Louis Bemey, the newsletter's editor, "It's
a crime perpetrated by the employees against themselves.”

Lawsuits may uncover wrongdoing, but outwardly, Enron's 401(k) program seems fairly typical, says Jack
VanDerhei, a pension expert at Temple University, According to company spokesman Mark Palmer, Enron
matched employee investments with a 50 percent stock contribution: If I invested $5,000, Enron would put up
$2,500 in stock. The stock contributed by the company could not be sold until a worker reached 50; but there
were 20 investment choices -- including buying Enron stock -- for personal contributions. True, there was a total
trading ban from Oct. 29 through Nov. 12, because the plan's outside administrator was being changed. But,
says Palmer, investors were informed of a ban in late September and early October. They could have sold then
or anytime earlier. Enron's stock had dropped all year, from $68.50 in February to $49.10 in June to $27,23 in
September. Obviously, many didn't.

Enron's downfall stemmed mainly from its own mistakes. Whether some corporate officials crossed the line
between creative obscurity and illegal concealment is an open question. But in a larger sense, the collapse
reflected the financial fever of the past decade. The profit motive -- the promise of reward for risk and effort --
is a great incubator of invention and wealth, But those who glorify capitalism's triumphs often forget that it's
also vulnerable to the frailties of human nature. There was 3 mass merchandising of dreams and delusions that
was indiscriminate in its effects, Candor was corroded, judgment clouded. Pursuing self-enrichment, people
often follow the path of least resistance. It sometimes leads to a cliff.

© 2001 The Washington Post Company

“ 01495

01200000000149


DEPARTMENT OF THE TREASURY
WASHINGTON, D.C, 20220

License No. ¥x- [(b)(2)]
Feperat REPUBLIC OF YUGOSLAVIA (SERBIA AND MONTENEGRO) Kosovo SANCTIONS REGULATIONS
LICENSE
(Granted under the authority of § 203 of the International Emergency Economic Powers Act
{50 U.S.C. § 1702], Executive Order 13088, 31 C.F.R- Parts 501 and S66, and Bxecutive
Oxder 13121.

To: Enron Corporation (the “Licensee")
1775 I Street NW
Suite 800
Washington, DC 20006 Att: Thomas C. Briggs VP, Government Affairs

1. Based on your letter of November 10, 2000 (the ‘Application’) and on information
otherwise available to the Office of Foreign Assete Control, the transactions and
activities delineated on the reverse hereof are hereby authorized.

2. This License is granted upon the statements and representations made in the Application,
otherwise filed with or made to the Treasury Department as a supplement to the Application,
or based on information available to the Treasury Department, and is subject to the
condition, among others, that the Licensee comply in sll respects with all regulations,
“o\ings, orders, and instructions issued by the Secretary of the Treasury under the
authority of Section 203 of the International Baergency Economic Powera Act, 80 U.S.C. §
1702, and the terms of this License.

3. The Licensee shall furnish and make available for inspection any relevant information,
records, or reports requested by the Secretary of the Treasury, or any other duly authorized
officer or agency.

4. This License is not transferable, and is subject to the provisions of Executive Order
13088 of June 9, 1998, 31 C.F.R. Parts 501 and 586, Rxecutive Order 13121 of April 30, 1999,
and rulings issued pursuant thereto. It may be revoked or modified at any time at the
discretion of the Secretary of the Treasury. If this License was issued as a result of
willful misrepresentation on the part of the applicant, it may, at the discretion of the
Secretary of the Treasury, be declared void from the date of its issuance, or from any other
date.

5. ‘this License does not excuse compliance with any law or regulation administered by the
Office of Poreign Assets Control or another agency (including reporting requirements)
applicable to the transaction() herein licensed, nor does it release Licensee or third
parties from civil or criminal liability for violation of any law or regulation.

Issued by direction and on i of the Secret o the oy
oF F
otal Ta fee
t

2 ee a
pirbator
Attention is directed to, inter alia, 50 U.S.C. § 1705, 18 U.S.C. § 545, 18 U.S.C, § 1001,
18 U.S.C. § 3571, 19 U.S.C. § 1592, 19 U.S.C. § 1595a, 28 U.S.C. § 2462 note, and 31 C.F.R.
§ 886.701 for provisions relating to penalties.

00400000000151


For illustrative purposes only, the following chart shows the number of shares of EOG Common
Stock or the amount of cash that a Holder of Exchangeable Notes would receive for each
Exchangeable Note at various Maturity Prices, The table assumes that there will be no adjustments
to the Exchange Rate described under "~ Dilution Adjustments’ below. There can be no assurance
that the Maturity Price will be within the range set forth below. Given the Initial Price of $21.75 per
Exchangeable Note and the Threshold Appreciation Price of $26.32, a Holder of an Exchangeable
Note would receive at Maturity the following number of shares of EOG Common Stock or amount of
cash (if Enron elects to pay the Exchangeable Notes in cash):

Maturity Price Number of
of EOO Shares of LOG
Common Stock Commen Stock Amount of Cash
$20.00 1.0000 $20.00
21.75 1,0000 21.75
oo 24.00 0.9063 21.75
26.32 0.8264 21.75
28.00 0.8264 23.14

Interest on the Exchangeable Notes will be payable, and delivery of EOG Common Stock (or, at
the option of Enron, its cash equivalent) in exchange for the Exchangeable Notes at Maturity will be
made upon surrender of such Exchangeable Notes, at the office or agency of Enron maintained for
‘such purposes, which will initially be the principal corporate trust office of the Trustee, currently 311
West Monroe, 12th Floor, Chicago, Illinois 60609 or at the Trustee's office maintained for such
purpose in New York, New York, provided that payment of interest may be made at the option of
Enron by check mailed to the persons in whose names the Exchangeable Notes are registered at
the close of business on each January 15, April 15, July 15, and October 15.

The Exchangeable Notes will be transferable on the books of Enron at any time and from time to
time. No service charge will be made to the Hokier for any such transter except for any tax or
governmental charge incidental thereto.

The indenture does not contain any restriction on the ability of Enron
otherwise convey all or any portion of the EOG Common Stock held by it, and
EOG Common Stock will be pledged or otherwise held in escrow for use at Maturity of the

Enron. In addition, as described herein, Enron will have the option, exercisable In Its sole discretion,
to satisfy Its obligations pursuant to the mandatory exchange for the principal amount of each
Exchangeable, Note (at Maturity by Gellvering to Holders of the Exchangeable Notes either the
specified number of shares of cash in an amount equal to the value of such
number of shares at the Maturity Price. In the event that Enron does sell, pledge or convey all or @

thereof and the applicable record date, if any, for the exercise of such rights occurs after such date.

Dilution Adjustments ‘

The Exchange Rate Is subject to adjustment if EOG shall (i) pay @ stock dividend or make a
distribution yth respect to EOG Common Stock in shares of such stock, (il) subdivide or split the
outstanding shares of EOG Common Stock, (iii) combine the outstanding shares of EOG Common
Stock into a smaller number of shares, (iv) issue by reclassification of shares of EOG Common
Stock any shares of common stock of EOG, (v) issue rights or warrants to all holders of EOG
Common Stock entitling them to subscribe for or purchase shares of EOG Common Stock at a price
per share less than the market price of the EOG Common Stock (other than rights to purchase EOG

v7

00900000000263


Nickoloff, Peter

From: InvestorGuide Daily [daily@investorguide. com)

Sent: Wednesday, January 02, 2002 6:27 PM

To: peter.nickoloff@do.treas.gov

Subject: InvestorGuide Daily - January 2, 2002

InvestorGuide Daily January 2, 2002
brought to you by

InvestorGuide (portal) http: //wew. investorguide.com

InvestorWords (glossary) http://www. investorwords.com

WebFinance Consulting http: //wwe.webfinanceconsulting.com

If a friend forwarded you this message, get a free subscription by
sending any email message to dailyGinvestorguide.com

Contents:
Market Summary
Business News and Analysis
Tomments
Earnings
Word of the Day
On this Date
Notable Quotable

Today's issue is sponsored by Annuity.net:

Will you have enough money for retirement? Annuity.net makes it easy
to compare Fixed or CD-Type Annuities that beat bank rates and offer
tax-deferred growth. See how you can earn guaranteed interest for up
to 10 years, plus bonus rates in the first year!

http://www. annuity.net/index.htm?rid=850232

market summary

After a day of mixed trading, the major indices finished in the plus
column to start the year. Economic news provided some confidence as
the Institute of Supply Management Index came in at a
better-than-expected 48.2%, still contracting, but at a slower pace.
Leading the Nasdag was the semiconductor sector; tech stocks showed
signs of recovery, pushing higher after favorable news from the World
Semiconductor Trade Statistics that reported the global DRAM market
grew 17% in November. Despite a few brokerage downgrades, stocks saw
increased buying interest late afternoon; the Dow managed a 51.90
point gain and the tech index finished up 28.65 points.

Dow Jones Industrials: 10073.40 +51.90 +0.52%
Nasdaq Composite: 1979.25 +28.85 +1.48%
SEP S00: 2154.67 +689 +0.57%
30-year Treasury Bond: 5.564% +0.086

For more news and information on the market, investing, and personal
finance, please visit http://www.investorguide.com

21 01735

01200000000391



Traasury Market Room 622-2659 GLOBAL FINANCIAL MARKETS

Temothy OuLaney, Gwector 1ae2 TS AM
ery iia Seg Exibar's chev Das
mass yas 058% Be mt
ems eee 22% ames ase
saan 17% Laee aes
148% earm is as
sas 1am onan An
£5206 o.s35 17%, A
Te] Twas Ge Des Os
wae mas 198% tons 8%
sass 0 029% 143 f15%
4 an sens oor art
35.00 re) nears 3495 14%
1 we a ss Tas
mse out 026% 3084 ear
eT Ha ans ee £Av%
+197 Bru) a ‘set Tan
Pe uM ane PST) 13%

sete
sar so

Neneh 225 Las

Japan Tapte asi
German DAX 18%
Preech CAC 120%
UK ETS: ro
TA Hang Beng ots
Keeran Kowpt 228%
Troe Weignied sens
Teli Wig The
Sesh Adrien SE as
Mexkan Baba as
Wrasilien Bovewpa 430%

570

Tips chaos orchemr) ‘ ) 2 ’
| BMELRGING FINED INCOME ‘Thadard“l ‘Daas PD)

Current as +

ip change ' cencmanged unchanged .

ma ‘Masice Par Sata PL
Carnes 197s ne eat wer
ys cheng ” s 4 u

01741

01200000000397


Total per unit operating costs for lease and well expense, DD&A, general and administrative
expense, interest expense, and taxes other than income decreased $.14 per Mefe, averaging $1.29
Per Mcfe uring 1994 compared to $1.43 per Mcte for 1993. The decrease was primarily due to per
unit reductions in OD&A and taxes other than income as discussed above,

1993 compared to 1992, During 1993, total Operating expenses of $465 million were $112 mil-
lion higher than the $353 million incurred in 1992, Lease and weil Sxpenses increased approximately
$10 million primarily due to expanded domestic and international operations. Exploration expenses

increased approximately $4 million Primarily due to increased exploration activities in North
America. An unsuccessful Guif of Mexico well added nearly $4 millon to dry hole expenses and a

by benefits realized in the form of tight gas sand federal income tax credits and certain state
Severance tax exemptions. General and administrative expenses increased almost $9 million to
$45 milion primarily reflecting cost reductions included in 1992 related to changes associated with
Certain employee compensation plans and overall higher costs in 1993 due to an expansion of

Sted with certain state severance tax exemptions allowed on high cost natural gas volumes and a
$3 million reduction of state franchise taxes resulting from refunds of prior year payments received
in 1993. 4

Total per unit operating costs for lease and welll expense, OD&A, general and administrative
expense, interest expense, and taxes other than income increased $.03 per Mcfe, averaging $1.43
Per Mcte during 1983 compared to $1.40 per Mcfe for 1992. The total increase was associated with
DDBA expense which was up $.10 per Mcfe as noted above being partially offset by a reduction of
$.07 Mcfe In all other costs.

Other income

funds temporarily surplus to the Company and $4 million associated with settiaments related to the
termination of certain long-term natural gas contracts. 7

Interest Expense -
Net Interest expense for the first nine months of 1995 was up $3 million as compared to the
same period in 1994 reflecting primarily a higher level of debt outstanding during the 1995 period.

Not interest expense in 1994 decreased approximately $1 mition to $8 million as compared to

Not interest expenss decreased $12 million, or 55%, to $10 million in 1983 as compared to 1992
reflecting the repayment of a substantial portion of the Company's long-term debt in 1992 with
Proceeds from the sale of common stock in August 1992 and the sale of # volumetric production
Payment in September 1992. The estimated fair value of outstanding interest rate swap agreements
at December 31, 1993 was a negative $3.3 million based upon termination values obtained from third
parties. -

00900000000300


by various means: increasing market share at thin risk-adjusted margins; incurring difficult-to-measure long-tail liabilities;
shaping a firm's cashflows and liabilities using reinsurance contracts and options; or investing heavily in potentially
lucrative but increasingly risky ventures.

There's nothing wrong with any of these, providing a business succeeds in clearly communicating its risk position to
investors, has limited stakeholders other than shareholders and does not depend on external perceptions of its soundness
to remain in business. Most risk management firms fail on one or all of these caveats, and when things go wrong, analysts
suddenly find themselves shifting from a plausible tale of profits to one of losses that don't have a verifiable floor. They
begin fo suspect they will discover the real answer not in the next conference call, but years later in the dry transcripts of
courts, liquidators, regulators and commissions, (The Royal Commission on Australia’s HIH Insurance begins sitting next
week and wil report in mid-2002.)

One answer to the problem of air walking is to strengthen the connection between risk reporting, company statements and
the specific duties of boards of aroctore. A research paper
g ac html> recently published by the Economic Policy Review

of the Federal Reserve Bank of New York points out that to become liable for a bank failure in the US, directors have to fail
utterly to establish a reporting system for risk. The authors of the paper argue that this is too soft, given the increasingly
Critical nature of such systems and the variety of stakeholders in a bank. They recommend instead: “In order to avoid
liability, directors of banks have @ continuing obligation to develop and maintain a detaied and elaborate system for
monitoring and oversight.”

Elsewhere, the international accounting authorities and the regulators of both the banking and insurance industry are
moving to tighten up best practice in company accounts and the reporting of risk. Away from the field of regulatory capital
reform, the Basle Committee's accounting task force issued 8 report <http:/www.bis.org/pubWbebs84.ntm> in August on
the internal audit function in banks. Among other recommendations, it stressed that a bank's internal audit group should
regularly carry out an independent review of the risk management system developed to set the bank's capital levels. The
same committee is currently preparing @ survey of how internal audit works in practice.

But these are long-term efforts, and to be effective they will have to cross many professional and industry boundaries.
Meanwhile, risk officers might ask themselves a simpler question. If a rumour circulates tomorrow that their firm is in
trouble, could they convince an outsider that the cogs in their financial reporting, risk reporting and corporate governance
systems are all meshed together?

Tracking: Recipient Read
Carlaton, Norman Read: 11/2301 12:06 PM
‘Schultheiss, Heiditynne Read: 1/2/02 17:47 AM

01702

01200000000358


REVIEW &

Raiding Your 401(k)

Tn most of Ameria, when some

§

‘aces bre. The 480K! 10 par
‘Deadas as mowed 4s frown 9 mates ot

plane uf te Asverican Benefits Cornet
‘saps, “Weare in dargwe of poste ak
tng by anrecaicte

OUTLOOK |

ow, Gare are some. property
ts losers tat Gegerve ater. Uf
Lt arre ou tae Were ital i, us |

wer The company annecrned 5 12 tA
ton ee In eqptty the west the share
price reeling. they fexew 4 lexitanae
MMewsnre, "ine Rerun ruaistales the
Spoceex 420s wie frauen fe oly 19
4ay5— and Thal ft ys dee ts trance
‘of fund rearmgemen! tte bad Boon set
tn metion moenite eariber uae bad eat,
ing 0 do wiih ite other woes. |

Bilder way this oe at suenetting
that Is guing bo be seve ay regela
tion sromsirey new Savile am 411k!
Gal's what Sennor

scaraianst radke jourvalls® wes co
‘oped in 19K the sender of Pat
hea putice ater Deie! Pavalener ane
seatesced to death The Prerayteasia
ugreree Court wgitete! Ws CORPICEIOR ID
‘THWG, asad ln 1298 It pedused to prant ate
quest har a new tia) Ye 18 the tS.
‘fapreme Overt edited ti review Any

amas agpeat
‘Yoo think We case would end
ee, inca cunt i Oe
tusatiad weighed if. Bot op Thon weak
Sederall Jodie Wiliass Yobo Jt. herent
© paling Throwing out Mie taratl's
“homie. Lm other words, to de

“hor ‘or

|
Death-Row Due Process |

{hal a twee sentencing Dearing 9¢ bet

rag

STREET JOUHNAL THURSDAY, DECEMBER 3 201

The Real Heroes :

anyate,
E itt

i

is
HUE
Belt
tabs

i

7
Eatieds
a

‘With taikes over 6 senaas plan raring
s comehason, fe or Sry 18 Bo
tevarbete aa tera dsaser

7 pened «bal
exgred a5 4 cornprenie ft wedd be
aicoy aided tue a pond fe c=

ne Yrached be Deron

ee tke
peed
ia be,

i

i!
i

i
fi:

i
se RF

ii
H
5

|

i

i.
z
r

fs
iit
[

,

iy
ili
EI
BE
ist
ty

a

i
3
f
ts
fi
ag
t

al

7
:
§
ER

i
i

5

#R
i
H
P

f

t

ri

f

i
sil
eH
rite

Ht
Ha

eh
f
a

ar
14 soeens Steines
ange” re rearee Self
= a
tae
“hae”

i

i
e
i.
a

7 i
PEPE GREE

ty
5

é
3
2
rr

1
tf
ey

EM
ip
i
i

j
gE
fr
i
i
I

F.
i

i
if
hi
3
a

i
"i

if
is f
a

i

f

t
WHERE BE

ii

ae
A

Hl

*

= Lier etre

ui

i °
s .

i

ae é 483
ah

Bis
Bs

i
te

Ky
a

00762

01200000000107


Page | of I

EnronOnline

View By: Commo:

Presantationt Markets by Commodity ee
a EnronOniine offers registered users the ability to buy and sell a wide variety of commodities throug
jevearce Americas, Europe, Australia and Asia. Learn more about EnronOniine’s activities in your area by c
leplareey the markets below.
N Gta feidora,

01385

12/4/01

http://www. enrononline.com/docs/marketing/Markets/
01200000000741


Rao, Geetha

From: Tom.Briggs@enron.com

Sent: Monday, January 22, 2001 1:54 PM
To: geetha.raoGido.treas.gov

Subject: India/Dabhol Meeting

¥)

asret PPA OC

Talking Pores Geetha,

My apologies for the delay in sending this material. I have lost both my
regular assistant and my temp so I am a bit overwhelmed.

John Hardy will be attending the meeting tomorrow at 3. His SS# is
{(b)(6)) and birthdate is [(b)(6)]_ If you could remind me of the
address of the meeting I would appreciate it. I managed to lose that as

well.

John and I have a brief agenda: 1) we want to update you on Dabhol and 2)

we want to discuss way in which the USG may become involved in encouraging
market reform necessary to extract value out of our generating asset.
Specifically, we want to focus on refgorm at the Indian federal level that

will be necessary to deliver power to customers other than MSEB.

We look forward to meeting you tomorrow.

{See attached file: Dabhol PPA - DC Talking Points.doc}

00500000002269


Certain Definitions

Unless otherwise indicated in this Prospectus, natural gas volumes are stated at the legal
pressure base of the state, area or country in which the reserves are located and at 60° Fahrenheit.
Natural gas equivalents are determined using the ratio of 6.0 Mef of natural gas to 1.0 barrel of
crude oil, condensate or natural gas liquids.

As used herein, the following terms have the specific meanings set out: “Mcf"' means thousand
cubic fest, “MMcf" means million cubic feet, Bcf" means billion cubic fest, "Bbl" means barrel,
“MBDI"" means thousand barrels, 'MMBbI" means million barrels, "Mcle" means thousand cubic
feet equivalent, “MMcfe" means million cubic feet equivalent, 'Bcfe” means billion cubic feet
equivalent, “MMBtu" means million British thermal units, "BBtu" means billion British thermal units
and "TEU" means trillion British thermal units.

With respact to information on the Company's working interest in wells or acreage, “net” oil and
gas wells or acreage are determined by multiplying “gross” oll and gas wells or acreage by the
Company's working interest in the wells or acreage.

“Exploration and development expenditures” include costs associated with exploratory and
development drilling (including exploratory dry holes), leasehold acquisitions, seismic data acquisi-
tlons, geological and land related overhead expenditures, delay rentals, producing property acquisi-
tions, capitalized interest and other miscellaneous capital expenditures. “Total finding costs" is the
ratio of total exploration and development expenditures to reserves added as a result of the drilling
and acquisition program. Reserves added include the total net natural gas equivalent volume of all
natural gas, crude oll, condensate and natural gas liquids added from extensions, discoveries and
other additions, purchases in place and revisions of previous estimates.

“Infill drilling” means drilling for the development and production of net proved undeveloped
reserves.

00900000000283


1998-SE-007965

ENRON, WASHINGTON

TRANSMITTAL SHEET

TO: Enron European Distribution List
FROM: Joe Hillings

DATE: July1, 1998

RE: Electricity

cc

Please see enclosed information from CNBC “Street Signs” - Interview with Jeff Skilling,

Encl.

Joe Hillings

00100000000375


DEPARTMENT OF THE: TREASURY
| WASHINGTON, 0.C.

SECRETARY OF THE TREASURY

; + March 9, 1999

Ry Mr. Kenneth L. Lay :
a | Chairman and Chief Executive Officer _
Enron i 4
P.O. Box 1188 ' '
Houston, TX 77251 ie
‘ i Dear Ken: i
Thank you for your letter endorsing the City of Houston’s ris
Empowerment Zone application. lara pleased to see that —
private sector businesses are taking such an active role in their |
| . community’s economic health. Participation of companies such ;
i as yours is critical for the economic vitality of our cities. tg
Once again, thank you for taking the time to write.
Sincerely,
aes ——
| ce
€. Rubin
toy
j :
a IK

nee

00100000000107


InternctWeck > IntemetWeek 100 > Services > Trader Reaps Benefits Of E-Market Leade..; Page 7 of 7

Cost reductions from indirect materials procurement on the

Internet 9%
Cost reduction from direct materials procurement on the

Internet 6%
Cost reduction in customer management via the Internet 16%
Cost reduction in fulfillment and delivery via the Internet 7%

Figures are averages for InlemetWeek 100 companies in tia industry
“Orders that are fultiied accurately, on tine and in the right quarry
Source: intumetWnak

©2001 CMP Media LLC

01408

http://www. intemetweek.com/100-01/serv.htm 12/4/01
01200000000764


SEC'Y O'NEILL: Well, it’s obviously a big and serious story when millions of: people are economically
impacted by the meltdown of a major corporation, Of course, it’s a very important story and it’s something that
we need to pay attention to. But we need to pay attention to, again, whether or not all the facts have been
dutifully reported and people were given the information required under law to make intelligent decisions.

“ 01521

01200000000175


{(b)(5); outside scope]

00500000000214


the integrity of financial markets. Indeed, even if Enron is cleared of any wrongdoing and regains some of its
past luster, as it well might, the company that preaches the merits of self-regulating marketplaces has reminded
us all of the need for a strong regulator on Wall Street.

Tracking: Recapient Read
Carteton, Norman Read: 11/2101 2:15 PM
Schulthelss, Heidlynne Reed: 11/2/01 1:16 PM

‘ 01696

01200000000352


of all outstanding Indenture Securities, a witten notice specifying such default or breach end
requiring it to be remedied and stating that such notice is a “Notice of Default” under the Indenture;
of (¢) certain events involving Enron in bankruptcy, receivership or other insolvency proceedings or
an assignment for the benefit of creditors.

if an Event of Default described in clause (a) or (b) in the foregoing paragraph has occurred and
38 continuing with respect to Indenture Securities of any series, the Indenture Provides \hat the
Trustee or the holders of not less than 25% in principal amount of the Outstanding Indenture
Securities of that series may declare the principal amount of all of the Indenture Securities of that
series to be due and payable immediately, and upon any such declaration such principal amount
shall become immediately due and payable. if an Event of Default described in clause (c) or (d) of the
foregoing paragraph occurs and is continuing, the Trustee or the holders of not less than 25% in
Principal amount of all of the Indenture Securities then outstanding may deciare the principal amount
Of all of the Indenture Securities to be due and payable immediately, and upon any such deciaration
such principal amount shall become immediately due and payable.

A default under other indedtedness of Enron is not an Event of Default under the Indenture, and
an Event of Default under one series of Indenture Securities will not necessarily be an Event of
Default under another series.

At any time after such a declaration of acceleration with respect {0 Indenture Securities of any
Series (or of all series, as the case may be) has been made and before judgment or decree for
Payment of the money due has been obtained by the Trustee, the holders of a majority in principal
amount of the outstanding indenture Securities of that series (or of all series, as the case may be)
may rescind and annul such declaration and its consequences, if, subject to certain conditions, all
Events of Default with respect to Indenture Securities of that series (or of all series, as the case may
be), other than the non-payment of the principal of the Indenture Securities due solely by such
Geciaration of acceleration, have been cured or waived and all payments due (other than by
acceleration) have been paid or deposited with the Trustee. With certain exceptions, the holders of
Not less than a majority in principal amount of the outstanding Indenture Securities of any series, on
behalf of the holders of all the Indenture Securities of such series, may waive any past default
described in clause (a) or (b) of the first paragraph of this heading "Events of Default and Rights
Upon Default" (or, in the case of a default described in clause (c) or (d) of such paragraph, the
holders of a majority in principal amount of all outstanding Indenture Securities may waive any such
Past default), and its consequences, except a default (a) in the payment of the principal of (or
Premium, if any) or interest on any Indenture Security, or (b) in respect of a covenant or provision of
the Indenture which under the Indenture cannot be modified or amended without the consent of the
holder of each outstanding Indenture Security of such series affected.

The holders of not less than a majority in principal amount of the Indenture Securities of any
Series at the time outstanding are empowered under the terms of the indenture, subject to certain
limitations, to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the Trustee.

The Indenture further provides that no holder of an indenture Security of any series may enforce
the Indenture except in the case of failure by the Trustee to act for 60 days after notice of a
continuing Event of Default with respect to the indenture Securities of that series and after request
by the holders of not less than 25% in principal amount of the outstanding Indenture Securities of
Such series and the offer to the Trustee of reasonable indemnity, but this provision will not prevent a
holder of any Indenture Security from enforcing the payment of the principal of, and interest on, such
holder's Indenture Security,

The Indénture requires that Enron deliver to the Trustee, within 120 days after the end of each
fiscal year, an Officer's Certificate, stating whether to the best knowledge of the signers thereof,
Enron is in default in the performance and observance of certain of the terms of the Indenture and, if
80, specifying each such default and the nature and status thereof of which the signers may have
knowledge.

23

00900000000269


has increased production in each of the last four years with a compound annual growth rate of
13.1%, while increasing proved reserves approximately 32%, both on a natural gas equivalent basis,
For 1994, net equive'ent production reached a new high of 307 Bete, an increase of 9% cver 1993.
Natural gas production in 1994 averaged approximately 749 MMcf per day, which represents an
increase of 6% over 1993, Crude oil and condensate production averaged 12.6 MBb! per day in 1994
which represents an increase of 42% over 1993. Natural gas production for the first nine months of
1995 averaged 719 MMcf per day, down 24 MMcf per day from the first nine months of 1994. Lower
volumes in 1995 reflect the voluntary curtailment by the Company of United States production at a
higher rate than in 1994 because United States natural gas prices were down by 26% period to
Periog, the impact of the sale of reserves and related assets and the effect of the reduction and
redirection of natural gas drilling activities early in 1995. Crude oil and condensate volumes for the
first nine months of 1995 averaged 18.6 MBD! per day, an increase of 55% over the first nine months
of 1994,

Achieving and maintaining the lowest possible cost structure are also important goals in the
implementation of the Company's strategy. Over the last five years, the Company has reduced total
cash operating expenses, including lease and well, general and administrative, taxes other than
income, and interest expenses from $.95/Mctfe in 1989 to $.49/Mcfe in 1994, a reduction of 48%, At
the same time non-cash expenses (depreciation, depletion and amortization) have been reduced
from $.93/Mete in 1989 to $.80/Mcte in 1994, a reduction of 14%. For the first nine months of 1995,
cash operating expenses averaged $.56/Mcfe compared to $.50/Mcte for the first nine months of
1994 and non-cash expenses averaged $.69/Mcfe and $.81/Mcte tor the two periods, respectively.

Consistent with the Company's desire to optimize the use of its assets, the Company also
maintains a strategy of selling select oll and gas properties that for various reasons no longer fit into
future operating plans, or which are not assessed to have sufficient future growth potential and
when the economic value to be obtained by selling the properties and reserves in the ground is
evaluated to be greater than what would be obtained by holding the properties and producing the
reserves over time. As a result, the Company typically receives each year a varying but substantial
level of proceeds related to such sales which proceeds are available for general corporate use.
Proceeds from property sales in 1994 were $91 million ($71 million after tax) and in the first nine
months of 1995 were $101 million ($77 million atter tax).

North American Operations. The Company's seven principal United States producing areas
are the Big Piney area of Wyoming, South Texas area, East Texas area, Offshore Guill of Mexico
area, Canyon Trend area of West Texas, Pitchfork Ranch area of New Mexico and Vernal area of
Utah. Properties in these areas comprised approximately 78% of the Company's United States
reserves (on a natural gas equivalent basis) and 85% of the Company's United States net natural
gas deliverability as of December 31, 1994 and are substantially all operated by the Company. The
Company's other United States natural gas and crude oil producing properties are located primarily
in other areas of Texas, Utah, New Mexico and in Oklahoma,

At December 31, 1994, 93% of the Cornpany's proved United States reserves (on a natural gas
equivalent basis) was natural gas and 7% was crude oll, condensate and natural gas liquids.
A substangial portion of the Company's United States natural gas reserves Is in long-lived fields with
well-established production histories. The Company believes that opportunities exist to increase
Production in many of these fields through continued infill and other development drilling.

The Company also has natural gas and crude oll producing properties located in Western
Canada, primarily in the provinces of Alberta, Saskatchewan and Manitoba. The Company produces
natural gas from seven major areas and crude oil from three major areas. The Sandhills area in

0900000000278


1998-SE-007101

Christopher M. Long
Director

Fevienal Gooernunent Affairs

Wy, Enron Corp.
2, 1775 Eye Street, NW, Suate 800

Weshingion, DC 20008
(202) 466-9158
Fez (202) 828-3372
longitenran cow

June 9, 1998

The Honorable Lawrence H. Summers

Deputy Secretary of the Treasury

US Department of Treasury

1500 Pennsylvania Avenue, NW

Room 3326

Washington, DC 20220
Dear Mr. Summers:

Enron recently sponsored a BCIU lunch with HE John Evans Atta Mills, Vice President of
Ghana, and held a private meeting with the Honorable Frec Ohene Kena, the Minister for Mines
and Energy. During these meetings Enron shared its propusal to address the ongoing energy
crisis in Ghana.

Enron has been working to establish a gas and power infrastructure project in Ghana in
conjunction with the Ghana National Petroleum Corporation (GNPC). Enron has negotiated a
letter of intent (LO!) with the Government of Ghana and the GNPC that is ready for immediate
signature. Our proposal holds special appeal because it will be internationally financed without
resorting to finance guarantees from the Government of Ghana.

It is our understanding that the Government of Ghana is planning to meet this week to review
U.S. involvement in correcting the energy shortage. We request your assistance in
communicating the importance of U.S. involvement in the Gihana energy sector as part of this
review, while also encouraging the Government of Ghana to immediately sign the LOI. The
Enron project would provide relief very quickly, and is ready to progress with no financial risk to
the Government of Ghana.

Please contact me if you need additional information on the Enron project or our involvement in
Ghana. | look forward to working with you on this issue.

Sincerely,
Cnrvisteptn TM, dey,

cc; Shannon Ballard, DOC
David Pumphrey, DOE
Steve Lawrence, Enron
Terry Thorn, Enron
Tony Way, Enron
Michelle Whitaker, DOC

Natural gas. Electricity. Endless possibilities.TM

00100000000089


America crude oil and condensate volumes using commodity price swap agreements at NYMEX-
based West Texas Intermediate Crude Oil ("WTI") prices averaging $18.77 per Bbt and $18.90 per
Bb! for the last three months of 1995 and the year 1996, respectively. Included in the 1995 and 1996
hedge transactions are commodity price swap agreements totaling up to 3,000 Bbi per day at WTI
prices ranging between $18.70 and $18.80 per Bbi each of which includes a one-time option
exercisable by the counterparty at various times up to and Including December 31, 1996 and for
various periods some of which extend thraugh December 31, 2000 at the same respective NYMEX-
based prices as are applicable iin the individual agreements for the 1995 and 1996 periods. The
Company continues to evaluate the potential for ‘entering into and may enter into, additional hedging
transactions related to certain of the remaining months in 1995, and in future years. In addition, the
Company also may close out any portion of the existing or yet to be entered into hedges as
determined appropriate by management of the Company.
La .
Trading Transactions
Subsequent to September 30, 1995, the Company sold call options with a notional volume of 50

BBtu per day at an average price of $2.10 per MMBtu for the period January through December,
1996.

The Company's long-term debt-to-total-capital ratio was 19%, 15% and 14% as of
September 30, 1995 and December 31, 1994 and 1993, respectively. The Company has entered into
8n agreement with Enron Corp. pursuant to which the Company may borrow funds from Enron
Corp. at a representative market rate of interest on @ revolving basis. During 1994, there were no
funds borrowed by the Company under this agreement. During the first nine months of 1995, the
average of the dally balances of funds borrowed by the Company under the agreement was
$2.3million, and the balance at September 30, 1995 was $16.3 million. Under a promissory note
effective January 1, 1993 at a fixed interest rate of 7%, the Company may advance funds temporarily
Surplus to the Company to Enron Corp. for investment purposes. Dally outstanding balances of
funds advanced to Enron Corp. under the note averaged $200,000 during the first nine months of
1995 and $69 million during 1994 with no belance outstanding at December 31, 1994 or September
30, 1995. There was a balance of, $7 million qutstanding at December 31, 1994 under a commercial

paper

result of $23 million of new borrowings relaied to certain international drilling activities, a $7 million
Increase in commercial paper, and the recording of an $8 million capital lease obligation, The
‘estimated fair value of the Company's long-term debt, including current maturities of $2 million
$30 million, at December 31, 1994 and 1993 was $186 million and. $192 miltion, respectively, based
upon quoted market prices and, where such prices were not available, upon interest rates currently
available to the Company at year end. : . i

Uncertainty continues to exist as to the direction of future North America natural gas price
trends and there is @ wide divergence in the opinions held by some in the industry. However, recent
history would tend to support, and it seems there is emerging among a larger number of industry
representatives somewhat of @ consensus, that natural gas prices will remain below parity with
crude oll, condensate and natural gas liquids for some time. This situation Is being impacted by
improvements in the technology used in drilling and completing oll and gas wells that are tending to
mitigate the impacts of fewer oil and gas wells being drilled, the deregulation of the natural gas
market under Federal Energy Regulatory Commission Order 636 and subsequent related orders,
and improvements being realized.in the availability and utilization of natural gas storage capacity.
However, the continually increasing recognition of natural gas as a more environmentally friendly
source of energy along with the availability of significant domestically sourced supplies should result

30

00900000000304


AM Global Financial Markets

Treneny Maiaat Arctlveos Uret. 2

— The themes of broad yen weakness, selling of longer-dated U.S. Treasuries, and thin,
end-of-year trading conditions persist,

Forcign Exchange: The yen is weaker across the board, moving convincingly abowe the Y 128
level against the dotae to fresh three-year lows. Participants cited yesterday's comments by
Japanese PinMin Shiokawa and Vice FinMin Kuroda conveying apparent acceptamce of a
weaker yen, and discounted EconMinTakenaka’s lone assertion thas the yen's exchange rate was
nearing levels compatible with fundamentals. Although shorer-term speculative accounts took
profits above the Y128 level, dealers continue to expect a fairly rapid move in dollar‘yen above
Y120, once rumored options barriers around that Jevel are broken through, Althceagh the dollar
and the euro are little changed against most ocher currencies, market talk that British Petroleum
may buy Enron-cwned gas stations in Germany was cited as future support for the euro; dealers
took in stride today’s Financial Times reports of a possible flood of counterfeit euro stes
produced by eastern Exropean countries and noted that euro notes will be accepted at stores im
the United Kingdom after Jan. 1.

Japan: Participants are focusing on the BOJ's two-day policy meeting, which concludes
tomorow, FinMin Shickawa said today that "we are strongly asking the BOJ to provide
abundant liquidity %0 the banking system” and called om the central bank to provide mecre than 14
trillion yen in liquidity in the run-up 10 year-end, comments which foreign exchange market
participants also took as tacit approval to sel! the yen,

Emerging Asia: In comirast to recent weeks, emerging Asian currencies are beginning to
respond negatively to the yen's deprectation, Today, the New Taiwan dollar fell 10 a forar-month
Jow against the US. dollar. Afier outperforming the yen for a number of wecks, the Korean won
depreciated 0,6%% yesterday and was little changed overnight,

Europe: Euro-area consumer price inflation for November was 00 expectations, but area
induserial prodwction fell by moce than expected. As a result, curo-area sovereign debt is
rallying, with yields | to 7 bps lower and shoet ends outperforming. Implied yields on ear
dated curibor futures contracts (March and June) are 3 to 4 bes lower.

Commodities: In very thin trading, crude oil prives are consolidating ahead of the release of
AP! data late this afternoon.

US. Assets Overnight

‘The from-month DJIA, Nasdaq 100, and S&P $00 futures contracts are all trading
modermely higher, suggesting positive movernent in prices al the New York open. Treasury
prices are little changed to modestly lower, the long bond outperforming. The ten-year yield
rose to a five-tnanth high, reflecting hedging activity by mortgage investors.

Today's Eventa: Actual Sonsenaus Expectation Previous Peciod
‘Tworday BOY coord meeting starts — no Change expected but 3 few contacts look for Snkering at Te margins to increase liquicity
ECB Prasidert Dusenderg om ene Jestmany before the European Partament st 10-30 Abt

Euro-araa CPI, Now. final 21% 24%
Euro-area indusirist production, Oct so re 1.0% ann 0.5% mm
U.S, housing starts, Nov. 6am 150K 1552

Two-day Grankan COPOM meeting starts ~ no change in SELIC rale expected

Kathleen MP. Byrne
For tetmrmal Use Only f2)1801 8:01 AM

01727

01200000000383


the news.

The future of Enron is now in question as credit-rating agencies today downgraded the company's
bonds to junk status, triggering the payment of more than $3 billion in outstanding debts.

Enron spokesman Eric Thode said all trading was halted on EnronOnline this moming in the wake of
the Dynegy announcement, but trading of core energy products, such as natural gas, resumed this
afternoon. At no time was telephone trading suspended, he said.

Enron's online business model is different from most independent exchanges, which link buyers and
sellers. Enron is a party to all transactions at its site, acting as either the buyer or seller. Enron makes
its profits by buying low and selling high, and employs an army of analysts to compile information that
could affect future prices on natural gas, electricity and the 1,500 other commodities it trades online.

Thode declined to comment on reports this week that Enron traders were working to help valued
customers by brokering deals between buyers and sellers.

"We're still in the market, and we're still conducting transactions that make commercial sense," said
Thode.

Even before halting trading today, activity on Enron's Web-based exchange, EnronOnline, has
reportedly fallen steeply in recent weeks as trading partners abandon the site in favor of deals with
more stable firms, Dynegy and a number of other energy traders do business online, but none in
volumes approaching EnronOnline, which pioneered the field and once saw trade volumes in excess
of $4 billion per day.

Enron's Thode, however, said that trade volumes on EnronOnline have not declined signficantly in
recent weeks.

Over the past 30 days, the site has averaged about 5,300 trades per day, with a total value of $2.7
billion, Thode said. That's well within the average volumes seen on the site during any 30-day period
this year, Thode said.

The New York Stock Exchange halted trading of Enron shares ahead of the Dynegy announcement,
but Enron's stock had already lost $2.95, or 71.3 percent of its value on rumors of the dissolution.
Trading was halted at $1.19. Enron's stock traded at more than $90 last August.

Dynegy cancelled the deal citing "breaches of representations, warranties, covenants and
agreements in the merger agreement.”

Dynegy had sought to renegotiate the terms of the merger after Enron's stock price continued to
plummet in the wake of the Nov. 9 merger announcement.

Dynegy’s announcement came as Standard & Poor's, Moody's Investors Service and Fitch, Inc.
downgraded Enron's long-term debt to below investment-grade status. The loss of investment-grade
credit means that more than $3 billion in debts to off-balance sheet partnerships are due
immediately.

In a prepared statement, Enron said it is "taking actions designed to preserve value in the company’s
core trading and other energy businesses." Enron said it is temporarily suspending all payments
other than those necessary to maintain core operations,

“With Dynegy’s termination of the merger and the ratings agency downgrades, we are evaluating and
exploring other options to protect our core energy businesses,” Enron Chairman and CEO Kenneth L.
Lay said in the prepared statement, "To do this, we will work to retain the employees necessary to

01476

01200000000130

v6


That hardy workhorse of capitalism-the joint-stock company-looks
surprisingly durable, But pressure on it is increasing. The Economist
leoks at 'the future of the company’. (source: Economist)

hetp: //wew. investorguide,com/cgi-bin/weekly.cgi?08534

Copyright 2001 by InvestorGuide.com, Inc.

InvestorGuide Daily is designed to keep you informed of the latest
investing news. It includes a market summary, top news, IPOs, earnings
and more.,.everything you need to invest better, every day. You can
also find this newsletter every evening at

http: //wew. investorquide.com/daily. htm]

This strictly opt-in newsletter is published by InvestorGuide.com
(http://www. investorguide.com), and is sent only to those who have
specifically requested it. No information gathered from newsletter
subscribers, including e-mail addresses, is ever shared with or sold
to any third-party. If you know others who might like to receive
InvestorGuide Daily, feel free to forward this issue to them. To
subscribe, send any message to daily@investorguide.com. To
unsubscribe, send any Sage to investorguidedaily-offamail-list.com.
If you would like to advert in this newsletter or on any of the
InvestorGuide websites, please contact advertise@investorguide.com

InvestorGuide,com has no control over the sites we link to, is not
affiliated with these sites, and cannot take responsibility for their
quality or suitability. The news, earnings, and IPO information is not
meant to be comprehensive, and data provided is not guaranteed to be
accurate. We are not responsible for claims made by advertisers and
sponsors. Anyone who makes investment decisions based on what they
read here does so at their own risk and cannot hold WebFinance Inc.
(DBA InvestorGuide.com, Inc.) or its employees responsible. For the
complete disclaimer please see

http://www. investorguide.com/disclaimer, html]

01694

01200000000350


1998-SE-013737

Kenneth L. Lay
Chairman end

Chief Executive Officer
%, Enron Corp.
P.O. Bes 1188

Houston, TX 77251-1185

December 3, 1998 (713) 853-6773
Fax (713) 853-5313

Aisytien ren. com

The Honorable Robert E. Rubin
Secretary of the Treasury
Department of the Treasury
4500 Pennsylvania Avenue, NW
Washington, D.C. 20220

Dear Secretary Rubin:

The City of Houston was designated as an Enhanced Enterprise
Community in 1994 with an emphasis on delivering social services and
affordable housing. We have done a good job with this designation and now we
would like to be named as an Empowerment Zone.

With the increase in business in the Central Business District (CBD),
Houston is making progress in improving its unemployment rates and raising its
education levels. Enron has been very active in helping to create jobs in our
inner city and we have worked to improve our educational system. We strongly
supported the construction of a new baseball stadium and the bond election for
our local school district for badly needed facilities. As one of the largest
employers in Houston, we support the City's efforts to provide job creation,
capital formation, and business assistance.

An Empowerment Zone would be extremely helpful in our efforts to
diversify our economic base and to recover from a decline in oil and energy-
related industries.

| urge you to approve Houston's application for an Empowerment Zone.

Sincerely,

few Fd

Natural gas. Electricity. Endless possibilities.

00100000000105


business news and analysis

Manufacturing activity shrank for the 17th consecutive month in
December but beat expectations, raising the prospect of a slow
rebound, reported by the Institute of Supply Management. {source:
Washington Post}

http://www. investorguide.com/cgi-bin/daily.cgi705s35

After 10 years of planning, the euro changeover moved smoothly through
its first day acrosa the continent, and few of the 300 million
residents of the eurozone lamented the loss of their national
currencies. (source: USA Today}

http://www. investorguide.com/cgi-bin/daily.cgi?05536

Ag some current and former Enron officials try to distance themselves
from controversial partnerships that played a role in the company's
demise, internal Enron documents show top management and directors
viewed the partnerships as integral to maintaining the energy-trading
giant’a rapid growth in recent years. (source: MSNBC)

http://www. investorguide.com/cgi-bin/daily.cgi?05537

Analysis:

Even with last year's dismal stock market, and the year before that,
equity prices are still "priced for perfection," as they say on Wall
Street. One false step by the world's leading economy, the United
States, and the stock market will be churning sour cream. (source:
MarketWatch)

http: //wew. investorguide.com/cgi-bin/daily.cgi?05538

With portfolio companies underperforming, much of existing management
is walking away, leaving a serious skill shortage, particularly in the
financial areas. Private equity fund partners often help out during
the start-up phase, but with anywhere from 5 to 10 companies to
manage, there are limite. (source: CFO.ccom)

http://www. investorguide.com/cgi-bin/daily.cgi?05539

Most software firms had to work harder to sell less during 2001, and
this year could prove to be maddeningly similar, even if a general
recovery is in the cards. The reason? Some analysts wonder how quickly
software customers, weary from the ongoing receasion, will want to
spend money on new technology if their own businesses are just
starting to improve. (source: The Street)

http://www. investorguide.com/cgi-bin/daily.cgi?05540

In Brief:

- The American Petroleum Institute said that gasoline inventories
declined for the third straight week by 312,000 barrels during the
last week in December.

~ Homestore.com announced that it overstated ite revenues for the
first three quarters of 2001 by $95 million.

~ Microsoft will go to court next week to ask for a four month
extension since the penalties proposed by nine states differ from the
company's settlement with the Justice Department

If you have any friends or colleagues who would appreciate getting
this news ry day, follow this link (or if you prefer, simply
forward this issue to them);

http://www. investorguide.com/cgi-bin/recommenddaily.cgi

You can research companies mentioned in today's news by following

these links:

Enron http://www. investorguide.com/egi-bin/r.cgi?name-ENE
Homestore /{wow, investorguide.com/egi-bin/r.cgi?name=HOMS
Microsoft http://www. investorguide.com/cgi-bin/r.cgi?name=MSFT

22 01736

01200000000392


opportunities, and long-term investors can henefit from identifying
and investing in such companies.

Por additional investing ideas and insight from the CEO of
InvestorGuide.com, visit http://www. tomments.com

earnings

Tuesday's major earnings reports:

Company Name (Ticker): actual, expected, same q last year
Charles Schwab (SCH): $0.08, $0,068, $0.12
Check Point Sftwr (CHKP): $0,30, $0.29, $0.32
DoubleClick (DCLK): ~$0,48, -$0,05, $0.00
eBay (EBAY) : $0.14, $0.13, $0.09
Forest Labs (FRX): $0.47, $0.44, $0.36
Handspring (HAND): -$0.16, $0.14, -$0.07
Intel (INTC): $0.15, $0.11, $0.38
Juniper Ntwke (JNPR): $0.05, $0.05, $0.24
Mellon Bank (MEL): $0.38, $0.38, $0.37
MIPS Techs {MIPS}: ~$0.05, -$0.05, $0.14
Pervasive Sftwr (PVSW): $0.08, n/a, -$0.06
RF Micro Device (RFMD): $0.02, $0.02, $0.05
SBS Tech (SBSE): -$0.83, n/a, $0.32
Tyco Intl (TYC): $0.74, $0.72, $0.57
Visual Networks (VNWK): -$0.01, -$0.03, ~$0.31
Wells Pargo (WFC) : $0.69, $0.68, $0.65
Wednesday's major expected earnings reports:

Company Name (Ticker): expected, same q last year
Abbott Labs (ABT); $0.52, $0.48

Advanced Micro (AMD): -$0.18, $0.53

AMR Corp (AMR): -$4.93, $0.34

Apple Computer (AAPL); $0.11, -$0.73

Bank One (ONE); $0.65, $0.44

Brio Tech (BRIO) : -$0.04, -$0.01

Compaq (CPQ): -$0.01, $0.30
Continental Alr (CAL): -$4.56, $0.61
DigitalThink (DTHK) : ~$0.06, $0.17

Extreme Networks (EXTR) : $0.01, $0.11

Genentech (DNA): $0.20, $0.16

General Motors (GM): $0.53, $1.15

Harris Corp (HRS): $0.28, $0.30

Inktomi {INKT): -$0.11, $0.01

JP Morgan Chase (JPM): $0.33, $0.37

Knight Trading (NITE): $0.10, $0.28
Macromedia (MACR): -$0.14, $0.29

Mercury Computer (MRCY) : $0.15, $0.30

Redback Ntwrks (RBAK): -$0.22, $0.05

Sonus Networks (SONS): -$0.05, $0.00
SouthTrust (SOTR): $0.42, $0.37

Symantec (SYMC) =: $0.64, $0.78
Travelocity.com (TVLY) : $0.10, -§0,05

Yahoo! (YHOO): $0.02, $0,13

For more earnings information, check out
http://www. investorguide.com/earningscalendars. html

word of the day

rate-improvement - A fixed rate mortgage provision which gives the
borrower a onetime option to reduce the interest rate, without

, 01785

01200000000441


in further increases in demand and a supporting/strengthening of the overall natural gas market over
time. Being primarily a natural gas producer, the Company is more significantly impacted by
changes in natural gas prices than by changes in crude oil and condensate prices. Based on the
portion of the Company's anticipated natural gas volumes for which prices have not, in effect, been
hedged using NYMEX-related commodity market transactions, long-term marketing contracts and
the sale of a volumetric production payment, the Company's net income and cash flow sensitivity to
changing natural gas prices is approximately $4.0 million for each $.10 per Mcf change in average
welthead natural gas prices. Using various commodity price hedging mechanisms, the Company
has, in effect, locked in prices for an average of about 50% of its anticipated wellhead natural gas
volumes and about 30% of its anticipated wellhead crude oil and condensate volumes for the year
1995 and about 65% of its anticipated wellhead natural gas volumes and about 40% of its
anticipated wellhead crude of and condensate volumes for the year 1996. The percentage of
volumes,hedged may change during the remainder of 1995 and will change in future years.

Other factors representing positive impacts that are more certain continue to hold good
potential for the Company in future periods. While the drilling qualification period for the tight gas
sand federal income tax credit expired on December 31, 1992, the Company has continued in 1995,
and should continue in the future, to realize significant benetits associated with production from
wells Grilled during the qualifying period as it will be eligible for the federal income tax credit through
the year 2002. However, all other factors remaining equal, the annual benefit, which was $36 million
in 1994 and is estimated to be approximately $21 million for 1995, is expected to continue to deciine
in future periods as production from the qualified wells declines. The drilling qualification period for a
certain state severance tax exemption available on qualifying high-cost natural gas revenues
continues through August 1996 in its current form and in a modified and somewhat reduced form
from that point through August 2002. Consequently, new qualifying production will be added
prospectively to that presently qualified. Other natural gas marketing activities are also expected to
continue to contribute meaningfully to financial results. The Company compieted a fairly significant
restructure of its other natural gas marketing portfolio during 1992 with the sale of a volumetric
Production payment of approximately 124 Befe (136 TBtu) for $326.8 million that was subsequently
revised in 1993 and elimination of most delivery obligations under four long-term fixed price
marketing contracts. The proceeds from the sale of the volumetric production payment added
substantially to the financial flexibility of the Company supporting future development while the
combined effect of all elements of the restructuring on net income has not been, and will not in the
future be, significant. These factors are expected to contribute significantly to earnings, cash flow,
and the ability of the Company to pursue the continuation of an active exploration, development and
selective acquisition program.

The Company plans to continue to focus a substantial portion of its development and certain
exploration expenditures in its major producing areas in North America. However, based on the
continuing uncertainty associated with North America natural gas prices and the continuing weak-
ness in that market, and as a result of the recent success realized offshore Trinidad and opportuni-
ties available to the Company In conjunction with the recent signing of agreements in India, the
Company anticipates expending an increasing portion of its available funds in the further develop-
ment of these opportunities. In addition, the Company expects to include limited but meaningful
exploratory exposure in other areas outside of North America in Its expenditure plans and will
continue to evaluate the potential for involvement in other exploitation type opportunities, The
continuation af expenditures in other areas outside of North America in the near term is expected to
be primarily for the evaluation of conventional oil and gas exploration and exploitation opportunities
in the U.K. North Sea and China, respectively, and coalbed methane recovery prospects in Australia
and China. Other prospects in various locations will also attract the expenditure of some funds. (See
“Business - Exploration and Production” for additional information detailing the specific geographic
‘ocations of the related drilling programs). The Company continues to pursue a strategy of funding

3

00900000000305


»

' .

License No. IA- [(b}(2)] Page 2 otf 2

SECTION 1 - AUTHORIZATION: Subject to the limitations and conditions
herein, this license hereby authorizes Enron Capital and Trade Resources
Corporation and all U.S. persons involved in the transactions for which this
license has been sought pursuant to the Application to engage in only those
transactions necessary to assist or enable [(b)(4)]

SECTION 2 - WARNING: Except as authorized above, nothing in this license
authorizes a U.S. person to engage in any transaction prohibited by the
Iranian Transactions Regulations, 31 C.F.R. Part 560, or Executive Orders
12613, 12957, 12959, and 13059.

SECTION 3 - RECORDKEEPING REQUIREMENT: As a condition of this license and in
accordance with 31 C.F.R. Part 501, the licensee(s) hereunder is/are required
to keep full and accurate records of all transactions engaged in under this
license. Such records shall be made available for examination upon demand
for at least 5 years from the date of each transaction. Such records shall
clearly demonstrate the applicability of the authorization set forth in § 1
hereof.

SECTION 4 - PRECEDENCE: This license is issued on a nonprecedential basis.
RE EERE EEE EKER RRR ERNE REE EEE EE EEH REE ERR EERE HERE RE EEE REE RRREE REE


Nickoloff, Peter

From: alert@stratfor.com

Sent: Tuesday, January 15, 2002 6:36 PM

To: redalert@stratfor.com

Subject: Intelligence Briefing by STRATFOR: Japan, United States, Argentina

STRATFOR. com
INTELLIGENCE BRIEFING by STRATFOR

http://www, stratfor.com

15 January 2002
PREE INTELLIGENCE BRIEFING:
Japan's Disarming Return to Asia
Japan is about to ratchet up efforts to prevent the spread of small
arms and land mines in Asia. In digarming Agia, which will require
sending self-defense troops abroad, it appears Tokyo hopes to soothe
foreign opposition to its growing global defense role.

Click below to read the STRATFOR analysis:
http://www. stratfor.com/home/giu/archive/011502-htm

ng Tet iss its commentary to the Net.
We find the unexplored angles, puncturing the conventional
wisdom. Check in this week for articles on a possible Bush-Enron
amoking gun; how the EPA provides inatructiona for domestic
terror; and the case for dumping Paul O'Neill.

TNR Online: Read it every day.
http: //www.tnr.com/redirect_stratfor. html

NEW ON STRATPOR TODAY:

Media and War, Appearance and Reality

In portraying the “war on terroriem,* the media and military have
ewapped their historical roles: The media have become cheerleaders,
creating expectations of replicable victories, while the military
has been objective and restrained, saying the war will be long

and hard.

http: //wew. etratfor.com/northamerica/commentary/0201151930a.htm
Argentine Default Forcing Discipline in Capital Marketa
Argentina's financial downfall is reminding international investors

and creditors to be more cautious when evaluating risk versus reward.
The new calculus will encourage better decigion-making by both

‘ 01787

01200000000443


BUSINESS

General

The Company, a Delaware corporation organized in 1985, is engaged, either directly or through
@ marketing subsidiary with regard to domestic operations or through various subsidiaries with
regard to international operations, in the exploration for, and the development, production and
marketing of, natural gas and crude oil primarily in major Producing basins in the United States, as
well as in Canada, Trinidad and India and to a lesser extent, selected other international areas. At
December 31, 1994, the Company's estimated net proved natural gas reserves were 1,910 Bcf and
estimated net proved crude oil, condensate and natural gas liquids reserves were 37 MMBbI. At
sucn date, approximately 70% of the Company's reserves (on a natural gas equivalent basis) was
located In the United States, 16% in Canada, 11% in Trinidad and 3% in india,

The ny Pursues its oll and gas exploration and development operations primarily by the
acaquat®h, ough varous meens mcusg bl no lnsod acer nets eae
acreage that is either undeveloped or lightly developed, and drilling of internally generated pros-
pects. The Company also maintains a strategy of selling selected oil and gas properties that, for
various reasons, no longer fit into future operating plans or which are not assessed to have
Sufficient future growth potential and when the economic value to be obtained by selling the
Properties and reserves in the ground is evaluated to be greater than what would be obtained by
holding the properties and producing the reserves over time. As a result, the Company typically
receives each year @ varying but substantial level of proceeds related to such sales which proceeds
are available for general corporate use.

Exploration and Production
‘orth American Operations

area and Vernal area. Properties in these areas comprised approximately 76% of the Company's
United States reserves (on a natural gas equivalent basis) and 85% of the Company's United States
net natural gas deliverability as of December 31, 1994 and are substantially all operated by the
Company. At September 30, 1995, properties in these areas comprised approximately 87% of the
Company's United States net natural gas deliverability. The Company's other United States natural
gas and crude oll producing properties are located primarily in other areas of Texas, Utah, New
Mexico and in Oklahoma,

At December 31, 1994, 93% of the Company's proved United States reserves (on a natural gas
equivaient basis) was natural gas and 7% was crude oll, condensate and natural gas liquids. A
Substantial portion of the Company's United States natural gas reserves is in longulived fields with
well-established production histories. The Company believes that opportunities exist to increa:
Production In many of these fieids through continued infill and ather development dritting.

The Company also has natural gas and crude oil producing properties located in Western
Canada, primarily in the provinces of Alberta, Saskatchewan and Manitoba.

Big Piney Area. The Company's largest reserve accumulation is located in the Big Piney area
in Sublette and Lincoln counties in southwestern |. The Company is the holder of the largest

The current principal Producing intervals are the Frontier and Mesaverde formations. The
Frontier formation, which occurs at 6,500-10,000 feet, contains approximately 66% of the Com-
pany’s current Big Piney reserves. The Company drilled 67 wells in the Big Piney area in 1994.
Although natural gas drilling has been curtailed in this area during 1995 in response to market
conditions, numerous drilling opportunities will be available for several years.

W

00900000000285


The number of Americans filing new claims for unemployment benefits
dropped during the first week of the new year, suggesting the huge
wave of layoffs triggered by the recession and the terrorist attacks
may be abating. (source: MSNBC)

http://www. investorguide.com/cgi-bin/daily.cgi?05583

The controversy over the Enron bankruptcy and the energy company's
dealings with the Bush administration expanded this morning as the
White House acknowledged that senior Bush officials received early
warning from Enron and suggested that Enron wan! the government to
intervene to protect its bondholders. {source: Washington Post)
http://www. investorguide.com/cgi-bin/daily.cgi?705584

Analysis:

Technology began 2002 as the darling of the stock market, even
heralded as the "first baby of the New Year” by Lipper Ine., the
mutual fund research firm. The early sprint raised investors’ hopes
that the sector will lead the market higher, but analysts caution that
the outlook for tech — and tech funds — is still quite uncertain.
(source: ABC News)

http://www. investorguide.com/cgi-bin/daily.cgi?05585

The Enron debacle won't be President Bush's Whitewater. It will be
much worse. Unlike the Whitewater deal that dogged the last
administration, the collapse of the nation's largest energy trader
into the nation's largest bankruptcy last month is set to go straight
to the heart of exposing what is wrong with the way the Bush
administration is conducting itself these days. (source: MarketWatch}
http://www. investorguide.com/egi-bin/daily.cgi?05586

Don't look for Yahoo! to follow the path set by rival America Online
and merge with arger partner -- at least not just yet. A year after
America Online and Time Warner completed their $108 billion mega deal,
Yahoo! is still flying eolo. The Internet portal, now under the
guidance of CBO Terry Semel, is no longer the struggling det.com of
last year. {source: CnnMoney)

http: //wew. investorguide.com/cgi-bin/daily.cgi?05587

In Brief:
- The report on wholesale inventories from the U.S, Department of
Commerce indicated that inventories fell 1.1% to $290.4 billion in
November.

If you have any friends or colleaques who would appreciate getting
this news every day, follow this link (or if you prefer, simply
forward this issue to them):

http://www. investorguide.com/cgi -bin/recommenddaily.cgi

You can research companies mentioned in today's news by following

these links:

AOL http: //wew. investorquide.com/cgi-bin/r.cgi?name=AOL
Enron http: //wew. investorguide.com/cgi-bin/r.cgi?name«ENE
Yahoo http: //wew. investorguide.com/cgi-bin/r.cgi?name=«YHOO

You can research any publicly traded company by following this link:
http://www. investorguide.com/research. html

advertise with us

Did you know that advertising in InvestorGuide Daily is a great way to
reach over 60,000 online investors? If you have a product or service
that you think our readers could benefit from, please send us an ema‘?

at advertise@investorguide.com. » O01 744

01200000000400


Company does not believe that the cessation of consolidated tax reporting with Enron Corp. and
effectiveness of the Tax Allocation Agreement concurrent with deconsolidation will have a material
adverse effect on its financial condition or results of operations. See “Relationship Between the
Company and Enron Corp.”

The nature of the respective businesses of the Company and Enron Corp. and its affiliates is
such a@s to potentially give rise to contlicts of interest between the two companies. The Company's
operations account for substantially all of Enron Corp.'s natural gas and crude oll exploration and
production operations. An affiliate of Enron Corp. has entered into an agreement to acquire a
controlling interest in Coda Energy, Inc. (‘Coda’), @ company engaged in domestic oll and gas
explosation, development and production. Crude oil accounts for approximately 86% of Coda's
proved reserves. At December 31, 1994, Coda reported estimated proved natural gas reserves of
39,808 MMcf and estimated proved crude oll, condensate and natural gas liquids reserves of 39,207
MBbis. If the transaction is consummated, contflicts of interest could arise between the Company
and Coda. See “Relationship Between the Company and Enron Corp. - Conflicts of interest.”

0900000000280


DEPARTMENT OF THE TREASURY
WASHINGTON, D.C. 20220

Cuban Assets Control Regulations License No. Cu- [(b)(2)]
LICENSE

(Granted under the authority of 50 U S.C. App. 5ib), 22 U.S.C. 2370(al, 22 U.S.C, €001-10,
Executive Order 9193, Bxecutive Order 9969, Proclamation 3447, and 31 CPR Parts 501 and $15)

To: Enron Corp. (the “Licensee")
333 Clay Street
Suite 1600
Houston, TX 77002-7361
Attn: Orlando Puig
Commercial Manager

i. Pursuant to your letter of July 11, 2000, the following transaction(s} is hereby
licensed:
* * * * * SEE REVERSE * * * . .

2. This license is granted upon the statements and representations made in your
spplication, or otherwise filed with or made to the Treasury Department as a supplement to your
application, and is aubject to the conditions, among others, that you comply in a2] respects with
all regulations, rulings, orders and instructions issued by the Secretary of the Treasury under
the authority cited above and the teres of this license. ‘

3. The licensee shall furnish and make available for inspection any relevant information,
records or reports requested by the Secretary of the Treasury or any duly authorized officer or
agency of the Secretary.

4. Thia license expires on October 31, 2001, is not transferable, is subject to the
provisions of 31 C.F.R. Parts 501 and $15, and any regulations and rulings iasued pursuant
thereto and may be revoked or modified at any time at the discretion of the Secretary of the
Treasury acting directly or through the agency through which the license waé issued, or any other
agency designated by the Secretary of the Treasury. If this license was issued aa a result of
willful misrepresentation on the part of the applicant or his duly authorized agent, it may, in
the discretion of the Secretary of the Treasury, be declared void from the date of its issuance,
or from any other date.

5. This license does not excusé compliance with any law or regulation administered
by the Office of Foreign Assets Control or another agency (including reporting requirement}
applicable to the transaction(s) herein licensed, nor does it release the Licensee(s) or
third parties from civil or criminal liability for violation of any law or regulation.

fasued by direction and on behalf of the Secretary of the Treasury:
OFFICE OF FOREIGN ASSETS CONTROL

By SPYCO

(Acting) Chief of Licensing

(Attention is directed to 19 U.5,C. 1592 and 159$a, 18 U.S.C. S48, 18 U.S.C. 1001,
50 U,S-C. App, 26, and 31 CPR 515.701 et seq. for provisions relating to penalties.)

00400000000006


word of the day

floater - A fixed income instrument which has a coupon rate or
interest rate that varies based on a short term rate index. A floater
is generally advantageous when interest rates are rising. opposite of
inverse floater.

For more financial terms, please visit http://www. investorwords.com

on this date

January 11, 1737: Alexander Hamilton, the first U.5. Secretary of the
Treasury, is born.

notable quotable

"Foreign Aid: Taxing poor people in rich countries for the benefit of
rich people in poor countries." - Bernard Rosenberg

Copyright 2002 by InvestorGuide.com, Inc.

InvestorGuide Daily is designed to keep you informed of the latest
investing news. It includes a market summary, top news, IPOs, earnings
and more...everything you need to invest better, every day, You can
aleo find this newsletter every evening at

http://www. investorguide.com/daily-html

This strictly opt-in newsletter is published by InvestorGuide.com
(http: //wew. investorguide.com), and is sent only to those who have
specifically requested it. No information gathered from newsletter
subscribers, including e-mail addresses, is ever shared with or sold
to any third-party. If you know others who might like to receive
InvestorGuide Daily, feel free to forward this issue to them. To
subscribe, send any message to dailyainvestorguide.com. To
unsubscribe, send any message to investorguidedaily-offamail-list.com.
If you would like to advertise in this newsletter or on any of the
InvestorGuide websites, please contact advert isesinvestorguide,com

InvestorGuide.cem has no control over the sites we link to, is not
affiliated with these sites, and cannot take responsibility for their
quality or suitability. The news, earnings, and IPO information is not
meant to be comprehensive, and data provided ia not guaranteed to be
accurate. We are not responsible for claims made by advertisers and
sponsors. Anyone who makes investment decisions based on what they
read here does so at their own risk and cannot hold WebFinance Inc.
{DBA InvestorGuide.com, Inc.} or its employees responsible. For the
complete disclaimer please see

http://www. investorguide.com/disclaimer-html

* 01753

01200000000409


will not necessaril receive an amount equal the principal
amount thereof. The x to . pa

able for EOG Common Stock at the option of the holder.
Enron may only exercise its option
changeable Notes in cash from the proceeds of its sale of

Enron common stock. See “Description of the Excha
able Notes - General." ° nae

No Redemption or Sinking Fund... the Exchangeable Notes are Mot subject to redemption,
Gefeasance or any sinking fund Prior to Maturity.

Ranking... -» The Exchangeable Notes will be Unsecured obligations of
Enron ranking pari passu with alt of its other vraetured and
unsubordinated indebtedness.

|
|
|
|

an appreciation of 21% over the Initial Moreover,
TecoWve upon excreta cn, wl te onaionn;
receive upon exc! laturity perce

eau of irl Pe hea yt resus Koos
tion Price) of any appreciation of vaiue of EOG Common
Hotere of ie Exchanganse see vAreaaion, Pree

ol
any rights with respect io OG Common Sick freee.

and are expected to be used to retire existi indebtednes:
and for general corporate purposes. See ‘Use of Pro-
ceeds.”

Relationship Between Enron and

FOG ceca Enron currently owns 80% of the outstandi shares of EOG
Common Stock Assuming the Underwriters: overeaicteon:

00900000000250


Nickoloff, Peter

From: Carleton, Norman

Sent: Thursday, December 13, 2001 4:42 PM
To: Schultheiss, Heid#tynne; Nickoloff, Peter
Subject: Hearing on Dec. 18 -- Enron
December 13, 2001

Senate Commerce Committee Sets Dec. 18 Hearing On Eron

Dow Jones Newswires

WASHINGTON -- The Senate Commerce Committee will hold a hearing Dec. 18 on “issues
surrounding the collapse of Enron Corp.”

The hearing was announced by Sens. Ernest Hollings, D-S.C., and Byron Dorgan, D-N.D. Hollings
chairs the Commerce Committee and Dorgan heads the panel's Cubcommittee on Consumer Affairs.

The committee said a witness list will be made public later.

-By John Connor, Dow Jones Newswires; 202-862-9273;
John, Connorsdewjones.com

; 01716

01200000000372


natural gas and liquids, including crude oil, condensate and natural gas liquids, that cannot be
measured in an exact manner. The accuracy ot any reserve estimate is a function of the amount and
quality of available data and of engineering and geological interpretation and judgment. As a result,
estimates of different engineers normally vary. In addition, results of drilling, testing and production
subsequent to the date of an estimate may justity revision of such estimate. Accordingly, reserve
estimates are often different from the quantities ultimately recovered. The meaningfulness of such
estimates |s highly dependent upon the accuracy of the assumptions upon which they were based.
in general, the volume of production from oll and gas properties owned by the Company
declines as reserves are depleted, Except to the extent the Company acquires additional properties
containing proved reserves or conducts successful exploration and development activities, or both,
the proved reserves of the Company will decline as reserves are produced. Volumes generated from
future activities of the Company are therefore highly dependent upon the level of success in
acquiring or finding additional reserves and the costs incurred in doing so.
Acreage
' The following tables summarize the Company's developed and undeveloped acreage at
December 31, 1994 and September 30, 1995. Excluded is acreage in which the Company's interest
Is limited to owned royalty, overriding royalty and other similar interests.

‘Undeveloped Total
Gross Net Gross et ‘Orces, Net

At December 31, 1994:

978,427 637,870 1,952,656 1,705,716 2,931,083 2,343,586
501,989 307,996 437,523 353,550 999,512 661,546
18,000 602,207 180,662 662,207 196,662
3,990 74,851 71,108 79,051 75,098

= 13,913,600 11,756,800 13,913,600 11,756,800

967,856 16,980,837 14,067,636 18,525,453 15,035,692

661,647 2,321,727 1,775,151 3,875,751 2,436,798
335,559 424,302 349,503 983,836 685,062

18,000 602,207 180,662 662,207 =: 198,662
4,200 3,990 74,851 71,108 79,051 75,098

Other International - = 13,422,400 11,773,100 13,422,400 11,773.10

Total ....-cere 2,177,758 1,019,198 16,845,487 14,149,524 19,023,245 15,168,720

18

00900000000292


Nickoloff, Peter

————————————— ——  ——.—0COCOOOOW

From: InvestorGuide Daily [daily@investorguide.com]

Sent: Tuesday, December 18, 2001 5:40 PM

To: peter.nickoloff@do.treas.gov

Subject: InvestorGuide Daily - December 18, 2001

InvestorGuide Daily December 18, 2001
brought to you by

InvestorGuide (portal) http://www, investorguide.com

InvestorWords (glossary) http://www. investorwords,.com

WebPinance Consulting http://www, webfinanceconeulting.com

If a friend forwarded you this message, get a free subscription by
sending any email message to daily@®investorguide.com

Contents:
Market Summary
Business News and Analysis
Earnings
Word of the Day
On this Date
Notable Quotable

Today's issue is sponsored by CyberTrader:

Desire to know more about the power of direct access trading? Gain the
knowledge you need to be a successful CyberTrader. Practice your
skills without losing any money on CyberTrader's Simulators. What are
you waiting for? Open an account today!

http: //www.cybertrader.com/bannera/investorguide/banner

market summary

After a big jump at the open powered by an encouraging increase in
housing starts, the markets lost momentum and traded sideways for much
of the day. However, investors jumped on buying opportunities in the
late afternoon and pushed the major indices to some of the loftiest
territory of the s on. The Dow especially benefited from a GE
announcement detailing an aggressive expansion plan for the coming
years that is expected to offset any slowing of the economy. At the
close, the Nasdaq was up 17 points, and the Dow managed a triple-digit
gain of 106.

Dow Jones Industrials: 9998.39 +106.42 42.08%
Nasdaq Composite: 2004.76 +17.31 +0.87%
S4P 500: 1142.92 +B.S6 +0.75%
30-year Treasury Bond: 5.526% -0.130

For more news and information on the market, investing, and personal
finance, please visit http://wew.investorguide.com

business news and analysis

16

01730

01200000000386


ry, It's moving into new places. Though Americans
haven't embraced shopping from ceil phones and PDAs
in force, wireless data technology is improving, and
United Airlines’ (No. 32) wireless services for travelers
are a perfect example. Rumpus (No. 15) decided not to
play ball with traditional toy retailers and children’s
media experts, instead becoming one of the most prolif-
ic developers of animation on the Web.

Carrier (No. 48) ts among the forward-thinking manu-
facturers incorporating the Internet into their products
— in Carrier's case, thermostats and air conditioners —
to make them more desirable and provide better infor-
mation about their use. The Internet is finding 2 home,
too, in a venue once thought inhospitable: brick-and-
mortar stores. Internet kiosks in Staples’ (No. 38) more
than 950 stores help shoppers go home satisfied.

And the success of credit card issuer Capital One Bank
(No. 42), after it waited so tong to formulate its Internet
plan, shows what else has changed. Last year It was fash-
jonable to rap laggard companies that hadn't rushed
their core business onto the Web. As it turns out, other
banks’ supposed first-mover advantage proved to be less
useful than Capital One's patient insistence on first
understanding what worked.

How We Did It

For this year’s Smart Business 50, our team of reporters
and editors did what journalists do best: months of
research, starting with leading U. S. companies across
every industry, as well as nonprofit organizations and
government agencies. We ruled out pure-play Internet
companies — they're not what this list is about. We
interviewed e-business chiefs at diverse companies and
asked them to nominate their peers,

We also consulted the experts. Two advisors in partic-
ular pointed us to e-business leaders in their areas of
expertise: Patricia Seybold, CEO and founder of the
Patricia Seybold Group and author of The Customer
Revolution (Crown Business, 2001), helped identify corm-
panies that use the Web to bolster their customer capl-
tal. William Markham, a logistics expert at AT Kearney,
pointed us to businesses successfully integrating the Net
in logistics and distribution processes.

Finally, we selected leaders in retailing, manufacturing,
financial services, media, health care, transportation,
distribution, and other sectors. Ultimately, the ranking
represents the well-considered opinion of the Ziff Davis
Smart Business editors.

We learned a lot, We think you will too, —DS

them wrong.

antee that.

Enron

enrononline.com, enron.com, clickpapercom,
commoditylogic.com, dealbench.com, enroncredit.com

Make Yourself a Market

Enron, the Houston-based energy trader, has proved the e-business experts right — and proved

For years, visionaries predicted that computer networks would create new marketplaces where
buyers and sellers would find each other without a middleman, and a freer-than-ever market
would drive prices to unbeatable levels. They were right about the Net opening markets. But
countless e-business exchange failures during the past year reveal that simply hooking comput-
ers together doesn't create a perfect marketplace. There must be equilibrium — a buyer for every
seller who comes to do business, and a seller for every buyer. Public e-marketplaces can't guar-

01389

01200000000745


IntemetWeek > IntemetWeek 100 > Services > Trader Reaps Benefits Of E-Market Leade..: Page 5 of 7

Enron's procurement department has used the auction functions
in DealBench to buy more than $1 billion of goods, everything
from broadband networking gear to carpeting for the new 40-story
skyscraper Enron is building across the street from its 50-story
headquarters in downtown Houston.

DealBench's collaboration tools manage the complex
communications that are part of any large structured deal.
Features include secure two-way messaging and the ability to
deliver multimedia presentations and give participants varying
levels of access to sensitive information.

Last month, Enron added Data Room, a document management
system that lets companies set up "virtual data rooms” to
streamline the bidding process for complex physical assets, such
as refineries and manufacturing plants. Normally, companies
selling these types of assets have to staff a physical room hosting
lawyers and engineers from every potential bidder, each of whom
require several days to pore over hundreds of thousands of pages
of technical documents. Enron has used Deal Room to syndicate
some $3 billion of its own credit to more than 81 financial
institutions and sell more than $240 million in assets.

With all DealBench services, companies can host any number of
potential bidders simultaneously, giving each participant the exact
level of access necessary. Bidders download a piece of client
software that decodes encrypted documents on the site, so even
if sensitive documents are sent to unauthorized users, they can't
be opened, says Jeffrey Bartlett, a principal at DeaiBench.

Rather than take a percentage of the overall deal, Enron sells
DealBench licenses to the deal managers and hosts the platform.
Enron wouldn't reveal specifics about pricing, which varies based
on the length of contract, number and size of prospective deals
and the number of potential bidders.

Centerpiece Of E-biz

For the time being, energy trading—and trading in financial
products related to those trades--will remain the centerpiece of
Enron's online business. Forrester estimates that notional trading
for U.S. natural gas futures and options contracts amounted to
about 3.6 times the total quantity of physical trades and 12 times
the amount of physical delivery in 2000.

“Electricity in the U.S. is a $300 billion market, but the velocity at
which that $300 million is being turned over is increasing," says
Bob Christensen, an energy industry analyst with First Albany
Corp. "The same power--and all the fuels related to it-can churn

and change hands a dozen times a day.”
01406

http.//www.internetweck.com/100-01/serv.htm 12/4/01
01200000000762


“The US bankruptcy code imposes restrictions on all of the things that are essential to the derivatives market - like
demanding payment, collateral and netting - but over the years provisions have been added for different derivatives
instruments, People have been trading for the last 10 years on the assumption that those provisions will work. Everyone
expects them to, but it hasn't been tested,” she says.

Bankruptcy law is careful about the allowances made for preferential treatment - the general idee being, says the lawyer,
‘that the goal is to preserve the value of the bankrupt company, and then to divide its assets among creditors. Derivatives
market practice, including netting, could place some creditors ahead of others in the queue. The industry has argued that
this is essential for the safe functioning of the financial system, and US lawmakers have tended to agree - but the latest
tegislation that would enshrine the rights of derivatives market participants to net across a range of products has not been
passed in its entirety. As things stand, there's a danger that Enron's trustees will see attempts to net across derivative
products as a dilution of Enron’s value, argues the lawyer,

Most significantly, there's no definite provision for credit default swaps under the existing legislation. “Are they swaps at
all?" she asks. “If not, they don’t fit into any protected category. People could be sitting there with a useless default swap
from Enron - at the same time, they could have other obligations which they have to pay in.”

isda isn't keen on the suggestion that cross-product netting might not work. “The master agreement is intended to cover all
types of contracts,” says Summe. “Counterparties should be able to net across product types.” She concedes that Isda hes
been trying hard to get netting legisiation passed “because we need an update of the definitions,” but notes that although
isda produces the industry's legal documents, it does not offer legal opinions. Anyone wanting to know whether cross-
product netting will work “would get a better idea from a law firm".

Tracking: Recipient Read
Carleton, Norman Read: 12/9701 10:02 AM
Schulthetss, Heiditynne Read; 12/1601 843 AM

: 01707

01200000000363


WSJ.com Page 2 of 3
prospective one.

Small wonder that only about 1% of all stocks covered by street analysts have "sell" recommendations. Even in October
2001, 16 out of 17 securities analysts covering Enron had "buy" or "strong buy" ratings on the stock. As long as the
incentives of analysts arc misaligned with the needs of investors, Wall Street cannot perform an effective watchdog
function.

In some cases, boards of directors have their own conflicts. Too oflen, board members have personal, business, or
consulting relationships with the corporations on whose boards they sit. For some "professional directors," large fees
and other perks may militate against performing their proper function as a sometime thorn in management's side. Our
watchdogs often behave like lapdogs.

But it is on the independent accounting profession that we most rely for assurance that a corporation's financial
statements accurately reflect the firm's condition. While we cannot expect independent auditors to detect all fraud, we
should expect we can rely on them for integrity of financial reporting. While public accounting firms do have
reputations to maintain and legal liability to avoid, the incentives of these firms and general auditing practices can
sometimes combine to cloud the transparency of financial statements,

In my own experience on several audit committees of public companies, the audit fee was only part of the total
compensation paid to the public accounting firm hired to examine the financial statements. Even after the divestiture of
their consulting units, revenues from tax and management advisory services comprise a large share of the revenues,of
the "Big Five" accounting firms. In some cases auditing services may be priced as a "loss leader" to allow the
accounting firm to gain access to more lucrative non-audit business.

In such a situation, the audit partner may be loath to make too much of a fuss about some gray area of accounting if the
intransigence is likely to jeopardize a profitable relationship for the accounting firm. Indeed, audit partners are often
compensated by how much non-audit business they can capture. They may be incentivized, then, to overlook some
particularly aggressive accounting treatment suggested by their clients.

Outside auditors also frequently perform and review the inside audit function within the corporation, as was the case
with Andersen and Enron. Such a situation may weaken the safeguards that exist when two independent organizations
examine complicated transactions. It's as if a professor let students grade their own papers and then had the
responsibility to hear any appeals, Auditors may also be influenced by the prospect of future employment with their
clients.

Unfortunately, our existing self-regulatory and standard-setting organizations fall short, The American Institute of
Certified Public Accountants has neither the resources nor the power to be fully effective. The institute may even have
contributed to the problem by encouraging auditors to "leverage the audit” into advising and consulting services.

The Financial Accounting Standards Board has often emphasized the correct form by which individual transactions
should be reported rather than the substantive way in which the true risk of the firm may be obscured, Take "Special
Purpose Entities,” for example, the financing vehicles that permit companies such as Enron to access capital and
increase leverage without adding debt to the balance sheet. Even if all of Enron's SPEs had met the narrow test for
balance sheet exclusion (which, in fact, they did not), our accounting standard would not have illuminated the effective
leverage Enron had undertaken and the true risks of the enterprise.

Given the complexity of modern business and the way it is financed, we need to develop a new set of accounting
standards that can give an accurate picture of the business as a whole. FASB may have helped us measure the individual
trees but it has not developed a way to give us a clear picture of the forest. The continued integrity of the financial
reporting system and our capital markets must be insured. We need to modernize our accounting system so financial
statements give a clearer picture of what assets and liabilities on the balance sheet are at risk. And we must find ways to
lessen the conflicts facing auditors, security analysts, and even boards of directors that undermine checks and balances

our capital markets rely on. 01 346

http://interactive.wsj.com/archive/retrieve.cgi?id=SB 1011 145236418110120,djm&tempiate—pisirusg 1/18/02
01200000000702


made with respect to the Exchangeable Notes, in accordance with such holder's method of
accounting, and the amount of OID, if any, attributable to the Exchangeable Notes.

Pursuant to the agreement to treat the Exchangeable Notes as a Unit, a holder will be required
to allocate the purchase price of the Exchangeable Note between the two components of the Unit
(the Exchange Note and the Purchase Contract) on the basis of their relative fair market values. The

Exchangeable Note to the Exchange Note unless the stated interest on the Exchangeable Note
represents a yield that is lower than Enron's normal cost of issuing debt with a similar term to the
Exchangeable Note ("Enron's Mid-Term Borrowing Rate”). If the stated interest on the Exchange-
able Note represents a yield that is lower than Enron's Mid-Term Borrowing Rate of 5.90 percent,
Enron and the holders agree to allocate to the Exchange Note an amount, less than the principal

Note a&4 rate equal to Enron's Mid-Term Borrowing Rate, and to allocate to the Purchase Contract
the remainder of the purchase price of the Exchangeable Note.

If the amount allocated to the Exchange Note (its deemed issue price) is less than the stated
principal amount of the Exchangeable Note, the Exchange Note will be treated as having OID. in that
event, a U.S. Holder will be required to include in income OID as it accrues, in accordance with a
constant-yieid method, in an aggregate amount equal to the difference between the stated principal
amount of the Exchangeable Note and the deemed issue price of the Exchange Note. However. if
the amount of OID relating to an Exchange Note is less than three-fourths of one percent of the
Stated principal amount of the Exchangeable Note, no amount of OID will be deemed to exist with
respect to the Exchange Note. A U.S. Holder's tax basis in the Exchange Note will increase over its
term by the amount of OID included in such hokier's income with respect to the Exchangeable Note.

Upon the sale or other disposition of an Exchangeable Note, a U.S. Holder generally will be
required to allocate the amount realized between the two components of the Exchangeable Note on
the basis of their then relative fair market values. A U.S. Holder will recognize gain or loss with
respect to each component equal to the difference between the amount realized on the sale or other
disposition for each such component and the U.S. Holder's tax basis in such component. Such gain
or loss generally will be long-term capital gain or loss if the U.S. Holder has held the Exchangeable
Note for more than a year at the time of disposition,

At Maturity, pursuant to the agreement to treat the Exchangeable Note as a Unit, on the
repayment of the Exchange Note a U.S. Holder will recognize capital gain or loss which will be fong-

Holder will recognize no additional gain or loss on the exchange, pursuant to the Purchase Contract,
Of the principal payment due on the Exchange Note for the EOG Common Stock. However. a U.S.
Holder will recognize additional capital gain or loss, which should be short-term capital gain or loss.
Squal to the difference between the cash received in fieu of fractional shares and the portion of the
Principal amount of the Exchange Note allocable to fractional shares. A U.S, Holder will have a tax
basis in such shares of EOG Common Stock equal to the principal amount of the Exchange Note
less the amount of the portion of the principal amount of the Exchange Note allocable to any

Subsequent sale or disposition of such stock. Alternatively, at Maturity, if Enron pays the Exchange-
able Note in cash, a U.S. Holder will have additional gain or loss (which might be ordinary income or
loss rather than capital gain or loss) equal to the difference between the principal amount of the
Exchangeable Note and the amount of cash received from Enron.

Due to the absence of authority as to the proper characterization of the Exchangeable Note, no
Sssurance Can be given that the IRS will accept or that a court will uphold the characterization
agreed to in the Indenture or the tax treatment described above. Proposed Treasury regulations with
Fespect to “contingent payment” debt instruments (the "Proposed Regulations") would provide for

25

00900000000271


ZO/B T/T ds", [-10-Z00TIUIOd MatA” Sau AUIOdmaLA/sMmoU/OS-ysLO a/:dyy

oxy (8G parvasae yt HY “ERIS ZOD

eon On
“re
v
‘quaweSevew (e/Ge2 pue ysl) puNnos jo soNesd e4y WO WjBUEWS MeJp JBuy BsOU,
Que S20]S8AU! pue s20}eynGeu ‘seouabe Gules jo suoRsanb payuiod ey) oj svamsue
agen Ajuo ayy ‘Ayewayr Guyeysenep aq jem Ae saouenbesuce ayy ‘seop
1! Woy PU — jn BLUOD Bum LANA aL (syBLYO PUB sSuLIEg “UOIUS Ag paJenoosip
8B) JE]B] JO JeUONS “a/QeUaIUN Os}e jg "GUCUM AjUO JOU S! VOIVeISTyGo UO
SOURS? }O PUN S11 “BUA| WONG dAHINIUI 20 e UAL) AJ@SOp auOW BoUBWIOVEG
}OOYBs $400q ,PeyOD, oY 729 SeAjosWALY Spnjep Uara Aew SaBEVEW
“$8529 aWOS Uj ‘AdUB}UNCIDE Balyeasd 0} POSAI O} S! UOENYS SILy JO jNO AEM BUD

‘Buyansouew

‘@nIsuayap 30) SuORdo Jama} BABY PUB — aney AaA yuILy Kay] UELR aIQe!EANe
yeydeo ssa] aney Aauy puy Aew sepuedwoo aseyy ‘a/qnoy Oyu) SUT LY Ou

j| “SU! SS9UISNG "poo)ssapuN Ayood ynq “Burdy-ySiy dow Jo auo yeog ABW WUE
UN-/J/@M BSWUSUjO UB USAT ‘Jey!de9 Jo spuNOWE payquENbuN PUR PagoujUcOUN
@WNSUOD SessaUIsNG aso\y) Se Vane ‘AjenGer Ajo pueyssepun Au; sxsU
‘@njoau! }2y) SOSsouIsng UI pabefua ave — Auedww0d Jo adj JeyjO Aue Ayeoqoesd
JO ssepUd} ‘ssapen Ady) Oq — SUY ‘VOLO 00} |I\y LOSED Oly JEW S! UBYO MOY

yng ‘AURSOP Wao Sy JO JOYS Sy St ¥ AES 0] Sy] PINOM AUedUUOD Aue ‘AyeaiD

“.Saigoo[-1qaoy aly Sey AUeo/ oYEW OL] BOUIS ~~

Augsep 204 yo B6yeyp u) au ASyy mouy yee Oly 18) [pu] eUI) UI S}eoYys SoURVEG
Jjaly 16, 0} aS0YD Jey} Bsou) O12 SS}UEdWOD LEWES @4) '29QUI9DEQ-PIL LI

[o) JeWNOP JOAUIS HEM OY) PIO} WOdS UeTY ISAIEUE YOU Sy “@nIP e OWL! SLUM, y! e20}aq
- Ppaj2e100 8g UED ayquurys Aue yey) ‘pucd—as pue ‘pauuosul Apsyeudoudde aue
w Sayed paysess}U) Sly Jey} '}SJy BUNSUE 0} S| LOHENI!S SY) 0} @sUOdSO AjuO OU
> “SNOUAS JO [Bas 9g 0} BABY LAA L.USAOp YOR
Pe SUL “Uy Bua BY) JO AyqelA au) SUaVEAIY) BOUAPYLOD Jepjoysyeys BuysrU}WIP
@J94M JUIOd ey} 0} ‘Aiprdes SUBpUA yey) BdUa}EdWOO ayEI0dvO9 yo aoURVeedde

AU) U) YORU EWS B WLI UIGEG UAYO SJAISESIP SSOUISNg "PeyeysuOWEP

€ Jo ¢ ode {aWuETo1g JOWDTEUEYY YShY INO, WSIATY OL sump, :uonmmdg

01200000000697


even planned to use Ms shils and
onsets to offer whole new cfitriby-
tion channels to lucrative entertain
ment industries.

Loter on, in autumn 2001, os ne
company foced disaster, its top
executives were forced fo admit
that they had uted the debt capi-
101 raked on and off-oolance sheer
Guring the Soom year to make
some poor investments hi non-core
businesses? To many, * seemed
that Erron had bought its internet
and other new economy dreams
by mortgaging its chances of sur
viol GF O More mundane com-
pany.

Sy then it had been revealed just
how complicated some of the off-
balance sheet tronsactions recy
were. On November 8, 2001, Enron,
having broken accounting mies.
was obliged fo reveal o snail toc-
tion of its off-balonce sheet Irons
‘actions. IMs not clear fram Enron's
restatement of Its accounts what
the economic motivation was for
compicotad Wonsectons such as
thot described in Bax A (see page
5]. But one thing become clear as
trouble brewed in the summer of
2001: complicated off-balance
sheet Yarsactions such as this
trade it difficult to convince ono
Wysts that the company wos being
straightforward in its attempt to
meet earnings targets.

Analysts alse began to reakie
they Mod no woy to be certain
whether of nat cov booked
uptront nad come with a hidden
price tag in the form of future credit
Mak oF other bobMies.

Off-polance sheet transactions
can be Used to shape the rik ond
leverage profile of a company in
more profound ways. For examsie,
the Marin specicl purpose entity

that was created to raise money
from Enron's water company
assets, Esued some $700 millon in
debt fo Investors. due in 2003. that
is Backed by its wotar company
assets. But if the book value of he
water compony assets, such os
Wessex Water. fel before the debt
was repaid, then Enron wos Healy 10
have to moke up the snerifol by
means of a change against Its own
famings. Osprey. o vehicle for rais-
ing finance using Evon's energy
ond other assats, hos a similar stuc-
ture.

In casition creditors that tunded
some of the specic! purpase wehi-
cles were prombed early repay:
mans in Cash or coloterct # Enron's
credit rotng ‘et Below o certain
level, This kind of Clouse 6 increas-
ingly common in corporate finance
of investor in debt instruments
hope it wil reduce the /ak thet they
wil and up holding credit risky junk’
bonds, Sut while agresing fo these
clauses neiped Enron goin the
Snencing Mot it needed at o com-
petitive rate, the contingent nature
of the funcing significantly reduced
the chances of the compony sur
viving any crist: that triggered laws
of stock, cash or salable assets
back fo i financing partners.

ha report on the potentiol dan-
ger a! ratings downgrade tagers,
feleased after the Enron bank:
fupicy on December 7. Moody's
Investors Service noted that as
Enron's ratings wars downgraded,
it Miggered o mumbar of cash or
collateral demoncs. These in-
Cluded. says Moody's. "0 $490 mit
fon note payable to a imited part
nership which. absent colateral is
@ demand obigotion Moreover,
Enron must repay. refinance, or
cath collteralse additional face

ERisk.com

Nevember 4, 2001; Ensen Serrnally seuutes its casings for 1997
to 2001, to account for the $1.2 billion reduction to shareholders’
‘equity that as alrcady cauned it wo such trouble. Dt adirits hat
“certain off-balance sheet enmities should have been included in
Ereon' cormclichtid financial sunemneats”. Including them axcass
that Escoe's declared debt busden incseasod by busdseds of
millions of dollars mn the period, aed is owt income is likewise
reduces,

Navember 9, 2001; Suring disaster in the face, Enron ansounces
that it has agpeed to & takeuver by Chevron Texaco-backed Dynegy.
The company wosld be Sed by Dywegy's Chrack Wutuan, whe
reassures irwesours tual the new company woul! “keep & mK
balance sheet and straightforward firancial viructure as hey
peiorisea”. Under the deal, ChevrunTeaaco advances Dynegy $1.$
Dillioe to buy a share it the Noethem Natural Gas pipeline, giving
Feros the cas infusion it needs io stay afloat and proserve is
credit ratings. Dynegy paira the night to purchase the whale of the
pipeline ifthe deal 2 throug’. Rather hopefully, the pees
announcement describes the tkeover as “unleashing the value uf
‘Barns’ cove energy businessex

Nuvetnber 12, 2401: Enron dowsgeaded, which itadeits ox
Nowerther 1 will rnquice i to pay cf eacty $490 million off debt
thos wold ceherwine mature i 20003, Soares fall again, and troug>
by Noweniber 21 the company has racceeded in renegotistng the
dete, market commentators are starting to say that Dynegy might
lcveckse manerial adverse change (MAC) clauses in the merger
agreement, and breaches of eapresestation, to fhee itself af the deal.
Sige are growing that Enron's cove exergy trading Busisess will
sous be crippled by the ancermainty

Nowernber 21, D001: Hetween November 1¢-2!, fieron arranges a
$1 billion cradit line frcen JPMorgan Chase ard Citigroep, secuned
‘agate its pipelines The corspuny comtinaes desperate seputiations
‘with ite ober creditors to preserve its fanding and liqsidity.

Noveraber 28, 2061: Dynegy Ine vay i has terrinuated the merger
agreersene and will exmcoe ite option to purchase Exeon’s sxierest
in dye Nomen Nunural Gas Contpany. The main ruling agencies
downgrade Ereon’s taling wv below investracet yeade, which ax turn
triggers barrnfal classes in Eiven's debt obligation. Lay say there
will be a tomporsry superar of all payments except thowe
pecemary to protect the company's core energy franchine. Over the
nest few days, Enron's sharwe trade berwewn 43 and 25 cents, down
foe their high of $90) m 2000,

December 2, 2001; Baron files for chapter 15 banikraptcy
festection orm the conrts, aaying it intends to auc Dysegy for $10
billion for breach of contract Its execstives continue to struggle te
sabeage sorne of the value af ix core energy bresinens, hoping to ect
it ep at a mew entity: But from this dine, the lawyers and the US
turahruplcy ext hold the whip heasd over # corporation that had
racely mimed its carsings tarpoa.

December 3, 2001: Thowiends of eeaployees in Hoasos are
laié off as commenraices speculate on the chance of Enron finding
eresagh fiaancing ard market ered ility % preserve its core
ranweal gas and power wading businesses, for the besefil of ite
credinacs

01797

01200000000453


‘License No. YK- [(b)(2)] Page 2 of 2

SECTION 1 - AUTHORIZATION: The Licensee and its U.S. affiliates,
as well as U.S. persons who are employed by the Licensee, Enron
Capital & Trade Resources, Ltd. ("ECTRL"), or other affiliates of
Licensee, are hereby authorized to [(b)(4)]

SECTION 2 - REPORTING AND RECORDKEEPING REQUIREMENTS: The
Licensee is subject to the recordkeeping and reporting
requirements of, inter alia, 31 C.F.R. §§ 501.601 and 501.602,
including the requirement to maintain records concerning the
transactions undertaken pursuant to this License for a period of
at least five years.

SECTION 3 - PRECEDENCE: This license is issued on a non-
orecedential basis.

Prrerrerrrrritii

00400000000152


Nickoloff, Peter

From: Byrne, Kathleen
Sent: Tuesday, December 18, 2001 8:05 AM
To: _DL Market Group; Andrew 0. Sacher (E-mail); David Griffiths; E.A. Wayne; Enrique Perez
(Email Eric H. Otto (E-mail); J.P. Reid; Jay Hoffman; Meg Lundsager; Philippa Malmgren:
J. Shevlin
Subject: AM Global Financia! Markets - December 18, 2001

~ The themes of broad yen weakness, selling of longer-dated U.S. Treasuries, and thin, end-of-year trading
conditions persist.

Foreign Exchange: The yen is weaker across the board, moving convincingly above the Y 128 level against the dollar to
fresh three-year lows. Participants cited yesterday's comments by Japanese FinMin Shiokawa and Vice FinMin Kuroda
conveying apparent acceptance of a weaker yen, and discounted EconMinTakenaka's lone assertion thal the yen's
exchange rate was nearing levels compatible with fundamentals. Although shorter-term speculative accounts took profits
above the Y128 level, dealers continue to expect a fairly rapid move in dollar/yen above Y130, once rumored options
barriers around that level are broken through. Although the dollar and the euro are little changed against most other
currencies, market talk that British Petroleum may buy Enron-owned gas stations in Germany was ciled as future support
for the euro; dealers took in stride today’s Financial Times reports of a possible flood of counterfeit euro notes produced by
eastern European countries and noted that euro notes will be accepted at stores in the United Kingdom after Jan, 1.

Japan: Participants are focusing on the BO\"s two-day policy meeting, which concludes tomorrow. FinMin Shiokawa said
today that "we are strongly asking the BOJ to provide abundant liquidity to the banking system” and called on the central
bank to provide more than 14 trillion yen in liquidity in the run-up to yaar-end, comments which foreign exchange market
participants also took as tacit approval to sell the yen.

Emerging Asia: In contrast to recent weeks, emerging Asian currencies are beginning to respond negatively to the yen's
depreciation. Today, the New Taiwan dollar fell to a four-month low against the U.S. dollar. After outperforming the yen
for a number of weeks, the Korean won depreciated 0.6% yesterday and was little changed overnight.

Europe: Euro-area consumer price inflation for November was on expectations, but area industrial production fell by more
than expected. As a resull, euro-area sovereign debt is rallying, with yields 1 to 7 bps lower and short ends outperforming.
Implied yields on near-dated eurlbor futures contracts (March and June) are 3 to 4 bps lower.

Commodities: In very thin trading, crude olf prices are consolidating ahead of the release of AP! data late this afternoon,

U.S. Assets Overnight

‘The front-month DJIA, Nasdaq 100, and S&P 500 futures contracts are alll trading moderately higher, suggesting positive
movement in prices at the New York open. Treasury prices are little changed to modestly lower, the long bond
outperforming. The ten-yeer yield rose to a five-month high, reflecting hedging activity by mortgage investors.

Today's Events: Actual Consensus Expectation Previous Period

Two-day BOJ board meeting starts -- no change expected but 3 few contacts look for tinkering at the margins to increase
liquidity.

ECB President Quisenberg gives quarterly testimony before the European Parliament at 10:30 AM.

Euro-area CPI, Nov. final 2.1% 2.1% 2.4%

Euro-area industrial production, Oct -1.4% mim 1.0% mim -0.5% mim

U.S. housing starts, Nov. 8:30 a.m. 1540K 1852K

Two-day Brazilian COPOM meeting starts — no change in SELIC rate expected

Dect@aMect

1s

01726

01200000000382


All the cleces were now in place
for a crids that could not be man
aged. The finc countdown to cisas
ter over the two months leading up
to Enron's Chapter 1) bonkruptcy
fling on December 2% charted in
our timeline, By the time thal Error
had adjusted its cris management
fo cope with ity corporate gover:
nonce lofwes, is liquidity time
bomb was ticking much too fast,

The company formoby rastated
its earring! on Nowernber 8 to
eccount for a $1.2 bition reduction
te shorenolders’ equity. It was
obiged to admit “cenan ofba-
once sheet entifes souk have
been included in Enron's consol
doted financial statements pur
to generchy occepted
accounting princicles

inchding them meant Enron's
deciared debt burden increcied
by hundreds of millions of doltors in
‘the period, and its net incorne was
thewise reduced, Earon’s own sum
mary of the restatement is giver in
Box 6. but Ihe numbers weren't os
Imperiont as its own terse admission
thet the orginal “financial state-
ments for these periods anc the
audit reports relating to the year
end financial statements for 1977
through 2000 should not be refed

Conclusion

Already. observers of ime Enron
barkutey hove taken divergent
views on its couses. Those who give
the benefit of the doubt to Enron's
top executives suspect that whie
the company might inevitably
been heading for o toll in terms of
its shore price, It was catapulted
into bankruptcy by ponic-s¥icken
investors. The orgument says that
ivestors: faiec to recognke that

suant

Enron's accounting and corporate
governance problems hod inflicted
relatively ‘ivicl damage on an
essenticiy neatthy company.

Those of @ more cyrical Dent
have suggested that Enon was a
stor pertormer onty in the serve of
putting on 0 good oct, For these
commentator, Enron's ablity to
meet eomings targets. and report
otmer figures and ratios that
pleased Me market, was the rest
of the over-claver - not necessarily
iWegal - shoping of cashtows, That's
@ charge thot can only be finaly
setted by o minute examination of
the company's books. ond by tne
SEC Inwestigation now under wary.

The chief execute officer of
Andersen, the accounting firm thet
qudited Enron. hes akeody sought
to deflect critickm by pointing to. a
genera! folure of the cccounting
profession. He soys thot today's
company occounts ore tao back
wards-looking, Mat they offer ony
intarm@tant cisclosure, that they fell
to come to terms with off-balance
sheet soecial purpose vehicles. and
that they should wpport o wider
range of key perfomance indica:
tors $

The vorlous enquiries into tne
Evon folie ore tkely to probe
deep and lang. By thot fime.
though. we wil have for more infor
mation to hand than cid investors
Gs they Guirped Enron's snares, or
creditors os they entorced contin
gent clauses to put ther capital out
from the company.

This suggess Mo! we must look
foro smpler explanatan of Ewon's
$20-10-26-cent death splot

Pemops Erran’s shareholders
soit out cn the compony becouse
they beleved Mat to finance its
creams ond make its targets, the

incoene of apy

—--—- ERisk.com —-,

met

$96 million in 1997, $113

million in 1998, $250 million in 1999 and $132 millice
58.2000, iernoees of 517 salen fof Ms em gaerter of

2001 and $5 million for the second

quarter and
getiction of 317 million forthe third quarer of 2001.

in November 1997, the consolidation of the LIM
subsidiary for 1999 and 2000 and prior year proposed.
‘wedi adjustments, The consolidation of JEDI and |

Coeweo also will increase Enron's debt

> debt by approximately
$711 cnilliom in 1997, $561 million in 1998, $685 maillion

(= 1999 and $628 million in 2000.7

‘Faron, summary of resiotemen! of occounis, 360
bitp.iiwww,cnroe comicorpeses

compory had engineered away
any chance of a more mundone

exétence. There wos no floor to the

share price becouse oF the stock |
fell, wasters and creditor: came to
suspect that mechoniens were
ateady in ploce that woukt crain |
any $4-c-shore core business of
the Iquidity ond reputation that it
depended upon. They okeady |

knew that the company’s accounts

would be of litte use in such o situc-

tian. And they no longer belleved

the only people who covid quiclly

WW in the gone @

Notes

1 Bik “CRO Profi: fick Buy = Bone Comeration”, Fenway |

mor

2 “Emon Pion Asset SeihOl 19 Siem Debt”. Houston Chronicie,

November 1S, 200!

3 Moody's Special Comment, “The Unintended Comeauences

of Roting Irigge't", Deceminer 7, 2001

4 Enon. preamivies to revichement of occounts, 1ee

Die enioncomccm ies

$ Jon Rerodin, “A Wake-Lip Com’ Ihe Wor Sheer Journa

Cecember 4, 2001

Peart OG |
01799

01200000000455


Financing

Costs, Total project cost is $3 billion (Phase I $1.1 billion; Phase II $1,9 billion).

Total Debt. Total project debt is $2 billion (Phase I $600 million; Phase I $1.4 billion).

Indian Debt. Of the $2 billion project debt, $1.2 billion is Indian debt, consisting of direct loans
and guarantees. (Because the Japanese, U.S. and Belgium Exim Banks take no direct risk, the
Indian banks guaranteed their loans.)

Other Foreign Government Lenders, Japanese Exim Bank, Belgium Credit Agency, U.S, Exim
Bank, and Opic, the latter also providing political risk insurance to shareholders.

Other Lenders. 40 other international banks are involved in the loans for the Dabhol project.
Fuel Supply. Both the Oman and Abu Dahbi governments are involved in providing fuel to
Dabhol. The Oman facilities are 60 percent owned by the Government and 30 percent owned by
Shell.

LNG Tanker, The tanker is owned by Shipping Company of India, Mitsui and 15 percent by
Enron,

00500000002272


CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
FOR NON-UNITED STATES HOLDERS OF COMMON STOCK

The following is @ summary of certain United States federal income tax consequences of the
acquisition, ownership and disposition of Common Stock by a holder that, for United States federal
income and estate tax purposes, is a Non-United States Holder. For purposes of this discussion, a
“'Non-United States Holder’ means a corporation, individual or partnership that is, as to the United
States, a foreign corporation, a non-resident alien individual or a foreign partnership, or a trust or
estate other than one the income of which is subject to United States federal income tax regardless
Of its source. This summary does not address all aspects of United States federal income and estate
‘axation and does not deal with foreign, state and local tax consequences that may be relevant to
Non-United States Holders in light of their specific circumstances. Furthermore, this summary is
based on the provisions of the United States Internal Revenue Code of 1986, as amended, and the
regulatidhis, rulings and judicial decisions thereunder, all of which are subject to change. PROSPEC-
TIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO
THE UNITED STATES TAX CONSEQUENCES TO THEM OF ACQUIRING, HOLDING AND DISPOS-
ING OF COMMON STOCK AS WELL AS ANY TAX CONSEQUENCES THAT MAY ARISE UNDER
THE LAWS OF ANY FOREIGN, STATE, LOCAL OR OTHER TAXING JURISDICTION.

Dividends

Dividends paid to a Non-United States Holder generally will be subject to withholding of United
States federal income tax at a rate of 30% (or a lower rate prescribed by an applicable tax treaty). If
the dividends are effectively connected with the conduct of a trade or business within the United
States by the Non-United States Holder, the dividends will be subject to the ordinary United States
federal income tax on net Income that applies to United States persons and will not be subject to
withholding if the Non-United States Holder files a United States Internat Revenue Service
Form 4224 with the Company or its dividend paying agent. In the case of corporate holders, such
dividends might also be subject to the United States branch profits tax at a rate of 30% (or a lower
rate prescribed by an applicable tax treaty). A Non-United States Holder may be required to satisty
certain certification requirements in order to obtain any reduction of or exemption from withholding
under the foregoing rules and may obtain a refund of any excess amounts currently withheld by filing
an appropriate refund claim with the United States Internal Revenue Service. _

Distributions in excess of the Company's current and accumulated earnings and profits, as
determined for United States federal income tax purposes, will be treated first as a return of capital
to the extent of the Non-United States Holder's tax basis in the Common Stock (and will be applied
against and reduce such holder's tax basis in the Common Stock) and thereafter as gain from the
sale of Common Stock. The portion treated as a return of capital will not be subject to United States
federal income tax and the portion, if any, treated as gain will be subject to the rules described under
“= Gain on Disposition” below. Because the Company will not be able to determine whether a
distribution should property be treated as a dividend or as a return of capital at the time of payment,
it ts required to treat all distributions as dividends for United States withholding tax purposes. Non-
United States Holders will be eligible to claim a refund to the extent that a distribution represents a
return of capital and may In certain circumstances be eligible to claim a refund to the extent that a
distribution is treated as gain. Non-United States Holders should consult their own tax advisors with
respect to distributions in excess of current and accumulated earnings and profits.

Gain on Disposition
General Rule
Subject to special rules for Individuals described below, a Non-United States Holder generally
will not be subject to United States federal income tax on gain recognized on a sale or other
disposition of Common Stock unless (a) the gain is effectively connected with the conduct of a trade
or business within the United States by the Non-United States Holder (in which case the United
States branch profits tax described above may also apply to corporate holders) or (b) the gain is

00900000000313


PROSPECTUS SUMMARY
The following is a summary of certain information contained in this Prospectus. It is not
intended to be complete and is qualified in its entirety by the more detailed information contained
elsewhere in this Prospectus, Capitalized terms which are not defined in this summary are used as
defined elsewhere in this Prospectus.

Enron Corp.

Enron, organized in 1930, is an integrated natural ges company with headquarters in Houston,
Texas. Essentially all of Enron's operations are conducted through its subsidiaries and affiliates
which are principally engaged in the gathering, transportation and wholesale marketing of natural
gas to markets throughout the United States and internationally through approximately 44,000 miles
of natural gas pipelines; the exploration for and production of natural gas and crude oil in the United
States agg internationally; the production, purchase, transportation and worldwide marketing of
natural gas liquids and refined petroleum products; the independent (i.e., non-utility) development,
promotion, construction and operation of power plants, natural gas liquids facilities and pipelines in
the United States and internationally; and the non-price regulated purchasing and marketing of
energy related commitments.

Enron Oil & Gas Company
EOG, together with its subsidiaries, is one of the largest independent (non-integrated) olf and
gas companies in the United States in terms of domestic proved reserves. It is engaged. diractly and
through its subsidiaries, in the exploration for, and the Gevelopment, production and marketing of,
natural gas and crude oil primarily in major producing basins in the United States, as well as in
Canada, Trinidad and India, and to a lesser extent, selected other international areas.

The Exchangeable Notes Offering

Exchangeable Notes Offered..... 10,000,000 Exchangeable Notes.

Principal Amount ...... 0... 00006 $21.75 per Exchangeable Note.

Stated Maturity ...............5 December 13, 1998.

Interest Rate 2.2... eee ee 614% per annum, or $.34 per Exchangeable Note per quar-
ter, payable quarterly in arrears.

interest Payment Dates ......... January 31, April 30, July 31, and October 31, beginning
January 31, 1996.

Exchange at Maturity ........... ‘At Matuirity, the principal amount of each Exchangeable Note
willl nron into a number of

~ 00900000000249


Ford Motor Company unveiled a sweeping overhaul involving 22,000 job
losses in North America, five plant closures there and a $4.1 billion
restructuring charge, Including previously announced job losses
elsewhere in the world, Ford will shed 35,000 jobs. (source: Financial
Times)

http: //wew, investorguide.com/cgi-bin/daily.egi?05588

The U.S. economy faces "significant risks in the near term,” Pederal
Reserve Chairman Alan Greenspan said Friday while pointing to some
signs of recovery. (source: MarketWatch)

http://www, investorguide.com/cgi-bin/daily.cgi?05589

Analysis:

A wave of controversy stirred up by the collapse of energy giant,
Enron, hag washed up at the front door of the White House. Amid a
series of potentially embarrassing revelations, the Bush
administration faces a new test. (source: The Economist)

http: //wew, investorquide.com/cgi-bin/daily.cgi705590

Around midyear, investors will be getting a better look at corporate
balance sheets, thanks to new accounting rules covering goodwill and
how to reflect its impairment, (source: CFO.com)

http://www. investorguide.com/cgi-bin/daily.cgi?05591

As the White House steps up scrutiny of 401(k) plans, lawmakera are
threatening legialation to curb company stock holdings and employers
are reviewing their plans. (source: USA Today)

http://www. investorguide.com/egi-bin/daily.cgi?05592

In Brief:
- UBS Warburg was the winning bidder in Enron's trading operations;
Enron will retain ownership of 49% of the business.

If you have any friends or colleagues who would appreciate getting
this news every day, follow this link (or if you prefer, simply
forward this issue to them):

http://www. investorguide.com/egi-bin/recommenddaily.cgi

You can research companies mentioned in today's news by following
these links:

Enron http://www. investorguide.com/cgi-bin/r.cgi?name-ENE
Ford http://www. investorguide.com/cgi-bin/r.cgi?name«F
UBS Warburg http://www. investorguide .com/cgi-bin/r.cgi?namesUBS

You can research any publicly traded company by following this link:
http://www. investorguide.com/research. html

earnings

Friday's major earnings reports:
Company Name (Ticker): actual, expected, same q last year

BB&T Corp (SBT): $0.63, $0.62, $0.58

Monday's major expected earnings reports:
Company Name (Ticker) : expected, same q last year

Charles Schwab (SCH): $0.06, $0.22
E*Trade (ET): $0.02
Pannie Mae (FNM): $1.13
Northern Trust (NTRS): $0.54

For more earnings information, check out
http://www. inveatorquide.com/earningacalendars.html

° 01752

01200000000408


Nickoloff, Peter

ne

From: Lori Santamorena@bpd.treas.gov

Sent: Monday, December 10, 2001 2:47 PM

To: norman.carleton@do.treas.gov, peter.nickoloff@do.treas.gov
Subject: 1BN ) Enron Records at SEC Sought by House Energy and Comme

—— Forwanied by Lori Santamorena/BPD on 12/10V01 02:45 PM =
“PUBLIC DEBT, US DEPT OF TREASURY” <GSRS@bloomberg.net>
12/10/01 02:34 PIA

To LSANTAMORENAM8PD TREAS.GOV

cc:
‘Subject: 418N ) Enron Records at SEC Sought by House Energy and Comene

Enron Records at SEC Sought by House Energy and Commerce Panel
2001-12-10 13:15 (New York)

Enron Records at SEC Sought by House Energy and Commerce Panel

Washington, Dec. 10 (Bloomberg) -- The U.S. House Energy and
Commerce Committee asked the Securities and Exchange Commission to
produce by next Monday all reviews and reports it has done on
Enron Corp. since 1997.

Committee chairman Representative Billy Tauzin and James
Greenwood, chairman of the panel's oversight and investigations
subcommittee, made the request in a Dec, 7 letter to SBC Chairman
Harvey Pitt released by Tauzin's office today.

““The apparent collapse of the company has resulted in the
L of substantially all of the equity value in Enron, and the
logs by many participants of sizeable portions of their retirement
savings,'' said Tauzin of Louisiana and Greenwood of Pennsylvania,
both Republicans. ~*It also highlighted the lack of transparency
in Enron's derivative positions in the energy market.''

Tauzin and Greenwood requested SEC reviews of all Enron
quarterly and annual filings with the agency beginning January
1997 up to the date the SEC launched ite own formal probe into
Enron, Tauzin and Greenwood also want #11 proposed adjustments to
Enron filings submitted to the SEC by Enron auditors.

--Vicky Stamas in Washington (202) 624-1956, or
vstamas@bloomberg.net /ba

Story Illustration: To compare Enron's stock performance with
market indexes, cype {ENE US <Equity> COMP <GO>},

Company news:
ENE US <equity> CN

a

01483

01200000000137


Gea

No person has been authorized to give
any information or to make any representa-
tions other than those contained in this Pro-
spectus, und, if given or made, such informa-
tion or representations must not be relied
upon as having been authorized. This Pro-
spectus does not constitute an offer to sell or
the solicitation of an offer to buy any securi-
ties other than the securities described in this

Prospectus or an offer to sell or the solicita-
ton of an offer to buy such securities in any Enron Oil & Gas Company
circums! in which such offer or solicita- .

Common Stock
(Per value $.01 per share)

00900000000245


Risk

— December 2001—

Enron's off-balance machine

Enron's failure is likely to provoke years of mud-slinging and
legal suits. Do we need to wait for the gory details, asks Rob Jameson,

or are the most important lessons are already apparent?

© December 2, 2001,

fvon Comeration fled

for Donkruptcy protec-

fion from its creditors in
the longest financial falure the US
has ever seen. It wos an ironic end
for a company that had becorne
one of the US equity morkets’
brightest sfors in the pot decade
by ploneering new instruments and
concepts in financial ris manage-
ment across energy. telecom ond
crest markets

Enron was the sixthtangest
energy Company by morket capi.
talzation In the word, with rev
enues of $101 bilion and assets of
$47.3 bifon in 2000, 5 fore has
mared the reputations of Its top
executives ond hurt of is stoke-
hokders.

Sharencidess who stayed loyct
saw the prce of an Erron shore
side tom a high of around $90 6
share in August 2000 fo well uncer
SD cents a share in November 2001
Major crecitors such as US banks
‘ond credit insurers were lett
exposed to potenticl losses of nun-
Greds of mifons of doles. and
losses pplad around the werd to
bonks that had taken part in
Error’s syndicated borrowings, and
to funds that had bought Enron's
debt and equity.

Erron’s corporate custorners
were left tying t unwind long-tern
Fisk Monagerent agreements with
@ counterparty that might not be
ble to pay up. The energy morkets
that Enron had helped to crecte
toced the credit 6k. disuption and

Squidity shock of losing thei biggest
ond bes!-coptcléed participant,

And mony of Enron's 21,000
employees in the US anc around
the word found thernseives pot
‘only without a job. but losing  por-
tion of pension plons that had been
invested in heir employer

History suggests that follures as
precipitous of thot of Erron oe
rorely the result of o single rik event
oF bed groctce. So how did Enron
become a company that could
fot allord to stat? And what mech-
‘Gnisrns made the task of culfing "me
firm out of Bs deolh spiral so impos-
sie for its feted corporate pilot?

A star ts born
Enron become business legend
fot only Dacouse * mode money
and grew fast. but because it
evolved from being o company
with @ rather dull set of physical
assets In a reguiated market into a
financially sophisticated fk man-
agement Company Mat shoped Its
own Waging environment. it was a
trick that onclysts later beliaved the
compary might cary of in many
more markets around the world
from power, fo water. 'o metois
ond bendwidth

The company was formed from
he merger of Houston Notural Gas
end) interNorth «of =~ Omnaha,
Nebroska. in Ady 1985, the year
thot the US Federal Energy
Reguating Commision iswed on
order thot required pipelines to pro-
wide open cccets to pipeline
capacity. With other reguistory

developments aver the next sev
erol years, the order encouraged
the growth of a market in short-term
0s supply contracts, and eventu-
ily @ true spot market for notural
gos. Ht wos a market that Enron
came to dominate through the
evelopment of its own physical
pipeline assels. ond through its
emerging expertise in the manoge-
meant of portfolios of contracts tor
natural gas. he mos! volatie major
commedity markat in the work.

The key moments in Enron's
evelopment can be seen in our
eccompanying tires. a its self
prockimed occomplthrnents grew
ever bigger “the premier notural
gos pipeline” (1985); “the workd"s
first natural gas mojor (1970) ond
“the world's leoding energy Com-
ony” {1995}. But It wes the ski: the
company hed gained in ris. man-
‘ogement thot fed this vision. They
lowed the compcny to buld a
trading operation. fo tronsfer ats
intelectual sk¥s fo other morkets,
‘ond to begin fo offer high-nargin
isk monagement services.

Enron fist began to market this
skll with the launch af its GasBank
service in 1989, which cllowed pro-
ducers and wholesoiens to buy frm
future gas supplies and to hedge
ther natural gas price rise. The
choice of terminology was not
accidental. Over the yeor. the
company Contnued to see itself a5
an “energy bane’ and to position its
image ond stils of s#rdor to Mowe
of the Irwastment banks on Wal
Sheet that were applying rocket

a i
01794

01200000000450


Nickoloff, Peter —_—— ———

From: InvestorGuide Daily [daty@investorguide.com]

Sent: Tuesday, January 15, 2002 6:17 PM

To: peter nickolof@do.treas.gov

Subject: InvestorGuide Daily - January 15, 2002

InvestorGuide Daily January 15, 2002
brought to you by

InvestorGuide (portal) http://www. investorguide,com

InvestorWords (glossary) http://www, investorwords. com

WebFinance Coneulting http://www. webfinanceconsulting.com

If a friend forwarded you this message, get a free subscription by
sending any email message to daily@investorguide.com

Contents;
Market Summary
Business News and Analysia
Tomments
Earnings
Word of the Day
Notable Quotable

Today's issue is sponsored by InvesterPlace.com:

FREE Report from America's top tech advisor. Full details on what
comes next for tech PLUS 5 specific picks to make you 50%-to-75%
RICHER in 2002. Don't miga out:

http: //www.ppi-orders.com/index.htm?promo_code=1AR212

market summary

The day began with a release of economic news and showed December
retail sales declined only 0.14%, better than the expected 1.2%.
Throughout the day, the major indices vacillated, but, in the end,
they managed a modest gain in anticipation of after-the-cloge earnings
reports. The carly news is good; eBay reported fourth-quarter
operating earnings of 14 cents, beating estimates, and Intel announced
a profit of 15 cents per share, also better than expected. At the
close, the Dow had gained more than 32 points, and the Nasdaq finished
up 10 points.

Dow Jones Industrials: 9924.18 +32.73 +0,33%
Nasdaq Composite: 2000.91 +10.17 +0.51%
S&P S00: 1146.02 +7.61 +. 067%
30-year Treasury Bond: 5.3368 0,041

Por more news and information on the market, investing, and personal
finance, please visit http://www. investorguide.com

business news and analysis

Dire predictions of holiday sales gloom failed to come true in
1

01783

01200000000439


science to purely financiat com
tracts to ucrotve effect during the
1990s. Like "he best of those Dorks.
Enron would toke money of an
inlermadiony and provider of liauid-
ay. rather than retaining energy
price sk on its books.

Unfike banks. however, Enron
remained unraguicted alter the
emerging energy derivatives indus
try successully fought off attempts
by the Commodity futures Irading
Commission to extend its powers to
the market #1 me eorty 19905, The
frm remained answerable only to
ts sharehakiers ond debtholders for
@ copitel structure and rite man-
egament, and to their proxies the
Secutifies & Exchange Commission
and the rating agencies for the
otcurecy of the Errited information
that it chose to disclose.

This was aiways cisconcerting for
onotysts, After ak, they were recom
mending the company to investors
preckely because it wos the pre-
errinent financiel wizard of its sec-
for in terms of the interaction
between physical assets ond caste
flow: the monogement of complex
contoct portlolios Gnd onset volatt
ay. and Me shaping of risk and
leverage fo exiroct Me maximum
value from capital.

It was on open secret in the cor
porate world that accounting stan-
dards ond comeony reporting
Ocross the risk managernent indus
tries nad not kept pace with new
techniques in off-balance sheet
fineneing, financial engineering
Gnd controct technology, In the
mergy trading sector. in paricukr.
the valves of unreatsed gains and
losves that might be included in o
company's occoun’s were depen-
dent upon many casumptions. The
Potential tor a gap between finan

cia rectty and company reporting
was growing In an industry-wide
tend thot leveraged the impor-
force of a company’s chief finan.
cio! officer. ond of comorate cred
ibtlty in general.

Meanwtile. through the 1990s
Enron repectediy hit ts earnings tor-
92% and then set ital! tough new
goals in o manner that mode it the
darting of Wal Street's equity ana
wits. Enron's specio’ skis in com
madity morket development and
frICE tisk monogement seamed to
offer the frm an embarosnent of
fichas in terms of nvestrnent oppor-
tunifes in the US Gad cround the
world from the mid 17905 a: power
ond other reguioted ulifly markets
in the UK. US and elsewhere fol
lowed the same path toward
deregulation.

While Enon retcined strategic
Oenenhip of some physica cisets,
such as power plants and pipelines
in the US energy industry end
obroed, the company believed its
future lay in spectheading deregu-
lation and trading in energy ond
other Commodity markets around
the world, while ao ceveloping
highkmargin ak management
sendces

Occasonaly, Enron cdnitted to
stumbing In lis home temtory of
energy cantact rise management,
notably in the cove of the biock
episode, Ths deol lef! Enron on.
Qerously exposed fo faling gas
prices in the UK offer it signed o
maniive "toke-or-pay’ gas Contract
in 1993 with companies operating
the J-Block gos field in the UK Norn
Sea. Enron finaly hod to reach o
settioment with its suppliers in 1997,
The eptode cost the company
some $37 milton alter tax in 1997.
‘ond led te serious questions being

-- ERisk.com

Joly 19851 Ener formed by merger of Houston Nerueal Gas and
ImerNonh, a Ontaha, Nebeaska-Dased natura! pus

company. Company warks its way though the [ieralisasion af the
‘anual gas market In the US wo besorne an opetracces transporter
of gas

198i; Garon begins construction af power piles in UR.

1989: Baron lnunches its CasBanis to allow producers and
“wholesalers so buy firre fare gas mapplies and to badge their
ranueal gas prive risk.

Dane 1994: Enron North America bepine to trade electricity.

December 196 Dabivol Power Project, of wihich Enon is a
Feincipal stalomholder, begins consirection af a layucfied matucal gt
power plant

Sane 1997: Enron records 8 change of $450 riltien tn bring to a
‘lose the prottens urchertying the J-Block comtract, which had

commited & to natural gas prices thet were ort of line with the

Market

August 1997: Encore says it has sold its frst weuther derivative
‘coartaet. IPs the fest of euanyy arzernpts to bathé risk msnageenert
rmaricets outside the energy markets ox expinit Ereen’s perceived
commodiry risk management ieliecranl capital anc expertise. In
the next tree years Enron invests sigmifiowst capital are
rmanagemers tine in trying 10 develop traded risk manager
markets in bandwidth (first trade, Decernber 1998), pulp and paper.
‘Plastics, Coal, and in reuring ini esisang metals risk rearagenest
rrakets,

Septersber 1997: Enron Energy Services is formned w provide
‘erety outwarcing services to commercial and other eensurners,

Decerniber 19981 Enron buys the UK's Wesuen Water and creates »
“label water company” that it calls Azuets, Baron works to extend
lis electricity wholesale markering influence from the UK's power
market inno Eueope.

May 1999: Phuse | af the toublesame Dabhol Power Project
begias ‘cormenesecial uperation’.

November 1999. EmonOnline is launched as a globel commodity.
trading site and Eros is poritomed as a “sew ecseony” corpacry.

May 2900; Barus acquires MO ple, a London-based ments wader,
to extend its crmesodity market capbilities

Aupast 2000: Fireon's sanck reaches high-veater mark at arousd S90
per share,

Sanvary 1001: Baron's stock still at $8, and execunives eccrine
‘to talk up the shares to analysts, saying in late Jarvsary thet $1260
share might prowe 2 reasonable target prioe Theough the early
spring the price of ebarps in the compart falls, but the whare price to
earings rallo coeronues on midicate that ervestors think Enon will
grow profits rach faster than any of its enemy market competitors.

01200000000451


VALIDITY OF THE EXCHANGEABLE NOTES

The validity of the Exchangeable Notes will be passed upon for Enron by James V. Derrick, Jr.,
Senior Vice President and General Counsel of Enron, Mr. Derrick owns substantially !ess than 1% of
the outstanding shares of Common Stock of Enron. Certain matters will be passed upon for Enron
by Virson & Elkins L.L.P. The validity of the Exchangeable Notes will be passed upon for the
Underwriters by Bracewell & Patterson, L.L.P. Bracewell & Patterson, L.L.P. currently provides
services to Enron and certain of its subsidiaries and affiliates as outside counsel on matters
unrelated to the issuance of the Exchangeable Notes.

EXPERTS

The consolidated financial statements and schedules included in Enron's Annual Report on
Form 10-K for the year ended December 31, 1994, incorporated by reference in this Prospectus,
have’een audited by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect therato and are incorporated by reference herein in reliance upon the authority
of said firm as experts in accounting and auditing in giving said reports.

The letter report of DeGolyer and MacNaughton, independent petroleum consultants, included
‘as an exhibit to Enron's Annual Report on Form 10-K for the year ended December 31, 1994, and
the estimates from the reports of that firm appearing in such Annual Report, are incorporated by
reference herein on the authority of said firm as experts in petroleum engineering and in giving such
reports.

28

00900000000274


USE OF PROCEEDS

The shares of Common Stock of the Company being offered hereby and the Exchangeable
Notes are being sold by Enron Corp. Accordingly, the Company will not receive any of the proceeds

from the Stock Offerings or the sale of the Exchangeable Notes or delivery of shares of Common
Stock pursuant thereto,

PRICE RANGE OF COMMON STOCK AND CASH DIVIDENDS

hare have been restated to reflect the two-for-one stock split on May 31,

eit

gB8 BeBe eee

See the cover page of this Prospectus for the last reported sale price of the Common Stock on
the NYSE as of a recent date.

As of November 1, 1995, there were approximately 270 record holders of the Company's
Common Stock, including individual participants in security position listings. There are an estimated
5,100 beneficial owners of the Company's Common Stock, including shares held in street name.

; Following the initial public offering and sale of its Common Stock in October 1989, the Company
paid quarterly dividends of $0.025 per share beginning with an initial dividend paid in January 1990
with respect to the fourth quarter of 1989. Beginning in January 1993 with respect to the fourth
Quarter of 1982, the Company has paid quarterly dividends of $0.03 per share. The Company
Currently intends to continue to pay quarterly cash dividends on its outstanding shares of Common
Stock, However, the determination of the amount of future cash dividends, If any, to be declared and
paid will depend upon, among other things, the financial condition, funds from operations, level of
exploration and development expenditure opportunities and future business prospects of the
Company.

10

00900000000284


[(b)(5); outside scope]

00500000000215


Nickoloff, Peter

From: ERisk [ERisk@email.eRisks.com)
Sent: Friday, November 16, 2001 12:54 PM
To: peter.nickoloffi@do.treas.gov
Subject: ERisk Essentials
.com/images/essential .QiF> portal erisk com <nitp:liemall eftiskcs coming bin tQMa’?
a

Weekly

Review
in this week's round-up bceDAQ> of economic, banking and P&C insurance news from an

rep fioe ak een Danner Se ae an Dynegy prepares to absorb Enron; disagreements
‘continue over the availablity of credit, Japanase banking hits a new crisis: Swiss Re's dispute with World Trade Center loasenokler deapens; Allianz

raises its estimate of WTC claims.
Analysis

Just 88 everything seems to be going nicely for US mortgage lenders, See eae Rameeve oficial io wasn tat ety need is ext back om
lending and concentrate more on their risk management. In this week's analysis <hitp:/enail eR 9 fio b g
Duncan Wood rears onthe contovarsy Mal Edward Grams remarks caused, and ioks af wh te te Fed governor Ras
@t the ‘east.

Case Study
The collapse of HIH Insurance last spring continues to reverberate. The The liquidator recently anounced that losses might reach as much as A$5.3 billion
{U5$2.75 billion), making it Australia's worst-ever corporate failure. The hearings of the Royal Commission into the affair begin on 26 November and
this month, MIs regulator has released @ new set of proposed reguistons for general insurance, to come into force in 2002. Our latest Case Study
-<hitp:liemail @Risks, comvogi-bin 10/Ra?y=hMe JODNrM20C)ECRIZIAS> summarises the sorry tale and looks at the key lessons to be learned.
‘Stil available: Case Studies on the California power crisis <hiip:/iemail,eRisks.comvcgl-bin 1 Oiflo?yshMeJODNEM20CjECK7bOAu> and the BCCL

Research Archive
‘This manth we update fe operstonal risk <http:\iemail eRisks, conm/cgi-bin 10Mfic?y=hMieJODNrMZOCjECECIOAE section of our Research Archive
‘Shitp emai. eRisks. com/ cgi-bin 1 O"lo?y=nMeJOD Nr MZ0CjE0CarDAk>. This includes links to @ recent survey on how quickly new ideas on operational
risk management are being adopted by the banking industry, and to an award-winning paper on how pre-claims settlement cagh advances, basket
insurance products and securitisation might help in the transfer of operational risk. Plus articles on o9 risk software implementation, and more,
‘St available: [Recent research papers on creck risk <atipsvemallarceka. comiog-bin 1Oiflo7y=nMeJOONMZOC\EDEABOAA>, market risk
‘<hitpaltamadl.6Ftishs, comvicgi-bin 10Mo? ysriMeJOONTMZOCjE0bd 10AF>, ERM <hio /ieenail eRisks,carm\cq)-bin 10ifio?y=hMe,JODMeM2OCIEDbA20AG>

and business risk <hitp:\iomail,eRisks.com/egi-bin1 Ole ?y=hMeJCONPM20C}E00d30AH>.

a 17,000 risk profassionats receive this email every week, To find out how your message could reach them, mai us at infogarsk. com
. =
Smaito. 34 20iniogerisk comes

Teak Eoeonliale ie published every Friday by ER 5
To subscribe to this newsletter, please email
To unsubscribe, access your
where you received this message.
It you hawe forgotten your password, you con reset Itby toloweg i
For technical support queries, please email

“ 01474

01200000000128


RELATIONSHIP BETWEEN THE COMPANY ANO ENRON CORP.
Ownership of Common Stock

Through its ability 10 elect all of the directors of the Company. Enron Corp. has the ability to
control all matters relating to the management of the Company, including any determination with
Frespect to acquisition or disposition of Company assets, future Issuance of Common Stock or other
Securities of the Company and any dividends payable on the Common Stock. Enron Corp. also has
the ability to control the Company's exploration, development, acquisition and operating expendi-
ture plans, There is no agreement between Enron Corp. and the Company that would prevent Enron
Corp. trom acquiring additional shares of Common Stock of the Company.

The sale by Enron Corp. of the shares of Common Stock of the Company will cause Enron
Corp.'s ownership interest in the Company to fall below 80% with the result that (i) the Company will
cease tbe included in the consolidated federal income tax return fited by Enron Corp. and (li) the
Tax Allocation Agreement between the Company and Enron Corp. described below will cease to be
eftective from the time at which deconsolidation occurs for future periods, but will remain in effect
with regard to periods pricr to deconsolidation. The Company has entered into a supplemental
‘agreement with Enron Corp. clarifying future potential adjustments associated with the final settle-
ment on audit of taxes for periods prior to the deconsolidation for Issues not addressed in the
original agreement. The Company does not believe that the cessation of consolidated tax reporting
with Enron Corp. and effectiveness of the Tax Allocation Agreement concurrent with deconsolida-
tion will have a material adverse effect on its financial condition or results of operations.

Contractual Arrangements

The Company entered into a Services Agreement (the ''Services Agreement”) with Enron Corp.
effective January 1994, pursuant to which Enron Corp. provides various services, such as mainte-
nance of certain employee benefit plans, provision of telecommunications and computer services,
lease of office space and the provision of purchasing and operating services and certain other
corporate staff and support services. Such services historically have been supplied to the Company
by Enron Corp., and the Services Agreement provides for the further delivery of such services
Substantially identical in nature and quality to those services previously provided. The Company has
agreed to a fixed rate for the rental of office space and to reimburse Enron Corp. for all other direct
costs incurred in rendering services to the Company under the contract and to pay Enron Corp. for
allocated indirect costs incurred in rendering such services up to a maximum of $6.7 million for
1994, such cap to be increased in subsequent years for inflation and certain changes in the
Company's allocation bases with any increase not to exceed 7.5% per year. Approximately $6.8 mil-
lion was paid under the Services Agreement by the Company to Enron Corp. in 1994. The Services
Agreement is for an initial term of five years through December 1998 and will continue thereafter
until terminated by either party.

In’March 1995, in a series of transactions with Enron Corp. and an affiliate of Enron Corp., the
Company exchanged all of its fuel supply and purchase contracts and related price swap agree-
ments associated with a Texas City cogeneration piant (the "Cogen Contracts") for certain natural
gas price swap agreements (the “Swap Agreements") of equivalent value, As a result of the
transactions, the Company has been relieved of all performance obligations associated with the
Cogen Contracts. The Company will realize net operating revenues and receive corresponding cash
payments of approximately $91 million during the period extending through December 31, 1999
under the terms of the Swap Agreements. The estimated fair value of the Swap Agreements was
approximately $81 million at the date the Swap Agreements were received. The net of this series of
transactions will result In increases in net operating revenues and cash receipts for the Company
during 1995 and 1996 of approximately $13 million and $7 miftion, respectively, with offsetting
decreases in 1998 and 1999 versus that anticipated under the Cogen Contracts.

35

0900000000309


1O/e/T1

£40 ¢ o8eg

WY T00E 1 [MOMMA OS yaeMjewWoIT aad

D48Ap JNOK Gulaeay NOY XAGINOD JO No Sow! aL 15)

MON wonéuasrS FF m0 erernuoy Q

"SOIWOUOD2 JO sajdiouud pue
PONPUOS JO Sajru oO} snNoiuedu! j,USeM } }epOW sseuUlsNg Aue ey)
1Ng "SBM 7! J9q NOA LjepowW sseulsng Jeyeq e OJ UO UQIU Sey

“wey} WY JEU MOUy
SJOWJEdWOS S$}! BuOjaq [jam JeWS}U] Sy} UO SjayewW Buyew sem
uquu “AGseue uane ‘sauysnpul [je JO unyny ayy ae BAGUP UQIU

uoneGajUl-p, /eOQUA pue UONe|NBasep pue Uo!RedWCD ey)
WYBu 30) B PIP 3] "UMOP S,y JeUY AOU LOIUZ Y9rY 0} ASS 00} $3]

“quewyoyue
jeuossad ‘syunooe |je Aq "pue uotsuedxe 40) ayjedde ajqenesur
sjuowoBeuew Sem pi ‘Jseaq 44) Pol]! JEU) JOWzU] },USEM }! ING

“Bulpey jo ssauisng
POSEG-UOREWOJU! ‘BPIJEIOA O44} JO) SOUI}od)d Pue SoVeUyoL

1007 “O€ J2quisA0N < WoW [[Py ,Upiq uWayU] oY] < yaayoworuy

ITP AK Loe

01415

01200000000771


94~131267

ENRON
CORP

Kenneth L. Lay * ©, fox MBB
Grormen ond Hourton. Tens 77251168
ick Execseree Offeme 13) 453-6773

February 28, 1994

The Honorable Lloyd Bentsen
Secretary of the Treasury
Department of the Treasury
1500 Pennsylvania Avenue, NW
Room 3330

Washington, OC 20220

Dear Lloyd:

As indicated in the attached press release, Enron Oil and Gas Company and its
Indian partner, Reliance Industries, have been awarded the rights to develop and
operate the Tapti, Panna, and Mukta fields off the Western coast of India. The strong
support for our efforts on this matter from you and others in the Clinton Administration
were very instrumental to this outcome.

In his remarks to the Business Council last Wednesday evening, President Clinton
made the point that his Administration was committed to promoting U. S. business
interests abroad. | believe our success in India is tangible evidence of the results of
this policy.

At the same time, | remain concemed that the current relationship between the
U. S. and India governments is not as positive as it probably should be. The attached
copy of an article from the February 24 Washington Post articulates this concem better
than | could. I would hope the Administration would take affirmative steps to put these
relations between the worlds two largest democracies on a better footing.

| want to again express my appreciation to you and others in the Clinton
Administration for supporting our activity in India. We firmly believe the success of this

01000000000889


December as sales at U.S. retailers slipped a smaller-than-expected
0.1 percent in the month, according to a report from the Commerce
Department released on Tuesday. (source: Washington Post)
http://www. investorguide.com/cgi-bin/daily.cgi?05613

TechNet, which represents about 250 high-tech heavy hitters, released
@ report Tuesday asking the Bush administration to jump-start the
adoption of affordable high-speed Internet access through 4 series of
initiatives that include offering tax incentives and removing
regulatory hurdles. (source: CNET)

http: //wew, investorguide.com/cgi-bin/daily.cgi?0s614

Analysis:

Most of the attention paid to Enron's finances has focused on ite
balance sheet~--in particular how it hid debt by allocating it to
supposedly independent private partnerships, But the jet engine of
Enron's share-price rise was not its set and liability picture, but
its otherworldly increase in revenue: Between 1996 and 2000, Enron
reported an increase in sales from $13.3 billion to $100.8 billion.
(source: Forbes}

hetp://wew. investorguide.com/cgi-bin/daily.cgi?0S615

Andersen is not the only Big Five accounting firm in hot water with
the Securities and Exchange Comm: on. The government's top financial
cop censured KPMG for auditor independence violations because
apparently, KPMG audited a company it had an investment in, (source:
CFO. com)

http://www. investorguide .com/egi-bin/daily.cgi?70s616

Tech stocks pour on the bubbly, As the market heads into a challenging
earnings season, tech valuations already leak too good to be true.
(source: Business 2.0)

http://www. investorguide,com/cgi-bin/daily.cgi?05617

In Brief:
- The New York Stock Exchange said it would delist Enron shares.

If you have any frienda or colleagues who would appreciate getting
this news every day, follow this link (or if you prefer, simply
forward this issue to them):

http://www. investorguide.com/cgi-bin/recommenddaily.cgi

You can research companies mentioned in today's news by following

these links:

eBay http://www. investorquide.com/cgi-bin/r.cgi?name=EBAY
Enron http://www. investorguide.com/egi-bin/r.cgi?name=ENE
Intel http://www. investorguide.com/egi-bin/r.cgi?name=INTC

You can research any publicly traded company by following this link:
http: //wew, investorguide.com/research. html

tommentas

A time-tested principle of investing is to zig when others are
zagging... if you avoid the herd mentality, you will be better off, on
average, The same applies to business itself. In the recent economic
downturn, conditions became more challenging for just about every
company, but companies that are built te last turned this to their
advantage, They found it easier to hire great employees who were being
laid off indiscriminately at struggling companies. They found it
cheaper to acquire struggling competitors. They found it cheaper to
advertise, especially online. And in general, they found it easier to
cut more favorable deals, because their partners were desperate. When
times are tough, companies with vision look for and find

; 01784

01200000000440


sett Peat tbe

00763

i Pat ult NG oT
pag Hy wi q beets | eH
| ae
: Se
i || BR ee
ti 24 |} A
Hi tke Heit ia 3335 —
glut tiling Wie =
A i ae Ht A . Ai ial Lilt | a —
Bild ee iat ii i OQ
3 nj Hai ua |
i 3 suits || st
° 24
|
Fil oe
i
| if
i
HI i
EEE
HEH T iis ERT tet HAH I
guts
ite piu etialineal
3 he hil i cy
2 gue ai suilte ae
3 iil Tver ily
{| 3 # : ye:
fej i
23 it:
| = «

01200000000108


FOCUS Enron case sparks Congressional push for energy derivatives regulation Page 2 of

Tyson Slocum, an energy research director for Public Citizen, a nonprofit consumer advocacy organization, told
AFX News that he is working with several members of the House of Representatives to help draft new legislation
which would also seek to regulate energy derivatives trading.

Slocum said the legislation being drafted with the House lawmakers would stop other energy groups like Enron who
participate in derivatives trading from operating "unregulated power auctions."

Trading would instead be regulated by a listed exchange like the New York Mercantile Exchange or the Chicago
Board of Trade where counterparties could gain a clearer insight into contract prices and volumes, he explained.

Enron's ability to operate its privately run EnronOnline outside of the scrutiny of regulators like the SEC and CFTC
was made possible by a policy initiated by Wendy Lee Gramm, the wife of retiring Texas Republican Senator Phil
Gramm, when she was the chairman of the CFTC in 1993.

Enron petitioned the CFTC in 1993 asking the agency not to regulate energy derivatives contracts. Wendy Gramm
subsequently initiated a policy which exempted derivatives trading from the commission's oversight.

"We want to undo what Wendy Gramm did in 1993 at the Commodity Futures Trading Commission where the
CFTC refused to regulate energy derivatives contracts,” Slocum said,

After leaving the CFTC, Gramm was named to Enron's board of directors where she rose to become chairwoman of
the firm's audit committee.

The energy group's ability to operate EnronOnline out of the reach of federal regulators was further consolidated in
Dec 2000 when Congress quietly passed the Commodity Futures Modernization Act.

One of the act's co-sponsors was the then head of the Senate Banking Committee, Phil Gramm.

Public Citizen's Slocum said the legislation he is assisting with would also seek to repeal sections of this act-

Randall Dodd, a professor of finance at American University in Washington and a director of the Derivatives Study
Center which was set up in the wake of the Long Term Capital Management hedge fund collapse in 1998, also believes
Congress made a mistake in deregulating derivatives trading.

"Congress made a big mistake thirteen months ago when they completely deregulated OTC derivatives markets, and
extended that to energy derivatives as well. The derivatives markets play a very critical role in these markets,” Dodd
said.

Dodd beligves the OTC derivatives markets, like that run by EnronOnline -- which has now been purchased in
Principle by UBS Warburg -- should be subject to fraud and manipulation oversight.

The size of these markets now makes it necessary that there is more reporting transparency, licensed brokers and a
designated dealer bringing parties together, Dodd argues.

“Those markets are wrought with fraud, and the great thing about the licensing process is that you can run security
checks on the guys that are doing the

Dodd worked at the CFTC as an economist from 1997-2000, and says that more than half of the agency's resources
at that time were going into enforcement actions against fraud.

‘The House legislation that Public Citizen is helping to draft is also looking to tighten up the regulations overseeing
US companies’ offshore subsidiaries.

jje/gar/pav/

NNN

1/16/02 01 274

01200000000629


Beleaguered discount retailer Kmart's shares plunged to a 35-year low
on Wednesday after Standard & Poor's said it would drop the discount
retailer from its S&P 500 index, ag bankruptcy worries mounted.
(source: Fox News)

http://www. investorguide.com/cgi-bin/daily.cgi?05616

Yahoo President and Chief Operating Officer Jeff Mallett announced
Wednesday that he would resign, ag the Web portal reported
fourth-quarter earnings that exceeded Wall Street expectations.
(source: CNET}

http://www. investorguide.com/egi-bin/daily.cgi?05619

Analysis:

Wedding bells could be ringing again by thie spring, as more
technology companies warm up to the idea of getting hitched with a
merger partner. This year, companies are expected to focus on growth,
rather than just survival. Acquisitions should be a little more
frequent, and so should acquisition-based stock gains. (source:
MarketWatch)

http://www. investorguide.com/cgi-bin/daily.cgi?05620

What sort of devices will define the market for wireless technology in
the United States? Let's face it, no one really knows. To date, the
only firsthand experience many Americans have had with wirelese
technology has been downloading stock quotes or sports scores on @
cumbersome, Web-enabled phone, While devices such as Research in
Motion's Blackberry have had some success attracting wireless
customers in niche markets (mainly corporate users), the wireless
industry has, for the most part, failed to offer consumers much in the
way of compelling technology. This could begin to change in 2002.
{gource: Business 2.0)

http://www. investorguide.com/egi-bin/daily.cgi?05621

The aftershocks from the collapse of Enron, a Texan energy-trading
firm, in history's biggest corporate bankruptcy, may yet destroy the
firm’s auditors, Andersen, reducing the Big Five of global accountancy
to the Big Four. The survivors might find themselves facing a harsher
regulatory climate. About time too. (source: Economist)

http://www. investorguide.com/egi-bin/daily.cgi?05622

In Brief:
- Ap a result of falling energy costs, the Consumer Price Index, a
measure of inflation, dropped 0.2% in December, fueling expectations
of more interest rate cuts.

Tf you have any friends or colleaguea who would appreciate getting
this news every day, follow this link (or if you prefer, simply
forward this issue to them):

http://www. inveetorguide.com/cgi-bin/recommenddaily.cgi

You can research companies mentioned in today's news by following
these links:

Enron http: //wew. investorguide.com/egi-bin/r.cgi?name=ENE
Intel ty /www.investorguide.com/egi-bin/r.cgi?name=INTC
Research/Motion http://www. investorguide.com/egi-bin/r.cgi?name=RIMM

You can research any publicly traded company by following this link:
http://www. investorguide.com/research, html

earnings

Wednesday's major earnings reports:
Company Name (Ticker): actual, expected, same q last year

01200000000506


WSJ.com Page | of 6

December 13, 2001
Page One Feature

Enron Lobbied Hard to Limit
Oversight of Trading Operations

By MICHAEL SCHROEDER and GREG IP
Staff Reporters of THe Wau. STREET JouRNAL

WASHINGTON ~ A year ago, when most of the political world was obsessed with the deadlocked
presidential election, Enron Corp. was quietly but aggressively lobbying Congress, Its object: a little-
noticed bill shaping federal policy toward the complex financial instruments known as over-the-counter
derivatives.

In 1989, the Houston energy giant, originally a utility that produced and transported natural gas and
electricity, had begun shifting its focus to energy trading. It soon came to view the burgeoning market
for derivatives -- financial instruments that derive their value from an underlying commodity or wager
on the future ~ as the key to its ambitious expansion plans. And it wanted as little government
interference with that market as possible.

The company's lobbying campaign was so aggressive that staff members of one congressional
committee asked a lobbyist for an Enron-led industry group to negotiate major aspects of the bill
with regulators, In the end, Enron had provisions inserted in the law that blocked federal oversight of
some of its major corporate product lines, such as energy and metals derivatives, and its EnronOnline
energy-trading network,

Now, once-mighty Enron is in bankruptcy court, Its market value has plunged since last year to about
$500 million from more than $77 billion, But one of the most striking features of its rapid decline was
that financial regulators had little clue what was going on inside Enron, That's at least partly because
Enron — as much as any company in America -- had invested a lot of time and money over the past
decade in keeping government out of its business,

‘Crisis of Confidence’

Wednesday, the House Financial Services Committee belatedly jumped in. Lawmakers heard from
Joseph Berardino, chief executive of accounting firm Arthur Andersen LLP, who said that Enron's
collapse had created a “crisis of confidence” in the accounting profession. And they heaped criticism on
the company and on Andersen, its auditor, for issuing financial statements they said failed to reflect the
shakiness of Enron's condition.

Rep, John LaFalce, a New York Democrat, echoed the sentiments of many
‘See full coverage of

» the risa and pep committee members when he called Enron's collapse a wake-up call. "How
Enron, many more Enrons are out there, and what are the systemic factors that made

this collapse and other future collapses possible?" asked Mr. LaFalce.

> Listen to the Enron . . oe oo
hearing in the House, |! Wednesday, the Securities and Exchange Commission said it is considering

by arrangement with new regulations this year to require more precise disclosures about

http://interactive.wsj.com/archive/retrieve.cgi?id~SB 1008202066979356000.dimé&template=,,. 12/13/01

01542

01200000000196


WSJ.com Page 5 of 6

bankruptcy legislation.

The reforms opposed by Enron and other derivatives traders were killed, Rep. Baker's proposed hedge-
fund disclosure law died in the House Banking Committee. No one introduced any legislation to give the
SEC or CFTC more authority over derivatives,

Some of Enron's political muscle comes from well-connected members of its team. In 1993, Enron
named Wendy Lee Gramm, a former CFTC chairwoman and wife of Texas Sen. Phil Gramm, to its
board. The collapse has put Ms. Gramm, who is chairwoman of the board's audit committee, in the
hotseat. One of Enron's key outside lobbyists is Ken Raisler, a former CFTC general counsel and now a
law partner at Sullivan & Cromwell in New York. Late last year, Enron hired Linda Robertson, a senior
Clinton administration Treasury official, to head its Washington office.

During the last election, Enron made political contributions of $2.4 million, more than double the next-
most-generous energy and natural-resource company. Republicans got 72% of Enron's contributions.
For the same period, House and Senate agriculture-committee members, who oversee commodities
trading, and other key lawmakers received $50,338, up from $38,256 in the previous election cycle,

All of this gave Enron unmistakable clout. In the fall of 1998, after the LTCM debacle, when Ms. Born
was gaining support for her effort to press for derivatives regulation, Enron lawyer Mr. Raisler met with
one of Ms. Born's supporters, CFTC Commissioner John Tull. Mr. Raisler asserted that Treasury wanted
Mr. Tull to oppose Ms. Born’s initiatives. Mr. Tull told Ms. Born about the meeting and that he was
withdrawing his support at Treasury's request, according to people with knowledge of the mecting.

Mr. Raisler confirms he met with Mr. Tull. "I don't remember what we discussed other than that, I, on
behalf of my clients, said we were dismayed at how Brooksley was handling herself during that period,"
he says. Mr. Tull, who has retired to his Arkansas rice farm, didn't return phone calls. Ms, Born said she
couldn't confirm or deny the incident.

In Jate 2000, Enron won sweeping legislative guarantees against future regulation of its trading
businesses. People involved in negotiating the Commodity Futures Modernization Act say that Enron
representatives were fanatical about preventing any hint of derivatives regulation. Its refusal to budge
put it at odds with some moderate members of its own lobbying coalition, including Goldman Sachs and
Morgan Stanley, Mr, Raisler denied that there was any such split.

Enron was so forceful in pushing for energy and metals commodities to be exempted from oversight that
the exemption provision was sometimes referred to by Capitol Hill staff as the "Enron Point." That and
other Enron-friendly provisions made it into the bill.

Enron's Mr. Palmer says, "We were never shy about our views" on leaving OTC derivatives trading
unregulated, but he added that many other market participants felt the same way. "Enron," he adds, “is a
bit of a lightning rod.”

Michael Greenberger, former director of the CFTC’s trading and markets division, blames Congress for
giving derivatives dealers a blank check to operate “opaque and nontransparent to the government as a
whole.”

So little is known about the operations of Enron and other derivatives players that its hard to predict the

economic impact of their missteps. "You don't know the leverage of these things. They're playing with
fire,” adds Mr. Greenberger, now a professor at the University of Maryland law school. "One of these

http://interactive,wsj.com/archive/retrieve.cgi?id=SB 1008202066979356000.djm&templates,,. 12/13/01

01546

01200000000200


DEPARTMENT OF THE TREASURY
WASHINGTON, D.C. 20220

July 23, 1998

Christopher M. Long

Director, Federal Government Affairs
Enron Corporation

1775 Eye Street, NW, Suite 800
Washington, DC 20006

Dear Mr. Long:

Deputy Secretary Summers asked me to respond and thank you for your recent letter conceming
the energy crisis in Ghana. I agree with you that the US can play a supportive role in ending the
shortages as quickly as possible,

Our ambassador in Accra has stressed to the Ghanaian government that they should move
forward with energy sector project negotiations or risk losing the interest of US businesses.
Furthermore, an Interagency Task Force consisting of staff from the US Department of Energy
and US Agency for International Development has been created to coordinate an active US
strategy.

The Task Force arrived in Ghana on July 15. They will investigate options for addressing the
energy crisis, provide assistance wherever possible, and make recommendations for further
collaborative solutions. They will emphasize options that maximize private sector participation,
and will recommend expanding and diversifying Ghana's energy resources in a cost-effective and
environmentally sustainable way.

Be assured that the Treasury will do everything it can to help improve the investment climate in
Ghana and throughout Africa, in the spirit of the President's Africa Initiative.

Sincerely,

omg

Daniel M, Zelikow
Deputy Assistant Secretary
(Asia, the Americas, and Africa)

00100000000091


EnronOnline - Legal Contracts Page 1 of 1

oot Legal Contracts

tmturs Boies 1. My company does not have any commodity contracts with Enron in
How can I transact?
Ragherasten 6 User EnronOniine has online contracts, known as General Terms and Conditions (GTC), whic
your transactions done online. The first time a User in your company wants to transact o
Techical Questions felevant product, there wil not be a submission button available on the screen. Instead. y
Legal Contracts prompted to read and accept the GTCs for that product. The GTCs must be accepted in
—E to be abve to transact via EnronOnine in that product. GTCs can be printed out and acce
Legal & Privacy clicking on the Product Short Description in the quotes screen, even if you do not intend
that particular product.

2. How do | know that you haven't changed GTCs without informing m
Wf we revise te GTCs for @ particular product, we will notify you by showing new GTCs o
product screen. You will not be able to transact via EnronOnline until you have accepted
GTCs. Furthermore, there is a version number and issue date on each GTCs, You have
revised version of the GTCs online to be able to transact in that particular product online

3. What is the Electronic Trading Agreement (ETA)? How can! see and

ETA?

The Electronic Trading Agreement combined with the Password Application signed offlin
legal framework for transactions carried out via EnronOnline. Master Users will see the E
login stage and will have to accept it to be able to transact online. The ETA can also be v
times after it has been accepted and is available for printing from the bottom left hand co
quotes screen. -

4. How can | see and print the General Terms and Conditions (GTCs) f

Product?

You can see the GTCs for a product by clicking on the GTCs fink available when your mo
Product Short Description on the quotes screen. You can print out a copy of the GTCs fo
product.

©1999 Enron Corp. All rights reserved

01383

hitp://www.enrononline.com/docs/marketing/AboutEnronOnline/LegalContracts/ 12/4/01

01200000000739


Online - Registration & User Administration Page 2 of 2

company, If you wish to suspend other Users until you get a new Password, plaase Cont
we will do it for you.

7. | forgot my User Password. How do | get a new one?
It you are not a Master User, please contact the Master User in your company. EnronOn
designed to make it easy for your Master User to reissue you a new password without co
Enron. The Master User will need to go into the Administration screen (accessible to Mas
from the quotes page) and reset your password.

8. Can a Master User set up other Users in a satellite office?
‘Only if the satellite office is in the same county as the Master User. You need to have a
in each country in which you transact, and you need to complete an additional password
and registration form for each country,

9. If | change User details, when will they take effect?
Changes take effect immediately after they are processed by the EnronOnline database.

10. What is the difference between a User and a Guest User?

Guest User accounts provide temporary sccess to EnronOnline and are a great way for y
More about EnronOniine price to becoming a registered User. Guest Users can view real
posted by Enron traders, while Users can also transact via EnronOnline by clicking on th
apply to be a Guest User you need to complete the form found in Contact Us. To apply to
User you are also required to complete the Registration Form and sign the Password Ap
Contact Us. To apply to be @ User you are also required to complete the Registration For .
the Password Application.

11. You sent me a new User ID for the Password | specified in the Pass
Application. What happens to my Guest User ID?
Your Guest User ID you used earlier for viewing prices is no longer needed as your new
do everything the old one did, and more. Your previous Guest User ID will expire.

12. My account just stopped working. What is wrong?
It you only have a Guest User ID, then your access may have expired. Please ragister fo
User ID or Contact Us for further information. if you are a User, please contact your Mas
Giscuss why you cannot access your account. if you are a Master User, please Contact U
information,

13. The security of my Master User ID and Password has been comprom
What do | do? How do | close down my account immediately?
Users and Master Users can change their own passwords, If this is not sufficient, then th
in each company can delete the User's old User ID and create a new User ID and Passw
It your Password has not been changed already by someone else, then you can change
password to something unique. if your Password has already been changed by someone
you can request that we disable your old ID and issue a new one. Please contact the En
Help Desk. You will be asked to fax a letter from an authorized representative of your co
instruct the disabling of the account. To obtain a new User ID and Password, you will nee
a naw Password Application,

14, Can brokers have access to EnronOnline?
EnronOniline is available only to companies which can transact online for their own accou
Companies which cannot transact online on their own behalf are not eligible for registrati
Users or as Guest Users with EnronOniine.

01387

http://www.enrononline.com/docs/marketing/AboutEnronOnline/RegistrationandUserAdmini:..: 12/4/01
01200000000743


our rst systems within one year, and
we have a PhO in the RAC group
working on this,”

In a company of more thon
22,000 employees. operctionat risk is
‘an important factor. “We don't
quontly operctonal rk as a dolor
amount,” says Buy. "But we do have
2 ‘doorstep’ sytem where some-
one will show up unannounced and
check your transactions. Manage
ment is required to oct on the
‘speeding fickets’ thot ore some-
fives given out as o resu? ot these
checks.”

Enron takes If seriousty. too. Buy
Gescribes technology as “the blood
that runs through our veins”, and
says he reviews IT issuaas every day:
‘Wf there's @ problem with the
aggregotion system, for exampie. it
hos to be undertoad and cor
rected. | clocate port of avery
moming fo ths.” The RAC group
tees hearty on Enron's If infecrtruc-
ture, which Buy describes os “o
giont octopus, with tentocles feed-
ing into Houston, where we opgre-
gate credit exposure. VaR orKd so
On = 50 you con 386 why it has to.
work propery”

The RAC group has just 10 staff
working for it what's more, Buy
expects this fo stwink by about 19
per cent: “We hove sa many comm
ponies growing so test that we've
ren forced to get more organ-
sed." Ths rapid ocquisiion ond
growth of new business fines is
another of the big chakenges tor rie
manages: at Enron = maving into
new businesses is notoriously Micky
when it comes to bolancing rise and
feword, and Enron's portfolio of
business Ines & more divene than
most

Buy says that before staring o
new type of busines: ~ for example.
roding © particuiar commodity ~

Enron staf must get interim
pproval for an clocated level of
Fak by the RAC group, before the
boom approves # “Betore we co
that." he says. "we need to see Mat
they Con calicviate positions, do
volue-ol4isk and have back: and
midde-otfice procedures in place:
it's @ very exhaustive process.”
New businesies are Glo scrut
nised corefully for the impoct they
wil have on Eon's overct! credit
e@xpawre. Enron handles crede risk
in much the seme way that a bank
would looking at the merits of indi
vidual Counterparties and exposure
to sectors. "We would look corey
ot sectors such os steel, pulp and
poper. which ore loaded wen bad
credits," says Buy,

other tools wie to ames
new business ines afe feof
options end notional mork-fo-mnor-
kel. ewan in Gusinesses that would
not normally lend themselves to
marting to market. “We got into
teal options cbout two year aga.
ond my feeling 5 that they nave ir-
ited but not zero use.” says Buy. “We
approach our business a5 @ Com
modity-fke position with embedded
options ond gseude markto-mor
ket posifions. If we do anirwestment
in @ power plow, we have o state
Gc Mk monegement system Hot
calculates o pseudo mark-to-
market for that investment
“Those things that ove in people's
faces every day get managed well
ond vice versa, The problems we've
had are ‘outside the box’. The
things outside ou crocesses ore he
ones where we got bunt - for
exomele, with J8I0ck" he says. The
dHlock epitode sow Ervon finding
itselt dangerousy @xpased to falling
905 prices in the UK. entered into
a “toke-orpay" gos contract,

signed im 1993 between Enron and
the companies operating the J
Block gas feld in the UK North Sao,
Error planned to use the 260 milion
cubic feet per doy of gos. at
Ground 20 pence per therm, to sup-
ply one of ifs own power stations
‘ond 10 s@1 on to other electric
power plants. But by the fe it was
dus to take delivery of the gos, te
market price wos closer to 10
pence per therm. ond gas demand
was lower thon had been antici:
pated,

Snce a takeorpay contract
fans just that, Enron was caught
in.on untenable position. and finally
had to reach o salliemant wilh tne
}bleck suppier in 1997, under
which it mode o com payment of
$440 milion to get out of its con
fract. The whole episode cost Enron
$537 mifon otter tax during 1997.
ond lect to serious questions being
‘corked of boord level about contral
over large remactions. Senior man-
‘egement had not been aware of
the contacts. which were agreed
by he corporation's asvet develop
mant busines, Enron intemationc!
Group. "This was a classic commnod-
iy posifion thot wos not marked to
marke! ond wetched, We got ham-
mared,” Buy ocmits. “and that
would never have happened in a
managed. mark-to-market environ
meant”

He says there wil chwoys be mar
ket changes and risks that cre cut
Side the firn’s contrat, but the key is
to be fully owore of Enron's @xnc-
sure across of! the different markets
it & in. “You're st going to have
market aberrations. tke whet
going onin Cal#temia ght now." he
says. “So jong a you know the
boundaries of your exposure, you
con cope with that.”

Alan McNeo, ERisk

- ~ ERisk.com —

ee

01444

01200000000800


WSi.com Page 5 of 6

bankruptcy legislation.

The reforms opposed by Enron and other derivatives traders were killed. Rep. Baker's proposed hedge-
fund disclosure law died in the House Banking Committee. No one introduced any legislation to give the
SEC or CFTC more authority over derivatives.

Some of Enron's political muscle comes from well-connected members of its team, In 1993, Enron
named Wendy Lee Gramm, a former CFTC chairwoman and wife of Texas Sen. Phil Gramm, to its
board. The collapse has put Ms. Gramm, who is chairwoman of the board's audit committee, in the
hotseat, One of Enron's key outside lobbyists is Ken Raisler, a former CFTC general counsel and now a
Jaw partner at Sullivan & Cromwell in New York. Late last year, Enron hired Linda Robertson, a senior
Clinton administration Treasury official, to head its Washington office.

During the last election, Enron made political contributions of $2.4 million, more than double the next-
most-generous energy and natural-resource company. Republicans got 72% of Enron's contributions.
For the same period, House and Senate agriculture-committee members, who oversee commodities
trading, and other key lawmakers received $50,338, up from $38,256 in the previous election cycle.

All of this gave Enron unmistakable clout. In the fall of 1998, after the LTCM debacle, when Ms, Bom
was gaining support for her effort to press for derivatives regulation, Enron lawyer Mr. Raisler met with
one of Ms. Born's supporters, CFTC Commissioner John Tull. Mr. Raisler asserted that Treasury wanted
Mr. Tull to oppose Ms. Born's initiatives. Mr. Tull told Ms, Born about the mecting and that he was
withdrawing his support at Treasury's request, according to people with knowledge of the meeting.

Mr, Raisler confirms he met with Mr. Tull. "I don't remember what we discussed other than that, 1, on
behalf of my clients, said we were dismayed at how Brooksley was handling herself during that period,"
he says. Mr. Tull, who has retired to his Arkansas rice farm, didn't return phone calls. Ms. Born said she
couldn't confirm or deny the incident.

In late 2000, Enron won sweeping legislative guarantees against future regulation of its trading
businesses. People involved in negotiating the Commodity Futures Modernization Act say that Enron
representatives were fanatical about preventing any hint of derivatives regulation. Its refusal to budge
put it at odds with some moderate members of its own lobbying coalition, including Goldman Sachs and
Morgan Stanley, Mr. Raisler denied that there was any such split.

Enron was so forceful in pushing for energy and metals commodities to be exempted from oversight that
the exemption provision was sometimes referred to by Capitol Hill staff as the "Enron Point." That and
other Enron-friendly provisions made it into the bill.

Enron's Mr. Palmer says, “We were never shy about our views" on leaving OTC derivatives trading
unregulated, but he added that many other market participants felt the same way. "Enron," he adds, “is a
bit of a lightning rod."

Michael Greenberger, former director of the CFTC’s trading and markets division, blames Congress for

giving derivatives dealers a blank check to operate "opaque and nontransparent to the government as 2
whole."

So little is known about the operations of Enron and other derivatives players that its hard to predict the

economic impact of their missteps, "You don't know the leverage of these things. They're playing with
fire,” adds Mr. Greenberger, now a professor at the University of Maryland law school. "One of these

http:/interactive.wsj.com/archive/retrieve.cgi?id=SB 1008202066979356000,djm&templates... 12/13/01

01492

01200000000146


$608 million in 1992. Decreased 1994 net operating cash flows were primarily due to the receipt in
1993 of @ refund on settlement on audit of federal income taxes paid in certain Prior years.
Decreased 1993 net operating cash flows were primarily due to the receipt in 1992 of $327 million of
Proceeds from the sale of a volumetric production payment, increased net operating revenues and a
Gecrease in provision for current taxes resulting from both increased tight gas sand federal income
tax credit utilization and the receipt of a refund on settlement on audit of federal income taxes paid
in certain prior years, In accordance with the requirements of SFAS No, 95 - Statement of Cash
Flows”, net proceeds from the sale of selected oil and gas reserves and related assets are not
included in the determination of net operating cash flows.

Sale of Selected Oil and Gas Reserves and Related Assets

During the first nine months of 1995, the Company received proceeds of $101 million from the
sale of selected oil and gas reserves and related assets compared to $82 million received in the first
ning months of 1994. Taxable gains from the first nine months of 1995 sales generated income
taxes of $24 million leaving, net proceeds of $77 million. During 1994, the Company received
Proceeds of $91 million from the sale of selected oil and gas reserves and related assets compared
to $42 milion received In 1993. While the quantity of equivalent reserves sold in 1994 was slightly
less than 1993, higher average proceeds received per equivalent unit of reserves sok in 1994 as
compared to 1993 resulted in significantly higher 1994 proceeds. Taxable gains resulting from the
1994 sales generated income taxes of $20 million, leaving net proceeds of $71 million. Taxable gains
resulting from such sales in 1993 generated federal income taxes of $8 million, leaving net proceeds
of $34 million.

Sale of Volumetric Production Payment

in September 1992, the Company sold a volumetric production payment for $326.8 milllion to a
limited partnership. Under the terms of the production payment agreements, the Company conveyed
@ real property interest in approximately 124 Scte (136 TBtu) of certain natural gas and other
hydrocarbons to the purchaser. Effective October 1, 1993, the agreements were amended providing
for the extension of the original term of the volumetric production payment through March 31, 1999
and including @ revised schedule of daily quantities of hydrocarbons to be delivered which is
approximately one-half of the original schedule. The revised schedule will total approximately 89.1
Bcte (97.8 TBtu) versus approximately 87.9 Bcfe (96.4 TBtu) remaining to be delivered under the
original agreement. Daily quantities of hydrocarbons no longer required to be delivered under the
revised schedule during the period from October 1, 1993 through June 30, 1996 are available for
sale by the Company. The Company retains responsibility for its working interest share of the cost
of operations. In accordance with generally accepted accounting principles, the Company
accounted for the proceeds received in the transaction as deferred revenue which is being amor-
tized into revenue and income as natural gas and other hydrocarbons are produced and delivered to
the purchaser during the term, as revised, of the volumetric production payment thereby matching
those revenues with the depreciation of asset values which remained on the balance sheet following
the sale and the operating expenses incurred for which the Company retained responsibility. The
Company expects the above transaction, as amended, to have minimal direct impact on future
earnings. However, cash made available by the sale of the volumetric production payment has
Provided considerable financial flexibility for the pursuit of investment alternatives.

00900000000302


At Maturity, the principal amount of each Exchangeable Note will be mandatorily exchanged by
Enron into a number of shares of EOG Common Stock at the Exchange Rate (as defined below) or,
at Enron's option with respect to all, but not less than all, of the Exchangeable Notes, cash with an
equal value. Accordingly, Holders of the Exchangeable Notes will not necessarily receive an amount
equal to the principal arnount thereof. The “Exchange Rate" is equal to, Subject to adjustment as a
result of certain dilution events (see “Dilution Adjustments * below), (a) if the Maturity Price (as
defined below) of EOG Common Stock is greater than or equal to $26.32 per share of EOG Common
Stock (the “Threshold Appreciation Price’’), .8264 shares of EOG Common Stock per Exchangeable
Note, (b) if the Maturity Price is less than the Threshold Appreciation Price but is greater than the
Initial Price, a fractional share of EOG Common Stock per Exchangeable Note so that the vaiue
thereot (determined at the Maturity Price) is equal to the Initial Price and (c) if the Maturity Price is
less than or equal to the initial Price, one share of EQG Common Stock per Exchangeable Note. No
fractional shares of EOG Common Stock will be Issued at Maturity as provided under “Fractional

res” below. Notwithstanding the foregoing, Enron may, at Its option, deliver cash at Maturity in

shares of EOG Common Stock at the Maturity Price. Such option, if exercised, must be exercised
with respect to all of the outstanding Exchangeable Notes, If Enron elects to deliver cash in lieu of
shares of EOG Common Stock upon the mandatory exchange of the Exchangeable Notes, on or
prior to seven Business Days preceding the Stated Maturity, Enron will 8o notify the Trustee and
Publish @ notice to that effect in a daily newspaper of national circulation. If Enron elects to deliver
shares of EOG Common Stock, Holders of the Exchangeable Notes will be responsible for the
Payment of any and all brokerage costs upon the Holder's subsequent sale of such stock.

The “Maturity Price” is defined as the average Closing Price per share of EOG Common Stock
for the 20 Trading Days immediately prior to (but not including) Maturity. The "Closing Price’ of any
Security on any date of determination means the closing sale price (or, if no closing price is reported,
the last reported sale price) of such security on the NYSE on such date or, if such security is not
\isted for trading on the NYSE on any such date, as reported in the composite transactions for the
principal United States securities exchange on which such security is so listed, or if such security is

market value of such security on such date as determined by a nationally recognized independent
investment banking firm retained for this purpose by Enron. A “Trading Day” is defined as a
Business Day on which the security the Closing Price at which Is being determined (A) is not
Suspended trom trading on any national or regional securities exchange or association or over-the-
Counter market at the close of business and (B) has traded at least once on the national or regional
securities exchange or association or over-the-counter market that is the primary market for the
trading of such security. “Business Day" means any day that is not a Saturday or Sunday or a day
on which the NYSE, banking institutions or trust companies in The City of New York are authorized
* oF obligated by law or executive order to close.

The Indenture pursuant to which the Exchangeable Notes are issued contains a covenant by
Enron to the effect that should Enron exercise its option to pay all outstanding Exchangeable Notes
in cash, such cash must be provided by the proceeds from a sale by Enron of its common stock.
Such sale of common stock by Enron must have occurred not more than 540 days prior to the notice
by Enron to Holders of Exchangeable Notes of its election to deliver cash in lieu of EOG Common
Stock,

16

00900000000262


AVAILABLE INFORMATION

Enron, a Delaware corporation, is subject to the informational requirements of xchange
Act of 1934, as amended (the “Exchange Act"), and in accordance therewith fles reperts: oroey statements
and other information with the Securitias and Exchange Commission (the Commission”), Such reports, proxy
Statements and other information can be inspected and copied at the public reference facilities maintained by
the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549; and at the following Regional
Offices of the Commission: Midwest Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511; and Northeast Regional Ottice, Seven World Trade Center, Suite 1300, New York.
New York 10048. Copies of such material can also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates. Enron's
Common Stock and Cumulative Second Preferred Convertible Stock are listed on the New York and Midwest
Stock Exchanges, and Enron's Common Stock is also listed on the Pacific Stock Exchange. Reports, proxy
statements apd other information concerning Enron can be inspected and copied at the respective offices of
these exchanges at 20 Broad Street, New York, New York 10005; 120 South LaSalle Street, Chicago, illinois
60603; and 301 Pine Street, San Francisco, California 94014,

This Prospectus constitutes a part of a Registration Statement on Form S-3 (together with all amendments
and exhibits thereto, the “Registration Statement’) filed with the Commission under the Securities Act of 1933,
88 amended (the Securities Act"), with respect to the Exchangeable Notes. This Prospectus does not contain
all of the information set forth in such Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission, Reference is made to such Registration Statement and to
the exhibits relating thereto for further information with respect to Enron and the Exchangeable Notes. Any
Statements contained herein concerning the provisions of any document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission or incorporated by reference herein are not
complete, and in each instance reference is made to the copy of such document so filed for a more complete
description of the matter involved..Each such statement is qualified in its entirety by such reference.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed with the Commission by Enron (File No. 1-3423) pursuant to Section 13a) of

the Exchange Act are incorporated herein by reference:
(a) Annual Report on Form 10-K for the year ended December 31, 1994;
(>) Quarterly Report on Form 10-Q for the quarter ended March 31, 1995;
(c) Quarterly Report on Form 10-Q for the quarter ended June 30, 1995; and
(¢) Quarterly Report on Form 10-Q for the quarter ended September 30, 1995

Each document filed by Enron pursuant to Section 13(a), 13{c), 14 or 15(d} of the Exchange Act
Subsequent to the date of this Prospectus and prior to the termination of the offering of the
Notes pursuant hereto shail be deemed to be incorporated herein by reference and to be a part hereof from the
date of filing of such document. Any statement contained herein or in @ document all or a portion of which is
incorporated or deemed to be incorporated by reference herein shall be deemed 'to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently
filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such
Statement-"Any statement so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.

Enron will provide without charge to each person to whom a copy of this Prospectus is delivered, on the
request of any such person, a copy of any or all of the foregoing documents incorporated herein by reference
other than exhibits to such documents (unless such exhibits are specifically incorporated by reference into the
documents that this Prospectus incorporates). Requests should be directed to Secretary Division, Enron
Corp., at its principal executive offices, 1400 Smith Street, Houston, Texas 77002 (telephone: 713-853-6151).

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANS-
ACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE EXCHANGEABLE NOTES OR THE
EOG COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCON-
TINUED AT ANY TIME.

00900000000248


Aiming for a
single metric

ced about the biggest Rick Buy

chafienge he faces, Erron's

chiet rist officer could neve

be aocused of aiming low: fi

Buy
aims to condense of

Enron Corporation into ¢ et

tic. This would

Hienal, market and credit mise anc

ote rakodpusted retum on

corps

copital wolue-al-tise (VOR]

ond extreme vaive th

-y Into wnat

Buy colt as

je “preudo capitol

ot

ik figure” that con be shown to

the Erron beard of directors.

‘sa. daunting tank foe the CRC

ny that en

ness lines as civerse ot runni
vast natect 9

Qa
Bipeline network

wholesale power fi

keling. 6

foding. project financing ond cor

ting

weil os engheering o

constuction. That's with

ut toking

Sccount new ventures such Os
Enron's entry into the UK water bush

ness through Azur: its rn

with weather carvatives

the launch of temper

fs launch

exchenge for troging bandw

ond its foray credit risk

0 onlin

manogement for third parties,

Ronked 18th in the Fortune 500

rciax, with reverk

ing & ist of ©

towards the 2
Buy attributes portly to the develop:
ment of the Enron Online e-trodir

pisttom = which

biggast e-commerce com

vowe frerwections since. ih
Jounch lost yeor

The ste and complexity of Enron's

cthvesrvee

5 Ines qnd counter

party lat makes the ideo of a singe

rise mecsurement fi

¢ the whole fen

mast inv

of Hs othe

we under that, for example,

jo Shel in London

Shell ebewhere

Buy joined Enon from Sonkers

Trust in 1994, and os

O president

a5 well as fo the board

Enron's executive ong

heods the risk assasient and con:

trols (RAC] group. Enron's sey

rate

tek commit oi

yeor ogo. ord the risk fu

comprises Buy are

9
a
°
a)
g
o

the boord oF

ment. The board sets the

nd senior manage:

oppetite for risk, whie the RAC
Group measures and reports On rk
throughout the company

The board tends to be vague on
the detoik of fie positions, “says
Bu
levels with certain m

ond PAL swings We

“I ity to axcertain their comer!

1 try to set

our Smits struct

date thy hove
rea the
board's views to some es they

know that we need fo hoke on rise

but aso the

y toke the view mat

we're not @ pure trading house.”
Individual transactions +
of $750,000 onc cts
dire

we

tty to Buy's RAC group. wie
have the valve of §75

anyting

milion has
board

nh addition to the RAROC
volue-ottive mel

fanty in use at Enron, Buy & now
keen to inchde exleme voive

theory i the range of metrics

ampicy

sant confidence leves,” he

but it's not the 95 per cant that's

the germane meine - thot's net

@ Company

g into extreme

clue thecry in o big hope

nave it completely intagrated intc

01200000000799


Analysis:

American retail sales in November saw the biggest drop in a decade
according to the latest government figures. The Federal Reserve cut
interest rates again this week, for the eleventh time thie year and
for the first time since the economy was officially declared to be in
recession. Some of the current optimiem that a swift and strong
recovery is under way may be overdone. (source: The Economist}
http://www. investorguide.com/cgi-bin/daily.cgi?05445

Investors who lost their shirts on Enron don't plan on sticking around
in case there is a second act to this tragic comedy, and Enron's
former rivals are bearing the brunt of this sudden concern. Shares of
energy companies plunged early as investors bailed on the sector,
concerned that Enron's misleading accounting could be an industry
standard and that other companies could be mini Enrons just waiting to
implode. (source: Marketwatch)

http://www. investorguide.com/cgi-bin/daily.cgi?05446

The software giant's antitrust saga now spans two centuries, and the
issue just seems to keep going. It is a very significant win for the
states and federal government that they were able to brand Microsoft a
monopolist, which means it is a company that is subject to special
regulation and scrutiny in the future analyst say. (source: The
Street)

http://www. investorguide.com/egi-bin/daily.cgi?05447

If you have any friends or colleagues who would appreciate getting
this news every day, follow this link (or if you prefer, simply
forward this issue to them):

http://www. investorguide.com/cgi-bin/recommenddaily.cgi

You can research companies mentioned in today's news by following

these links:

Aetna http://www. investorquide.com/cgi-bin/r.cgi?name=AET
Applied Mat. /www. investorguide.com/cgi-bin/r.cgi?name=AMAT
Ciena fwww.investorguide,com/cgi-bin/r.cgi?name=CIEN
Enron {wwe investorquide,com/cgi-bin/r.cgi?name=ENE
HotJobs. com /www. investorguide,com/cgi-bin/r.cgi?name=HOTI
Lucent www, investorguide,com/cgi-bin/r.cgi?name=LU
McGraw Hill ‘www. investorguide.com/cgi-bin/r.cgi?name=MHP
Microsoft /www, investorguide.com/cgi-bin/r.cgi?name=MSFT
Oracle http: //wew, investorguide.com/cgi-bin/r.cgi?name=ORCL
Qwest http://www. investorgquide.com/cgi-bin/r.cgi?namesO
Yahoo http://www. investorguide.com/cgi-bin/r.cgi?name=YHOO

You can research any publicly traded company by following this link:
http: //wew. investorguide.com/research. html

earnings

Oracle posted a second-quarter profit that met revised analyst
estimates Thursday, but revenue remained flat and net income fell 12
percent. Excluding one-time costs, Oracle announced a second-quarter
profit of $549 million, or 10 cents a share, compared with last year's
second-quarter profit of $623 million, or 11 cents 4 share. Kall
Street analysts had expected revised carnings of 10 cents a share.
(source: CNET)

http://www. investorguide.com/cgi-bin/daily.cgi?05448

Thursday's major earnings reports:
Company Name (Ticker): actual, expected, same q last year

Adobe Systema {ADBE): $0.14, $0.22, ; $0.34 Oo 1 71 8

01200000000374


same period in 1994 due to significantly lower United States wellhead natural gas prices. In addition,
the impact of the sales of of and gas reserves and related assets (net of purchases of similar
888618) resulted in a reduction of approximately 40 MMct per day in delivered volumes for the first
nine months of 1995 as compared to the first nine months of 1994. The Company refocused its 1995
drilling activity away trom natural gas Geliverability and toward natural gas reserve enhancement
and crude oil exploitation in the United States in response to the significant decline in United States
Natural gas prices in recent periods. Wellhead crude oil and condensate average prices increased
10% adding approximately $8 million to net operating revenues compared to the first nine months of
1994. Crude oil and condensate wellhead volumes increased 55% adding approximately $27 mittion
fo net operating revenues compared to the same period a year ago primarily reflecting new
production on stream offshore india, and higher volumes offshore Trinidad and in North America,

Other marketing activities associated with Sales and purchases of natural gas, natural gas price
Swap trartsactions, other commodity price hedging of natural gas and crude oil and condensate
Prices utilizing NYMEX-related commodity market transactions, and volumetric production payment
related margins added approximately $91 million to net Operating revenues during the first nine
months of 1995, an increase of approximately $67 million from the same period in 1994. This
increase primarily resulted from a gain of $51 million on natural gas commodity price
Activities utilizing NYMEX-related commodity market transactions in the first nine months of 1995
compared to @ $2 million loss during the same period in 1994 and increased margins associated with
other natural gas marketing activities. The average associated costs of natural gas marketing, price
Swap and volumetric production payment transactions, including, where appropriate, average well-

reduction in other natural gas marketing volumes increased net operating revenues by approxi-
mately $3 million compared to the first nine months of 1994. The Company realized an $11 midion
gain in the first nine months of 1995 related to certain NYMEX-related commodity market transac-
tons with an Enron Corp. affiliated company that were designated for trading purposes in late 1994,
The Company had no open trading positions at September 30, 1995, See "Trading Transactions.”

In March 1995, the Company exchanged existing fuel supply and purchase contracts and
related price swap agreements associated with a Texas City cogeneration plant for certain natural
92 price swap agreements of equivalent value issued by an Enron Corp. affiliated company. As a
result of these transactions, the Company realized a $8.4 million increase in net operating revenues
in the first nine months of 1995 over the amount realized from the exchanged fuel supply and
purchase contracts in the same period of 1994. See “Relationship Between the Company and Enron
Corp. - Contractual Agreements.”

Gains on sales of reserves and related assets during the first nine months of 1995 increased
$10 mittion to $63 million when compared to the same period in 1994 which increase was attributable
{0 the Company's continuing efforts in optimizing the use of its assets.

1994 compared to 1993. During 1994, net operating revenues increased to $626 million, up
$45 million as compared to 1993.

Average wellhead natural gas volumes increased approximately 6% compared to 1993 primarily
reflecting the ¢tfects of development activities offshore Trinidad and in Canada partially offset by
voluntary curtailments of production in the United States in 1994. The volume reductions in the
United States as @ result of voluntary curtaliments were more than offset by the new natural gas
deliveries from the Kiskadee field offshore Trinidad and increased deliveries in Canada. The
increase in wellhead natural gas volumes added $28 million to net operating revenues. Average
wellhead natural gas prices were down significantly from 1993 reducing net operating revenues by

23

0900000000297


InternetWeek > InternetWeek 100 > Services > Trader Reaps Benefits Of E-Market Leade..; Page 2 of 7

software Enron created to help its energy trading in dozens of
traders manage credit risk, offers a —_ other commodity businesses.
service to some 10,000 companies to including bandwidth, data
quickly determine the cost of siorage, products,
extending credit to their own trading Tor ebuomers freight logistics
partners. EnronCredit.com, which accomplishment:With
broke even in its first year, is EnronOpiine =, Ese brought

i ate
expected to turn a profit this year. pricing 0 ‘energy mer nthe
Net Works is part software Scommeree piatoone win
development house and part IT daily trade volumes in excess of
department, responsible for routine —_$4 billion
tasks, such as desktop support, and
critical functions, such as keeping * Services: Industry Leaders
Enron's e-business infrastructure
running. The group, with 1,500 * Services; By The Numbers
employees, grew some 30 percent in
the past year, occupying more than» ONLINE EXTRA—
four floors of Enron's downtown Reporter's Notebook On
Houston headquarters. Enron

“Our job is in two parts," says Net Works COO Greg Piper. "Help
Enron expand horizontally in markets for new commodities like
forest products and freight services, and build a business around
the tools that helped to transform Enron.”

E-Commerce Apex

While Enron's e-business gains have been spotty in some areas--
it has struggled to create liquid Web markets in bandwidth and on
paper, for instance--EnronOnline is one of the most successful e-
marketplaces. It conducted its millionth transaction late last
month, and the total value of trades on the site exceeds $590
billion. Online trading now accounts for almost 75 percent of
Enron's energy transactions in North America, the company says.

Enron counts both purchases and sales in its volume numbers--
unlike e-marketplaces that simply take a cut of transactions on
their sites--because the company Is a “counterparty” to every
trade on EnronOniline, Enron makes its money on the spread
between what it pays for commodities and what it sells them for.

When a customer clicks to buy gas, electricity, steel or any other
commodity, Enron guarantees price and delivery time. The key for
Enron isn't to own massive amounts of physical product or
storage and delivery capacity, but to arrange for third-party supply
and logistics electronically. Enron stays informed about the vast
array of factors that can influence price and delivery on a minute-
by-minute basis by employing thousands of researchers, analysts,
weather forecasters and other market specialists.

01403

http://www. intemetweek.com/100-01/serv.htm 12/4/01
01200000000759


DEPARTMENT OF THE TREASURY
- WASHINGTON, D.C. 20220

License No. IA- [(b)(2)]
TRawian TRANSACTIONS REGULATIONS

LICENSE

(Granted under the authority of Section $05 of the International Security and Development Cooperation
Act of 1985 (22 U.S.C. § 2349aa-9|, Section 203 of the U.S. International Emergency Economic Powers
Act (50 U.S.C. $ 1702), the National Emergencies Act (50 U.8.C. § 1601 et seq.) Executive Orders
12613, 12957, 12959, and 13059, and 31 C.F.R. Parte 502 and 560.)

To: Enron Capital and Trade Resources Corp.
c/o: Sutherland, Asbill and Brennan, L.L.P.
1725 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404 Attn: Beverly J. Rudy, Esq.

1. Based on the February 20, 1994, letter to the Office of Foreign Assete Control trom or on behalf
of Enron Capital and Trade Resources Corp. (the *Application’}, 31 ¢.F.R. § S6olb)(4)lana information
otherwise available to the Office of Foreign Assets Control, the transaction(s) and activity(ies) on
the reverse hereof are hereby authorized.

2. This license is granted upon the statements and representations made in the Application, otherwise
filed with or made to the Tr ury Department as a supplement to the Application, or based on
information available to the Treasury Department, and is subject to the condition, among others, that
the licensee(e! hereunder comply in all respects with ali regulations, rulings, ordere, and
instructions issued by the Secretary of the Treasury under the authority of Section $08 of the
International Security and Development Cooperation Act of 1985, Section 203 of tne U.S. Inte: tional
Emergency Economic Powers Act (50 U.S.C. § 1702), the National Emergencies Act {$0 U.S.C. § 1702),
and the terme of this license.

3. The licensee(s| shall furnish and make available for inspection any relevant information, records,
or reports requested by the Secretary of the Treasury, or any other duly authorized officer or agency.

4. This license is not transferable, and is subject to the provisions of Executive Orders 12613,
12957, 12959, 13059 and any regulations and rulings issued pursuant thereto. It may he revoked or
modified at any time at the discretion of the Secretary of the Treasury. If this License was issued
as 4 result of willful misrepresentation on the part of the applicant, it may, at the discretion of
the Secretary of the Treasury, be declared void from the date of its issuance, or from any other date.

5. Thie license does not excuse compliance with any law or regulation administered by the Office of
Foreign As: s Control or another agency (including reporting requirements} applicable to the
transaction(s} herein licensed, nor does it release Licensee(s} or third parties from civil or
criminal liability for violation of any law or regulation.

Issued by direction and on behalf of the Secretary of the Treasury:

OFFICE OF FOREIGN ASSETS CONTROL

*y R. Richard N zlexfpe
Director

Attention ig directed to, inter alia, 18 U.S.C. § 545, 18.U.5.C. 1001, 19 U.5.C. 1592, and 19 U.5.C.
1595a, SO U.S.C. § 1708, and 31 C.F.R. Part 560 for provisions relating to penalties

00400000000063


Page 4 of
ICE Benefits From Enron Concerns,
Reports Surge in Trading Volumes

11/14/2001
The Oil Daily
(c} 2001 Energy Intelligence Group. All rights reserved.

The IntercontinentalExchange (ICE), an electronic trading platform set up by big energy companies, has witnessed a
surge in activity as rival exchanges face problems.

Last week, as rumors swirled about the future of energy services giant Enron, many energy traders abandoned
EnronOnline for what they said was a more stable business at ICE.

“There has been a clear shift of energy and metal trading activity during October into ICE markets," ICE Chief
Executive Jeffrey Sprecher said in a statement Tuesday. "We believe that this has resulted, in part, from the uncertainty
that has been exhibited in several key energy trading venues over the past several months.”

As well as the turmoil at Enron, ICE has likely benefited from the temporary closure and subsequent disruptions at the
New York Mercantile Exchange (Nymex) following the Sep. 11 attacks,

The surge continued into November, Last week, trading volumes in crude oil and products on ICE averaged 11 million
barrels per day, a 45% increase over the October daily average.

North American gas volumes last week hit 950 billion cubic feet, up 13% over the previous month's weekly average. In
North American power, daily trading volumes surged to nearly 11 million megawatt hours, a 34% increase over the
October average.

ICE was founded last year by oil majors BP, Royal Dutch/Shell, and Total Fina Elf, four international banks, and six
top North American gas and power trading firms. The electronic exchange is currently installed on about 7,000
desktops at more than 400 trading firms.

Volumes on EnronOnline were down late last week, confirmed company spokesman Eric Thode. "We saw some minor
decreases Thursday and Friday. The uncertainty related to the merger had some impact on volumes,” he said. Some
reports had volumes on

EnronOnline down by about 20% late last week.

Now that Enron's combination with rival Dynegy has been announced, Thode said, the value of trades completed on
EnronOnline has retumed to a more normal average of $2.6 billion per day.

The “Enron effect" has not been confined to ICE, however.
Since word emerged of Enron's credit problems, open interest has dried up in Henry Hub futures contracts on Nymex.

On Oct. 25, when Enron said it was drawing down $1 billion on available credit lines and seeking more cash to avoid a
liquidity crunch, open interest in Nymex Henry Hub contracts peaked that day, then fell 12% over the next four trading
days.

According to the Commodity Futures Trading Commission (CFTC), commercial long and short positions dropped by
65,429 and 56,195 contracts, respectively, over the Oct. 30 trading week, Open interest in the ful] Nymex Henry Hub
strip dropped by 64,095, to 457,990 contracts.

The bleeding continued last week. The CFTC said Friday that open interest fell by a further 10,662 contracts to
through Nov. 6,

1/16/02 01263

01200000000619


ZO/SL/I dse"/1-10-ZOOTIMIOdMarA” smauquIod mata/smau/UIOD"ysUa'AavAy//:dyy

sey Alojsiy Sy “6ue) oq j,upSsau wajgoud jen!U! Oy) “O]BURI yO POS S14) UL

“ul Buidde)s sojernBas

SU) 0) pee) AjayEWH/N UED JEY) PUB ~ SopeJSUMOP Peo axOAOId VED WUNY UF YOIYA
“saoud aueys ssoudap 0} Jomod ay) aney |\ns SUCGEDUELULUODAL ||9S “UOHIPUad

0} edoys Aueddys a4) UMOP 4jO Wy @ Js UBD sdnoJB esau) jo aUO Aue Aq

UORde pus — BFGND4] 10; Bu)y4O9) ;No ||B ase si@pjoyqueYs pur sjshjeue ‘seouebe
sGuyes 's2ojpeynGey ‘Aep aj jo Jepuo ey UleGe eau s! Wsiogdeos “Loys ul

“4B @K S14) DB sau) dn uadseYs 0} eazy jIIm “OO} “s1O}!PNY ‘PaHOdeuUN

40 payoopano 06 ued yey) Swe;qosd ony Ajjenuajod eu) payyByyGiy sey Awweyeo
4) ING ‘anl3 Beg OU) JO SYBQWeW JeYjO Ag pue LAsUApUYY AG YjOq “siO}B;NBad

YUM Su-URY 9{qB'p9196)p JO SALAS 2B UI 1SE}e] Uy AlUO S! BPEQEP UOIUZ Oy) UE
802 S,uasepUy “@yNdeusIp Cpu! UA\NR) MOU BAey = GuNodas jeOUeUY UI eoUapYyUCD
Ouqne yo suonseq Burujewas may OY) JO BUO AUaded [HUN — SvOH|pHe PUY

“sseuyino,
4191) BIEHSUGWAP 0} US ALEYWUNS Aue “LUDOg Woo}oP ayy BuuNp BuIpespooyo
BjqeByeEyapul 20y) 404 Je94 }Se| GUIPUNOM & yoo) oym ‘sysAjeue AyNby

“uaysesip

Sujwooy jo Guywem snoy-iyL 1 Ajuo Buri6 pue sseyewerg ou) Burysiund woy
pede ‘yonw engype yim sopesBumop Suinss} uo aoueys anjssau6Be AjBurseasour
SemuebGe ey seyjeym uoysanb sypund Aueyy “sis9 Ueisy 4661 ou) BuUNp
BOUBULO}LAd [BLUSIP JOY) SOUIS YE} Of)| PeAdsU! aneY “OO} “se;OUaGE BugEY

“s1Sa78)U) HEL PUBNBayeS 0} sy0ye;NBau ysry

0} Ajayy|UN aye Aauy JuaLUOW a4) 20) Ing — U9Es 9g o} SUIEWOs GOURIS SIYI UM
Bebe s20p|Oyoxe}s JOU) PU SJap/OYaVeYs ‘suoyPezd ‘ssapjouAayod ‘suoysodep
J2YIEYM *.WwSyeyGeD jo sniueS oy), Jo yNsai B Sem asdeljoo S,uONNy JEU yao
SIU} JOINED JUBUUCS andsrug 6, //19N,O [Ned Aue;e108s Aunsees, Ag pesiwopde
SOYjE UE ~ SJODIOYSHE}S 2:94) 20 Suu) |ENPIAIPUI JOU 'WaIsAs aut OSjoud

0} 8 pynous 804 say) 124) PeNBue UsYo SAY “OSINOD jo “sxOVE\NGes WAPOY,

“BPPEGEP HIH 4} JO SuypueY Sj) Ul S/O17e peyWpe

sey Awourny UojeinSay jenuEpnig UEWERSNY a4) PHOM OY) JO BpIs JeUJO By) UO
ue ‘AWwoyIny seoyues feoUeU!4 a4) Jo ISjORUS ays 0} pa sey ey e|qeINdy
40 @SdEyO9 BL) “BILWAUESW "YP OY} UI 'SUeO| aBEGYow 4Sy-4GRy Jo anjEA

OU} BBPS9J 0} P9920) SBM | JOY! Pasdeyoo Yo/yM “yUEG soUEdNS JO BJNe) Ou)

Aq passeueque Bujeq sours enlsuayo 94) UO ASupsea.5u| usaq eney ‘aydwexe
40} 'ss0)e¢nGas BuueG SF) “aug UF SU deay 0} arjoso. Woy) poudYIGuaRs oney
AjUO UBD sus}SeSID /E/DUBUY SJe@A \Se| PUe — GuIpUay j/e}e2 BWUdqNs se suo}Des
[2{SJ9A0.4U09 YoRs Uy Apeynoqed ‘pauieouce ag 0} UOsta: ajduue aney svojeSoy

OveTto

£50 Taaeg LOUNURITOIY JuUsUaTeURIAY YSIY INOA pISIATY OF duty :uorutdG

01200000000696


DEPARTMENT OF THE TREASURY
WASHINGTON, D.C, 20220

License No. IA-[(b)(2)]
Trawian TRANSACTIONS REGULATIONS

LICENSE

{Granced under the authority of Section 505 of the International Security and Development Cooperation
Act of 1985 [22 U.S.C. § 2349aa-9), Section 203 of the U.S. International Emergency Economic Powers
Act ($0 U.S.C. § 1702), the National Emergencies Act {50 U.S.C. $ 1603 @t seg.) Executive Orders
12613, 12957, 12989, and 13059, and 31 C.F.R. Parts 501 and S60.)

To: Enron Capital and Trade Resources Corp.
c/o: Sutherland, Asbill and Brennan, LLP
1725 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404

1. Based on the April 17, 1998 letter to the Office of Foreign Agsets Control by Sutherland, Asbill
and Brennan, LLP on behalf of Enron Capital and Trade Resources Corp. ithe *Application*), 31 C.F.R
§ 560 [(b)(4)] and information otherwise available to the Office of Foreign Asset# Control regarding the
subject thereof, the traneaction(s) and activity(iee! delineated on the reverse hereof are hereby
authorized,

2. This License is granted upon the statements and representations made in the Application, otherwise
filed with or made to the Treasury Department as a supplement to the Application, or based on
information available to the Treasury Department, and ie subject to the condition, among others, that
the Licensee|s) comply in all respects with 411 regulations, rulings, orders, and instructions issued
by the Secretary of the Treasury under the authority of Section 505 of the International Security and
Development Cooperation Act of 1985, Section 203 of the U.S. International Emergency Economic Powers
Act (50 U.S.C. § 1702), the National Brergencies Act (50 U.S.C. § 2702}, and the terms of this
License.

3. The Licensee{s) shall furnish and make available for inspection any relevant information, records,
or reports requested by the Secretary of the Treasury, or any other @uly authorized officer or agency.

4. This Lic © ie not transferable, and is subject to the provisions of Executive Orders 12613,
12957, 12959, and any regulations and rulings i: ed pursuant thereto. It may be revoked or modified
at any time at the discretion of the Secretary of the Treasury. If this License was issued as a
result of willful misrepresentation on the part of the applicant, it may, at the discretion of the
Secretary of the Treasury, be declared void from the date of its issuance, or from any other date.

5. This License expires May 31, 199%, it does not excuse compliance with any law or regulation
administered by the Office of Foreiqn Asse Control or another agency (including reporting
requirements} applicable to the transaction(s) herein licensed, nor does it release Licensee(s! or
third parties from civil or criminal liability for violation of any law or regulation,

Issued by direction and of Behalf of the.Secretary |bf the Treasury:

Attention is directed to, inter alia, 18 U.S.C. § 545, 18 U-S.C. lod1, 29 U.S.C, 1592, and 19 U.5.C.
1595a, 50 U.5.¢. § 1705, and 31 C.F.R. Part $60 for provisions relating to penalties

00400000000049


income Taxes

Income tax provision increased $13 million for first nine months of 1995 as compared to the
ame period in 1994 primarily resulting from higher income before income taxes and lower benefits
associated with tight gas sand federal income tax credits utilized in the first nine months of 1995 as
compared to the same period in 1994 partially offset by a $12 million benefit associated with the
Successful resolution on aucit of federal income taxes for certain prior years.

Income tax provision in 1994 inctudes a benefit of approximately $36 million associated with
tight gas sand federal income tax credit utilization, a benefit of approximately $8 milion related to
reduced estimated state income taxes and a portion of certain franchise taxes which is treated as
income tax under SFAS No. 109, and a $5 million benefit from the reduction of the Company's
deferred federal income tax liability resulting from a reevaluation of deferred tax requirements.

Income tax benefit in 1993 includes a benefit of approximately $65 million associated with tight
gas sand federal income tax credit utilization, an approximate $7 million predominantly one-time
non-cash charge recorded in the third quarter of 1993 primarily to adjust tho Company's accumu-
lated deferred federal income tax liability for the increase in the corporate federal income tax rate
from 34% to 36% and a $12 million benefit from the reduction of the Company's deferred federal
income tax liability resulting from a reevaluation of deterred tax requirements.

Capital Resources and Liquidity
Cash Flow

The primary sources of cash for the Company during the nine-month period ended
September 30, 1995 and for each of the years in the three-year period ended December 31, 1994
included funds generated from operations, the sale of Common Stock, the sale of a volumetric
Production payment, proceeds from the sale of selected oil and gas reserves and related assets and
the issuance of debt. Primary cash outflows during these periods included funds used In operations,
exploration and development expenditures, dividends and the repayment of debt.

Discretionary cash flow, a frequently used measure of performance for exploration and produc-
tion companies, is generally derived by adjusting net income to eliminate the effects of depreciation,
depletion and amortization, impairment of unproved oil and gas properties, deferred taxes, gains on
sales of oil and gas reserves and related assets, certain other miscellaneous non-cash amounts,
except for amortization of deferred revenue, and exploration and dry hole expenses. However,
based on the continuing practice of the Company of selling selected oll and gas reserves and related
assets in furtherance of its strategy of fully utilizing Its assets in optimizing profitability, cash flow
and return on investments, it belleves that net proceeds from these transactions should also be
considered as available discretionary cash flow and accordingly is presenting those values for all
periods shown. The Company generated discretionary cash flow of $387 million during the first nine
months of 1995, a 3% decrease from the $401 million generated for the same period in 1994,
Primarily reflecting lower net operating revenues, higher cash expenses and a decrease in benefits
associated with tight gas sand federal income tax credits. The Company generated discretionary
cash flow of approximately $514 million in 1994, $521 million in 1993 and $346 million in 1992. The
1933 amount includes $50 million associated with a federal Income tax refund resulting from the
Settlement on audit of federal income taxes paid in certain prior years.

Net operating cash flows for the first nine months of 1995 and for each of the years in the three-
year period ended December 31, 1994 have been revised to reflect proceeds from the sale of a
volumetric: production payment during 1992 and the elimination of the related amortization of
deferred revenues as net operating cash flows rather than as investing cash flows as previously
reported. Net operating cash flows of $229 million for the first nine months of 1995 decreased
approximately $72 million as compared to the same period in 1994 primarily reflecting the same
factors addressed above with regard to discretionary cash flow and higher working capital require-
ments. Net operating cash flows were approximately $383 mitlion in 1994, $406 million in 1993, and

27

00900000000301


Nickoloff, Peter

From: Nickoloff, Peter

Sent: Thursday, November 08, 2001 10:46 AM
J Carleton, Norman, Schultheiss, Heid@ynne
Subject: Enron to be acquired

From the New York Times:
November 8, 2001

Dynegy Is Said to Be Near to Acquiring Enron for $8 Billion

By RICHARD A. OPPEL Jr. and ANDREW ROSS SORKIN
The board of Dynegy Inc. (news/quote </redirect/marketwatch/redirect, =i

MW.) hwatch.com/custom/nyt-com/him. b=DY N>) tentatively
approved a = last night to acquire the Enron Corporation (news/quote <del ctx?
cficu .marketwatch.com/cus! , the once-

ry energy-trading company laid low by a financial crisis and government ony executives close to
the transaction said.

A deal would enable Dynegy to buy the much bigger Enron at a fire-sale price - about $8 billion in stock, or
roughly $10 a share, for a company that less than a year ago had a market value of nearly $70 billion. But with
stock and bond investors fleeing, some of its trading partners refusing to do business with it, Enron had few
choices but to talk to Dynegy.

As part of the deal, Chevron (news/quote </redirectmarketwatch/redirect.ctx?

Wehttp://custom.marketwatch,cony' |-companyprofi _ >) Texaco
(news/quote </redirect/marketwatch/redirect. ctx”MW= =http://custom.marketwatch.con/custom/nyt-convhtm-

companyprofile.asp&symb=TX>), which owns a 27 percent stake in Dynegy, would give Enron a cash infusion
of at least $1.5 billion up rE er and an additional $1 billion when the deal closed.

The executives said the companies hope to finalize the details and announce the deal today.

If completed, a takeover by Dynegy, a company only about one-quarter its size in revenue, would represent a
remarkable humbling of Enron, the nation's biggest buyer and seller of natural gas and electricity, Enron had
$139.7 billion in revenue for the first nine months of the year.

As recently as last spring Enron was lionized by investors as an innovator that had in many ways created and
cleverly dominated the nation's deregulated encrgy markets. It would also vindicate not only Dynegy, which
took a more measured approach to doing business in those markets, but also critics uncomfortable with energy
deregulation who said Enron's energy trading was ruthless, its finances murky and its power and influence too
extensive.

The company's chairman and chief executive, Kenneth L. Lay, is a close friend of President Bush. He has been
one of Mr. Bush's largest campaign contributors, and no other energy company gave more money to Republican
causes last year than Enron. Mr. Lay would be on the board of the combined companies, the executives said, but
it was unclear if he would have an operational role.

Enron's problems came to light last month when the company disclosed $1 billion in write-downs and an

unusual $1.2 billion reduction in shareholder equity. The reduction in equity arose from transactions with
investment partnerships involving Andrew Fastow, the chief financial officer, who was forced to resign on Oct.

01697

01200000000353


Tracking: Recipient Read
Carleton, Noeman Read: 11/9/01 1:22 PM
Schulthess, Heid?ynee Read: 11/001 1:22 PM

01700

01200000000356


a relatively small $600 million. Despite Enron's popularity as a component of CDOs, and despite the downgrades suffered
as a result, it is clear that investors in synthetic CDOs generally won't be too worried.

However, S&P also rated six transactions called credit-linked notes (CLNs) says Khakee, and the loss potential here is far
greater - they represent $2.7 billion in direct exposure to Enron. CLNs use a similar structure to synthetic CDOs: @ special-
purpose vehicle (SPV) issues notes to investors, accepting their funds in retum, and then transacts @ credit default swap
with the firm that is holding the debt, The big difference is that a single name backs the CLN, rather than a pool of different
names. “With these CLNs, the invstor is buying exposure to a pool of one,” says Khakee.

Enron also transacted three structured credit deals of its own that were rated by S&P, issuing a total of $3 billion in notional
value, says Khakee. “In these deals, Enron is the counterparty - they were one counterparty in a credit default swap and
the counterparties on the other side of the deal are facing risk from Enron not because the compeny is part of their
Portfolio, but because the deal will have to be terminated,”

For investors in Enron's own structured credit, it is unclear what happens next. Khakee suggests that the counterparty will
need to seek a reptacement value for the terminated default swap, and will potentially have a claim against Enron equal to
the net difference between the value of the swap when first transacted and the current market value of a replacement -
they will mark the deal to market, and accept either a net gain or loss.

Fitch's Lench, however, says that's not necessarily the case. “It depends on the structure,” he says, “My understanding |s
thal, on day one of the transaction, in order to de4ink the rating of the notes from Enron, investors’ funds would be used to
buy sovereign debt. In the event of Enron's bankruptcy, those bonds would be liquidated to repay the investors.”

The uncertainty about close-out procedures for Enron's structured credit deals redoubles when attention switches to the
company’s derivatives activities, which covered the whole gamut of assets from commodities and currencies to interest
rates, credit and equity. One area that could have been stickiest was Enron’s role as a credit derivative Gealer - traders
admit that the energy company was a major player in the market, standing alongside some banks in terms of the volume
of its deals and appetite for credit risk. Add to that the number of transactions in which other counterparties were buying or
selling (heir own exposure to Enron - contracts now triggered by Enron's default - and you have the biggest event ever to
hit the credit derivatives market.

“It's by far the largest default of any US corporate and it’s been the largest trigger since Conseco triggered,” says Greg
Rosen, director and default swap trader with CSFB in New York. “Enron was also a very large seller of protection -
definitely a net seller - and we estimate that between $3 and $4 billion was sold to the market.”

Firms that have been trading Enron credit risk via the default swap market have Deen going back through their
documentation to check the terms of their transactions and settle the deals - CSFB included. “It's certainly been time-
consuming,” says Rosen, noting that there could be anywhere up to $6 billion in swaps with Enron as the underlying credit,
Nevertheless, he says: “It's been very positive in terms of reassuring people that the products work as advertised. We
expect the trades to settle in a timely and orderly manner,”

Those firm that had Enron as a counterparty, meanwhile, have had to find new protection - which Rosen expects to result
in a large liability for Enron. “Everyone's lost the protection they thought they had, and gone out to find new protection,
Spreads are likely to have widened since their original transaction, so they'll have a claim against Enron based on the
difference between the original and the replacement,” he says.

But what about firms that have a multitude of different derivatives transactions with Enron? The energy giant's presence in
@ range of derivative markets, and its well-documented appetite for risk means that many counterparties will need to
replace not just a default swap, Dut a whole basket of different transactions, from electricity swaps to forwards to interest-
rate swaps and default swaps.

Ideally, counterparties should be able to terminate all of their transactions with Enron, and work out @ net sum, to be paid
from one party to the other, representing a gain or loss across all of the defaulted deals. At least, that's how the industry
would like it to work,

Kimberley Summe, general counsel with Isda in New York, says that industry documentation makes specific provision for
cross-product netting, pointing out that a varieties of derivative are recognised and provided for under industry-standard
documentation known as the master agreement. But getting the bankruptcy courts to keep up with changes in the
derivatives industry hasn't been a simple matter, and some lawyers have been warming their clients for years that cross-
product netting may not be enforceable, no matter how much the industry wants & to be.

One lawyer - who asked not to be named because she didn’t want to “be seen giving ammunition to the bankruptcy court" -
says there's no guarantee that bankruptcy lawyers in the Enron case will recognise the arguments of the derivatives

industry.
2 0 1 706

01200000000362


DEPARTMENT OF THE TREASURY
WASHINGTON, D.C. 20220

No. ¥K- [(b)(2)]

‘Enron Corporation -
Suite 800

1775 Eye Street, NW

Washington, DC 20006

Att: Thomas C. Briggs
Vice President, Government Affairs

Dear Mr. Briggs:

This is with regard to your letter of December 4, 2000 to the Office
of Foreign Assets Control ("OFAC"), in which you requested
clarification of the scope of OFAC License No. Y¥K-[(b){2)] In your letter
you advised that Enron Corporation also sought OFAC authorization to
provide [(b)(4)] to the Federal Republic of
Yugoslavia (Serbia and Montenegro) (the "FRY (S&M)”).

Please be advised that Executive Order 13192 of January 17, 2001,
which became effective on January 19, 2001, amended Executive Order
13088 of dune 9, 1998 to lift in most situations and modify in others
the economic sanctions imposed against the FRY(S&éM). Consequently, an
OFAC license is not presently required for Enron Corporation to engage
in the activities described in OFAC License No. YK-libXor in those
activities described above.

Please note, however, that Executive Order 13192 imposes restrictions
on transactions with certain persons described in Section 1(a) of the
order. It also requires the continued blocking of property or
interests in property blocked prior to the order's effective date.
Consequently, OFAC licenses are required for any transactiona Enron
Corporation may undertake involving any blocked persons or blocked
property as described in Executive Order 13192 and for any
transactions involving previously blocked property. If you have any
questions concerning the scope of theee restrictions please contact
OFAC Licensing Division at (202)622-2480. In addition, you should
consult with other agencies of the U.S. Government, such as the
Department of Commerce, Bureau of Export Administration, and the
Department of State, Office of Defense Trade Controls concerning any
remaining restrictions that might apply to exports to the FRY(S&M).

A summary of OFAC restrictions concerning the FRY(S&M), which includes
the text of Executive Order 13192, is enclosed.

Sincerely,

Fee 20 208

(Acting) Chief of Licensing
Office of Foreign Assets Control

Enclosure

00400000000147


Nickoloff, Peter

From: ERisk [ERisk@email eRisks.com.treas.gov}
Sent: Friday, December 14, 2001 6:37 PM

To: peter nickoloff@do.treas.gov

Subject: ERisk Essentials

|

Apologies ta those readers who had difficulties reading last week's ERisk Essentials. The was caused by server problems af our email service provider
Weekly
Review
DUNG -uap <hyilp.ihww, erisk oo iweskiyinews weakhy200t-' tap> of economic, banking and ingurance industry news from
@ enterprise risk management perspectve: SEC's Pitt fights for accounsing requisition; invesioes deaf to Calpina’s pleas; banks fight the kaw; Emst &
‘Young races for Superior firefight; Lioyd's gets bullish. ingurers face losses of $25 nillion from Enron collapse
Analysis
Enron's derivative counterparbes <hitp www. stk combrewasanahyicn ea aS 2001-12-12.01 .88p> fe opersting under the assumption that
they wil be able to clase out all of their fades with a tidy net payment, but lawyers are warning that it may not be so aasy, Stuctwed crecit investors,
meanwhile, may find themselves caught out by a confluence of legal and valuation risks.

Viewpoint
The introduction of @ single European currency <hitp:(iwaw.erisk.cominews/ viewpointinaws_viewpoint2001-12-11 839? is & project huge enough to
daunt any risk manager. As the deadline for switching aver to the new currency draws closer, we look at some of the challenges faci one company,
NCR, which aims to convert around half of the ATMs in the eurozone to the new currency.

Feature
ft may De yeers before the problems that brought cown Enron are fully undersiced, but same of the Isswas thal brought down the once-mighty energy
Gant are already becoming dear. in this exclusive ERisk feature <hitp./waw arisk.comingwaingws tealures.asp>, Rob Jameson recounts the history
of Enron from its humble origins as an ambitious natural ss trader to its dark final days of crisis and bankruptcy,
Research Archive

This month we've added some interesting papers to the Market Risk <htp:iwww.erisk comroferencalarchivele!_archive_marketasp> section of our
Research Archive <hitp-iwww.erisk.comreterence/rel_archive.asp> on topks including the role of Squicity shocks in some market collapses, he
Problem of whether it makes sense to diversity iwestments around the ward when markets are becoming more intagratad, the effect of the intemat on
We insurance market prices, how to price digital options, and ‘expected shortfall’ as an adjunct to value-at-risk methodologies.

Bookstore
(ur featured Dock <hitpuiwww.erisk.com!store'store_bookstore.asp> this month is The Chasfening: inside ine Crisis that Rocked the Global Finencist
System and Humived the JF, by the Washington Post's Paul Blustein. With Argentina teetering on the edge of another emerging market crisis,
Btustein locks at the inrar workings of international monetary regulators during the 1997-6 financial crisis in the Far East, later to spread around te

world with hair-raising consequences. Chack it out in the ERisk Bookstore <hitp:mww.erisk.com/stora/store bookstore gep>

rs
than 17,060 risk profassionats receive this email every week. To find out how your massage could reach them, mail us at infoferisk.com

mailto. 25 2hinfoRensk com>)
ia
The ERisk Essentials is published every Friday by ERIst com <hitp Jiwwew.

To subscribe to fis newsletter. please register <htlp: www arisk.comlutiVrediater sag on our website.

To unsubscribe, @0cess your account <hito iwaw erisk convulilvaccount sec. ‘Your username & the email address where you received this message.
if you have forgotten your password, follow thi y to reset it.

For technical support queries. please email supportiperiek com <mailio:supparifiterisk com>

: 01720

01200000000376


Managing risk from top to bottom

Glenn Labhart of Dynegy

jenn Lothar is chief risk officer

ot Houston-based anergy group

Dynegy. The company's main

business fines include Dynegy
Marketing and Trode, which covers power
generotion and marketing and wading of
natural gas and power: Dynegy Midstream
Services. covering natural gas Fquicts Ilinots
Power, on energy delivery company with
650,000 elactric and natural gas customers:
ond Dynegy Globol Communicatons,
rough which it aims 12 become o player
in telecoms rnarkets, and which includes its
Dynegyconnect project to crecte o US
date network, The group had revenues of
329 bifon last year, and in the second
Quarter of 2001 it posted reverwes of $10.8
bélion, derived marty from increased natu-
fol gos and physica’ Power soles.

Labhort, who & responsible for corporate
isk oversight and enterprise risk, wos prewi-
ously vice president of Neste Tracing, o
vision of Finish national o8 company
Neste Oy. He hos aso worked as ossitant
vice presdent of MG Com, and for UK of
and gos exploration frm theentrol, cs well
as for Tenneco and & Paso Energy.

Prior to bis joining os CRO in August 1997.
Lobhert soys the role was o middie man-
agement position without corporate off
c@r stotut, Now, however. it is o Door
appointes job, end Labhort reports
directly % chief financial officer Robert
Doty, with ‘dotted lines’ to president
Stephen Bergstrom. ond chairman ond
‘CEO Cruck Watton, The CRO makes rec
ommendations to the executive nsk Com
mittee.

At Dynegy. the CRO role enphasises
both a lop-down view of mk and kcalsead
fk MorOgemMent, “There & Now a greater
emphass on aggregating rk ot the rop
level. My position was crected to astetsist
this, GN to partner with the business units in
our approach to rk.” says Labhert. While a
top-down view of apgregated rsk is Inpor-
tant, ne alvo stresses the devolved nate

of operational rsk managemen. for exc
pie. where individual busineses ore
fesporainie for moritoring and controting
heir sks, ond the importance af nsk trans-
fer horn the asset to fhe trading side of the
company's activities.

The decision to elevate ne role to Its cur
Fent level of importance wasn't sparked by
9 particular incident or risk management
fore. *it was simply 4 le with the gen-
eral direction in which we were moving,”
Labhott soys, “Oynegy made the dacision
fo expend capital nd technology in order
to develop naw processs, and the role of
fk in the organisation become more cen-
tral.” This process pre-dates Dynagy’s ran-
Son trom 9 regional uillty to a gictal
energy trader, but has become increas
Inpiy important os this progress continuss.

Monitoring risk

The tik management group cornprises 25
People, whose aim is “to ensure thot top-
down rk is managed while partnering with
People on the operstional sce of the busi
ness” The CRO concentrates on the track
flonal hypes of rik, such os market, credit,
legal ond business risks. "Our focus if to
ensure that risk is transfered to the fight
Gyasion from Ihe aiset side of the business,”
Lobhatt says. “From an operational point of
View, we monitor the ak and partner with
the business units to make sure It Is property
managed,”

‘Ths is ue of the power generason bus
ness « where Dynegy owns cround 14.000
megawatts of power generation capacity
and owns or controls 19,000MW = and of
the midstream assets, or nahuedt gas fiquicts.
where “the underhing cash flow is
mapped into one central oreo and then
we look of the spreads and the casts asso-
cioted with that area,” says Labhort.

“We're running a merchant enengy bus+
ness where the focus is to ensure Mat rise is
managed at o high lewel. but oko locally.”
he says, Inuwance and operations! risk are

not the CRO's direct responsiblity. “That's
the enterprise rik model we've devel-
oped,” he says. “ond we're comonabie
wilh il, even if i's not necessatly o stor-
dord ERM model. The oder who work
closely with our asset group receive the
nicks casocioted with the asset group, and
con then lay off those rsks," he empkains,
“My Group mecsures these risks.”

Toco this, Dynegy mecures vake-ctrtik
(VaR} every day and uses other metrics
such os fitk-ogjuiled retum on capicl.
“FIOM this. we ames ond adjust the lewel of
capital assigned to each business.” says
Latphart. The main focus is on VaR. But to
Gitional exposure Smits ore abo Used. His
Gfoup cho Crectes monthly and quarterly
feports on the amount of equity put at risk
ond makes recommendations cecordingly
to the executive rik committes.

“We Gio moniter Cash, in order to mane
‘aga the aptionalty of our portolios, And of
COUn@ we monitor the traditional "Greeks",
such as theta, vega. gornma end $0 on.
which cre meaiwred by our trading sys
terms,” he says

Asked whot he reckons wil be the next
big challenge for the CRO. Labhort man-
tions the opportunities for averaging off
the firn’s e-commerce statagy. *Ihs gives
vs more COpablity for looking ot data and
then further decentratiing risk by pushing it
down to the ragions within the busines
unis.” His group can akeady communi
Cate rkk levels to the executive risk Com-
mittee through on inlenal website known
5 the risk Gashboord, Ths ollows a com
stant, dynamic view of each business urit’s
expomure, which can be viewed on on
oggregsied poss

"We feel there is more incremental
ondiyss we can do through e-commerce
channels, for cath Row at Mik, VOR and so
on. We've been spending the capitol to
allow us to Go this. and tha emohatis 6 on
using thi technology to allow us to make
the fight decisions.” says Labhart. i

01442

01200000000798


1/15/02

Page 3 of

Dodd said Enron's problems have created "substantial damages" throughout the U.S, economy, where
investors and employees lost billions in stock value, and even other players in the energy markets

suffered when the collapse put downward pressure on prices,

Still, he said, "the difference is that Enron's failure, although it has inflicted damage throughout the
economy and even intemationally, didn't result in the systematic meltdown that regulators thought
Long-Term Capital's failure posed,”

01272

01200000000627


activities. For example, in its financing activities Enron Corp. or any entity in witich it has an interest
may make joans secured by oi! and gas properties or securities of oll and gas companies, may
acquire production payments or may receive interests in oil and gas properties as equity com-
ponents of lending transactions, As a result of Its lending activities, Enron Corp. may also acquire oil
and gas properties or companies upon foreclosure of secured loans of as part of a borrower's
rearrangement of its obligations. Such acquisition, exploration, development and production activi-
ties may directly or indirectly compete with the Company's business. There can be no assurances
that Enron Corp. will not engage directly or indirectly through entities other than the Company, in the
natural gas and crude oil exploration, development and production business in competition with the

Joint Energy Development Investments Limited Partnership ("JEDI"), a limited partnership in
which Enson Capital & Trade Resources Corp. ("ECT"), a wholly owned subsidiary of Enron Corp.,
owns @ 50% general partner interest, has entered into an agreement to acquire @ controfling interest
in Coda, Coda is engaged in the exploration for, and the development, production and marketing of,
natural gas and crude oil primarily in North Texas and Oklahoma. Crude oll accounts for approxi-
mately 86% of Coda’s proved reserves. At December 31, 1994, Coda reported estimated proved
natural gas reserves of 39,808 MMcf and estimated proved crude oil, condensate and natural gas
liquids reserves of 39,207 MBbis. Enron anticipates that the transaction will be consummated in
early 1996, subject to Coda stockholder approval and other conditions. Contlicts may arise between
Coda and JEDI, and if the acquisition of Coda occurs Enron will be required to resolve such conflicts
In a manner that is consistent with its fiduciary and contractual duties to other investors in Coda and
JEDI and its fiduciary duties to the Company. ECT has entered into an agreement with JEDI and
other investors in Coda designed to minimize certain conflicts of interest that may arise and
providing, among other things, that the Company has no obligation to offer any business opportun
ties to Coda. P

‘The Company and Enron Corp. and its affiliates have in the past entered into material intercom-
pany transactions and agreements incident to thelr respective businesses, and the Company and
Enron Corp. and its affiliates may be expected to enter into material transactions and agreements
from time to time in the future. Such transactions and agreements have related to, among other
things, the purchase and sale of natural gas and crude oil, the financing of exploration and
development efforts by the Company, and the provision of certain corporate services. The Company
believes that its existing transactions and agreements with Enron Corp. and its affiliates have been
at least as favorable to the Company as could be obtained from third parties, and the Company
intends that the terms of any future transactions and agreements between the Company and Enron
Corp. and its affiliates will be at least as favorable to the Company as could be obtained trom third
parties.

0900000000311 _


lore/Zl JOU LLINMUY oven) Urrpmapeeeney seme mnwrw woz

@AHeAOUL) JOP, UOIUA PoWeU Sey sulZeBeW aUNYVo, "SseUISNG GUO SpEp|IOe} Oy wuogeld yomyeu
qwetqjequ) Ue Guxiojengp 8) PUE "Pyow oy PUNCUE SuaWOISNS 0} SBO}NES queweSeurw ySu pue /eOUEUY

PUR SeMPOWWOS FeITSAYd SOMED “ADIMPYOM SoqHOE, AGuaue sayeuado PUB sjNgsua “sdoanap ‘seb
JUUNeU PUB AyoUDe;e SeONpaid “spasse SUAPEHUMNUALOD pur AGuoue up VOM LES Ajeyewrcudde suwo YOR
“Auedwoo sy, “sewedwios suoMeo|UNUALCS pus se6 /EsNYBU “Ayoupeye Bupes| 8.p0Mm aig jo duo $1 UOIUZ

“vOut

785 Guipeeoxe oryen uonoeSsUEN secu8 & WWM SUORIESURR 000'R/ | J8A0 Paye}dwos sety UUOpeId eoAUIUIODS
Mau §,UCUUg “syINPCUd OSB UEY B20W BpNjou! O) PEpUBCKe SKY OUI|UQUCIUZ ‘G61 JOCUAMON Ut youne)

Sy SOUNg “Wesy pue edowng “sESUOWY By) LU} S@qIPOUNUICS J84JO PUB UapEMpUeG “sypesd suclss}we “aded pue
dind "sjeawejoonad “sonpad Jeyeem ‘eco ‘seb fENyeU ‘yemod 20) Se0ud Su] -/ea) SapAcad BuyjUQUDIUZ

01409

“INO WS pu oBeoUD ‘saeGuy 807 WED “YoReg Guo} !WUOD “veNRH MON “AOWINIER

ssuesyC MAN co} AsaAyap 10) ‘UOAdO $ 4098S Je ‘O/GENEAR Og {IY PUB JeddoD vy pes Jo SAUER pauaysiGes

UO Paseq eq EM esNoUMeN, Pepuog Jedd0D 'S"f) 'ZUy JENUEW UES pure “AyD BYET WES ‘SEXO 'OSEd [3
S2uy UOSINL {SING} YS ‘SUBBPO MON “UUOD 'UBABY MON WOWHIER ‘SEE, ‘omIeUry OF Asanyep 205 ‘voydo
$JONOS J2 “QQRIIENE Og [WM PUE JeddoD Y apeId 4 SpUEIG Peas|He, UO PASE aq || BENOUBEN) PEI
BiH zaddos °S'f) "EUEIPUY PUE OMY “s}OLIMy “AYINyUBY “SESs9ULe, Ut @Agap 105 ‘YONdO suaing ye ‘e/qeyenr
99 JM PUR LUNUIUNTY LUNIWdiG BPEID YOY JO spUELG Pese}s/Beu UO PAseQ aq FM WNURLNTY OMI “ST

. APOW SSOUySNG UBADIG ANO JO VOYSUEPKS

jeurjau & pue Gupeq peseq-Gam oy arcu 0) S}aWEW ApoUWODS yO PUL SU U} UOHNUIVUCS & Ss} Gays FALL.
SUAUQUOIUZ Jo JPA Gu/GEvEW “UEXOUY o31NO} PIES ,"SIBWOISND JNO 20) SUO*OESUBH o/qneay BOW! pue
seowues juoweBeuew ¥sy soud 'BunUd percudus sapucud auyUQuO Ueno HeysUL Buyyes pur uring,

‘asnouuen, Papuog JeddoD ‘S’) PUE esNOYRIEN apd

UBiH saddos “S'n "WNUIWINTY ISEMpINE “S'N SPA|UF syINpaId B11 “sYEAUOD jEPEUL JEI!BAYA BaLf) 404) MOU [I
auyUQUasUy “sjoNpad ypIMpUeg pue Abeue UOJ JO Guuayo axsusyedwios e oy VORIPpe Ul “|ediouUd se
VOWS YEN sUOPESUEL BESB|OyM Gu_InpUC Jo} Wa)sAs PesEq-youJAyL ‘GBy B SIMUOISND L840 euyUQuay

Avemag 9 oOo)
“aUUQUOUS ~
vo vogoesueR syeyew jeo16Ayd yay O4y PEye/dusd Sey y AEPOE paoUNOUUE “dIOD VOMZ :NOLSNOH (omens
MOUBELUOT OG
000g '90 Ainr ‘Aepsuny, :aSv373Y JLVIGaWWI HOS ac yyeey somenuy wosy

auljUQUOIU UO UONOesUeL] S/e}eW 3S1]4 SOOUNOUUY UOIUZ

auluguosug

ZJo | Bed uooy ssaig - auUQuOI,
- a

01200000000765


Nickoloff, Peter —

From: Sharer, James

Sent: Wednesday, January 09, 2002 8:24 AM

To: _DL_Market Group; Andrew D. Sacher; David Griffiths; Eric H. Otto; Jay Hoffman; Lundsager,
Meg; Philippa Malmgren; reidjp; Shevlin, Thomas; wallarjg; wayneca

Subject: Financial Markets Moming Report 1/9/02

~Global equity markets were mixed. Cisco and Oracle indicate "the worst is over” in the tech sector, expect
gains in the second quarter.

~The yen firmed against the major currencies overnight as Japanese and South Korean officials expressed some
discomfort with the recent swift depreciation in the yon.

FX: The yen retraced to Y 132.30 after falling to a low of Y133.37, which prompted Japanese officials to express
discomfort with the speed of the yen’s recent depreciation. Government spokesman Fukada acknowledged that the yen’s
recent decline had been "a bit rapid” but “this is a level which is manageable.” However, earlier in the Tokyo session, the
MOF's Kuroda stated that the country's forex policy "remains unchanged despite the yen's rapid decline. South Korean
officials continued to complain about the weaker yen, The dollar was little changed against the euro.

Japan: Japan's leading diffusion index rose to 25 in November from a zero reading in October, while Novernber
household spending was up 0.9%. The Nikkei 225 Index and the TOPIX index were down 0.3% and 0.7% as bank stocks
weakened further. The TOPIX bank index fell 1.8%. JGB yields were unchanged to down 2 bps. The JGB 10-year
‘auction was well bid, with a coupon of 1.4% and the highest coverage ratio since 1989 at 11.35 times.

Emerging Asia: Emerging Asian stock markets were mixed. The Hang Seng and Singapore indexes were off 2.3% and
1.1%, The Taiwan and Kospi indexes were up 1.0% and 2.3%, aided by strength in semiconductor stocks, Hynix
Semiconductor rose 15.0%, bolstered by talk of an offer from Micron Technology for the South Korean chipmaker.

Europe: German unemployment rose a smaiier-than-expected 6,000 in December, The Euro area business climate index
fell to -1.23 in December, its lowest level since 1996. Euro area 3001 labor costs rose a larger than expected 3.3%. The
BOE policy committee began a two-day series of meetings. European stock bourses were mostly lower. The FTSE
underperformed, pressured by dectines in retail store and off issues. HSBC was downgraded by an analysts, citing
exposure to Enron and Argentina, German bund yields were up 1 to 6 bps on strong Euro area economic data. UK. gilt
yields were higher by 4 to 10 basis points.

Turkey; Turkey's National 100 index was down 3.1% to 14,421 on some profit-taking. The lira weakened 0.3%. The
Turkish EMBI+ sub-index spread narrowed 6 bps to 660 bps, while the overall EMBI+ spread narrowed 3 bps to 700 bps.

Latin America: The Argentine EMBI+ sub-index spread fell 4 bps to 4316 bps, while Brazil's EMBI+ sub-index rose 3 bps
to 835 bps.

Commodities: Brent crude oil is currently down $0.50 to $20.52 a barrel following news of a build in both crude oll and
distillate inventories,

U.S, Assets Overnight

Treasury coupon prices are currently down 1/8 to 1/4 point in light trading. There are no major U.S. economic statistics
scheduled for release today. Treasury will auction at 1 PM $6.0 billion 10-year inflation-indexed notes. The Dow, S&P 500
and Nasdaq index futures are indicating no clear direction at the New York open.

Today's Events: Actual Consensus Expectation Previous Period

JPN Prelim. Leading Diffusion index,Nov. 25 40.1 0 (was 16.7)

JPN Household Spending, Nov. +0.9% yiy +0.1% yy 40.4% yily

GER Unemployment, Dec. +6,000 +20,000 +17,000

EUR 3001 Labor Costs +3.3% +2.8% +2.7% (was +2.8%)

EUR Business Climate index, Dec, 123 AAT ~1.20 (was -1.18)
AM por

° 01739

01200000000395


As other companies convert their trading systems to online

models, Enron hopes to sell its expertise in this area, (Enron says

its own online-enabled back-end systems reduced its marginal
cost per transaction by 75 percent in 2000.)

Enron stands to gain twice: first, by providing the services itself,
and second, by further increasing online trade volumes in a
market where it has a clear ownership stake.

SERVICES
By The Numbers

CUSTOMER ISSUES
Expansion of customer base because of Internet capabilities

16%
Percentage of Intemet sales orders that are perfect 83 %*
Percentage of visits to Web site that are converted into orders

2%

SUPPLIER ISSUES
18% Percentage of purchase orders done Sver the Internet

16 %Percentage of strategic suppliers sourced over the
internet

15 %Percentage of strategic sourcing dollars spent over the
Internet

ELECTRONIC MARKETS
Percentage of sales orders conducted via an e-marketplace

17%
Percentage of purchase orders conducted via an e-marketplace
17%

E-BUSINESS REVENUE
8%Percentage of revenue achieved via the Internet
9%Percentage of orders received online

7%Percentage of revenue growth in last fiscal year resulting
from the Internet

19%tow much Internet revenue is expected to grow in the
current fiscal year

78%Percentage of companies expecting profitable online
operations in 2001

COST CUTTING

http://www. internetweek.com/100-01/serv.htm ) 1 40 7
01200000000763

internetWeek > IntemetWeek 100 > Services > Trader Reaps Benefits Of E-Market Leade..; Page 6 of 7

(2/4/01


buyers and sellers. More trading builds liquidity
And more liquidity tends to narrow spreads, result-
ing in better prices — and more deals for Enron to
handle.

Deal flow is key The more commodities Enron
handles, the more it can turn supply and demand
into value-added financial instruments like swaps.
It can sell a contract that allows a gas user to lock in
a fixed price for a set number of years as a hedge
against price spikes. It can provide the gas a power
plant needs to produce electricity or, if gas prices
spike, simply provide electricity to the power com.
pany

Technology makes it possible. A long-term gas
contract that in 1981 took two years to execute —
and in 1997 took two weeks — now takes less than
a second online. The company developed
EnronOnline using Macromedia Shockwave, a tool
more commonly used to create online games.
Customers just click to buy and sell. And Enron's
scalable backbone makes it easy to expand.

“We can move aggressively into new markets and
not get hung up with huge IT jobs,” says Greg Piper
(pictured), CEO of Enron Net Works. “It doesn't
matter whether it's coal or paper. We don't ever
have to say to [Enron CEO] Jeff Skilling, ‘Hey don't

move into a new commodity, because we'll have a
year-long IT project on our hands.’ ”

Behind the scenes, hundreds of traders who spe-
cialize in commodities work frenetically, constantly
adjusting prices. High-speed trading has so overtak-
en Enron (about 60 percent of its deals close
online) that this fall traders move to a high-tech
new trading floor across the street.

Outside Houston, not everyone loves Enron.
Californians curse the company for capitalizing on
the state’s bungled deregulation. A backlash and
slowdown of energy deregulation would crimp
Enron's growth, but Forrester Research predicts
online energy trading will explode from a $400 bil-
lion market last year to $3.6 trillion in 2005, And
Enron leads the field, with double the online trad-
ing volume of its nearest competitor.

The beauty of being a market maker is that you
don't care whether prices go up or down, as long as
they move. Thanks to the Internet, Enron is
equipped to make the most of the uncertainty that

comes with free markets. —DS

Reprinted from Zitf Davis Smart Business, September
2001, with permission, Copyright © 2001 Ziff Davis Media
Inc, Al Rights Reserved.

g

Endless possibilities.TM

(713) 853-4357

01391

01200000000747


Enron execs saw controversial deals as key to maintaining firm’s growth Page | of 4

areer Journal.com BUSINESS NEWS

——__—_—_—_—_— Anns
Journal. Business . [ Shoal

WS).CC HIGHLIGHTS

Enron execs saw controversial deals
as key to maintaining firm’s growth

Documents show top officers were aware of partnerships G
Exe
By John R. Emshwiller
THE WALL STREET JOURNAL °
Jan. 2— As some current and former Enron Corp. Mor

officials try to distance themselves from

controversial partnerships that played a role in

the company’s demise, internal Enron

feSW.cawt documents show top management and directors
viewed the partnerships as integral to

QwestDex~< maintaining the energy-trading giant’s rapid

exrline yetiow pages

Endabocal Buin growth in recent years.

@ E-MAIL THIS DZ . © COMPLETE STORY ">

ADVERTISING OM MSNBC
Sponsored by

WS,

‘areerJournal.com *! CareerJournal.com
Career! | ( rl |

( THE DOCUMENTS also reinforce the notion
emer) that top Enron officials, including Chairman Kenneth
The Wall Street journal Lay and former President Jeffrey Skilling, were
Ontine. directly involved in the creation and oversight of the
partnerships, which were run by former Chief
Financial Officer Andrew Fastow. Questions about
the partnerships in recent months contributed to a
collapse in investor confidence in the Houston-based

01438 1/3/02

01200000000794

http://www.msnbe.com/news/680656.asp?0si~-


Page | of
Schultheiss, Heidilynne

From: Randall Dodd [RDodd@Econstrat.org)
Sent: Wednesday, November 28, 2001 5:13
To: Randall Dodd

Subject: DSC Enron Nov 2007,.htm

Derivatives Study Center

Randall Dodd 1401 H Street, NW, Suite
560
Director Washington, D.C. 2000
202 326 8555 rdoddgeconstrat.org,

November 28, 2001

Dear Colleagues:

You have probably been reading about the failure of Enron, but you may not have focused on its impact on
derivatives markets. Enron was a major dealer in energy derivatives, and operated an electronic online derivatives
trading platform. That trading and market making activity was excluded from federal derivatives regulations under last
December’s Commodity Futures Modernization Act of 2000, Now, Enron’s online derivatives trading facility appears
to be shutdown, and its ability to conduct other over-the-counter derivatives trades is severely curtailed by its loss of
creditworthiness.

The next few days and weeks will no doubt provide more information about the causes and impact of this major
energy derivatives dealer. [t will likely provide an important lesson about the impact of last December's legislation. In
the meantime, I have attached a couple of articles about Enron in which the Derivatives Study Center was mentioned.

Sincerely,
Randall Dodd

Jitters Over Squeeze at Enron Rippling Through Gas Trading
Natural Gas Week
PI
(c) 2001 Energy Intelligence Group. All rights reserved

It's hard to imagine that when a giant player like Enron gets sick, a few others in the industry wouldn't also catch a
While many energy merchants have assured publicly that Enron's travails are not affecting their trading operations, the
evidence suggests business is not usual in the energy patch.

Since word leaked of Enron's credit problems, open interest has dried up in Henry Hub futures contracts on the New
York Mercantile Exchange (Nymex). A case can be made that this pullout sparked the technical surge in late-October
natural gas prices,

Furthermore, some counterparties are rumored to want to liquidate open positions with Enron, but are being outright
refused, or facing delays.

Whether gas prices ultimately rise or fall from this behind-the-scenes shuffling is unknown, but derivatives analysts

agree that the "Enron effect" will result in more volatile commodity trading, with the danger particularly acute in the
case of a commodity downswing,

1/16/02 01 260

01200000000616


Hannon, president of Enron Broadband Services, which completed an 18,000-mile fiber optic network in 2000
and built 25 "pooling points” to tie in with other provider networks.

A Helping Hand

Enron has plowed ahead so aggressively online that some trading partners that haven't invested in back-office
automation simply can't keep up, Piper admits. Enron is responding with CommodityLogic, software modules
designed to help trading partners streamline the fulfillment process and reduce data re-entry errors.

Enron will create and maintain a centralized database of information pertaining to trades, Partners access that

information with CommodityLogic software modules designed for such tasks as quality assurance, scheduling
and invoicing. The three modules in tests are InvoiceLogic; ConfirmLogic, an order confirmation system; and
NomLogic, which handles delivery scheduling for natural gas trades.

"Scheduling that natural gas would typically involve three to 10 phone calls and two to three faxes, and for a
deal done over the course of a 30-day month, you might have had to repeat that every business day,” says Tom
Gros, the Net Works vice president in charge of CommodityLogic. "With NomLogic, that process now takes
seconds. | enter it on the screen and automatically, if it's a month-long deal, the previous day's data appears for
me so I don't have the chance to create an crror.”

The business model for developing CommodityLogic is the same one Enron used for EnronCredit.com and its
other online initiatives: Net Works develops an application to save time or improve efficiency internally and
then repackages the app for external use. The software for EnronCredit.com's Cost of Credit service, for
instance, was originally developed to help Enron's own traders manage credit risk.

Much of Cost of Credit information is free with registration to EnronCredit.com, but Enron charges a fee to
download information or get e-mail alerts of significant changes to the credit risk of companies in a prespecified
portfolio, But the main way Enron makes money from the site is by selling "bankruptcy swaps” to enterprises
that want a hedge against the possibility that a partner will go out of business.

Whereas EnronCredit.com grew out of software Net Works developed for Enron's commodity trading business,
Enron's latest ASP offering, DealBench, came out of software designed to make it easier and faster for Enron to
negotiate large structured deals for complex assets, such as power plants.

Enron's procurement department has used the auction functions in DealBench to buy more than $1 billion of
goods, everything from broadband networking gear to carpeting for the new 40-story skyscraper Enron is
building across the street from its 50-story headquarters in downtown Houston.

DealBench’s collaboration tools manage the complex communications that are part of any large structured deal.
Features include secure two-way messaging and the ability to deliver multimedia presentations and give
participants varying levels of access to sensitive information.

Last month, Enron added Data Room, a document management system that lets companies set up "virtual data
rooms" to streamline the bidding process for complex physical assets, such as refineries and manufacturing
plants. Normally, companies selling these types of assets have to staff a physical room hosting lawyers and
engineers from every potential bidder, cach of whom require several days to pore over hundreds of thousands of
pages of technical documents, Enron has used Deal Room to syndicate some $3 billion of its own credit to more
than 81 financial institutions and sell more than $240 million in assets.

With all DealBench services, companies can host any number of potential bidders simultaneously, giving each
participant the cxact level of access necessary. Bidders download a piece of client software that decodes
encrypted documents on the site, so even if sensitive documents are sent to unauthorized users, they can't be
opened, says Jeffrey Bartlett, a principal at DealBench.

Rather than take a percentage of the overall deal, Enron sells DealBench licenses to the deal managers and hosts

181 01481

01200000000135


VV VU VV VV

CME Expands Benzene Trading Hours
http://www. hedgeworld. com/news/read_excite.cgi?storyfile-/sections/dail/da
i15415.html

EMETRA Clarifies Enron Relationship
http: / /www.emetracms.com/newsarea/emetranews .hta

RateXchange Successfully Completes $3.25 Million Private Placement
http://www. ratexchange.com/news/press/pr20011130.html

Refco Announces New Enhancements to MarketVoicesM
http://www. refco.com/pr_20001014 -html

TriMedia Names New CRO
http://www. trimedia.com/pr20011210-1.htm1

Winnipeg Commodity Exchange Completes Demutualization
http://www. wee .mb.ca/wnew/newsreleases/2001/pr-11-01-01.htm

Legislative/Regulatory Update

Congress Begins Probing Enron Collapse

The collapse of Enron, until recently the most outstanding example
of a successful online business-to-business exchange, has sent shockwaves
through the energy markets and in Washington, where the Securities and
Exchange Commission and at least four Congressional committees have
launched investigations.

Most of Washington's attention to date has focused on Enron's
accounting practices and the use of certain partnerships to move debt off
its balance sheet and inflate the company's earnings. However, some
attention hag been drawn to EnronOnline and the larger business of energy
trading, raising the question of whether more transparency and more
regulation are needed in this market.

Several lawmakers have cited Enron as providing another reason for
approving legislation that would revise the netting provisions of the
bankruptcy code. Netting refers to the practice, in case of a default, of
reducing exposures by calculating the amounts due between swaps
counterparties as one net amount, inetead of a much larger flow of
offsetting payrents. The legislation is currently incorporated into a much
larger bankruptcy reform bill, but awaps industry lobbyists and financial
regulators are urging Congress to carve out the netting provisions and
pass them separately.

The first hearing was held by the House Financial Services Committee
on Dec, 12 and focused on Enron's accounting practices. Next up will be
the Senate Commerce Committee, headed by Sen. Fritz Hollings, D-S.C.,
which hastily called a hearing for Dec. 18 to explore the "issues
surrounding Enron's collapse."

Meanwhile, the House Energy and Commerce Committee, chaired by Rep.
Billy Tauzin, R-La., is laying the groundwork for a hearing in early
January that is expected to focus on the effect of Enron's collapse on
energy markets, as well as off-the-balance-sheet partnerships that appear
to be at the reot of Enron's financial problems.

The Senate Energy and Natural Resource Committee, chaired by Sen.
deff Bingaman, D-N.M., also plans to hold a hearing in January to
investigate Enron's effect on U.S. energy markets. Bingaman said Nov. 29
that Enron's downfall highlights the importance of "data transparency and
competition" in the natural gas and electricity marke and said his
committee ig “keenly aware of the need for enhanced oversight and market
monitoring."

In related news, the SEC on Oct. 31 upgraded an informal inquiry to
a formal investigation of Enron and ite audit firm, Arthur Andersen, The
SEC has not disclosed what if any violations it is pursuing, but the
agency's top accountant said on Dec. 5 that Enron's collapse, coming on
top of several other widely publicized problems and restatements,
suggested that there is "a threat to the confidence in our system of
financial reporting and our capital markets.”

° 01722

01200000000378



cooking, Crop Grying and industrial facilities and as an engine fuel for vehicles, and ethane is used as
@ feedstock for synthetic fuels production.

International Gas and Power Services. Enron's international activities principally involve the
independent (non-utility) development, acquisition, Promotion and operation of natural gas and
power projects and the marketing of natural gas liquids. As |s the case in the United States, Enron's
emphasis is on businesses in which natural gas oF its components play a significant role, Oevelop-
Ment projects are focused on power plants, gas processing and terminalling facilities, and gas
Pipelines, whila marketing activities center on fuels used by or transported through such facilities.
Enron's international activities include management of direct and indirect ownership interests in and
Operation of power plants in England, Germany, Guatemala and the Philippines; a pipeline system in
southern Argentina; retail gas and propane sales in the Caribbean basin; Processing of natural gas
liquids at Teesside, England; and marketing of natural gas liquids worldwide. Enron is also involved
44 power and pipeline projects in varying stages of development in China, the Dominican Repubiic,
Colombia, Turkey, Bolivia, Brazil, Indonesia and elsewhere.

Enron Global Power & Pipelines L.L.C., a Delaware limited liability company ("EPP"), was
formed in November 1994 by Enron to own and manage Enron's operating power plant and natural
gas pipeline business conducted outside the United States, Canada and Western Europe, and to
expand such business through acquisitions, EPP’s initia! assets consist of interests contributed by
Enron in two power plants in the Philippines (with 226 megawatts of aggregate net generating
capacity), @ power plant in Guatemala (with 110 megawatts of net generating capacity) and a 6,548
kilometer (4,069 mie) natural gas pipeline system in Argentina. The public offering of common
shares of EPP was completed in November 1994. Enron owns approximately 52% of the common
shares of EPP. Enron formed EPP to attract public equity capital to emerging market infrastructure
Projects, to enable public investors to better evaluate and participate directly in the growth of
Enron's operating power plant and natural gas pipeline activities in emerging markets and to
generate additional capital for Enron to reinvest in future development efforts and for other
corporate purposes.

Exploration and Production. Substantially all of Enron’s natural gas and crude oil exploration
and production operations are conducted by its subsidiary EOG. EOG is engaged in the exploration
for, and development, production and marketing of, natural ges and crude oil primarity in major
producing basins in the United States, as weil as in Canada, Trinidad, india and to a lesser extent,
Selected other international areas. At December 31, 1994, EOG had estimated net proved natural
gas reserves of 1,910 billion cubic feet and estimated net proved crude oil, condensate and natural
gas liquids reserves of 37 million barrels, and at such date, approximately 70% of EOG's reserves
(on a natural gas equivalent basis) was located in the United States, 16% in Canada, 11% in Trinidad
and 3% in India. A limited partnership in which ECT owns a 50% general partner interest has entered
into an agreement to acquire a controlling interest in Coda Energy, Inc. ("Coda"). Coda is engaged
in the exploration for, and the development, production and marketing of, natural gas and crude cil

: Primarily in North Texas and Oklahoma. Crude oil accounts for approximately 86% of Coda's proved
reserves. At December 31, 1994, Coda reported estimated proved natural gas reserves of 39,808
million cubic feet (“MMctf"') and estimated proved crude oil, condensate and natural gas liquids
reserves of 39,207 thousand barrels (""MBbis"). See “Relationship Between Enron and EOG -
Conflicts of Interest.”

‘ RECENT EVENTS

In connection with a Power Purchase Agreement dated December 8, 1993, as amended,
between Dabhol Power Company, Enron's 80%-owned subsidiary, and the Maharashtra State
Electricity Board (the “MSEB"), Dabhol Power Company has been developing Phase | (approxi-
mately 695 megawatts) of a 2,015 megawatt electricity generating power plant south of Bombay.
State of Maharashtra, India (the ‘'Project’'). Financial closing occurred and Project construction

00900000000254


Mark G. Papa has been President-North American Operations since February 1994. From May
1986 through January 1994, Mr. Papa served as Senior Vice President-Operations. Mr. Papa joined
Belco Petroleum Corporation, a predecessor of the Company, in 1981 as Division Production
Coordinator and served as Senior Vice President-Drilling and Production, BelNorth Petroleum
Corporation from May 1964 until May 1986.

Waiter C. Wilson has been Senior Vice President and Chiet Financial Officer since May 1991.
Mr. Wilson joined the Company in November 1987 as Vice President and Controller and was named
Senior Vice President-Finance in October 1988. Prior to joining the Company Mr. Wilson held
financial management positions with Exxon Company, USA for 16 years and The Superior Ol
Company for four years.

Ben B. Boyd has been Vice President and Controller since March 1991, Mr, Boyd joined the
Company ipMarch 1989 as Director of Accounting and was named Controller in May 1990. Prior to
joining the Company, Mr. Boyd held financial management positions with DeNovo Oil & Gas, Inc.,
Scurlock Oit Company and Coopers & Lybrand.

Dennis M. Ulak has been Vice President and General Counsel since March 1992. Mr. Ulak
joined the Company In March 1987 as Senior Counsel and was named Assistant General Counsel in
August 1990. Prior to joining the Company, Mr. Ulak held various legal positions with Enron Corp.
and Northern Natural Gas Company.

THE SELLING STOCKHOLDER
Before Stock ‘Otlerngs ‘snares te ‘After Bock (Omeeingal 2)
Stockholder heres Percentage _be Sokdi) Shares Percentage
Enron Corp. 128,000,000 80% = 27,000,000 101,000,000 63%

(1) Assumes that the Underwriters’ over.
are

The registration related to the Stock Offerings and the Common Stock deliverable upon
exchange of the Exchangeable Notes is being provided pursuant to the terms of a Stock Restriction
and Registration Agreement with Enron Corp., under which the Company has agreed that upon the
request of Enron Corp. (or certain assignees), the Company will register under the Securities Act
and applicable state securities laws the sale of Common Stock owned by Enron Corp. The
Company's obligation Is subject to certain limitations relating to a minimum amount of Common
Stock required for registration, the timing of registration and other similar matters. The Company is
obligated to pay all expenses incidental to such registration, excluding underwriters’ discounts and
commissions and certain legal fees and expenses.

4

00900000000308


a different tax result under some circumstances for instruments having characteristics similar to the
Exchangeable Notes, but the Proposed Regulations would be effective only for instruments issued
60 days or more after their publication as final regulations. Under the Proposed Regulations, the
amount of interest included in a holder's taxable income for any year would generally be determined
by projecting the amounts of contingent payments (which might include the value of the EOG
Common Stock to be detivered at Maturity) and the yield on the instrument. Taxabie interest income
would be measured with reference to the projected yield, which might be less than or greater than
the stated interest rate under the instrument. In the event that the amount of an actual contingent
payment differed from the projected amount of that payment, the difference would generally
increase or reduce taxable interest income, or create a loss. Because of their prospective effective
date, the Proposed Regulations, if finalized in their current form, would not apply to the Exchange-
able Notes,

Evga in the absence of regulations applicable to the Exchangeable Notes, the Exchangeable
Notes may be characterized under current law in a manner that results in tax consequences
different from those reflected in the agreement pursuant to the Indenture and as described above.
Under alternative characterizations of the Exchangeable Notes, it is possible, for exampie, that (i) a
U.S. Holder may be taxed upon the receipt of EOG Common Stock with a value in excess of the
principal amount of the Exchange Note. rather than upon the sale of such stock, (il) any gain
recognized at Maturity (whether a U.S. Holder received EOG Common Stock or cash) may be
treated as ordinary income rather than capital gain, (iil) all or part of the Interest income on the

Note may be treated as nontaxable, increasing the gain (or decreasing the loss) at
Maturity of upon disposition of the Exchangeable Note (or disposition of the EOG Common Stock) or
(iv) if the stated interest rate exceeds Enron's Mid-Term Borrowing Rate, the Exchange Notes could
be considered as issued at a premium which, if amortized, would reduce the amount of interest
income currently includible in income by a holder and increase the taxable gain (or decrease the
loss) realized at Maturity or upon disposition of the Exchangeable Notes (or disposition of the EOG
Common Stock).

gain upon the disposition of the Exchangeable Notes. Holders should consult their tax advisors
regarding the applicability of this provision to an investment in the Exchangeable Notes.
Non-United States Person

In the case of @ holder of the Exchangeable Notes that Is not a U.S. Person, payments made
with respect to the Exchangeable Notes should not be subject to U.S. withholding tax; provided that
such holder complies with applicable certification requirements. Any capital gain realized upon the
sale or other disposition of the Exchangeable Notes by a holder that Is not # U.S. Person will
generally not be subject to U.S. federal income tax if (} such gain is not etfectively connected with a
US. trade or business of such holder and (i) in the case of an individual, such individual Is not
presént in the United States for 183 days or more In the taxable year of the sale or other
tnd either such individual does not have a “tax home” in the United States or the gain Is not
attributable to a fixed place of business maintained by such Individual in the United States.

Backup Withholding and information Reporting

‘A holder of the Exchangeable Notes may be subject to information reporting requirements and
to backup withholding at a rate of 31 percent of certain amounts paid to the holder unless such
holder provides proof of an applicable exemption or a correct taxpayer identification number, and
otherwiss complies with applicable requirements of the backup withholding rules.

00900000000272


License No. IA- [(b)(2)] Page 2 of 2

SECTION 1 - AUTHORIZATION: This license authorizes Enron Capital and Trade
Resources Corporation and all other U.S. persons involved in the transactions
for which this license is sought (collectively, "Enron"), to engage in all
transactions necessary to enable [(b}(4)]

SECTION 2 - WARNING: Except as authorized above, nothing in this license
authorizes a U.S. person to engage in any transaction prohibited by the
Iranian Transactions Regulations, 31 C.F.R. Part 560, or Executive Orders
12613, 12957, 12959, and 13059.

SECTION 3 - RECORDKEEPING REQUIREMENT: In accordance with § 560.601 of 31
C.F.R. Part 560, the licensee(s) hereunder is/are required to keep full and
accurate records of all transactions engaged in under this license. Such
yecords shall be made available for examination upon demand for at least 5
years from the date of each transaction. Such records shall clearly
demonstrate the applicability of the authorization set forth in § 1 hereof.

SECTION 4 - PRECEDENCE: This license is issued on a nonprecedential basis.
POUTUTTCTTTT TTT T TTT Titties tie

00400000000067


Other Natural Ges Marketing Volumes and Prices

The following table sets forth certain information regarding the Company's volumes of natural
gas delivered under other marketing and volumetric production payment arrangements, and result-
ing average per unit gross revenue and per unit amortization of deferred revenues along with
associated costs during each of the three years in the period ended December 31, 1994 ard the
nine-month periods ended September 30, 1994 and 1995.

Nine Months
Ended
Year Ended December 31 Seplember 30,
1982 10st i994 195"

Yolumes {MMet per dayX1) . ich
ross Revenue

Assodated Costs ($/Mofy3X4) .

Margin ¢/Mcf)

293 324

$257 $238 $241 $
232 2.06

$025 $032 $028 $

(1) Includes 28 MMcf per day in 1992, 81 MNict per ay in 1009 ened 48 Wesel per day in {804 and
in the nine-month periods ended Seplember 90, } and 1995 delivered under the terms of
payment exchange agreements effective October 1, 1992. as

amended.

(2) Includes per ynit deferred revenue et ee aS So a6 or Met in 1908 ad $2.46
equivaient of 1 per Mcf in 1992, $2.50 per Mcf in 1993, $2.46 per Mct in 1994 and $2.46
per Mcf and $2.47 per Mcf in the nine-month periods ended September 30, 1994 and 1995,
respectively.

(3) Includes an average value of $2.37 per Mot in 1902, $2.20 per Met i 1 0e8. Fe mer 30.
1994 and $1.99 per Mc! and $1.50 per Mcf in the nine-month periods ended September 30,
1994 and 1995, respectively, svernge equivalent welheed anus, any
transportation costs and exchange . for the volumes detailed in note (1).

(4) Including transportation and exchange differentials.
Oli and Gas Exploration and Production Properties and Reserves

The following tables set forth the Company's net proved and proved developed reserves
December 31, 1993 and 1994, and the changes in the net proved reserves for the year 1994
ectmated by the Company's engingering of tera br fie fohowing tables ere preserted 28

Natural Gas (Bef)
Net proved reserves at December 31, 1993 1,313.2 271.0 100.5 - 1,684.7
Additional disclosures: ;

875 -.6 - - 875
1,400.7 271.0 100.5 - 1,7722
ae Se eS St
a at)
(a8 92 - 3 573
2338 50.2 113.9 - 7-7,

( - a - -
(212. (o3 (23.2) = _(261.5)
1,307.4 206.6 2062 29.3 1,839.5
(Continued on mext page)

16

00900000000290 —


FROM: JOE HILLINGS
on ENRON CORP,

CNBC- STREET SIGNS WASHINGTON, B.C,

ENRON PRESIDENT AND COO JEFF SKILLING
JUNE 26, 1998

Ron: On the comer of "Wall & Main,” power failures across the country. As Mother Nature tums up the heat, several
industrial companies have been forced to close their doors because of power shortages and this may just be the
beginning, Following years of industry warnings, power suppliers are falling short of energy demands and utilities in
the Midwest and now New England are telling customers to cool it on their summer power needs. So what is 2 power
company to do in the face of anticipated heat waves this summer? Joining us now from Enron headquarters is Jeff
Skilling, the president and COO at Enron, one of the country's major power suppliers. Mr, Skilling, good to see you,
thank you for being with us today.

Skilling: Glad to be bere.

Ron: I was in Chicago just a day of so ago, when it was 95 degrees. The heat index was at 105 and the local utility
and municipality were both asking consumers to cut down on their air conditioning. Something that seemed like not
an unreasonable demand, given what they are facing, but one that was likely to go unheeded. What is happening right
now?

Skilling: 1 think you got it right when you were giving the bead-in a little bit earlier. We have had very hot
temperatures in the Midwest. We have a number of big generation facilities that are down right now. And we are
coming off of 8 years of high economic growth. All that mens that supply is stretched right now.

Ron: Now explain what that means, | mean, people may have a tough time understanding the notion that you are
ranning out of power when there are pawer plants all over the country, Electricity is not something that just goes
away over lime. There is more of i somewhere. Haw come the capacity constraints are bothering the industry right
now.

Skilling: You are limited to the capacity of the generation facilities that are in place, There are some regional
“opportunities and we, and everybody else in the industry, is working very hard right now to get electrons from where
there are some left into those markets that really need them. But the grid is not real exact effective, it is hard to move

electrons around and we are all trying the best we can to keep the power flowing.
Ron: Where do you find more power?

Skilling: There are parts of the country right now where the temperatures are not real high and where there is surplus
generating capacity. The trick, or the challenge, is using our existing transmission grid to get that power from those
areas into areas that need it.

Ron: Now vou know, were these promises by authorities, you know regulators and others, who suggested that as the
utility business became deregulated, it would be far more efficient, Mergers and acquisitions and all kinds of
different arrangements and combination would bead to a free Now around the country, We are not there yet, right?

Skilling: Not yet. We are working on it. 1 would make the argument in the absence of all of these market reforms and
deregulation of the wholesale power markets, we would have a lot worse problem than we have right now. The
fundamental issue is we have a lot of demand and we have some supply constraints right now and everybody is using
these new market mechanisms to try to get electrons into those areas but is a new market. It just takes tine to build
the capability to do thar

Ron: Is it, in fact, required that power companies in the United States are just going to have to, at some point, engage
in a heavy dose of capital spending and expand capacity rather radically here?

Skilling: That's one solution. And I'm sure there will be more of that in the future. The other thing that I think would
be very helpful is, if we could open the retail markets to competition so that customers could get a price signa. Right
now, all you can really do with the consumer is ask then to shut down or involuntarily curtail them. If on the other

00100000000376


UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, Enron has agreed to sell to
each of the Underwriters named below (the “Underwriters”), and each of such Underwriters, for
whom Goldman, Sachs & Co. are acting as representatives, has severally agreed to purchase from
Enron, the respective number of Exchangeable Notes set forth Opposite its name below:

Merrill Lynch, Pierce, Fenner & Smith
Incorporated .

Under the terms and conditions of the Underwriting Agreement, the Underwriters are committed
to take and pay for all of the Exchangeable Notes offered hereby, if any are taken,

The Underwriters propose to offer the Exchangeable Notes in part directly to the public at the
initial public offering price set forth on the cover page of this Prospectus, and in part to certain
Securities dealers at such price less a concession of $.40 per Exchangeable Note. The
Fone Rene ind each of such dealers may realiow, a concession not exceeding §.10 per Exchange.
able Note to certain dealers and brokers, After the Exchangeable Notes are released for sele to ie
Public, the offering price and the other selling terms may from time to time be varied by the
representatives.

Enron has granted the Underwriters an option exercisable for 30 days after the date of this
Prospectus to purchase up to 1,000,000 additional Exchangeable Notes solely to cover over-
allotments, if any. I the Underwriters exercise their over-allotment Option, the Underwriters hee
Soverally agreed, subject to certain conditions, to purchase approximately the same
hereo! that the number of Exchangeable Notes to be purchased by each of them, as shown in the
foregoing table, bears to the 10,000,000 Exchangeable Notes offered.

Enron. EOG and EOG's Chief Executive Officer have agreed that during the period beginning
{rom the date of this Prospectus and continuing to and including the date 270 days after the date cr
tins Prospectus, subject to certain exceptions set forth in the Underwriting Agreement, they will not
Winch are atact 12 sell or otherwise dispose of any EOG Common Stock, any securities of EOG

The Exchangeable Notes have been approved for listing on the NYSE, subject to official notice
of issuance, The EOG Common Stock (including the shares of EOG Common Stock which may be
received by a holder of Exchangeable Notes at Maturity) is listed on the NYSE.

ZThe Underwriters andior their affiliates have provided investment banking and financial advisory
Services to Enron, its subsidiaries or affiliates in the past, for which they have received customary
compensation and expense reimbursement, and may do so again in the future.

Enron and EOG have agreed to indemnity the several Underwriters against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments the Underwriters may be

27

00900000000273


Southern Saskatchewan is the largest single Producing area, contributing 51% of Canadian deliver-
ability at September 30, 1995. Canadian natural gas deliverability nat to the Company at September
30, 1995 was approximately 70 MMct per day and the Company held 8pproximately 350,000 nat
undeveloped acres in Canada

Outside North America Operations. The Company has operations offshore Trinidad and India
€N¢ i$ conducting exploration in selected other international areas. Properties offshore Trinidad and
India comprise 100% of the Company's current reserves and Production outside of North America.
The Company's reserves at December 31, 1994 included 236 Bcf of natural gas and 12 MMBbI of
liquids in these two areas. The Company's net production trom offshore Trinidad was approximately
100 MMct per day of natural gas and 6.2 MBbI per day of crude oil and condensate at September 30,
1995. The Company's net production from offshore india was approximately 3.5 MBbI per day of
crude oll net to the Company at September 30, 1995, In addition, the Company is pursuing other
exploitation opportunities in countries, including China, Mozambique and Qatar, where indigenous
natural gas reserves have been identified, particularly where synergies in natural gas transportation,
Processing and power cogeneration can be optimized with other Enron Corp. affiliated companies,

Relationship Between the Company and Enron Corp.

All of the shares of Common Stock offered hereby and in the Stock Otferings are being sold by
Enron Corp., and the Company will receive no proceeds from such sales. Concurrently with the
offering of the Exchangeable Notes, Enron Corp, is offering for sale 27,000,000 shares of Common
Stock (31,050,000 shares if the Underwriters’ over-alictment options ip such Stock Offerings are
exercised in full). Following the consummation of the Stock Offerings, Enron Corp. will own an
aggregate of 101,000,000 shares of Common Stock or approximately 63% of the outstanding
Shares (or, assuming that the Underwriters’ over-allotment options in the Stock Offerings are ‘
exercised in full, 96,950,000 shares of Common Stock or approximately 61% of the
shares). At maturity, the Exchangeable Notes may be exchanged for no more than 10,000,000
shares of Common Stock (no more than 11,000,000 shares if the over-allotment option of the
uaderwriters in the Exchangeable Notes Offering is exercised in full), subject to adjustment under
certain circumstances and to Enron Corp.'s option to pay an amount of cash in lieu of such
mandatory exchange. Assuming the underwriters’ over-allotment options in the Stock Offerings and
the Exchangeable Notes Offering are exercised in full and the maximum number of shares is
mandatorily exchanged at maturity of the Exchangeable Notes, Enron Corp.'s remaining ownership
of Common Stock would be approximately 54% of the outstanding shares. Any market that
Gevelops in the Exchangeable Notes Is likely to influence, and be influenced by, the market for the
Common Stock. For example, the price of the Common Stock could become more volatile and could
be depressed by possible sales of Common Stock by investors who view the Exchangeable Notes
a5 & more attractive means of equity participation in the Company and by hedging and arbitrage
activity that may develop involving the Exchangeable Notes and the Common Stock.

Neither the Stock Offerings nor the delivery of shares of Common Stock pursuant to the terms
Of the Exchangeable Notes will affect the existing agreements between the Company and Enron
Corp. and their respective attiliates, except for the Tax Allocation Agreement which will cease to be
effective from the time at which deconsolidation occurs (when Enron Corp. ceases to own 80% of
the outstanding shares of Common Stock) for future periods, but will remain in effect with regard to
Periods prior to deconsolidation. For issues not 8ddressed in the original agreement, the Company
has entered into a supplemental agreement with Enron Corp. clarifying future potential adjustments
associated with the final settlement on audit of taxes for periods prior to the deconsolidation. The

0900000000279


Page 3 of

Pursell said this risk will be particularly strong in ancillary markets. A trade point such as the Henry Hub has plenty of
substitutes for Enron, but an emerging market, such as the Cheyenne Hub in the Rockies, will see more volatility.

Economist Verleger said there is the possibility that if gas prices start to drop this winter, momentum could snowball,
Many producers locked in gas prices with Enron and other marketers when valuations were high. If prices drop beneath
a certain floor, marketers will have to sell more contracts to cover the hedge. "It could start a virulent dynamic cycle
down in prices,” he said.

"L presume Enron intends to draw down its credit lines so it can open short futures positions if prices fall," Verleger
wrote in a research note. "I also presume Enron will do everything in its power to keep prices up for the next six
months to avoid having to make such sales.”

Dodd of the Derivatives Study Center is calling for more safeguards against "market externalities."

He pointed to Enron's troubles with the Dabhol power plant. "Why should the failure of a water treatment plan
or a power plant in India cause US derivatives markets to become less liquid?" Dodd asked.

Trading operations should be separately capitalized from other operations, he believes, "so that a failure of your
other businesses doesn't drag down your trading operations and harm markct liquidity."

He noted a parallel situation among banks, where banking functions are sealed off from other business because
of the vital market role they play. "They have required that banks separately capitalize their securities
operations and their banking operations, to avoid just this type of problem," he said.

Dodd is particularly peeved that only Enron is privy to volume and open interest information on its trading
platform. "They should report on who has the large positions in the market. They should conduct themselves
like an exchange,” he said. "If this were the Nymex, none of these problems would be happening.”

- Andrew Ware, Michael Sultan
Forward |2-Month Open Interest vs. Nymex Nov, 2001 Contract Price.

ii6io2 01262

01200000000618


1999-SE-004434

ENRON, WASHINGTON

TRANSMITTAL SHEET

1775 Eye Street, NW

Suite 800

Washington, DC 20006

202-466-9145

202-827-3372 (fax)

jhilin@enron.com

TO; The Honorable Robert E. Rubin

FROM: Joe Hillings

DATE: 5/3/99

RE: Enron International Statement on:
US-Japan Enhanced Initiative on Deregulation
And Competition Policy

| thought the attached statement from Enron International on US-Japan Enhanced Initiative on
Deregulation and Competition Policy would be of interest.

Best regards,

End.

00100000000255


MANAGEMENT
The current directors and executive officers of the Company and their names and ages are as
follows:
Name Age Position

Forrest E. Haglund. . 62 Chairman of the Board, President and
Chief Executive Officer; Director

Fred C. Ackman...... 64 Director

Richard D. Kinder, . 51 Director

Kenneth L. Lay 53 Director

Edward Randall, Hl... . 68 Director

Joe Michael McKinney . . 55. President-International Operations
MaX G, Papa...... . 49 President-North American Operations

Waiter C. Wilson. . 53 Senior Vice President and Chief Financial
54 Vice President and Controller

41 Vice President and General Counsel

Forrest E. Hoglund joined the Company as Chairman of the Board, Chief Executive Officer and
Director in September 1987. Since May 1990, he has also served as President of the Company.
Mr, Hoglund was a director of USX Corporation from February 1986 until September 1987. He joined
Texas Oil & Gas Corp. ("TXO") In 1977 as president, was named Chief Operating Officer in 1979,
Chief Executive Officer in 1982, and served TXO in those capacities until September 1967.
Mr. Hoglund is also an advisory director of Texas Commerce Bank National Association.

Fred C. Ackman is the former Chairman, President and Chief Executive Officer of The Superior
Oil Company. For over five years Mr. Ackman has been 2 consultant to the oll and gas industry and
has interests in ranching and investments,

Richard D. Kinder has been President and Chief Operating Officer of Enron Corp. since October
1990. From December 1988 until October 1990, he served Enron Corp. as Vice Chairman of the
Board. For over five years prior to his election as Vice Chairman, Mr. Kinder served in various
management and legal positions with Enron Corp, and its affiliates. Mr. Kinder is also a director of
Enron Corp., Enron Global Power & Pipelines L.LC., EOTT Energy Corp. (the general partner of
EOTT Energy Partners, LP.), Enron Liquids Pipeline Company (the general partner of Enron Liquids
Pipeline, L.P.), Sonat Offshore Drilling Inc. and Baker Hughes incorporated,

Kenneth L. Lay has been Chairman of the Board and Chief Executive Officer of Enron Corp. for
over five years, From February 1969 until October 1990, he also served as President of Enron Corp.
Mr, Lay is also a director of Eli Lilly and Company, Compaq Computer Corporation, Trust Company
of the West, EOTT Energy Corp. (the general partner of EOTT Energy Partners, LP.), and Enron
Corp.

Edward Randall, Ill is principally involved in investments. Mr. Randall is also a director of KN
Energy, Inc. and PaineWebber Group Inc.

Joe Michael McKinney has been President-international Operations since February 1994 with
responsibilities for all exploration, drilling, production and engineering activities for the Company's
international ventures outside North America. Mr. McKinney joined Enron Oli & Gas international,
Inc., a wholly-owned subsidiary of the Company, in December 1991 as Senior Vice President of
Operations and was elected President and Chief Operating Officer of Enron Oil & Gas international,
Inc. in April 1993, @ capacity in which he continues to serve. Prior to joining the Company,
Mr. McKinney held operations management positions with Union Texas Petroleum Company, The
Superior Ol! Company and Exxon Company, USA.

00900000000307


PROSPECTUS SUMMARY

The following is a summary of certain information contained in this Prospectus. It is not
intended to be complete and is qualified in its entirety by the more detailed information contained
elsewhere in this Prospectus. Certain terms are defined in this summary under “Certain Defini-
tions.” Capitalized terms which are not defined in this summary are used as defined elsewhere in
this Prospectus.

The Company
Enron Dil & Gas Company (together with its subsidiaries, “the Company") is one of the largest
indeper it (non-integrated) oil and gas companies in the United States in terms of domestic

proved reserves. It is engaged, directly and through its subsidiaries, in the exploration for, and the
development, production and marketing of, natural gas and crude oil primarily in major producing
basins in the United States, as well as in Canada, Trinidad and India and to a lesser extent, selectad
other international areas. At December 31, 1994, the Company's estimated net proved natural gas
reserves were 1.910 Bcf and estimated net proved crude oil, condensate and natural gas liquids
reserves were 37 MMBbI, a net increase of 8% and 78%, respectively, over year end 1993. The
Company has increased its reserves for six consecutive years, At December 31, 1994, approxi-
Matety 70% of the Company's reserves (on a natural gas equivalent basis) was located in the United
States, 16% in Canada, 11% in Trinidad and 3% in India. At such date, approximately 90% of the
Company’s total proved reserves was classified as developed.

While year end reserve evaluations will not be available for some time, based on the results of
the Company's drilling program for the first nine months of 1995, it is expected that extensions,
discoveries and other additions to reserves for the year will exceed production tor both North
America and Trinidad, as well as in total. Additionally, reserves acquired are expected to substan-
tially exceed those sold, with the resulting replacement of production from all sources expected to
exceed 150%.

Business Strategy. The Company's strategy Is to maximize the rate of return on investment of
capital by controlling both operating and capital costs and enhancing the certainty of future
revenues through the use of various marketing mechanisms. This strategy enhances the generation
of both income and cash flow from each unit of production and allows for the growth of production
on a cost-effective basis by optimizing the reinvestment of cash flow. Through this strategy, the
Company has increased its net income in each of the last five years, despite the volatile natural gas
price environment, and achieved a return on equity ranging from 8% in 1990 to 15% in 1994. For the
first nine months of 1995, net income increased 5% compared to tha same period for 1994.

The Company refocused its 1995 drilling activity away from natural gas Celiverability and toward
natural gas reserve enhancement and crude oil exploitation in the United States in response to the
decline in United States natural gas prices in recent periods. The Company also is focusing on the
cost-effective utilization of advances in technology associated with gathering, processing and
interpretation of 3-D seismic data, developing reservoir simulation models and drilling operations
through the use of new and/or improved drill bits, mud motors, mud additives, formation logging
techniques and.reservoir fracturing methods, These advanced technologies are used, as appropri-
ate, throughout the Company to reduce the risks associated with all aspects of oil and gas reserve
exploration, exploitation and development.

The Company implements its strategy by emphasizing the drilling of internally generated
Prospects in order to find and develop low cost reserves. By following this strategy, the Company

3

0090000000027 —


meant to be comprehensive, and data provided is not guaranteed to be
accurate. We are not responsible for claims made by advertisers and
sponsors. Anyone who makes investment decisions based on what they
read here does so at their own risk and cannot hold WebPinance Inc.

(DBA InvestorGuide.com, Inc.) or its employees responsible, For the
complete disclaimer please see

http: //wew. investorguide.com/disclaimer. html

19

01733

01200000000389


Exploration and Development Expenditures

The table below sets out components of actual exploration and development expenditures for
the years ended December 31, 1992, 1993 and 1994, along with those estimated for the year 1995
and actual components of exploration and development expenditures for the nine-month periods
ended September 30. 1994 and 1995.

Nine Morthe
TM,
Expenditure Category 19931994 i996 1995
Capital
Driting and Facilities . . $331 $342 «$257 = $225
hold Acquisitions 2 52 32 17
Producing Property Acqui 9 34 14 114

Capitalized Interest and Other . . 14 10 9

442 313 365
st 40

$501 $954 $405

Exploration and development expenditures for the first nine months of 1995 increased $51
million compared to the same period in 1994, and primarily reflect the acquisitions of selected
Properties to complement existing United States producing areas.

Exploration and development expenditures increased $63 million, or 14%, in 1994 compared to
1993, The increase primarily reflects the acquisitions of selected properties to compliment existing
North America producing areas and the addition of new international activities in India. See
“Business - Exploration and Production” for additional information detailing the specific geographic
locations of the Company's drilling programs and “'- Outlook” below for a discussion related to
future exploration and development expenditure plans.

Exploration and development expenditures in 1993 increased to $438 million, an 8% increase,
a8 compared to the $406 milltion expended in 1992. The increase was attributable to increased
domestic drilling activity with reduced emphasis on development drilling expenditures associated
with tight gas sand formations. The Company also implemented Its first development program
outside of North America during 1993, installing a jacket, platform and production facilities and
initiating natural gas production from the Kiskadee field offshore the southeast coast of Trinidad.

Hedging Transactions

‘With the objective of enhancing the certainty of future revenues, the Company has, as of
October 23, 1995, entered into hedging transactions for approximately 400 BBtu per day (approx!-
mately 381 MMef per day) and 529 BBtu per day (approximately 504 MMcf per day) of Its North
America natural gas volumes for the last three months of 1995 and the year 1996, respectively. A
significant portion of the 1995 and substantially all of the 1996 hedge transactions involve NYMEX-
based commodity price swap agreements totaling 260 BBtu per day at an average price of $1.98 per
MMBtu and 447 BBtu per day at an average price of $2.00 per MMBtu for the last three months of
1995 and the year 1996, respectively. The remaining hedge transactions of 140 BBtu per day and 82
BBtu per day for the last three months of 1995 and the year 1996, respectively, include notional and
physical transactions that involve fixed price sales contracts and volumetric production payment and
exchange agreements. Included in the 1996 hedge transactions are commodity price swap agree-
ments totaling 200 BBtu per day of notional volumes at a weighted average NYMEX-based price of
$1.97 per MMbtu which include one-time options exercisable by the counterparty on or before
December 17, 1996 totaling 200 BBtu per day of notional volumes in 1997 and 1996 at the same
weighted average NYMEX-based price of $1.97 per MMBtu. The Company has also, as of
October 16, 1995, hedged approximately 10,100 Bbi per day and 9,600 Bb! per day of its North

Elsglean$ i
Blagls

00900000000303


1995; all associated natural gas was being flared. The Company intends to continue development of
the accumulations and to expand processing capacity to allow crude oil production at full detiver-
ability as well as to permit natural gas sales.

Other international, The Company continues to evaluate other selected conventional natural
gas and crude oil opportunities outsida North America. The Company is pursuing other exploitation
opportunities in countries where indigenous natural gas reserves have been identified. particularly
where synergies in natural gas transportation, processing and power cogeneration can be optimized
with other Enron Corp. affiliated companies. In early 1995, the Company and the Catar General
Petroleum Corporation signed a nonbinding letter of intent concerning the possible development of
@ liquefied natural gas project for natural gas to be produced from the North Dome Field, The
Company and Enron Corp. may jointly hold up to a 40% working interest in the joint venture and drill
and develop to-be-agreed-upon reserves. In addition, the Company signed letters of intent in early
1995 wit the National Oil Corporation of Uzbekistan, and Gazprom, the Russian natural gas
company, to pursue the feasibility of joint venture development and marketing of previously dis-
covered conventional hydrocarbon reserves in Uzbekistan. The Cornpany is also in discussions
concerning the potential for conventional oll and gas development opportunities in China,
Mozambique and Qatar, The Company holds nonoperating working interests in two conventional oil
and gas exploration prospects in the U.K. North Sea.

The Company continues evaluation and assessment of its international opportunity portfolio in
the coalbed methane recovery arena, including projects in South Wales in the U.K., the Lorraine
Basin in France, Galilee Basin in Queensland, Australia and Hedong basin in China.

Marketing
Wellhead Marketing

The Company's North America wellhead natural gas production is currently being sold on the
spot market and under long-term natural gas contracts at market responsive prices. In many
instances, the long-term contract prices closely approximate the prices received for natural gas
being sold on the spot market. Wellhead natural gas volumes from Trinidad are sold at prices that
are based on a fixed price schedule with annual escalations. Natural gas volumes in India will be
sold to the Gas Authority of india, Ltd. under a take-or-pay contract at a price linked to a basket of
world market fuel oll quotations with floor and ceiling limits. Approximately 45% of the Company's
wellhead natural gas production is currently being sold to pipeline and marketing subsidiaries of
Enron Corp. The Company believes that the terms of its transactions and agreements with Enron
Corp. andior its affiliates are and intends that future such transactions and agreements will be at
least as favorable to the Company as could be obtained from third parties.

Substantially all of the Company's wellhead crude ofl and condensate is sold under short-term
contracts at market responsive prices. =

Other Marketing -

Enron Oll & Gas Marketing, Inc. ("EOGM") is a wholly-owned subsidiary of the Compeny
engaged in various marketing activities. Both the Company and EOGM contract to provide, under
short and long-term agreements, natural gas to various purchasers and then aggregate the neces-
sary supplies for the sales with purchases from various sources including third-party producers,
marketing companies, pipelines or from the Company's own production. In addition, EOGM has
purchased and constructed several small gathering systems in order to facilitate its entry into the
gathering 5

attiliated withi Enron Corp. These marketing activities have provided an effective balance in manag-
ing the Company's exposure to commodity price risks for both natural gas and crude oil and
condensate wellhead prices. See “Management's Discussion and Analysis of Financial Condition
and Results of Operations - Capital Resources and Liquidity - Hedging Transactions.”

14

00900000000288


VV

consortium. The alliance, which was announced on Dec. 4, will allow both
marketplaces and their customers to share technology in e-procurement and
supplier chain integration.

<http:/ /www.omnexus.com/omnexus/eng/closed/html/OmnexusNews_pr_12_04_01-ht
ml>

Rolfe & Nolan Joins with Tru&xchange in Processing Partnership

Rolfe & Nolan, a leading software provider for the futures and
options industry, has announced a partnership with TruExchange, a vendor
of trading and matching engines for electronic exchanges. The two
companies plan to offer a Straight Through Processing (STP) solution for
the derivatives industry. This new solution will be an integration of the
TruExchange trading engine and the market data system managed by Rolfe &
Nolan, This product will be jointly marketed and will handle front-end
order capture, exchange routing/access, trade matching, execution,
back-office clearing, and settlement.

http://www. truexchange.com/news_events/presa_ releases/pr-rn1124. html
http://engine. solidé.com/servlet/SolDisplay?purpose=vlewpressreleasetpreas
id=94susername=rol feéusername2=1456465691

GTWA Survey Pinds Transaction Volume Dramatically Higher

The Global Trading Web Aasociation, a group representing online
marketplac: sociated with Commerce One, issued a report on Nov. 12
finding strong growth in transaction and sales volume among its members.
The group, now up to 33 members, projected a total of more than 2.1
million transactions and $6.2 billion in sales on member exchanges by the
end of the year.

chttp: //wew.gtwa.net/news/20011112_growth.html>

Aberdeen Group Iss! Report on "Best Practices" Among Online Markets

Aberdeen Group, a Boston-based consulting firm, has recently
published several reports of interest to GMarkets Association members,
including an analysis of what factors play a critical role in making some
online markets successful and a report on the "second coming" of net
markets,

<http://www.aberdeen.com/abtsrcompany/hottopics/netmarkets2001/thankyou.ht

If you would like this newsletter sent to others within your firm, please
contact David Bruderle at dbruderleGatmarkets.org

Tf you do not wish to receive the GMarkets Newsletter from us in the
future, you may opt out by notifying us via e-mail at
mailto:optout@atmarkets.org or by writing us at 2001 Pennsylvania Avenue
N.W., Suite 600, Washington, DC 20006.

Comments and suggestions may be sent to David Bruderle at
dbruderlegatmarkets.org

01725

01200000000381


‘Treasury Market Room 22-2650

Timatty DuLaney, Director

GLOBAL FINANCIAL MARKETS

121801

745 AM

araian rule

Daw Joes
Nandy

sar me
Nikko 225
Japon Topi
Germs DAX
French CACAO
UX, PISE ee

somes
sins

31923 oa T81%
si9Lat 007% ar

TER. Heng Seng
Korean Kanp
Toinae Weighted

ps cheenge sehenent 2 a8 . 2
EMERGING PLIMLD UNCON horea tt ‘Thaleet Aeteorve We Rusnie Minin '§7 ‘Roland PP)
Current os 4m a] ir) TM
pv change 4 1" onhangee ua anges 4
Acemtinatar = Bell C MeweaPar = Voweaiata DOR
Carcent oat 108 an et
gs change ‘ a 0

01728

01200000000384


SELECTED FINANCIAL DATA OF ENRON

The financial information set forth below has been derived from the audited and unaudited
consolidated financial statements of Enron. The information should be read In connection with, and
is qualified in its entirety by reference to, Enron's financial statements and notes thereto
incorporated by reference herein. See “Incorporation of Certain Documents by Reference.” The
interim data reflects all adjustments which, in the opinion of the management of Enron, are
necessary to present fairly such information for the interim periods. The results of operations for the
nine-month periods are not necessarily indicative of the results expected for a full year or any other
interim period.

Nine Months
Ended
Year Ended Oecember 31,

7900100121003 tate
(in mations)

$6415 $7,906 $0,964 $6297 $6,639

4222 5567 6517 4.631 4,728
1,057 1,033 m4 754

es n 6S ”
7 84 58 6t
4560 (44t 326 8
108 102 78 os
7355 8288 5874 6.963
716 623 676

ard 7” “0
16 2 16

lelsslgle' gales slglsgss 8

wo
3
LJ
Income belore taereat, ninoriy intereat and Income taxes 62 738 Me 709 Bat
Interest and related charges, MO... 6.6 c ee cree eee 385 7 wo be) 202 Paty
- 2 20 “4 24
7 2 n a x“
se 135 17 127 180
202 a 453 MS was
202 a 453 us =
2s ita 1s " WW
$316 $ 48 $ 3 $ 378
December September 30,
1800 181 1 1995

tn reamiona)
$9,849 $10,070 $10,312 $11,504 $11,968 $13,029

2.983 3109 «24800 (2,681 2805 3425
_ - _- au v7 396

tld 101 179 196 290 n6
1o38 1.901 2518 2623 2,080 3,107

income ended December 31, 1993 includes a primarily non-cash charge of $54 miftion to adjust for the
" oe Tr ons conponuns toturel Somme Gok rete bom from 34 percent to 35 percent.

10

00900000000256


may adversely affect the price of the EOG Cornmon Stock and, because of the relationship of such
amount to be received upon exchange to the price of EOG Common Stock, such other events may
adversely affect the trading price of the Exchangeable Notes. There can be no assurance that EOG
will not make offerings of EOG Common Stock or take other action in the future,

Possible illiquidity of the Secondary Market

It Is mot possible to predict how the Exchangeable Notes will trade in the secondary market or
whether such market will be liquid or illiquid. Exchangeable Notes are novel securities and there is
currently no secondary market for the Exchangeable Notes. The Underwriters currently intend, but
are not obligated, to make a market in the Exchangeable Notes. There can be no assurance that a
secondary market will develop or, if a secondary market does cevelop, that it will provide the holders
of the Exchangeable Notes with liquidity of investment or that it will continue for the life of the
Exchangeable Notes.

The Exchangeable Notes have been approved for listing on the NYSE, subject to official notice
of issuance. However, there can be no assurance that the Exchangeable Notes will not later be
delisted or that trading in the Exchangeable Notes on the NYSE will not be suspended. If the
Exchangeable Notes are not listed or traded on any securities exchange or trading market, or if
trading of the Exchangeable Notes is suspended, pricing information for the Exchangeable Notes
may be more difficult to obtain, and the liquidity of the Exchangeable Notes may be adversely
affected.

No Obligation on the Part of EOG with Respect to the Exchangeable Notes

EOG has no obligations with respect to the Exchangeable Notes or amounts to be paid to
holders thereof, including any obligation to take the needs of holders of the Exchangeable Notes
into consideration for any reason. EOG will not receive any of the proceeds of the offering of the
Exchangeable Notes made hereby and is not responsible for the determination of the timing of.
prices for or quantities of the Exchangeable Notes to be issued or the determination or calculation of
the amount to be paid upon mandatory exchange at Maturity.

Tax Uncertainties

The Indenture (as defined herein) requires that any holder subject to U.S. federal income tax
include currently in income, for U.S. federal income tax purposes, payments denominated as
interest that are made with respect to the Exchangeable Notes, in accordance with such holder's
method of accounting, and the amount of original issue discount ("OID"), if any, attributable to the
Exchangeable Notes as it accrues. The Indenture also requires holders to treat the Exchangeable
Notes as @ unit consisting of (i) an exchange note, which is a debt obligation with a fixed principal
amount unconditionally payable at Maturity equal to the principal amount of the Exchangeable
Notes, and (ii) a forward purchase contract pursuant to which the holder agrees to use the principal
payment due on the Exchangeable Notes to purchase at Maturity the EOG Common Stock that the
holder is entitted to receive at that time (subject to Enron's right to deliver cash in lieu of the EOG
Common Stock). It is contemplated that, upon a holder's sale or other disposition of the Exchange-
able Notes prior to Maturity, the ammount realized will be allocated between these two components of
the Exchangeable Notes on the basis of their then relative fair market values. Because of an
absence of authority as to the proper characterization of the Exchangeable Notes for tax purposes,
these tax characterizations and results are uncertain. This uncertainty extends to characterization of
any gain or loss recognized with respect to the Exchangeable Notes at Maturity as capital grin or
108s oF ordinary income or loss and, in the event Enron delivers EOG Common Stock at Maturity, as
to whether any gain or loss can be deferred until a sale or disposition of such stock. As a result of
these uncertainties, Enron has not received an opinion of counsel with respect to the specific tax
consequences of owning or disposing of the Exchangeable Notes. See “Certain United States
Federal Income Tax Considerations.”

00900000000252


DEPARTMENT OF THE TREASURY
WASHINGTON, D.C. 20220

License No. IA- [(b)(2)]
IRANIAN TRANSACTIONS REGULATIONS

LICENSE AMENDMENT

(Granted under the authority of SO U.S.C. §§ 1701-06, 22 U.S.C. § 2349aa-9, Executive Orders
12613, 12957, 12959 and 13059, and 31 C.F-R. Parts $01 and S€0.)

To: Enron North America Corp.
(formerly known as Enron Capital & Trade Resources Corp.)
c/o: Sutherland Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, DC 20004-2415
Attn: Beverly J. Rudy, Bsquire

1. Based on the March 31, 2000 letter from Sutherland Asbill & Brennan
LLP, on behalf of Enron North America Corp., to the Office of Foreign
Assets Control, the expiration date of License No. IA-[(b)(2)] as amended by
License No. IA- [(b)(2)]} is hereby extended to May 31, 2001.

2. All other terms, conditions, provisions and limitations of License No,
IA-[(b)(2)] @8 amended by License No. IA- [(b)(2)] are unaffected by the
foregoing and remain in force.

Issued by direction and on behalf of the Secretary of the Treasury:

OFFICE OF FOREIGN ASSETS CONTROL

y R. RICHARD NEWCOMB WAY Ve

R. Richard Newcomb
Director

Attention is directed to 18 U.S.C. § 1001, 50 U.S.C, § 1705, and 31 C.F.R. § 560.701 for
provisions relating to penalties.

((b)(5)]
00400000000021


ZO/SL/1 ZOOTIUIOd MLA SmaUUIOdMaTA/SMaU OD Ysa AMA ayy

ZO0e

Ul B]EIE/SO0e AjUO yA PUdy BLA PUB Vea jsed ayy sano SSoULBNE) 194) BAId OF
uss AjSulseaoul eweoag ye ‘suONpNe "Aquedes sow “‘pue sysAjeue ‘suopeinbey
ysow ue Ajosuip asow syayew Apis pu Ayyend ypeud Buruljoap jo junuq

Sup seeq say) aouls 'e|qeseu Ayejnoed que suoQnyysul peroueuYy “AunruDS
woy ges 3] eu0-ou ubis e 5,)| ‘SUNOWTY BUILUE|e y fqns at) auooeq des
SUL PUB gH ‘Pul4 $B Syy|OUOWW ayeOdJOD YoNs VAY '9doDsOJIIW Sly sepuN
sevjoswoyy Surpuy que suuy Jo JeUUeW We “UOIsse9e) S9gG)-Apes oy UI Uses
#82] $/8A8) 07 Gurqua}> syineyep UAA “ox Oy) PUB SeoUeHe Gunes ‘sseppoyaueys
Ajpuauyun yy jeep 0) Sulrey eve yeu) Sa}Uedwos ABsaUe Ajuo you 3,1 Ng

WM II 9

py e sapun sousGuewans ysulebe 3/66n4s 0) — Woy) Buowe puouwosd ABauAg
pue auidyes — SUUy JeWuRS A)POWedNs paqioj Sey eswep sy ‘anbeuN Used eAeY
juGaw sua\goud e209 sy ey puy queWwebevew Agmeuru JO 4S) je;UsWepUTY
BUY) SSSUPpe oO} paye) yp “yueNII2g AjoHULDa) U9eq sNeY (jou yyBiW 40) pub
ewwesSosd juewebeuew ¥su esidiejue s,UoJUZ yey) ye JO4 yusweHevVEW ys
JeENgDSyeul jo squad Sup jo JepuRWE dueYs @ s+ ‘jepueds Buymos6 pave ‘aBueyoxy
YOOIS YIOA MAN OY} LCA) ¥90}S SAURCLUOD Oy SI;OP 0} HEOM SILy VOISIDep ey

ssauved Bupey pue sioypaud ‘sioyseau! ‘seeXojdue

sAveduiod uaxd1.3s 94) 0} yOoYs SGny eB se awed Jaquuacag Aye ut Gury
Andruyueg sy “syjuow awos 20) SuyiGnuys ueeq pey yuerd ABsoue ag yGnoyiy
L00Z Ue) feUvOU euoWw Jeod Ave ui Auo}ys puUswaGeueW 4s doy ay) UeEq

eney Apayqnopun pynom UOsUZ JO VONENLUNY ayeLW|IN PUB SSWAaP jNO-UMBIP ay

Aunypnoys-ined WwNS j91/4>-U)-sO}PS ¥SINR SOMIM 'Z00Z
uy Augnuos y6no; Aj6ulsees9u! 0} puensoy yOO] UBD SYS je Jo SejUedWOD

2owwesGo1g uswaBeuey ¥SIY INO, PSIASBY O| OUI) UOIUIdE

sanss] UaWOBEUEW YSTY UO Weqed pur jw?)

WIOd MIA,

Bite

CJo p aieg {aumumifoig juwaTuRyy Ysty INO, WSIAdY OL ou :uOTUIdH

tented

6E€ETO

[2497 29y6iy y Oy juawaGouoy ys1y Buy

01200000000695


Power Shortage. India is in need of power. The Minister of Power has recently stated that India
needs 10,000 MW of new generation. (The state of Maharashtra itself faces a continuing
shortage of power (approx. 2000 MW) resulting in large areas facing load shedding and
blackouts.)

Foreign Direct Investment. Because India lacks the funds to construct needed power
infrastructure, foreign direct investment is needed. Failure to honor contractual commitments or
1 respect the sanctity of contracts will serve to discourage such investment.

Distribution Reform, The long term solution is to institute reforms quickly. Reforms that are
particularly pertinent to the financial distress suffered by the SEBs are:
State Electricity Boards must be unbundled into three business units (generation,
transmission and distribution) and be made accountable for their performance via
corporatisation.

- Professional management teams rather than bureaucrats must run the power
sector companies.

- Improvements to the infrastructure are critical, Losses cannot be reduced until
electricity is metered, those using power properly billed, the funds billed properly
collected, customers disconnected for nonpayment, and those responsible for
theft of power prosecuted,

- ‘The State must allow MSEB to run its business in a professional manner rather
than as a political vehicle. Thus, subsidies must not be granted unless the
government is willing to pay for them.

- Finally, the tariff structure must be rationalised so that the costs of distribution of
power to the various customer classes are reflected in the tanffs.

The Dabhol Tariff. The tariff is not an absolute number but is a formula. The tariff at which DPC
power is sold to MSEB is comprised of two cost factors, a fixed capacity charge and a variable
energy charge, The per unit cost of DPC power, in tum, depends on the quantity of power
actually drawn by the MSEB, prevailing international crude oil prices, and the rupee/dollar
exchange rate, Depending on fluctuations in these variables, the tariff can go either up or down. A
more representative way of judging tariff is on an annual average.

From May 1999 to October 2000, MSEB’s off-take from DPC was an average of 60 %, resulting
in an average tariff of Rs. 4.94, Hf during that period the off-take had been 90 %, the average tariff
would have been Rs. 4,02, Looking ahead, the recent drop in international fuel prices (which
affects the price of naphtha) will result in a decrease in the tariff. With the commissioning of the
second phase of the project by end 2001, when Liquefied Natural Gas (LNG) is used us fuel, the
tariff will be further reduced another 20-25% (assuming 90% off-take, prevailing foreign
exchange rates and international fuel cost remaining within $21-28,)

[tis not true that the tariff was Rs. 28 per unit during last summer. Rather, a Rs 7.80 figure was
recorded for the monthly cycle bill of July 2000 ~ a figure based on a low dispatch level of 33 %,
naphtha price of $ 306/MT and at an exchange rate of Rs. 45.35 per dollar. On the other hand,
had MSEB dispatched DPC at 90% during the same period, other factors remaining identical, the
tariff would have worked out to Rs. 4.31 per unit. (Capacity charge Rs.1.88 plus energy charge
Rs. 2.43).

00500000002271


LO/P/TL

£50 | deed

L002

oz sequsaseg

euljuO
PHomuedg

UNY [OE] [BOIMAWOO-Yyomyous}Ur MAM/dny

SaLOIS UOIUS SiOyy , ‘ . r
ifuos, —‘PUPWEPUNM J UNO $4eeA 4se") ‘Gof B

USN UA UMOpijayy JO 1NO S| Buijs Pue yoo}s AuUed e s} JNZ
zig UOIU :wru03 ‘oB pue Yyono} S| eujjUQuaIUZ jo sNyE}S
osly aS ayy ‘Ao}druyueg 40) payy sey uowUy ‘AepoL

"PaUIqWOS siOJJedWOO sy {ye VEY) 4966)q ‘uOING OBS

jo deo joysew e payods Uoiuy ‘yeed sy yy ‘sqyoud s,AuedwoS

ay} JO y¥/NG auy BuipjaiA pue suoNoesued ul Aep e UONG

L$ ueu) esow Burjpuey sem Apeasye ‘ays Bulpe.y-Aypowwos pjo
ea sy “auljuUQUaJUZ “YORNqU}sIP pue UOTONpaud jo suUBOW Sy}
Bulpuewwos VEY) JAYJ2J }9WS]U] BY} JBAO SENIPOWLUOD JeYJO pue
ABueue Buyeyoug jo ABayeqs $,uquus yyM 4jNey puy oO} PYeY SEM 3)

jepow Buipey peseq-joweju)

ji jo Sum @yj Uo Buyeos asem senuanal
$,uqju3 se ‘oBe sead e Aouepusose Buljpeys
sAuedwoo siy pazvewuns “diog uouu3

JO yapisaud vey; ‘Burns Aeuyor Moy s,yeyL

« fepow
SS@UISNg Jayaq AjJeyUOWEpUNy e eAeY OM,

NOLSaud Lu380u Ag

uosUZ [IIH 3,UPIC JeUs9}U] SUL

bOOZ "OE JequienoN

9" AMIN

suoytinsgns
sonersvary V3
SeD)N9S

eBexs009 joeg
Squewaddng
SyvRD
e6tg S005 Ndi\
suQUED CUNOSEY
ea rAyeesayu)
warn Guo,
yuswe6e6u3 9094
RIL (NOGY
$921NOSOY

s00 181870,
srAreuy Duy Waieebey
santay 8N

suming Guat)
esudiaiu3 ae) SaBeuryy
eaucieng Sanues
saps ase)

sagen Ae

sonar

deg uy

away Guyeag

away

suoyses

\pueeg paoueApy

SAME, Ly
WeNnsusty| gy

auees|

me ey se
BAD

e}

1O0Z ‘O€ 42QUIDAON < VOM [PY ,Upiq PwWAaIW] 9Y] < Yoo mjousaTUy

01413

01200000000769


10,000,000 Exchangeable Notes

ERE

6%% Exchangeable Notes due December 13, 1998
(Subject to Ex into Shares of Common Stock,
Par Value $.01 Per Share, of Enron Oil & Gas Company)

rat wig (er epee srgpable Noles due ect fue ot pry) a Notes en Suse

:
fowl ra vig at ate on Ss re’ on Sk
ane ae ere Sieeet

amr tor scum 2298
Unni PRR Thin a Benarncrt OTe s Soreeaeess Ss Me ee see “Cariain

co TTY Se aa he any reeves

Prospective investors are advised to consider carefully the information contained under “Risk Factors
Relating to Exchangeable Notes” beginning on page 5.

HAG NOT oa AN ogyate Of ORATION, A ear tee
ANPAES Fle $ AND EXCHANGE OR A EGUACT OF Ties PR
YEON TH ACCURACY On ADEQUACY OF THs PROSP
Initias ; ooneds

seguro sash 90,000

eM eRaT ERS USsaratiers against cortainlinbitties, including fabiittes under the Secures

Cae eek eee eat
Ges

ane ee sate
Goldman, Sachs & Co.
Merrill Lynch & Co.

Salomon Brothers inc

The date of this Prospectus is December 8, 1995.

00900000000247


InternetWeek > InternetWeek 100 > Services > Trader Reaps Benefits Of E-Market Leade..: Page 4 of 7

Services, which completed an 18,000-mile fiber optic network in
2000 and built 25 “pooling points” to tie in with other provider
networks. :

A Helping Hand

Enron has plowed ahead so aggressively online that some trading
partners that haven't invested in back-office automation simply
can't keep up, Piper admits. Enron is responding with
CommodityLogic, software modules designed to help trading
partners streamline the fulfillment process and reduce data re-
entry errors.

Enron will create and maintain a centralized database of
information pertaining to trades. Partners access that information
with CommodityLogic software modules designed for such tasks
as quality assurance, scheduling and invoicing. The three
modules in tests are InvoiceLogic; ConfirmLogic, an order
confirmation system; and NomLogic, which handles delivery
scheduling for natural gas trades.

“Scheduling that natural gas would typically involve three to 10
phone calls and two to three faxes, and for a deal done over the
course of a 30-day month, you might have had to repeat that
every business day," says Tom Gros, the Net Works vice
president in charge of CommodityLogic. "With NomLogic, that
process now takes seconds. | enter it on the screen and
automatically, if it's a month-long deal, the previous day's data
appears for me so ! don't have the chance to create an error.”

The business model for developing CommodityLogic is the same
one Enron used for EnronCredit.com and its other online
initiatives: Net Works develops an application to save time or
improve efficiency internally and then repackages the app for
external use. The software for EnronCredit.com's Cost of Credit
service, for instance, was originally developed to help Enron's
own traders manage credit risk.

Much of Cost of Credit information is free with registration to
EnronCredit.com, but Enron charges a fee to download
information or get e-mail alerts of significant changes to the credit
risk of companies in a prespecified portfolio. But the main way
Enron makes money from the site is by selling "bankruptcy
swaps” to enterprises that want a hedge against the possibility
that a partner will go out of business.

Whereas EnronCredit.com grew out of software Net Works :
developed for Enron’s commodity trading business, Enron's latest
ASP offering, DealBench, came out of software designed to make
it easier and faster for Enron to negotiate large structured deals

for complex assets, such as power plants.
01405

http://www.intemetweck.com/100-01/serv.htm 12/4/01
01200000000761


AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the Commission”), Such reports, proxy state-

Ky
concerning the Company can be inspected and copied at the offices of the New York Exchange at 20 Broad
Street, New York, New York 10005.

This Prospectus constitutes a part of a Registration Statement on Form $-3 (together with all amendments
and exhibits thereto, the “Registration Statement") filed by the Company with the Commission under the
Srourtios Act of 1933, as amended (the "Securities Act"), with respect to the shares of Common Stock offered
hereby. This Prospectus does not contain all of the information set forth in such Registration Statement,
Certain parts of which are omitted in accordance with the rules and regulations of the Commission. Reference
fe made to such Registration Statement and to the exhibits relating thereto for further information with raspect
to the Company and the shares of Common Stock offered hereby. Any statements contained herein conbel
ing the provisions of any document fled as an exhibit to the Registration Statement or otherwise fled wih ‘he
Commizsion of incorporated by reference herein are not necessarily complete, and in each instance reference
Komuie to the copy of such document 0 filed for a more complete description of the matter Involved. Each
such statement is qualified in its entirety by such reference.

The Company's Annual Report on Form 10-X forthe year ended December 3, 1998, Quarteny Raters
Form 10- for the quarters ended March 31, 1995, June
othe Common stock contained in the Registration Statement on Form 8-A deciared effective on October 3,
1989, are incorporated herein by reference.

Each document filed by the Company pursuant to Section 13(8), 13{c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the offering

this Prospectus

1 eos which algo ts oF is deemed to be incorporated by reference herein modifies or supersedes Suc)
ee aca ry: statement so modified of superseded shall not be deemed, except as so modified or
superseded, to constitute # part of this Prospectus. ‘

The will provide without charge to each person to whom a copy of this Prospectus is delivered,
‘on the request any such person, @ copy of any oF all of the foregoing documents incorporated herein Py
on the reque or than exhibits to such documents (unless such exhibits are specifically incorporated Dy
reference. ie the documents that this Prospectus incorporates). Requests should be directed to Secronry
reference: into te & Gas Company, at its principal executive offices, 1400 Smith Street, Houston, Texas 77002
(telephone: 713-853-6161).

IN CONNECTION WITH THE OFFERING OF THE EXCHANGEABLE NOTES AND COMMON STOCK OF
Tee seein oY ENRON CORP., THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACT ONS
Pee oo A iat OR MAINTAIN THE MARKET PRICE OF THE EXCHANGEABLE NOTES OR THE COMMON
eet eae COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL Iw THE OFT
See OF TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, WN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

00900000000276


WSJ.com Page 2 of 6

Hearings.com. You will companies’ accounting policies. And federal energy regulators said they are
need RealPlayer, available || planning new rules for energy-derivatives accounting,

The Enron debacle spotlights an enormous void in the nation's system of
ee financial regulation, and it is rekindling a difficult debate over just how that
gap should be filled.

Enron Unveds

Innovations in technology and finance have helped obliterate clear
distinctions between banks, brokerage firms and newer hybrids, such as
Enron, which built a privately run online trading empire that handled huge
volumes of electricity and natural gas.

New Attention to
Accounting Multiple Standards

These days, it's possible for exchanges, which once required centralized trading floors crowded with
traders, to spring up overnight in cyberspace. Meanwhile, financial regulators, hewing to decades-old
divisions of authority, continue to keep a close watch on banks, brokerage firms and conventional
exchanges, while leaving new entrants such as Enron to police themselves.

There now is a widespread consensus among policy makers that, at the very least, the nation needs
stricter accounting rules that would force companies such as Enron to do a better job of disclosing their
financial conditions. Other industry watchers would go further, Enron, they say, was one of the country's
leading commodities markets. It had amassed a $19 billion portfolio of derivatives,

In many ways, the Enron debacle raises the same questions that arose three years ago, after the near-
failure of hedge fund Long-Term Capital Management — a private investment fund for wealthy
individuals that made leveraged bets on financial markets, Long-Term Capital's misplaced wagers, many
based on derivatives, almost triggered a meltdown in global markets during 1998.

In the months following that near-calamity, many policy makers, such as then-Treasury Secretary
Robert Rubin, vowed to change the regulatory system to avert similar risks in the future. While they
opposed tighter regulation for derivatives trading, they argued there was at least a need for greater
disclosure in the derivatives market,

Since then, however, a broad industry coalition including Enron has worked with sympathetic regulators
and legislators to beat back pressure for more oversight of over-the-counter derivatives, And in some
cases, they have rolled back powers that regulators had had.

Most regulators and financial-industry executives insist that the financial system remains sound. The
fact that Enron's collapse doesn't as yet appear to have been caused by its derivatives trading, or to have
triggered a broader crisis, seems to bolster their argument.

Advocates of derivatives say the instruments give companies, investors and lenders a way to reduce their
exposure to many kinds of financial risks. Indeed, that's the main reason for their popularity.

New types of derivatives have emerged in recent years, allowing traders to bet on electricity prices,
telecommunications bandwidth and the influence of the weather, all of which Enron dominated. Enron
also was a big player in credit derivatives, which act as an insurance policy against corporate bankruptcy
by promising to pay back a lender's money in exchange for a premium.

hitp;//interactive.wsj.comVarchive/retrieve.cgi?id~SB 1008202066979356000.djm&template-.... 12/13/01

01489

01200000000143


new commodities like forest products and freight services, and build a business around the tools that helped to
transform Enron.”

E-Commerce Apex

While Enron's c-busincss gains have been spotty in some areas—it has struggled to create liquid Web markets in
bandwidth and on paper, for instance-EnronOnline is one of the most successful e-marketplaces. It conducted
its millionth transaction late last month, and the total value of trades on the site exceeds $590 billion. Online
trading now accounts for almost 75 percent of Enron's energy transactions in North America, the company says.

Enron counts both purchases and sales in its volume numbers--unlike e-marketplaces that simply take a cut of
transactions on their sites--because the company is a "counterparty" to every trade on EnronOnline. Enron
makes its money on the spread between what it pays for commodities and what it sells them for.

When a customer clicks to buy gas, electricity, steel or any other commodity, Enron guarantees price and
delivery time. The key for Enron isn't to own massive amounts of physical product or storage and delivery
capacity, but to arrange for third-party supply and logistics clectronically. Enron stays informed about the vast
array of factors that can influence price and delivery on a minute-by-minute basis by employing thousands of
researchers, analysts, weather forecasters and other market specialists.

Enron isn’t just moving physical product on the site. Much of its online deal-making is in financial derivatives
and risk management.

For example, Enron is now in the market for DRAM chips. But it doesn't buy and sell the chips; it sells financial
instruments that let companies lock in a price for DRAMs for a set period. Ultimately, Enron hopes to buy and
sell the chips itself, just as it buys and sells gas, electric-ity and other commodities.

Energy Trading Redone
Enron is reticent about disclosing exact volume figures for the different commodities traded on its sites. The
large majority of trades are still conducted in natural gas and electricity.

The Internet is transforming energy trading from something of an art form, dominated by person-to-person deals
negotiated over the telephone, to an automated science. By openly displaying its "bid" and "ask" prices--and the
spread between them—Enron drove trade volumes through the roof in 2000. Forrester Research estimates that
the "notional value” of online energy trades grew 750 percent in 2000, with EnronOnline accounting for most of
them.

But competing energy firms are banding together to form online marketplaces of their own. American Electric
Power, Aquila, BP Amoco, Duke Energy and others joined with Goldman Sachs and other financial firms to
form Intercontinental Exchange, while Axia Energy, Coral, Dominion TXU and Williams have formed
TradeSpark,

While these consortia may view each other as competitors, they see EnronOnlinc as complementary, says
Forrester analyst Jim Walker. "Everyone loves to have Enron trade on its site because Enron brings the most
valuable thing to the market, which is liquidity," Walker says.

Enron has purchased physical assets to ensure its own supply in several key markets, such as pulp and paper and
metals, Piper says. Metals trading, he says, is up to about 1,000 transactions daily, representing about 25,000
metric tons of steel.

Enron conducted $80 bandwidth trades in the first quarter, compared with 321 in the past year, and it expects to
handle more than 2,200 trades in 2001.

However, Enron's total online trading volume represents everything from storage services to long-haul circuits
to dark fiber to IP services. None of the bandwidth commodities has achieved liquidity yet, notes Kevin

01480

01200000000134

180


DEPARTMENT OF THE TREASURY
WASHINGTON, D.C. 20220

Cuban Assets Control Regulatious License No. CU- [(b)(2)]
LICENSE

(Granted under the authority of 50 U S.C. App. Sib), 22 U.S.C. 2370(a), 22 U.S.C. 6001-10,
Executive Order $193, Executive Order 9989, Proclamation 3447, and 31 CFR Parts 501 and 515)

To: Enron Corp. (the “Licensee")
333 Clay Street
Suite 1600
Houston, TX 77002-7361
Attn: Orlando Puig
Commercial Manager

12. Pursuant to your letter of July 11, 2000, the following transaction(s) is hereby
licensed;
* * * * * SEE REVERSE e bd * * *

2. This license is granted upon the statements and representations made in your
application, or otherwise filed with or made to the Treasury Department a8 4 supplement co your
application, and is subject to the conditions, among others, that you comply in all respects with
all regulations, rulings, orders and instructions issued by the Secretary of the Treasury under
the authority cited above and the tecns of this license. ‘

3. The licensee shall furnish and make available for inspection any relevant information,
records or reports requested by the Secretary of the Treasury or any duly authorized officer or
agency of the Secretary.

4. This license expires on Octeber 31, 2001, is not transferable, is subject to the
provisions of 31 °C.F.R. Parts 501 and 515, and any regulatione and rulings issued pursuant
thereto and may be revoked or modified at any time at the discretion of the Secretary of the
Treasury acting directly or through the agency through which the license was issued, or any other
agency designated by the Secretary of the Treasury. If this license wae issued as a result of
willful misrepresentation on the part of the applicant or his duly authorized agent, it may, in
the discretion of the Secretary of the Treasury, be declared void from the date of its issuance,
or from any other date.

S. This licenge does not excuse compliance with any law or regulation administered
by the Office of Foreign Assets Control or another agency (including reporting requirement)
applicable to the transaction(s) herein licensed, nor does it release the Licensee(s) or
thiré parties from civil or criminal liability for violation of any law or requlation.

Issued by direction and on behalf of the Secretary of the Treasury:

OFFICE OF FOREIGN ASSETS CONTROL

By
(Acting) Chief of Licensing

(Actention is directed to 19 U.S.C. 1592 and 1595a, 18 U.S.C, 545, 18 U.S.C. 1001,
50 U.S.C. App. 16, and 31 CFR $15.701 et seq. for provisiona relating te penaltios.)

0400000000007


GIO

DEPARTMENT OF THE TREASURY
WASHINGTON, O.C,

AUG 03 1999

UNDER SECRETARY

Mr. George Mufioz

President and Chief Executive Officer
Overseas Private Investment Corporation
1100 New York Ave., NW

Washington, DC 20527

Dear President Mufioz:

Thank you for your timely letter of July 19 regarding the Bolivia-Brazil Cuiaba gas pipeline
project, | had been meaning to follow-up with you, in light of the Board Resolution giving
conditional approval to the project (released on July 2), As you are no doubt aware, Treasury
and, I believe, other agencies have been hearing some complaints from NGOs since the Board
Mecting in mid-June. More recently, we have learned from the State Department that there may
be concems about the legality under Bolivian law of the protocol to set up the Chiquitano Forest
Conservation Consortium (CFCC), and that the Government of Bolivia may not have issued its
final environmental/construction permit. As you will recall, the establishment of the $30 million
CFCC and approval by the GoB were key to Board approval of the project.

Treasury staff met with OPIC staff on Wednesday, July 7, to discuss a range of concerns,
Several issues were resolved -- for instance, we are pleased to learn that OPIC has hired a
qualified scientist for the review of the supplemental Navarro study on the forest classification,
and a known environmental consulting firm to monitor implementation. Ho" , some
potentially serious concerns are outstanding. Clearly, this will remain a very sensitive, high
profile project, and it is very important to handle any and all associated issues well.

The full set of conditions set by the Board for project approval include: completion of Bolivian
and Brazilian environmental/construction permit requirements, review of the forest
classification, the environmental and social management system, the secondary impact
mitigation plan, indigenous peoples’ development plans, environmental training program,
preliminary steps for the Chiquitano Forest Conservation Consortium (CFCC), and endorsement
by the governments of Bolivia and Brazil. 1 urge OPIC Management to provide the Board with
an update certifying completion of all of the conditions before financing is released.

In general, I think that OPIC’s credibility could be enhanced by being more transparent than it
has been in the development of this project -- in terms of being both more proactive in promoting
consultation with people affected by the project, and more responsive to inquiries to ensure that
interested parties have all the information they are supposed to have, on a timely basis, and that
reports of problems are addressed.

01700000000005


the platform. Enron wouldn't reveal specifics about pricing, which varies based on the length of contract,
number and size of prospective deals and the number of potential bidders.

Centerpiece Of E-biz

For the time being, energy trading--and trading in financial products related to those trades--will remain the
centerpiece of Enron's online business. Forrester estimates that notional trading for U.S. natural gas futures and
options contracts amounted to about 3.6 times the total quantity of physical trades and 12 times the amount of
physical delivery in 2000.

"Electricity in the U.S. is a $300 billion market, but the velocity at which that $300 million is being tumed over
is increasing,” says Bob Christensen, an energy industry analyst with First Albany Corp. "The same power—and
all the fuels related to it--can chum and change hands a dozen times a day.”

As other companies convert their trading systems to online models, Enron hopes to sell its expertise in this area.
(Enron says its own online-enabled back-end systems reduced its marginal cost per transaction by 75 percent in
2000.)

Enron stands to gain twice: first, by providing the services itself, and second, by further increasing online trade
volumes in a market where it has a clear ownership stake.

Tracking: Recipient Read
Carleton, Norman Read: 12/4/01 12:37 PM
Schuthess, Heidynre
182

01482

01200000000136


RISK FACTORS RELATING TO EXCHANGEABLE NOTES

As described in more detail below, the trading price of the Exchangeable Notes may vary
considerably prior to Maturity due to, among other things, fluctuations in the price of EOG Common
Stock and other events that are difficult to predict and beyond Enron's control.

Comparison to Other Debt Securities; Relationship of Exchangeable Notes to EOG Common
Stock

The terms of the Exchangeable Notes differ from those of ordinary debt securities in that the
amount that a holder of the Exchangeable Notes will receive upon mandatory exchange at Maturity
is not fixed, but is based on the price of the EOG Cammon Stock as specified in the Exchange Rate.
There can be no assurance that the amount received by such holder upon exchange at Maturity
(whethgs in stock or cash) will be equal to or greater than the principal amount of an Exchangeable
Note because the price of the EOG Common Stock is subject to market fluctuations, and the value of
the EOG Common Stock (or, at the option of Enron, the amount of cash) received by a holder of an
Exchangeable Note upon exchange at Maturity, determined as described herein, may be more or
less than the principal amount of the Exchangeable Note. For example, if the Maturity Price of the
EOG Common Stock is less than the Initial Price, the amount received upon exchange will be less
than the principal amount paid for the Exchangeable Note, in which case an investment in
Exchangeable Notes will result in a loss.

In addition, the opportunity for equity appreciation afforded by an investment in the Exchange-
able Notes is less than the opportunity for equity appreciation afforded by an investment in the EOG
Common Stock because the amount received by a holder of an Exchangeable Note upon exchange
at Maturity will only exceed the principal amount of such Exchangeable Note If the Maturity Price
exceeds the Threshold Appreciation Price (which represents an appreciation of 21% over the Initial
Price). Holders of the Exchangeable Notes will only be entitled to receive upon exchange at Maturity
82.64% of any appreciation of the value of EOG Common Stock in excess of the Threshold
Appreciation Price.

It is impossible to predict whether the price of EOG Common Stock will rise or fall. Trading
prices of EOG Common Stock will be influenced by EOG's operational results and by complex and
interrelated political, economic, financial and other factors that can affect natural gas and crude oil
commodity markets generally. See the prospectus relating to EOG and to EOG Common Stock
attached hereto as Appendix A and Included as part of this Prospectus.

In addition, in the evant Enron does not exercise its option to deliver cash, holders of the
Exchangeable Notes will not be entitled to any rights with respect to the EOG Common Stock
(including, without limitation, voting rights and rights to receive any dividends or other distributions in
respect thereof) until such time as Enron shall have exchanged shares of EOG Common Stock for
Exchangeable Notes at Maturity thereof and unless the applicable record date, if any, for the
exercise of such rights occurs after such exchange.

The Exchangeable Notes will be unsecured obligations of Enron ranking pari passu with alll of
its other unsecured and unsubordinated indebtedness. The terms of the Exchangeable Notes do not
limit the amount of indebtedness which may be incurred by Enron.

Dilution of EOG Common Stock

The amount that holders of the Exchangeable Notes are entitied to receive upon the mandatory
exchange ‘at Maturity is subject to adjustment for certain events arising from stock splits and
combinations, stock dividends and certain other actions of EOG that modity its capital structure. See
“Description of the Exchangeable Notes - Dilution Adjustments.” The amount to be received by
holders of Exchangeable Notes upon mandatory exchange at Maturity may not be adjusted for other
events, such as offerings of EOG Common Stock for cash or in connection with acquisitions, that

00900000000251


1999“SE* 0212103 i

Gy,

Facsimile Cover Sheet

To:

Company:
Phone:
Fax:

From:

Company:
Phone:
Fax:

Date:
Pages including this

cover page:

Comments:

The Honorable Lawrence H.

Summers

U.S. Department of Treasury
202/622-1100
202/622-0073

Rosalee Fleming for

Kenneth L, Lay
Enron Corp.
713/853-6088
713/853-5313

10/08/99

2

as2 P. 1/2

00100000000135


CIENA Corp [CIEN): $0.05, $0.05, $0.14

H.J. Heinz Co (HNZ): $0.89, $0.59, $0.69
Oracle Corp (ORCL): $0.10, $0.10, $0.11
Tektronix (TEK): $0.12, $0.09, $0.38

Friday's major expected earnings reports:
No major earnings scheduled.

For more earnings information, check out
http://www. investorguide.com/earningscalendars. html

word of the day

incubator - A company or facility designed to foster entrepreneurship
and help startup companies, usually technologyrelated, to grow through
the use of shared resources and intellectual capital.

For more financial terms, please visit http://www. investorwords.com,

notable quotable

"It is going to be the bargain of the century. It is going to lock
like we bought the ialand of Manhattan for $7.5 million and some
beads." - eCompanies co-founder Sky Dayton on his $7.5 million
purchase of the domain name Business.com in November 1959, in an
Internet World interview

Copyright 2001 by InvestorGuide.com, Inc.

InvestorGuide Daily is designed to keep you informed of the latest
investing news. It includes a market summary, top news, IPOs, earnings
and more...everything you need to invest better, every day. You can
aleo find this newsletter every evening at

http://www. investorguide.com/daily.html]

This strictly opt-in newsletter is published by InvestorGuide.com
(http://www. investorguide.com], and is sent only to those who have
specifically requested it. No information gathered from newsletter
subsecribera, including e-mail addresses, is ever shared with or sold
to any third-party. If you know others who might like to receive
InvestorGuide Daily, feel free to forward this issue to them. To
subscribe, send any message to daily@investorguide.com. To
unsubscribe, send any message to investorguidedaily-offe@mail-liat.com.
If you would like to advertise in this newsletter or on any of the
InvestorGuide websites, please contact advertise@investorguide.com

InvestorGuide.com has no control over the sites we link to, is not
affiliated with these sites, and cannot take responsibility for their
quality or suitability. The news, earnings, and IPO information is not
meant to be comprehensive, and data provided ig not guaranteed to be
accurate. We are not responsible for claims made by advertisers and
Sponsors. Anyone who makes investment decisions based on what they
read here does so at their own risk and cannot hold WebPinance Inc.
(DBA InvestorGuide.com, Inc.) or its employees responsible. For the
complete disclaimer please see

http://www, investorguide.com/disclaimer.html

: 01719

01200000000375


Nickoloff, Peter

eee

From: InvestorGuide Daily [daily@investorquide.com]

Sent: Thursday, January 10, 2002 6:09 PM

To: peter_nickoloff@do.treas gov

Subject: InvestorGuide Daily ~ January 10, 2002

InvestorGuide Daily January 10, 2002
brought to you by

InvestorGuide (portal) http://www. investorguide.com

InvestorWords (glossary) http: //wew. investorwords.com

WebFinance Consulting http: //www.web£inanceconsulting.com

If a friend forwarded you this message, get a free subscription by
sending any email message to daily@investorguide.com

Contents:
Market Summary
Busi is News and Analysis
Advertise with Us
Earnings
Word of the Day
On This Date
Notable Quotable

Today's issue is sponsored by ChangeWave:

Double your money in the next six months! The Nasdaq surge that
started in September is only the beginning of a powerful tech
turnaround. But the rising tide will not lift all boats this time
around, Be prepared to act now! Sign up for Tobin Smith's FREE e-mail
seminar "Profiting Prom Change" :
hetp://www.changewave.com/reg/

market summary

The major market indices managed to pull up from earlier 1
close near break-even. Mixed reports on holiday retail sales kept the
indices near their opening levels. A couple of economic reports were
released today, including the Commerce Department's November report on
wholesale inventories and the Labor Department's weekly report on new
jobless claims. Inventories fell by 1.1% while the number of new
jobless claima fell by 56,000. The Dow blue-chip index closed 26.23
points lower (-0,26%) while the Nasdaq tech index gained 2.35 points

(+0.118).

Dow Jones Industrials: 10067.86 -26.23 -0,268
Nasdaq Composite: 2047.24 42.35 +0,12%
S&P 500; 1156.55 +1,41 40.12%
30-year Treasury Bond: 5.413% -0.087

For more news and information on the market, investing, and personal
finance, please vieit http://www. investorguide.com

6 01743

01200000000399



Nickoloff, Peter

From: InvestorGuide Daily [daty@investorguide.com]

Sent: Wednesday, January 16, 2002 5:54 PM

To: peter_nickoloff@do.treas.gov

Subject: InvestorGuide Daily - January 16, 2002

InvestorGuide Daily January 16, 2002
brought to you by

InvestorGuide (portal) http://www. investorguide.com

InvestorWorda (glossary) http://www. investorwords.com

WebPinance Consulting hetp: //www.webfinanceconsulting.com

If a friend forwarded you thie measage, get a Free subscription by
sending any email message to Gaily®investorguide.com

Today's issue is sponsored by TradingPit.com:

Major Wire House Analysts' 2002 And Beyond Stock Market Forecast!
Pind out: what major wire house analysts believe is in store for the
stock market in 2002 and beyond! Learn the dynamics effecting the
markets, and how you may better capitalize on them! Discover an
indicator that has never yet failed in predicting the next 12 months
for stocks! This highly informative, fascinating report, can very well
be the most important you've ever read for your financial well being!
Valued at $25, its yours free by clicking here now.

http: //wew.tradingpit.com/default.cfmfarc=igd

Contenta:
Market Summary
Business News and Analysis
Earnings
Word of the Day
Notable Quotable

Market Bummary

For investors, today was a bad day with a worse ending. The major
indices started in the red and seemed content to coast along for the
bulk of the day until another slide brought them to their lowest
levels at the close. The economy and earnings continue to be the chief
concerns with Intel bringing about some of today's pessimism by
announcing a decrease in capital spending for the coming year. At the
finish, the Nasdaq had fallen 56 points, and the Dow had lost 211.

Dow Jones Industrials: 9712.27 -211.88 72.134
Nasdaq Composite: 1944.44 ~56.47 -2.82%
S&P 500: 1127.56 -18.63 -1.634%
30-year Treasury Bond: 5.348% 0.009

For more news and information on the market, investing, and personal
finance, please visit http://www. investorguide.com

business news and analysiga

1

01849

01200000000505


24. The Securities and Exchange Commission is investigating those transactions.

Enron is expected today to send the S.E.C. answers to questions the agency has posed in its investigation. The
answers have been reviewed by Dyncgy officials, the executives said, and are expected to be released publicly.

Enron is scheduled to meet its creditors tomorrow about the company’s continuing crisis - and about the merger
deal, if there is one.

People close to the deal say the company hopes that a deal with Dynegy, and the release of the answers to the
S.E.C., will calm the crisis that has engulfed the company and led other energy companies that trade with Enron
to curtail their credit exposure to the company.

Besides worries about the huge losses and the S,E.C. investigation, investors and creditors are nervously
watching Enron's credit rating. Moody's Investors Service and Standard and Poor's have already cut the rating to
two notches above junk status, and on Monday, Fitch Inc. cut it to one notch above junk.

As part of the acquisition, Dynegy would be taking on Enron's $12.8 billion debt load - a number that does not
include billions of dollars of other debt, accumulated off the balance sheet, that has played a major role in
Enron's current problems. The executives said they expected the deal would lead to the sale of some Enron
assets to pay down the $12.8 billion debt.

Should Enron lose its investment grade rating, other energy trading companies could curtail their business with
the company even further, and Enron could be forced to issue tens of millions of shares of stock to cover off-
balance sheet debts that it has guaranteed,

Early Wednesday, shares of Enron plunged 28 percent, to about $7, on fears that the company was unable to line
up new investors.

But the stock took back most of its losses in the afternoon after CNBC reported the talks with Dynegy. Shares of
Enron closed at $9.05, off 62 cents. Dynegy shares closed at $33, down $3.

In addition to both companies' very large presence in energy trading, Enron owns the Portland General Electric

Company (news/quote </redirect/marketwatch/redirect.ctx?M W=http://custom.marketwatch.com/custom/nyt-
com/htm|-companyprofile.asp&symb=PGB>), 2 utility in Oregon it had already agreed to sell, and Dynegy
owns the Illinova Corporation, a retail electricity and natural gas utility in [linois.

Regulators may take a hard look at those utilitics in reviewing a merger deal, said Jeff Dietert, an analyst with
Simmons & Company in Houston. "Then you've got concerns about market power," he said. "It's just a lot of
different issues to deal with before we get too excited that this deal is going to get done.”

The acquisition would combine Enron, which dominates United States trading of electricity and natural gas and
has been shedding its hard assets, with Dynegy, a company that has pursued a much different strategy of using
trading to maximize earnings from its power plants.

Enron has always concentrated on sophisticated financial trading strategies, a senior executive at a rival energy-
trading firm, said. “Dynegy has always been more of a logistical player of physical asscts," he said. "Those are
very different cultures and very different mentalities.” The executive noted that there had been an immense
talent drain from Enron in the last two weeks. "It has become a frenzy," he said.

Tracking: Recipient Read
Carleton, Norman Read; 11/8/01 10:48 AM
Schultheiss, Meiditynne Read: 11/8/01 1046 AM

‘ 01698

01200000000354


issued under the Indenture. Specifically, the restrictions apply only to pledges, mortgages or liens
upon “Principal Property" (as defined in the Indenture and herein) to secure any “indebtedness” (as
defined in the indenture and herein), unless effective provision is mada whereby outstanding
Securities will be equally and ratably secured with any such indebtedness and with any other
indebtedness similarly entitled to be equally and ratably secured. There are certain exceptions to the
de‘inition of “indebtedness,” which are enumerated in the Indenture and herein. Ir addition, the
restrictions do not apply to prevent the creation or existence of mortgages, pledges, liens or
encumbrances on certain types of properties or pursuant to certain types of transactions, all as
enumerated in the Indenture and above. Also, up to 10% of Consolidated Net Tangible Assets (as
etined in the Indenture and hersin) is not subject to the mortgage and lien limitations contained in
the indenture.

Modification of the indenture

* With certain exceptions, the Indenture provides that, with the consent of the holders of not less
than 50% in principal amount of all outstanding indenture Securities (including, where applicable, the
Exchangeable Notes) affected thereby. Enron and the Trustee may enter into a supplemental
indenture for the purpose of adding to, changing or eliminating any of the provisions of the Indenture
‘or of modifying in any manner the rights of the holders of Indenture Securities under the Indenture.
Notwithstanding the foregoing, the consent of the holder of each outstanding indenture Security
affected thereby will be required to: (a) change the Stated Maturity (as defined in the Indenture) of
the principal of, or any installment of principal of or interest on, any Indenture Security, or reduce the
Principal amount thereof or the rate of interest thereon or any premium payable upon the redemp-
tion thereof, or change any Place of Payment (as defined in the indenture) where, or change the coin
‘of currency in which, any Indenture Security or any premium or the interest thereon is payable, or
impair the right to institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the Redemption Date, as defined in the
Indenture) or change the terms under which any Exchangeable Notes are exchangeable; (b) reduce
the percentage in principal amount of the outstanding indenture Securities of any series, the
consent of whose holders is required for any supplemental indenture or for any waiver provided for
in the Indenture; or (c) with certain exceptions, modify any of the provisions of the sections of the
Indenture which concern waivers of past defaults, waivers of certain covenants or consent to
supplemental indentures, except to increase the percentage of principal amount of Indenture
Securities of any series, the holders of which are required to effect such waiver or consent, or to
provide that certain other provisions of the Indenture cannot be modified or waived without the
consent of the holder of each outstanding Indenture Security affected thereby. The Indenture
provides that a supplemental indenture which changes or eliminates any covenant or other provision
of the Indenture which has expressly been included solely for the benefit of one or more particular
series of Indenture Securities, or which modifies the rights of the holders of indenture Securities of
such series with respect to such covenant or other provision, shall be deemed not to affect the
rights under the Indenture of the holders of Indenture Securities of any other series.

Events of Default and Rights Upon Default

Under the Indenture, the term “Event of Default" with respect to any series of Indenture
Securities, means any one of the following events which shall have ocourred and is continuing:
(a) default in the payment of any interest upon any Indenture Security of that series when it becomes
due and payable or default in the payment of any mandatory sinking fund payment provided for by
the terms of any series of Indenture Securities, and continuance of such default for a period of 30
days; (b) default in the payment of the principal of (or premium, if any, on) any Indenture Security of
that series at its maturity; (c) default in the performance, or breach, of any covenant or warranty of
Enron in the Indenture (other than a covenant or warranty a default in the performance of which or
the breach of which is otherwise specifically dealt with in the Indenture or which has been expressly
included in the Indenture solely for the benefit of one or more series of Indenture Securities other
than that series), and continuance of such default or breach for 60 days after there has been given to
Enron by the Trustee, or to Enron and the Trustee by the holders of at least 25% in principal amount

22

00900000000268


DEPARTMENT OF THE TREASURY
. WASHINGTON, D.C. 20220

License No. IA- [(b)(2)]
Trantam TRANSACTIONS REGULATIONS

LICENSE

{Granted under the authority of Section 505 of the International Security and Development Cooperation
Act of 1985 (22 U.S.C, § 2349aa-3}, Section 203 of the U.S. International Emergency Sconomic Powers
Act [50 U.S.C. § 1702), the National Emergencies Act (50 U.S.C. § 1601 mt seq.} Executive Orders
12613, 12957, 12959, and 13059, and 31 C.F-R. Parts S01 and 569.1

To: Enron Capital and Trade Resources Corp.
c/o: Sutherland, Asbill and Brennan, L.L.P.
1725 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404 Attn: Beverly J. Rudy, Esq.

1. Based on the February 20, 1998, letter to the Office of Foreign Assets Control from or on behalf
of Enron Capital and Trade Resources Corp. (the “Application"), 31 C.P.R. $ 5é0{(b)\(4)and information
otherwise available te the Office of Foreign Assets Control, the transaction(s} and activity(ies) on
the reverse hereof are hereby authorized.

2. This license is granted upon the statemente and representations made in the Application, otherwise
filed with or made to the Treasury Department as a supplement to the Application, or based on
information available to the Treasury Department, and ie subject to the condition, among others, that
the licensee(s} hereunder comply in all respects with all regulations, rulings, orders, and
instructions ued by the Secretary of the Treasury under the authority of Section 595 of the
International Security and Development Cooperation Act of 1985, Section 203 of the U.S. International
Emergency Economic Powers Act (50 U.S.C. § 1702], the National Rmergencies Act (50 U.S.C. § 1702},
and the terms of this license.

3. The licensee(s) shall furnish and make available for inspection any relevant information, records,
or reports requested by the Secretary of the Treasury, or any other duly authorized officer or agency.

4. This license is not transferable, and is subject to the provisions of Executive Orders 12613,
12957, 12959, 13059 and any regulations and rulings issued pursuant thereto. It may be revoked or
modified at any time at the discretion of the Secretary of the Treasury, If thia License was iasued
as a result of willful misrepresentation on the part of the applicant, it may, at the discretion of
the Secretary of the Treasury, be declared void from the date of its issuance, or from any other date.

S. This license does not excuse compliance with any law or regulation administered by the Office of
Foreign Assets Control or another agency (including reporting requirements) applicable to the
transaction(s) herein licensed, nor does it release Licensee({s) or third parties from civil or
criminal liability for violation of any law or regulation.

Issued by direction and on behalf of the Secretary of the Treasury:

OFFICE OF FOREIGN ASSETS CONTROL

By

R. Richard Newcomb
Director

Attention is directed to, inter alias, 189 U.S.C. § 545, 18 U.S.C, 100%, 19 U.S.C, 1592, and 19 U.S.C,
1595a, 50 U.S.C. § 1705, and 31 C.F.R. Part $60 for provisions relating to penalties.

{(b)(5)]


Indenture Securities (including the Exchangeable Notes) will be equally and ratably secured with any
and all such indebtedness and with any other indebtedness similarly entitled to be equally and
ratably secured, This restriction does not apply to prevent the creation or existence of:
{a) mortgages, pledges, liens or encumbrances on any property held or used by Enron or a
Subsidiary in connection with the exploration tor, development of or production of, oil, gas, natural
gas (including liquefied gas and storage gas), other hydrocarbons, helium, coal, metals, minerals,
steam, timber, geothermal or other natural resources or synthetic fuels, such properties to include,
but not be limited to, Enron's or a Subsidiary's interest in any mineral fee interests, oll, gas oF other
mineral leases, royalty, overriding royalty or net protits interests, production payments and other
similar interests, wellhead production equipment, tanks, field gathering lines, leasehold or field
separation and processing facilities, compression facilities and other similar personal property and
fixtures; (p) mortgages, pledges, liens or encumbrances on oll, gas, natural gas (including liquefied
gas and’storage gas), other hycrocarbons, helium, coal, metals, minerals, steam, timber, geothermal
or other natural resources or synthetic fuels produced or recovered from any property, an interest in
“hich ts owned or leased by Enron or a Subsidiary; {c) mortgages, pledges, liens or encumbrances
{or certain extensions, renewals or refundings thereof) upon any property acquired before or after
the date of the Indenture, created at the time of acquisition or within one year thereafter to secure all
or a portion of the purchase price thereof, or existing thereon at the date of acquisition, whether or
not assumed by Enron or a Subsidiary, provided that avery such morigage, pledge, lien or encum-
brance applies only to the property $0 acquired and fixed improvements thereon; (d) morigages,
pledges, liens or encumbrances upon any property acquired before or after the date of the Indenture
by any corporation that is or becomes a Subsidiary after the date of the Indenture ("Acquired
Entity’), provided that every such mortgage, pledge, lien or encumbrance (1) shall either () exis’
prior to the time the Acquired Entity becomes a Subsidiary oF (i) be created at the time the Acquired
Entity becomes a Subsidiary or within one year thereafter to secure all or a portion of the acquisition
price thereof and (2) shall only apply to those properties owned by the Acquired Entity at te We 0

tsssn security pursuant 10 the intemal Revenue Code of 1886, as amended, for the purpose of
fmancing the acquisition or construction of property to be used by Enron or a Subsidiary; () pledges
or assignments of accounts receivable oF conditional sales contracts or chattel morigages end
svidences of indebtedness secured thereby received in connection with the sale by Enron or &
Subsidiary of goods or merchandise to customers; or (k) certain other liens or encumbrances.

Notwithstanding the foregoing, Enron or a Subsidiary may Issue, assume or guarantee indeDt-
edness secured by & mortgage which would otherwise be subject to the foregoing restrictions in ap

Statements of Enron as of the end of the fiscal year preceding the date of determination.

‘The holders of at least 50% in principal amount of the outstanding Indenture Securities under
the Indenture fineluding the Exchangeable Notes) may waive compliance by Enron with the covenant
described above (and certain other covenants of Enron).

Is, shares ented to vote for the election of directors, but excluding shares entitled so to vove Orly
upon the happening of some contingency unless such contingency shall have occurred) of which

20

00900000000266


WSJ.com Page 6 of 6

emergencies won't subside."

Write to Michael Schroeder at mike.schroeden@wsj.com® and Greg Ip at greg.in@wsj.com?

URL for this Article:
http-/linteractive..ws),com/archive/retrieve.cgi?id®SB 1008202066979356000.djm

Hyperlinks in this Article:

(1) http:/finteractive.wsj.com/pages/enronpa:

(2) http: www nesringe. com/ionwholerolaegins asp7ID*878HID=4527

(3) http:/www.realplayer.com

(4) hitp:/finteractive.wsj.com/archive/retrieve.cgi7id=SB1008181357847808200.djm
(5) http: //interactive.wsj.com/archive/retriave.cgi?id=SB1008196294985520800.djm
(6) mailto:mike.schroeder@wsj.com

{7} mailto:greg.ip@wsj.com

Copyright © 2001 Dow Jones & Company, Inc. All Rights Reserved.
Printing, distribution, and use of this material is governed by your Subscription Agreement and copyright laws,

For information about subscribing, go to http://wsj.com

hitp://interactive.wsj.com/archive/retrieve.cgi7id=SB 1008202066979356000.djmactemplate=... 12/1301

01493

01200000000147


subsidiaries are or were included in the Enron consolidated return. To the extent a state or other
taxing jurisdiction requires or permits a consolidated, combined, or unitary tax return to be tiled and
such return includes EOG or any of its subsidiaries, the principles expressed with respect to
consolidated federal income tax allocation shall apply. The Tax Allocation Agreement will cease to
be effective from the time at which deconsolidation occurs. EOG and Enron have entered into a new
tax agreement pursuant to which, among other things, Enron has agreed {in exchange for the
Payment of $8.0 millicn by EOG) to be liable for, and to incemnify £0G against, all federal income
axes and state taxes measured by net income imposed on EOG for periods through the date Enron
reduces its ownership in EOG to less than 80%, Enron and EOG do not believe that the cessation of
Consolidated tax reporting and effectiveness of the Tax Allocation Agreement concurrently with
deconsolidation or the terms of the new tax agreement will have a material adverse effect on the
financial condition or results of operations of either Enron or EOG.

Conflicts of Interest

The. re of the respective businesses of EOG and Enron and its affiliates is such as to
potentially give rise to conflicts of interast between the two companies. Contlicts could arise, for
example, with respect to transactions involving purchases, sales and transportation of natural gas
and other business dealings between EOG and Enron and its affiliates, potential acquisitions of
businesses or oil and gas properties, the issuance of additional shares of voting securities, the
election of directors or the payment of dividends by EOG.

Circumstances may also arise that would cayse Enron to engage in the exploration for and/or
Sevelopment and production of natural gas and crude oil in compatition with EOG. For example,
Opportunities might arise which would require financial resources greater than those available to
E0G, which are located in areas or countries in which EOG does not intend to operate or which
involve properties that EOG would be unwilling to acquire. Also, Enron might acquire a competing oil
and gas business as part of a larger acquisition. In addition, as part of Enron's strategy of securing
suppiies of natural gas or capital, Enron may from time to time acquire producing properties or
interests in entities owning producing properties, and thereafter engage in exploration, development
and production activities with respect to such properties or indirectly engage in such activities
through such companies. Enron subsidiaries provide or arrange financing, including debt or equity
financing, for exploration and production companies that compete with EOG. In connection with
such activities, Enron affiliates may make investments in the debt or equity of such companies.
There are currently no such transactions under consideration that would result in voting control by
Enron or any of its affiliates, other than the transaction described in the next paragraph. In its
financing activities Enron or any entity in which it has an interest may also make loans secured by oil
and gas properties or securities of oll and gas companies, may acquire production payments or may
receive interests in oil and gas properties as equity components of lending transactions. As a result
of its lending activities, Enron may also acquire oil and gas properties or companies upon forecios-
ure of secured loans or as part of a borrower's rearrangement of its obligations. Such acquisition,
exploration, development and production activities may directly or indirectly compete with EOG's
business. There can be no assurance that Enron will not engage, directly or indirectly through
‘entities other than EOG, in the natural gas and crude oil exploration, development and production
business in competition with EOG.

Joint Energy Development investments Limited Partnership ("JEDI"), a limited partnership in
which ECT owns a 50% general partner interest, has entered into an agreement to acquire a
controling interest in Coda. Coda is engaged in the exploration for, and the development, produc-
tion and marketing of, natural gas and crude of primarily in North Texas and Oklahoma. Crude olf
accounts for approximately 86% of Coda’s proved reserves. At December 31, 1994, Coda reported
estimated proved natural gas reserves of 39,608 MMct and estimated proved crude oil, condensates
and natural gas liquids reserves of 39,207 MBbis. Enron anticipates that the transaction will be
consummated in early 1996, subject to Coda stockholder approval and other conditions, Conflicts
may arise between Coda and EOG, and if the acquisition of Coda occurs Enron will be required to
resolve such conflicts in a manner that is consistent with its fiduciary and contractual duties to other
investors in Coda and JEDI and its fiduciary duties to EOG. ECT has entered into an agreement with
JEDI and other investors in Coda designed tc minimize certain conflicts of interest that may arise

13

00900000000259 _


DEPARTMENT OF THE TREASURY
WASHINGTON, D.C. 20220

License No. IA- [(b)(2)]
Iraxran TRANSACTIONS RzoULATIONS

LICENSE AMENDMENT

(Granted under the authority ef 50 U.5.C. §§ 1701-06, 22 U.S.C. § 2349a0-9, Executive Orders 12613,
12957, 12989, 13059, and 31 C.¥.R. Parts 501 and 560.)

To: Enron Capital and Trade Resources Corp.
c/e: Sutherland, Asbill and Drennan, LLP
1725 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404 Attn: Beverly J. Rudy, Esq.

1. Based on the May 4, 1999 application of Sutherland, Asbill and
Brennan, LLP to the Office of Foreign Assets Control and OFAC License
No. IA-[(b)(2)] the expiration date of License No. IA-{(b)(2)is hereby
extended to May 31, 2000.

2. All other terms, conditions, limitations, and provisions of License
No. TA [(b)(2)P Te unaffected by the foregoing and remain in force.

Issued by direction and on behalf of the Secretary of the Treasury:
OFFICE OF FOREIGN ASSETS CONTROL

Val Nad too

A Richard Newcomb
rector

Attention is directed to 16 U.S.C. § 1001, $0 U.S.C, § 1705, and 32 C.F.R, § 560,701 for
provisions relating to penalties.

00400000000026


DEPARTMENT OF THE TREASURY
WASHINGTON, D.C. 20220

License No. YK-[(b)(2)]
FEDERAL REPUBLIC oF YUGOSLAVIA (SERBIA AND MowrenecRo) Kosovo SANCTIONS REGULATIONS
LICENSE
(Granted under the authority of § 203 of the International Bnergency Economic Powers Act
[50 U.S.C. § 1702], Executive Order 13088, 31 C.F,R. Parts $02 and S86, and Executive
Orger 13121.

To: Enron Corporation (the “Licensee”)
1775 I Street NW
Suite 800
Washington, DC 20006 Att: Thomas C. Briggs VP, Government Affairs

1. Based on your letter of October 18, 2000 (the ‘Applicaticn") and on information
otherwise available to the Office of Foreign Assets Control, the transactions and
activities delineated on the reverse hereof are hereby authorized.

2. This License is granted upon the statements and representations made in the Application,
otherwise filed with or made to the Treasury Department as a supplement to the Application,
or based on information available to the Treasury Department, and is subject to the
condition, among others, that the Licensee comply in all respects with all regulations,
wilings, orders, and instructions issued by the Secretary of the Treasury under the
authority of Section 203 of the International Emergency Economic Powers Act, 50 U.S.C. §
2702, and the terms of this License.

3. ‘The Licensee shall furnish and make available for inspection any relevant information,
records, or reports requested by the Secretary of the Treasury, or any other duly authorized

officer or agency.

4. This License is not transferable, and is subject to the provisions of Executive Order
13088 cf June 9, 1998, 31 C.F.R. Parts 501 and S66, Sxecutive Order 13121 of April 30, 1999,
and rulings issued pursuant thereto. It may be revoked or modified at any time at the
discretion of the Secretary of the Treasury. If this License was issued as a result of
willful misrepresentation on the part of the applicant, it may, at the discretion of the
Secretary of the Treasury, be declared void from the date of its issuance, or from any other

date.

5. This License does not excuse compliance with any law or regulation administered by the
Office of Foreign Assets Control or another agency (including reporting requirements)
applicable to the traneaction(s) herein licensed, nor does it release Licensee or third
parties from civil or criminal liability for violation of any law or regulation.

Issued by direction and on behalf of the Secretary of the Treasury:

Attention is directed to, inter alia, 50 U.S.C. § 1705, 18 U.S.C. § 545, 18 U.S.C. § 1003,
14 U.S.C. § 3571, 19 U.S.C, § 1892, 19 U.S.C, § 1595a, 28 U.S.C. § 2461 note, and 31 C.F.R.

§ 586.701 for provisions relating to penalties.

00400000000177


Nickoloff, Peter .
InvestorGuide Daily [dally@investorguide.com]

Monday, December 31, 2001 10:36 AM

peter.nickoloff@do.treas.gov

InvestorGuide Daily - year end issue

InvestorGuide Daily December 31, 2001
brought to you by

InvestorGuide (portal) http://www. investorguide.com

InvestorWords (glossary) http://www. investorwords.com

WebFinance Consulting http://www. webfinanceconsulting.com

The following is a special year-end edition of InvestorGuide Daily.
Below are links to the best year-in-review and year-ahead finance and
investing stories from around the web. InvestorGuide Daily will return
to its standard format on Wednesday. Enjoy and have a happy New Year!

Contents;
Market Summary
Looking Back: 2001 Business
Looking Bac! 2001 Investing
Advertise With InvestorGuide
Looking Ahead: 2002 and Beyond

market summary

Weekly Market Data Start End Change
Dow Jones Industriala: 10035,.34 10136.99 +1,.01%
Nasdaq Composite: 1945.73 1987.27 +2.13%
S&P 500: 1144.83 1161.01 +1.41%
30-year Treasury Bond: 5.4568 §,542% +0.086
lookiag back: 2001 businees

The Economist presente a series of articles on economies and
industries from around the globe, Technology, airlines, automobiles,
insurance, drugs, and media are all addressed. Descriptions of how
these sectors changed and how major companies were affected in 2001
make for a comprehensive reviee of the year. (source: Economist)
http://www. investorquide.com/cgi-bin/weekly.cgi?05524

A lot of companies, business leaders and workers would like to put
2001 behind them. And that's not including the unfortunate employees
poasessing an Enron 401(k) plan. ABC News sorts out the good, the bad,
and the bankrupt. (source: ABC News)

http://www. investorguide.com/cai-bin/weekly.cgi?05525

Honest CEOs. Harebrained ad campaigns. Appalling outfits, They've all
earned a place on Fortune's list of the best and worst of business for
2001. (source: Fortune)

http://www. investorguide.com/cgi-bin/weekly.cgi?05526

It's a big world of charity out there awaiting your year-end,
tax-deductible contributions-perhaps too big. The IRS recognizes more

01692

01200000000348


“GO| U0 AeYS

POeSEp PUE MOPUIM POyEO) SUN UI ¥O1D-H4EL “OAMOE ARIS Of MOPUIM PIYEOY OY) JuRM JeBUO| OU NO
“OO UO ARIS HOS PUE MOPUIM PAa}OY O4R Ul 4999-4Bu “Orne ARS oy mOpUIM PeIBOY JNOK yum NOA yy
é6uyeeddesip sdeax mopuym payeoy Aw auios mo

‘uRGe Su0q2996 2eyy INGA DAES PUE MOpUIM Seon AW aZFEUOSIAG BUN GWU! Y9Eq OD
essojouresed Aw yy Jeu s}oNpoud a4y Jo {Je Ges JoUUED yng 40} e dn yes OAeY |

"S04 “S389 BWUOS Uy
eseudxe yf Ueym y ppe-o 0} aAky | 111 JONposd jeNpJAIpUI Ue ppe ii

“SISPg SBS) Sf] JO WEY SED SN Be yeLN sjonpoud ye
JOU pus “SISBg GUE PUR ‘YoIBOY 1SB3 yp U! "SED SA AVE JEU) SJaNpoud FE WNYL TIM SIUY "SISBG - OAL
B9(] PUE ‘FS - VOIR "SED S1) - AypOWIWOD/ARURED 199)88 NOK ‘oKiWEXe 204 'saY}50 06 pou OP
Jey) Siajoweved Yym soyy & dn 266 BABY Kew NO, “UORIPUOD ,20, UE JOU ‘UOHIPUC .PUE,, UB ue s59—Rg
ésyonpoid Aue 00s jouer? | sWOD MOH ZBuPOM jou ele $30}/4 Aw aw0> MOH

‘Ag dnoip, 129/28 pue MOpU\A e JOY Ue NOK yng ‘ONY
2481 JoNpold Aw uy! sayy 3nd | UeED

“S10N8| B20 wanKuRUIW OU BYE a4dy 4 ~JONPOUd yeYR JO afqsUOSaZ SOU

JOPER LOIS @1g Aq 188 EYE PUR JoNpOAd YOeS 404 ]UAVEIEP GUE SOWYOR WTUKEW PUP WNWIURL Ou
2ouluQuowuy

uo seedde yey sewnjoa Jo saoud wnuuIW ay} UO syuy Aue esau any

“YOrss]WgNS INO

lly 0 Any AjjeonewCAne tim WEnsAS Oy} ‘YOPAD UI] BOLId & BDMIC NOK 41 “(AYJOOds NOK ebUE oN LILIA s}
44) Wayshs @uyUQUOIEZ OY) UO o1qEFEAE GIjId yS9q 1 Og WM Ye |I@s 40 ANG NOA doud ayy AyjeUOKUNy
S6UGy Fld OY) OZIIN NOK 1 "UEEIIS OY UO Bod BY} 2O}0s AUD VED NOA OY) ‘SIBPUC) jw] O2tIg 30
ny BURY BOUy @4) 8N JOU Op NOX 4 ‘Aque JeqUINU |EWEpIOTE Ue Aq PesNeD ss0N00 BIQISSOd
SWIOS WOW NOA seaVONd BI) “WAISAS BUN|UQUOIUZ 8Yy URjem Jeadde yeLy Sooud JOYE AJUO UED NO,
2eoud Bum & J9}U9 Ayjequepsoz8 | 4) sueddey 72UM

Aygsuogout

“seoud SUES OY) Ges sUAEN Ye ‘SOA,

Seog Pur stonpotg - out]uQue"

“eb

Zw

“tL

‘OL

——e —

samiesss aul

a

a

01200000000734

Pa


ENRON CORP.

Enron, @ Delaware corporation organized in 1930, is an integrated natural gas company with
headquarters in Houston, Taxas. Essentially all of Enron's operations are conducted through its
subsidiaries and affiliates which are principally engaged in the gathering, transportation and whole-
sale marketing of natural gas to markets throughout the United States and internationally through
approximately 44,000 miles of natural gas pipelines; the exploration for and development and
Production of natural gas and crude oil in the United States and internationally; the production,
purchase, transportation and worldwide marketing of natural gas liquids and refined petroleum
products; the independent (i.e., non-utility) development, promotion, construction and Operation of
Power plants, natural gas liquids facilities and pipelines in the United States and internationally; and
the non-price regulated purchasing and marketing of energy related commitments.

Transportation and Operation, Enron's operations include the interstate and intrastate trans-
missio# of natural 983, Construction, management and operation of natural gas and natural gas
jiquids pipelines, liquids plants, clean fuel plants and power facilities, Enron and its subsidiaries
operate domestic interstate pipelines extending trom Texas to the Canadian border and across the
southern United States from Florida to California. Included in Enron’s domestic interstate natural
ges pipeline operations are Northern Natural Gas Company (‘Northern’’), Transwestern Pipeline
Company ("Transwestern"), and Florida Gas Transmission Company (‘‘Florida Gas") (indirectly
50% owned by Enron), and all such pipelines are subject to the regulatory jurisdiction of the Federal
Energy Regulatory Commission. Each pipeline serves customers in a specific geographical area:
Northern, the upper Midwest; Florida Gas, the State of Florida; and Transwestern, principally the
California market. In addition, Enron holds a 13% interest in Northern Border Partners, L.P., which
‘owns a 70% interest in the Northern Border Pipeline system. An Enron subsidiary operates the
Northern Border Pipeline system, which transports gas from western Canada to delivery points in
the midwestern United States. Also, Enron has an approximate 15% interest in Enron Liquids
Pipeline, LP., which is engaged in pipeline transportation of natural gas liquids, refined petroleum
Products and carbon dioxide, operates coal terminalling, gas processing and natural gas liquids
fractionation facilities, and ts operated by a wholly owned subsidiary of Enron.

Domestic Gas and Power Services. Enron Capital & Trade Resources Corp. and its affiliated
companies ("ECT") purchase natural gas, natural gas liquids and power through a variety of
contractual arrangements, including both short- and long-term contracts, the arrangement of pro-
duction payment and other financing transactions, and other contractual arrangements. ECT
markets these energy products to local distribution companies, electric utilities, cogenerators, and
both commercial and industrial end-users. ECT also provides price risk management services in
connection with natural gas, gas liquids and power transactions through both physical delivery and
financial arrangements.

ECT offers a broad range of non-price regulated natural gas merchant services by talloring a
variety of supply and marketing options to its customers’ specific needs. ECT’s strategy is to
provide predictable pricing, reliable delivery and low cost capital to its customers. ECT provides
these services through a variety of instruments, including forward contracts, swap agreements and
other contractual commitments.

Certain Enron subsidiaries are engaged domestically in the extraction of natural gas liquids
(ethane. propane, normal butane, Isobutane and natural gasoline), which are typically extracted from
natural gas in liquid form under low temperature and high pressure conditions. Ethane, propane,
normal butane, isobutane and natural gasoline are used as feedstocks for petrochemical plants in
the production of plastics, synthetic rubber and other products. Normal butane and natural gasoline
are used by refineries in the blending of motor gasoline. Isobutane is used in the alkylation process
to enhance the octane content of motor gasoline and is also used in the production of MTBE, which
is used to produce cleaner burning motor gasoline. Propane is used as fuel for home heating and

7

00900000000253


LLETO

LOF/ZL

€ Jo | weg

/S20LigpUes}onpolg /MUljUQuOsUAT ING Y /BUTAaxTeUL/S20p/

‘yuag WPas

sy Sayoeau Auedwoo MOK g ‘acWEXE JO} ‘paydacde jou BG ABw UosU3 0} PayYAUqNS NOA |Jes 40 ANG

0) 220 @4y AYM SUOSTa QE avEyy “JAAAMO} “SEPER VOU Aq @uquo paysod uayM Wy Ge BEI “SOA
ésuesn

je 0} seajid owes ay) MoYs YOU $90g LUUY Uae98 OY) UO eaS | SDH By “S

-sapuo pus aoud B a2eyd NOK UeYM JaNPaId yo AjQUEND uy

JAIIE OBIE UE NOA "VONNSSXS UOIPESUEL OF JOd ,CUUN|OA [BNE d| }EO20y,, PUB Bunon 40 fy, UaEMIeG
S800) URS NOK ‘LORIPPE Uy “YOHdUISEG) YOUS PNP 8yy UO Guppy Aq way) 696 O58 UES OA
onposd Aq JUBA UBD PUB MOPUIM LO/SSRUGNS B}B80> BUA U} seadde ‘paysnipe aq ued Ayuend yeujiyo
ayy seWes9U! AyQUAND WUNWU;URL Oy) “AYQUEND UEsOH> INGA yNduU] GO] MOPUIMA UOISS/UQNS 7D OL} Ul
100g Ayuend my JB6U SMOUE my OSM UBD NOA “UB8sIS seyonb yy uo paysed Ayquenb wnwwncew & oy Gr
wem nok jonpasd ouy yo Aquenb ay Ayoods o} eojoyo & NOK sanib GuUMUQUOIUS “SNPOId URFPHO 204
Zyoesue 07 JUeM | JoNPoOd yo AYQUeNb oy} Jeye | UED

‘udauds SayONb ey] UO UORdLISEq LOUS PAPA, oy

vo Buporp-yal Aq jE}UOO G} OY dh YOO] WED NO, “sod joNpad BUR PeIsod Tea ¥s8P Buypes) VAAL OU

oy Agoguip weeds UBD NOK ‘Mangeweyy “aded $7) eWOD ayy ySnouy s39Npaud ynoge sh 48e WED NOA
20 4/2} | OP OY JONPOA Je;no qed e NOGE GOW MOLY OF IUEM| ©

ausaquy

oy) SSQ08 BpaNey UOWELUUOJU| 94) Se SABIOP 8G WED EUBy) ING ‘passacoid Apeoqewoyne 3} UOua
Aq Pens0e) YORELUOPUS 'UEBIOS ANOKA LO BLRWAIA 205 seoud Owh jeeu o/qeyene Bulyew 8) UOZUg (Ra)
jeugdo ue ye VOREUOjU! Buisud pues Buen a4) Ysouyjes OF Aflojouysa, PROUBAE SeSN OUgUQUQIUS

ow peed Ajng Ayyqedes Buysesuey pue seoud euyuQuolUy ay *

OHSS SJHYIEYY SUNUQUGIU BY) UI PUNdS Og WED sFONPOIG ey UO

UOTEUUOIU! EdOWY “AqISSOd 3 y 4) EGUEYD SIL] GYELY OF MOY OK WUOYL II OM 489q) Ga}y @UUQUOKS
ely [189 aseejd “suoieu/sjonpoud |BUORIPpE U} PESUER O} YS os 4 “SeqiPOURUCO ABJOUs epEApLOM, JO
UOqsaj9€ OPI" & U} ESLER 0} B/G @q PIMOYS NOA “sli puotsg ‘suOseEY AiC|EINBaL 40 y/paz0 “ce) “e59)
204 Suo/Ges 20 sy9NPOUd JeINoTed UL WOIUS LAM PRSUEN O} eIGeUN s Ayedwoo JNOA jew aiQesod Ose
'$] }] "DOK 20) paraudde saSr) Jeyseyy MOA suCiGes pue ‘sjonpoud auy uo spuedap ssacce Bupen sno,

Zu JRSURL} | UED SUO!Hes pue S}oNposd yey *

woo ssa | eve a5 |

auluQuosuy

sooLg pue sjINpolg - auyuQueug

$8dl4d @ S}ONPOld

WOO BUTTUOUOLUD Mummy) ay

01200000000733


DEPARTMENT OF THE TREASURY

WASTING) UI) bee Be eO

License No. IA- [(b)(2)}
InaxIam TRANSACTIONS REGULATIONS

LICENSE

(Granted under the authority of Section 505 of the International Security and Development Cooperation
Act of 1985 (22 U.8,C. § 2349aa-9), Section 203 of the U.S. International Emergency Economic Powers
Act (50 U.S.C. § 1702), the National Emergencies Act (SO U.S.C. § 1601 et seq.) Executive Orders
12623, 12957, 12959, and 13059, and 31 C.F.R. Parts 501 and 560.)

To: Enron Capital and Trade Resources Corp.
c/o: Sutherland, Asbill and Brennan, LLP
1725 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404

1. Based on the April 17, 1998 letter to the Office of Foreign Assets Control by Sutherland, Asbill
and Brennan, LLP on behalf of Baron Capital and Trade Resources Corp. (the ‘Application"), 31 C.F.R.
§ 560((b)(2)Jand information otherwise available to the Office of Foreign Assets Control regarding the
subject thereof, the transaction(s) and activitylies! delineated on the reverse hereof are hereby
authorized

2. This License is granted upon the statements and representations made in the Application, otherwise
filed with or made to the Treasury Department as a supplement to the Application, or based on
information available to the Treasury Department, and is subject to the condition, among others, that
the Licensee(s} comply in ell respects with all regulations, rulings, orders, and instructions issued
by the Secretary of the Treasury under the authority of Section S05 of the International Security and
Development Cooperation Act of 1965, Section 203 of the U.S. International Emergency Economic Powers
Act (50 U.S.C. § 1702), the National Emergencies Act (50 U.3.C. § 1702), and the terms of this
License.

3. The Licensee(s! shall furnish and make available for inspection any relevant information, records,
Or reports requested by the Secretary of the Treasury, or any other duly authorized officer or agency.

4. This License is not transferable, and ie subject to the provisions of Executive Orders 12613,
12957, 12959, and apy regulations and rulings issued pursuant thereto. It may be revoked or modified
at any time at the discretion of the Secretary of the Treasury, If this License wae iseued ae a
result of willful misrepresentation on the part of the applicant, may, at the discretion of the
Secretary of the Treasury, be declared void from the date of its issuance, or from any other date.

5S. This License expires May 31, 1999, it does not excuse compliance with any law or regulation
administered by the Office of Foreign Asset# Control or another agency {including reporting
.Fequirements) applicable to the transaction(s) herein licensed, nor does it release Licensee(s) or
third parties from civil or criminal liability tor violation of any law or regulation.

Issued by direction and of behalf of the.,Secretary |bf the Treasury:

oreice| oF FOREIGN ASSETS OL

‘“ yi} é J
618/98

Attention is directed to, Anter alia, 18 U.8.C. $ 545, 18 U.S.C, 1001, 19 U.S.C. 1592, and 19 U.5.c
1595a, 50 U.S.C. § 2705, and 3: C.F,R. Part $60 for provisions relating to penalties

0400000000052


WSl.com Page 4 of 6

as a bid to expand her agency's authority.

At the industry's urging, then-House Banking Chairman Jim Leach, an lowa Republican, called a private
emergency meeting of the regulators in late June 1998, summoning Ms. Bom from Georgetown.
University Hospital, where her daughter was undergoing knee surgery. The regulatory staff and
lawmakers berated Ms. Born for more than two hours in a fruitless effort to persuade her to stop her
campaign

‘Three months later, the Long-Term Capital Management crisis erupted, "You are welcome to claim
some vindication,” Mr. Leach told Ms. Born at an October 1998 congressional hearing.

In the subsequent months, Ms. Born intensified her campaign for greater derivatives regulation, And she
appeared to be gaining support. Several studies, task forces and panels were formed, recommending
lenders perform better due-diligence when dealing with high-risk traders and that trading firms improve
risk-management models.

A coalition of regulators, including the Fed, Treasury, CFTC and SEC, meanwhile, wanted to force
hedge funds to make public more information about their holdings, a recommendation Rep. Richard
Baker, a Louisiana Republican, incorporated into a proposed law. They also recommended extending the
powers of both the SEC and the CFTC over unregulated affiliates used by regulated firms to conduct
particularly risky trades. That could have brought Enron under the CFTC's jurisdiction, since Enron had
a futures brokerage affiliate that was already registered with the agency.

An industry panel with Gerald Corrigan, a former president of the Federal Reserve Bank of New York
and now a managing director at Goldman Sachs Group Inc., acting as co-chairman made several
recommendations, One called on banks and Wall Street dealers to make a quarterly disclosure to their
regulators of their 10 biggest exposures in each of several categories of risk. It also called for them to
identity the parties on the opposite sides of those transactions.

No Consensus

Though some Wall Street firms, including Goldman, now mect informally with regulators to discuss
their exposures, the panel's recommendations were never formally implemented. "There simply was not
a consensus" among cither regulators or dealers "that it was worth the time, energy and cost to do it,"
says Mr. Corrigan,

Meanwhile, the derivatives industry was fighting the push for more regulation. The effort was
spearheaded by trade groups like the International Swaps and Derivatives Association and the Managed
Funds Association, which represents hedge funds, Enron also joined the battle.

Over the years, the company had built a formidable lobbying machine, with a staff of 28 in Washington
alone, most of whom have been laid off since the company’s recent collapse. Enron also paid $2.1
million last year ta about a dozen Washington lobbying firms to work on a range of energy and financial
issues, more than double the fees it paid in 1997, according to the Center for Responsive Politics, a
nonprofit group that studies the role of money in politics.

To date, the only significant changes in OTC derivatives laws have been those largely endorsed by the
industry, such as removing legal obstacles to the creation of common clearing corporations for settling

derivative trades among multiple parties. Another change, removing legal obstacles to two participants
treating offsetting contracts with cach other as a single position, is expected to be part of new

http://interactive.wsj.com/archive/retrieve.cgi?id=SB 1008202066979356000.djm&template=.., 12/13/01

01491

01200000000145


During the fourth quarter of 1995, the Company anticipates recording as proved undeveloped
reserves approximately 1,100 Bct of methane contained, along with high concentrations of carbon
dioxide and nitrogen as well as small amounts of other gaseous substances, in the deep Wyoming
Paleozoic formation located under acreage leased by the Company and held by production in the
Big Piney area. The Company is actively pursuing the consummation of a market or markets from
several different potential sources to facilitate realizing the value of these reserves.

South Texas Area, The Company's activities in South Texas are focused in the Wilcox,
Expanded Wilcox, Frio and Lobo producing horizons. The principal area of activity is in the Lobo
Trend which occurs primarily in Webb and Zapata counties.

The Company operates approximately 470 wells in the South Texas area. Production is
primarily from the Lobo sand of the Wilcox formation at depths ranging from 7,000 to 11,000 feet.
The Gempany has approximately 250,000 net acres under lease in this area, Natural gas deliveries
net to the Company averaged 181 MMecf per day in 1994. At September 30, 1995, natural gas
deliverability trom this area net to the Company was approximately 150 MMcf per day which was
impacted during 1995 by the sale of selected properties. The Company drilled 56 wells in the South
Texas area in 1994 and anticipates an active drilling program will continue for several years,

East Texas Area. The Company's activities in the East Texas area are primarily in the
Carthage field, located in Panola County, and the North Millon field, located in northern Harris
County.

‘The Carthage field is the Company's newest area of concentration. This fleid Is one of the most
prolific fields in east Texas with production primarily from the Cotton Valley, Travis Peak and Pettit
formations. In 1995, properties were acquired that doubled the Company's acreage position to
17,000 acres. An active drilling program is panned for the remainder of 1995 and for several years.
The Company has an average 71% working interest in its holdings. The Company has continued its
activity in the North Mitton field where it now operates 19 wells and holds a 100% working interest in
the acreage. Further drilling is planned for 1996. At September 30, 1995, deliverability from the East
Texas area was approximately 35 MMcf per day of natural gas with almost 1.0 MBb! per day of
condensate, both net to the Company. .

Offshore Gui of Mexico Area. At September 30, 1995, the Company held an interest in 191
blocks in the Offshore Gulf of Mexico area totaling 561,000 net acres. Of the 191 blocks, 133 are
operated by the Company. These interests are located predominantly in. federal waters offshore
Texas and Louisiana. During 1995, the Company acquired a 50% interest in operations previously
owned by Santa Fe Minerals complementing previously owned Interests and adding significantly to
the Company's offshore operations. Natural gas deliveries trom this area averaged 83 MMcf per day
during 1994 and 118 MMcf per day during the first nine months of 1996, both net to the Company. A
substantial portion of such deliveries was trom interests in the Matagorda trend with significant
volumes also coming from the Mustang Island area. Deliverability from this area at September 30,
1995 was 160 MMet per day net to the Company sourced principally as noted above. The Company
has-maintained an active drilling program in this area during 1994 and 1995 and anticipates a similar
program to continue for several years. 7

Canyon Trend Area. The Company's activities in this area have bean concentrated in
Crockett, Sutton, Terrell and Vai Verde Counties, Texas where the Company drilied 331 natural gas
wells during the period 1992 through 1994. The Company holds approximately 91,800 net acres and
now operates approximately 500 natural gas wells in this area in which it owns @ 97% average
working Interest. Production is from the Canyon sands and Strawn limestone at depths from 5.500
to 11,500-feet. In 1994, natural gas deliveries from this area net to the Company averaged 65 MMct
per day. At September 30, 1995, natural gas deliverability from this area net to the Company was
approximately 54 MMct per day. The Company has maintained an active drilling program in the
Canyon Trend area during 1995 and expects a similar program to continue for several years.

Pitchfork Ranch Field. The Pitchfork Ranch field located in Lea County. New Mexico,
produces primarily from the Bone Spring. Atoka and Morrow formations. in 1994, deliveries net to
the Company from this area averaged 36 MM! per day of natural gas and approximately 2 MBbI per

12

00900000000286


Nickoloff, Peter

From: InvestorGuide Daily (daily@investorguide.com)

Sent: Thursday, December 13, 2001 5:44 PM

To: peter.nickoloff@do.treas.gov

Subject: InvestorGuide Daily - December 13, 2001

InvestorGuide Daily December 13, 2001
brought to you by

InvestorGuide (portal) http://www. investorguide.com

Investorwords (glossary) http://www. investorwords,.com

WebFinance Consulting http: //www.webfinanceconsulting.com

If a friend forwarded you this message, get a free subscription by
sending any email message to daily@investorguide.com

Contents:
Market Summary
Businese News and Analysis
Barnings
Word of the Day
Notable Quotable

market eummary

The major indices saw steep loses today after the release of retail
sales for November, which dropped 3.7%, much lower than the expected
2.9% decline. Tech stocks weighed on the Nasdag; Lucent and Ciena
issued profit warnings for the next few quarters. Even though jobless
claims fell, new job cut announcements from Applied Materials, Qwest,
McGraw-Hill and Aetna reminded everyone that the weak economy ia not
yet ready for a speedy recovery. At the close, the Nasdaq lost 64.87
pointe and the Dow shed 128.36 points.

Dow Jones Induetrials: 9766.48 -128.36 -1.30%
Nasdaq Composite: 1946.51 64.87 3.23%
SeP S00: 1119.38 717,69 "1.56%
30-year Treasury Bond: 5.531% +0.079

Por more news and information on the market, investing, and personal
finance, please visit http://www. investorquide.com

business news and analysis

Online consumer spending in the U.S. rose to US$5.3 billion in
November, a 10 percent increase over 2000 levels, according to a
recent report. The growth rate was the smallest monthly increase
recorded so far in 2001 by the eCommerce Pulse index, compiled by the
two firms. (source: Ecommerce Times}

http://www. investorguide.com/cgi-bin/daily.cgi?705443

Yahoo is making a $436 million unsolicited bid for the career web site
HotJobs in hopes of beating an earlier offer from the parent company

of Monster.com. (source: MSNBC)
http://www. inveetorguide.com/egi-bin/daily.cqgi?05444

6

01717

01200000000373


Drafted By Gchristopulos/ITI

Reviewed By: DLucich/IT
TWallace/ITI
GSampliner/GCI

00500000000216


Summary Financial and Operating Information

The following table sets forth a summary of selected consolidated financial and Operating data
for the Company for each of the five years in the Period ended December 31, 1994 and for the nine-
Month periods ended September 30, 1994 and 1995. This information should be read in conjunction
with the consolidated financial statements of the Company and related notes thereto incorporated
by reference herein (see “incorporation of Certain Documents by Reference”) and “Management's
Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in
this Prospectus. Financial intormation for each of the five years in the period ended December 31,
1994 has been derived from audited financial statements, Financial information for the nine-month
periods ended September 30, 1994 and 1995 has been derived from unaudited financial statements.
The integm data reflects all adjustments which, in the opinion of the management of the Company,
are ssary to present fairly such information for the interim periods. Results of the nine-month
Periods are not necessarily indicative of the results expected for a'full year or any other interim
period.

Mine Monthe
Year Ended December 31, Ended September 30,
1990 1901 1992 1993 1904 194 1995
(in Thousands, Except Per Share Amounts and Operating Data)

‘Statement of Income Date:
Net operating reverwes(!)... $ 403,137 $ 402588 $ 459,028 $ 581,020 $ 625.823 $ 474.340 $ 492,142
income before income taxes Ma 46.689 7B44 112,273 153,935 126,166 144,175
Nat income... eee 45.468 47916 97,580 138,025 147,998 105.438 110,731

per snare of

stocks2)..... oes $30 $2 $63 se $8 $68 $69

A of

Bp common, 451.900 151,800 154599188908 150.848 150,808 180.951
Balance Sheet Onte

(at period endk:

Nat oll and gas properties .. $1,305,196 $1,339,088 $1,466,011 $1,546,065 $1,684,811 $1,637,762 $1,843,150
a voce TAIT,988 1,455,008 1,731,012 1,811,162 1,881,067 1.858.819 2.109.971

277,918 132,836 An - + 25,000 25,000 16,320
140,442 289.556 180,000;3) 153,000 165.337 158,682 247 552

- - 301,395 227,528 184,183 195,109 224.085
610,042 643,185 826,008/3) 933,073 1,043,419 1,019,712 1,140,295

455 491 564 708 m3 743 ne
$51 $137 $158 $192 $1.62 sie9 $1.23
a2 82 as a9 126 12.0 186

$21.67 $18.76 $1790 $16.37 $15.62 $16.24 $16.77

(1) Net operating revenues for the years 1990 and 1991 and for the frat nine months of 1994 have been revived to Include
gains from sales of reserves and related assets for consistency with current year reporting,
of

(2) In May 1994, the Board of Directors Geciared a two-for-one the 's Common Stock to be attected as a
taxable dividend of one share for each share ovistancing. on 31, 1994. Al share and per share amounts
Prosonted herein are fefiected on poet apit basse. “ey
1992, the Company completed the sale of 8.2 milion shares of Common Stock in net
” ape Sees ia Sarasa rene tee oe a
a
used to repay long-term debt and for other general corporate purposes,

(4) inckxdes 28 MMct in 1962, 81 MMct per day in 1993 and 48 MMc! per in 1964 and Im the nine-month periods
Soe Bo, 1084 and 1805 cobrarSa under the Torta os mars sf ae ne simi peri
October 1, 1992, as amended.
inctudes: equivalent welhand valve of $1.70) Mot in 1992. $1.57 pee Mcf in 1993, $1.27 par Mcf in 1994 and
© Fae ter Mel ans (or Mem the rine-morit periods ended Seplembar 30, 1854 and 1855, feapentvey, tor te
volumes described in note (4), net of transportation costs,

00900000000281


EF DAVIS

SMART
BUSINESS

SEPTEMBER 2001 (ExCERPTED)

Enron ranked #1

SUSINESS

You want profitable Internet
companies? We found fifty of them.

LAST YEAR, IN THE FIRST SMART BUSINESS 50,
we defined a new kind of Internet company Never mind
Yahoo and eToys and Pets.com. Instead we highlighted
companies established years before the Web — and hon
ored those that had most successfully embraced the Net
to expand and enhance their business. If last fall you'd
invested in the publicly traded stocks among those 50
most Internet-savvy U. S. companies — including
General Electric, Enron, Charles Schwab, UPS, Lands’
End, and W. W. Grainger — you'd have beaten the mar
ket overall,

Live and learn. By now it’s conventional wisdom that
the Internet isn't a business model, it's just a bunch of
computers connected together. Using it as a revolution
ary communications medium is a first step, but deliver-
ing value to customers — and making more money than
you spend — remains key to business success,

“Why does a company like Carrier do e-business?” asks
Andre Papaleo, vice president of e-business at the 99
year-old manufacturer of air conditioners. “Because we
love to program in Java?” No. Carrier's e-business efforts,
like any other initiatives, must meet one or more specif.
je criteria, he says. They must increase market share.
improve profitability bolster asset velocity by speeding
product cycle times, or enhance user satisfaction.

If the Net isn't doing at least one of thase things, why
bother?

As we surveyed companies for this year's Smart
Business 50, we learned much about what's worked
online in 2001. We've pulled out the 10 key trends in
Internet business and labeled them as lessons_

The lessons are diverse. Enron, our top company this
year, stormed onto the Internet with one of the largest
private marketplaces in history, doing over $3 billion in
transactions a day. As many public online marketplaces
continue to flounder, the success of Enron Online shows
that the best way to attract buyers and sellers to a mar-
ket is not to build a Web site and hope they come, but
to be an attractive buyer and seller yourself.

General Electric (No. 4) has turned the Internet
inward to use it as a powerful collaboration platform
General Motors (No, 33) and Raytheon (No. 34), mean
while, are among the leaders in using the Net to teach
and train their employees.

Dell (No. 9) and Herman Miller (No. 10) exemplify
how the Internet build-to-order model not only gives
customers what they want, but slashes inventory and
production costs. Chemical maker Sigma-Aldrich (No.
20} now uses content to drive its e-commerce,

Meanwhile, as the Internet matures in the 2Ist centu

01388

01200000000744


Nickoloff, Peter

From: info @atm [info@etmerkets.org)
Sent: Monday, December 17, 2001 4:51 PM
To: Info @atm

Subject: @Markets Newsletter

@Markets Newsletter
Association News
ue 6

Magazine Preview

Four articles in the November/December issue of @Markets magazine
have been posted to the Web site, including a case study of an online
marketplace that found an innovative way to boost transaction volume.

Online Marketplace Acquires Buyer's Coop

EcFood, a California-based online marketplace serving the industrial food
industry, has found an innovative way to accelerate the growth of
transaction volumes. The company bought Master Dairies, a Maryland-based
buyer's cooperative, and expects the deal to pay off in eral different
ways. Peter Buxbaum reports.

"with the acquisition of Master Dairies comes the need to process
auctions and negotiations for multiple buyers on a wider variety of
products. The coop, which is now organized as a division of ecFood, is
bringing deals to other ecPood customers, thereby aggregating greater
demand and achieving lower prices for all concerned.

“Our cliente in markete that bump up againet Master Dairies members
are now taking advantage of deals we are putting together for the
cooperative,* says Joe Buchanan, vice president for strategic sourcing at
ecFood, "When we ran an auction for milk powder, an entire range of other
ecFood customers wanted in. We had no idea that companies that make juice
were buying milk powder. We were able to plug them into the coop deal."

For the full text of the article, go to
www. atmarkets.org/content/currentarticles.asp?a=71
<http://www.atmarkets.org/content/currentarticles.asp?a=71l>

@Markets@Expo

On Nev. 28-30, @Markets Association organized six panel discussions
on various aspects of online marketplace evolution as part of the annual
Expo conference in Chicago sponsored by the Futures Industry Association.
Audio files of the six sessions have been posted on the Web site, as well
as summaries of three of the panels. More summaries will be posted soon,
#0 keep checking the site!

Por Conference Program and Audio Piles, go to
wew.atmarkets.org/content/@MarketsGExpoaudic.asp
cshttp: //www.atmarkets.org/content/a@Markete®Expoaudio.asp>

For Session Summaries, go to www.atmarkets.org/content/preview.asp
<http://www.atmarkets,org/content/preview.asp>

Member Newa

CheMatch Transaction Volumes Surpase Five Million Metric Tons

http://www. chematch.com/aboutUs/viewPressRelease. jhtml ?ReleaseID=$2Freposi
toriest2FHeadlinest2PCheMatch+Transaction+Volumes+Surpass+Pive+Million+mMet
ric+Tons.html>

ChemConnect Signs New Global Partners
http: //wew, chemconnect .com/about/press_releases/Nov13-01.html

VVVVYVVVV VV VV

01721

01200000000377


refinancing, near the beginning of the mortgage.

For more financial terms, please visit http://www. investorwords.com.

notable quotable

"It's given new meaning to me of the scientific term black hole." -
Time, Inc. CEO Don Logan when asked how much Time Inc. had spent
developing ite Pathfinder web site

Copyright 2002 by InvestorGuide.com, Inc.

InvestorGuide Daily is designed to keep you informed of the latest
investing news. It includes a market summary, top news, IPOs, earnings
and more...everything you need to invest better, every day. You can
also find this newsletter every evening at

http://www. investorguide.com/daily.htm]

This strictly opt-in newsletter is published by InvestorGuide.com
(http: //www.investorguide.com), and is it only to those who have
specifically requested it. No information gathered from newsletter
subscribers, including e-mail addresses, ig ever shared with or sold
to any third-party. If you know others who might like to receive
InvestorGuide Daily, feel free to forward this issue to them. To
subscribe, send any message to daily@investorguide.com. To
unsubscribe, send any message to investorguidedaily-off@mail-list.com.
If you would like to advertise in thie newsletter or on any of the
InvestorGuide websites, please contact advertise@investorguide.com

InvestorGuide.com has mo control over the sites we link to, is not
affiliated with these sites, and cannot take responsibility for their
quality or suitability. The news, earnings, and IPO information is not
meant to be comprehensive, and data provided is not guaranteed to be
accurate. We are not responsible for claims made by advertisers and
Sponsors. Anyone who makes investment decisions based on what they
read here does so at their own risk and cannot hold WebPinance Inc.
(DBA InvestorGuide.com, Inc.) or ite employees responsible. For the
complete disclaimer please see

http: //wew. investorguide.com/disclaimer.html

01786

01200000000442


Nickoloff, Peter

Dene ee eee ncn

From: ERisk [ERisk@email.eRisks.com]
Sent: Friday, January 11, 2002 12:40 PM
To: peter.nickoloff@do.treas.gov
Subject: ERisk Essentials
<http://www.eri intial if> portal arssk com <hittp JiemalleRisks comicai-bin10Mo?

In Gris week's ound-. tip Risks, com/oni-bir H pe
an enterprise risk management perspective: Argentina devalues, and te banking lor counts the cost; the Enron plot thickens, Meni Lynch cuts
staf anc takes a $2.2 bilion restructuring charge: there's a change of management at American Re; Califoria refuses to allow terror cover exciusions.

Analysis
The prospects for the growth of alternative risk transter (ART) have never been better, many ineurance industry experts believe. And cred ineurance
<hittp.liemaieRisks comeg-bin 10"fa7y=hNusODNrM20CjECaw40AZ>. #9 tum, has been touted as potentally the fastest-growing area of ART. But wil
the fige in defaults and credit downgrades discourage reinsurers tom writing new crecit protection, or is credit insurance =8il 2 profitable business to be
in?

Viewpoint
Can psychological profiling be used to treeze criminals out of te banking system? The developers of new product Risk Values believe so, and in our
aurent OSA <hip:/iemail.cRisks. com/cgi-bin 1 Offo?y=nNuS0DNMM20CE Odwe0Aa> they argue that focusing on the motivation of bank customers is en
inherently better approach than tacitional transaction monitoring.

‘SIV availatve:
Our CRO Protie <httpiemail.eRisks.comiogi-bin 10/Nlo?y=hNusIONM2OC|ECGQn0Al> of Ereique Mejorada, head of risk control at energy firm

Calpine.

Reflections on Risk
AS part of cur review of 2001, we invited @ grcup of bank risk managers to tell us about the major Issues that concemed ther last year. Read this
special feature <hilp:/iemail eRisks.com/cgi-bin 1 Ovfo?yshNuS0DNMM20CjE0dQm0As> by ERisk's Duncan Wood, including contributions frorn rik
managers at CSFB, Lioyds TSB, KeyCorp and CIBC.

Events Calendar

Our featured evant <htip: (Jamal. oRisks, comicgi-bin Gio 7y=hNyS0ONMM20GE0J8Y0A0> for January is 1IF’s Best Practice in Capital Afocaton
<Dilpiemal. Risks comicg-bin TOMfia7y#hNuSCON M20C\ECewSDAb>, @ three-day conference that promises to caver capital from @ strategic
perspective, and festures speakers trom AON, Rabobarik, Deutsche Bank and Mari Lynch. Other events in January include conferences and
‘seminars an modeling credit risk in enarging markets, weather nek, collaleral management and aperational risk. Plus, details of caver risic
management events taking piace throughout 2002.
rae

| More than 18,000 risk professionals receive (his email every ween, To find cut how your message COW” reach hem, mai us at infogDerisk.com

‘The ERak Essentials ls publahed every Friday by

To subscribe to his newsletter, please recgsl
To unsunscride, Sc085s yccount <hétp:
where you received this massage.

If you hawe forgatten your password, follrw
For technical support queries, please email

<http://email.eRisks. i-bin10/flosensing?y=Nu50! OCIEN>

° 01750

01200000000406


RELATIONSHIP BETWEEN ENRON AND E0G
Ownership of Common Stock

Through its ability to elect all directors of EOG, Enron has the ability to control all matters
relating to the management of EOG, Including any determination with respect to acquisition or
disposition of EOG assets, future issuance of Common Stock or other securities of EOG and any
dividends payable on the Common Stock. Enron also has the ability to control EOG's exploration,
development, acquisition and operating expenditure plans. The sale by Enron of EOG Common
Stock pursuant to the Stock Offerings will cause Enron's ownership interest in EOG to fall below
60% with the result that EOG will cease to be included in the consolidated federal income tax return
filed by Enron. There is no agreement between Enron and EOG that would prevent Enron trom
acquiring additional shares of Common Stock of EOG.

Contractual Arrangements

EOG entered into a Services Agreement (the "Services Agreement") with Enron effective
Jafuary 1994, pursuant to which Enron provides various services, such as maintenance of certain
employee benefit plans, provision of telecommunications and computer services, lease of office

In March 1995, in a series of transactions with Enron and an affifate of Enron, EOG exchanged
all of its fuel supply and purchase contracts and related price swap agreements associated with the
Texas City cogeneration plant (the “Cogen Contracts") for certain natural gas price swap agree-
ments (the "Swap Agreements”) of equivalent value. As a result of the transactions, EOG has been
relieved of all performance obligations associated with the Cogen Contracts. EOG will realize net

operating
and $7 million, respectively, with offsetting decreases in 1996 and 1999 versus that anticipated
under the Cogen Contracts.

EOG has been included in the consolidated federal income tax return filed by Enron as the

tax reporting and settlement for the periods in which they were generated. The Tax Allocation
Agreement applies to EOG and each of its subsidiaries for all years in which EOG or any of its

12

00900000000258


Fastow attomncy has previously pointed to Enron
statements that all the LJM transactions were proper
and approved by the board and top management.

Copyright © 2002 Dow Jones & Company, Inc.
All Rights Reserved.

TOP WS} STORIES ON MSHBC

Volvo, Saab plan to launch SUVs
Package carriers deliver load of fees
Auto price war shifts to rebates

H Euro creates British waves

.S. impact
@PUL EOS NAME="http: Pie aoe ORR.

@PJL EOJ NAME="NWQs0001"

01441

01200000000797


Summary Oil and Ges Reserve Information

The following table sets forth summary information with respect to the Company's estimates of
its net proved natural gas, crude oil, condensate and natura! gas liquids reserves at December 31,
1994. For additional information relating to reserves, see “Business - Oil and Gas Exploration and
Production Properties and Reserves.”

Natural Natural Gas
‘Gas Equivalents (Bote)
185g) roped Uneveapes
Net proved reserves at December 31, 1994:

United States 1,307 17,787 1,229 185
Canada . . 297 72357 330 10
Trinidad 206 4,429 233 -
India..... 29 7,585 46 29

Total . 1,839 37,038 1,838 224

Reserve amounts set out above have been revised to exclude volumes attributable to a
volumetric production payment from owned reserves.

The Company's estimates of its net proved natural gas, crude oll; condensate and natural gas
liquids reserves at December 31, 1994, Including amounts attributable to a volumetric production
payment, are shown below. This disclosure is presented as additional information and is not
Cee ee rE ar Cae caeenert of Finenciel Accounting Standards
("SFAS") No. 69 - “Disclosures about Oil and Gas Producing Activities.”

Natural Gee
een caso) Developed Undeveloped

Net proved reserves at December 31, 1994,

i amounts attributable to volumetric
production payment
: 1,378 17,787 1,300 185
297 7.237 330 10
206 4429 233 -
23 7,585 46 29
1,910 37,038 1,909 __ 224

(1) Includes crude off, condensate and natural gas liquids.

00900000000282

al


—_—_

No person has been authorized to give
any information or to make any representa-
tions other than those contained in this Pro-
spectus, and, If given or made, such informa-
tion or representations must not be relied
upon as having been authorized, This Pro-
spectus does not constitute an offer to sell or
the solicitation of an offer to buy any securi-
ties other than the securities described in this
Prospectus or an offer to sell or the solicita-
tion of an offer to buy such securities in any
circumstances in which such offer or solicita~
tion is unlawful. Neither the delivery of this
Prospectus nor any sale made hereunder
shall, under any circumstances, create any
implication that there has been no change in
the affairs of Enron since the date hereof or
the information contained herein is correct as
of any time subsequent to Its date.

TABLE OF CONTENTS

Page

Available Information. ... 0... 0.00005 2
incorporation of Certain Documents

by Reference ... 2.606. c ere eens 2
Prospectus Summary .....-...----- 3
Risk Factors Relating to

Exchangeable Notes ... 0.6... 65 ee 5
Enron Corp. .......6 os 7
Recent Events .. 8
Selected Financial 10
Capitalization ©. 2.0... e essere eens 11
Relationship Between EnronandEOG.. 12
Use of Proceeds .. 2... csc ee rreeee 14
Ratio of Enron's Earnings to

Fixed Charges .........-.. 200005 14
Price Range of EOG Common Stock

and Cash Dividends............++ 14
Description of the Exchangeable

NOtGS 22... cece cere e rece eeaees 15
Certain United States Federal Income

Tax Considerations ...... 24
Underwriting 06... cece eee renee .
Validity of the Exchangeable Notes... 28
Experts... 0-22. cece cere rene 28
Prospectus Relating to

Common Stock of Enron Oil

& Gas Company .. Appendix A

———————————

10,000,000 Exchangeable Notes

614% Exchangeable Notes
due December 13, 1998

PROSPECTUS

Goldman, Sachs & Co.
Merrill Lynch & Co.

Salomon Brothers Inc
Representatives of the Underwriters

00900000000317


AM Global Financial Markets

snenrry 8, 2002

‘Trmsrsery Maret Fura his Ubi, 2222660

—Global equity markets were mixed. Cisco and Oracte indicate “the worst is over" in the
tech sector, expect gains im the second quarter,

The yen firmed against the major currencies overnight as Japanese and South Korean
officials expressed some discomfurt with the recent swift depreciation in the yen,

FX: The yen retraced to ¥ 132.30 after falling to a low of Y133.37, which prompsed Japanese
officials to express discomfort with the speed of the yen’s recent depreciation. Government
spokesman Fukada acknowledged that the yen’s recent decline had been “a bit rapid* but “this
is a level which is manageable.” However, earlier in the Tokyo session, the MOF's Kuroda
stated that the country’s forex policy "remains unchanged despite the yen's rapid decline. South
Korvan officials continued to complain ubout the weaker yen. The dollar was litte changed
‘against the euro.

Japan: Japan's leading diffusion index rose to 25 in November from a zero reading in
‘October, white November household spending was up 0.9%, The Nikkei 225 index and the
TOPIX index were down 0.3% and 0.7% a5 bank stocks weakened further. The TOPIX bank
index fell 1.8%, JGB yields were unchanged to down 2 bps. The GB 10-year auction was
‘well bid, with a coupon of 1.4% and the highest coverage ratio since 1989 # 11.35 times.

Emerging Asia: Emerging Asian stock markets were mixed. The Hang Seng and Singapore
indexes were off 2.3% and 1.1%. The Taiwan and Kospi indexes were up 10% and 2.3%,
aided by strength in semiconductor stocks. Hynix Semiconductor rose 15.0%, bolstered by talk
of an offer from Micron Technology for the South Korean chipmaker.

Europe: German unemployment rose a smaller-than-expected 6,000 in December. The Euro
area business climate index fell to -1.23 in December, its lowest level since 1996. Euro area
3Q01 labor costs rose a larger than expected 3.3%, The BOE poticy committee began a two-
day series of meetings. European stock bourses were mostly lower. The FTSE
underperformed, pressured by declines in retail store and oil issues, HSBC was downgraded
by an analysts, citing exposure to Enron and Argentina. German bund yiclds were up | to 6
bps on strong Buro area economic data. U.K. gilt yields were higher by 4 to 10 basis points.

Turkey: Turkey's National 100 index was down 3.1% 10 14,421 om some profit-taking. The
lira weakened 0.1%. The Turkish EMBI+ sub-index spread narrowed 6 bps to 660 bps, while

Change bps

the overall EMBI+ spread narrowed 3 bps to 700 bps. Sermo Fur teor 1
Wer Gerron bund 4.88% 3

Latin America: The Argentine EMBI+ sub-index spread fell 4 bps to 4316 bps, while Brazil's nee i oa 8
EMBI+ sub-index rose 3 bps to $35 bps. : Uk td ;
Wey AK. galt 5

Commodities: Brent crade oil is cerrently down $0.50 to $20.52 a barrel following news of a
build in both crude oil and distillate inventories.

LS. Assets Overnight

Treasury compon prices are currently down 1/8 to 1/4 point in light trading. There are no major
U.S. econamic statistics scheduled for release today. Treasury will auction at ] PM $6.0
billion 10-year inflation-indexed notes. The Dow, S&P $00 and Nasdag index furures are
indicating no clear direction at the New York open.

Today's Everts: Ac Consensus Expectation Previous Period
JPN Prelim. Leading Diffusion index, Nov. 25 40.4 0 (was 16.7)
JPN Household Spending, Nov. 70.9% Wy +0.1% vty 10.4% wy

GER Uner ployment. Dec. 6.000 20,000 *17,000

EUR 3001 Labor Costs +378 125% 42.7% (wns +2.8%)
EUR Business Climate index. Dec. 1.23 AAT ~1.20 twas -1.18)

For intemal Use Only

dim Sharer
WR02 8:19 AM

01740

01200000000396


ENRON

Oil & Gas Company NewsRelease
SN EE
PO, Box 1188 Houston, Texas 77251-1188 For Further information Comact;

A. H, Davis

(713) 853-6941

0} INI J V

FOR IMMEDIATE RELEASE: Friday, February 25, 1994

HOUSTON — Enron Oil & Gas Company (EOG) and Reliance Industries Limited
(RIL), India's largest private sector corporation, today confirmed that a Government of India
background paper indicated the awarding of offshore development and operating rights for
the Tapti, Panna and Mukta fields off the westem coast of India to their joint venture
consortium that also includes the Oil and Natural Gas Commission (ONGC) of India.

EOG expects to own its interest in the joint venture through a yet to be formed
subsidiary of its wholly owned subsidiary, Enron Exploration Company. Panna and Mukta
are oil fields with current production and Tapti is a large undeveloped natural gas field.

Upon receiving official confirmation within a week, EOG and RIL plan to expedite
with the Indian government final negotiation of the production sharing contract, operating
agreements and natural gas sales contracts. EOG, whose working interest ownership is
expected to be approximately 30 percent, will be operator of this joint venture development
project.

“We are very pleased that the Indian government appears to have given us the
opportunity to contribute to the further development of its hydrocarbon reserves and to its

- more —

01000000000891


MOA OTMENT OF THE TREASIIRY WNOV 9200 1898 i
WASHINGTON, D.C. 20220

OFFICE OF FOREIGN ASSETS CONTROL
CORRESPONDENCE ACKNOWLEDGEMENT, Page 1 of 1

Rudy, Beverly J. Tel.
Sutherland Asbill & Brennan LLP Fax 202/637/3593
1275 Pennsylvania Avenue,

Washington, DC 20004-2415

LICENSING DIVISION Pax: (202) 622-1657
OFFICE OF FOREIGN ASSETS CONTROL ("OFAC")

U.S. DEPARTMENT OF THE TREASURY

1500 PENNSYLVANIA AVENUE, N.W.

WASHINGTON, DC 20220

RE: FAC No. IA- {(b)(2), (b)(7)(0)]
This is to acknowledge receipt of your correspondence

dated 11/17/98 . Generally, it is the practice of this Office

to process all similar applications and inquiries in the order

of their receipt.

Please refer to the date of your original correspondence and

FAC No. cited above if you need to contact us or send supplemental

information. We look forward to serving you.

Note: Information on sanctions programs administered by OFAC can be
retrieved from our automated fax-on-demand system by dialing
(202! 622-0077, 24 hours a day, or through our World Wide Web
nome page, www.ustreas.gov/treasury/services/iac/tac.ntmi,

Pax to: 202/637/3593

00400000000092


WSJ.com Page 6 of 6

emergencies won't subside.”

Write to Michacl Schroeder at mike.schroeder(@wsj.com® and Greg Ip at greg.ip@wsj.com”

URL for this Article:
http:/finteractive ws), com/archive/retriave.cgi7id®SB 1008202066978356000.djm

Hyperlinks in this Article:

(1) http:/finteractive.wsj.com/pages/enronpage. hin

(2) httpsilweww. earings. com/clienUwhotesalelogin,asp7ID"97 &HID=4527

(3) htlp:/www.realplayer.com

(4) htlp:/imeractive. ws) comfarchive/retrieve.cgi?id=SB1008181357647608200.djm
(5) htipsinteractive. ws), com/archive/retrieve,cgi7id= SB 1008196294985520500.djm
(6) mailto;mike.schroeder@wsj.com

(7) maitto:greg.ip@wsj.com

Copyright © 2001 Dow Jones & Company, Inc. All Rights Reserved.
Printing, distribution, and use of this material is governed by your Subscription Agreement and copyright laws.

For information about sabseribing, go to hi wsj.com

http://interactive.wsj,convarchive/retrieve.cgi?id=SB 1008202066979356000,djma&template... 12/13/01

01547

01200000000201


VV VU VY EVV

the Exchange's plans to introduce a full array of risk management tools
under the umbrella of our clearinghouse,* NYMEX President J. Robert
Collins said in a statement released Oct. 30.

ICE Statement on Growth Trend
https: //www, intcx.com/pressnov0ld.html

NYMEX Announces OTC Clearing Plans
http://www. nymex. com/news/pr_detail.cfm?id=399

NYMEX Pulls the Plug on eNymex Platform

In separate but related news, NYMEX has quietly decided to shelve
further development of eNymex, its long-awaited online commodities
exchange. Inetead, NYMEX ia putting ite resourcea into ACCESS, an existing
electronic trading platform that was originally designed for after-hours
trading of NYMEX futures. NYMEX says it intends to use this platform to
attract traders who formerly used EnronOnline, and has opened the system
to a wider range of tradere.

The plan to create eNymex waa announced in May of 2000, at a time
when online buginess-to-business exchanges were proliferating rapidly.
NYMEX officials said at the time that eNymex would trade a wide range of
commodities, starting with energy and metals, and predicted that the
exchange would be up and running in the third quarter of that year.

ACCESS came into its own in September, when the terrorist attacks on
the World Trade Center forced NYMEX to evacuate its building and close its
trading floor. Urgently king some way to reopen its markets, the
exchange decided to accelerate a pre-existing plan to open the ACCESS
system to Internet trading.

NYMEX subsequently reopened its trading floor, which is located just
two blocks from ground zero, and resumed trading futures through the
traditional open outcry method. However, many firms are continuing to rely
on ACCESS to handle their futures trades, and the average daily trading
volume on the system has risen 23 percent since before the attacks.

CMX to Clear Metals Trading through BOTCC

The Board of Trade Clearing Corporation, the oldest independent
clearing organization in the futures industry, has announced a partnership
with Commodities Management Exchange, an online metals trading exchange
with close ties to the auto industry. BOTCC will process and administer a
guarantee of certain OTC transactions listed on the CMXchange, which will
assist the exchange's customers in their price risk management and FAS
Compliance. With customers including DaimlerChrysler, Ford and General
Motors, the CMXchange currently provides Internet-based spot and forward
trading in a number of base metals, and expects to begin trading aluminum
and other metals swaps transactions cleared by BOTCC during the first
quarter of next year.

http: //wew. botec .com/members/pressreleases/011128emxchange. html
http: //wew. cmxchange .com/BMExchange/About /Press_Releases/presa_releases.CF
M

PartMiner Names New CEO

PartMiner Inc., an online marketplace for electronic components, has
named Christopher Meyer as CEO, replacing Daniel Nissanoff, the founder of
the company. Meyer has served on PartMiner’s hoard since March 1999 and
comes to PartMiner from IHS Inc., a supplier of technical information,
where he was president and chief operating officer. Nissanoff will remain
with PartMiner as chairman of its board of directors.

PartMiner also announced that it will begin charging a subscription
fee for access to its component database, which previously was provided
for free.

www.partminer.com <http://www.partminer.com> (go to Dec. 10 press release)
Omnexus, Elemica Share Technology

Omnexus, an online plastice marketplace, has formed a "strategic
alliance" with Elemica, the chemicals network backed by an industry

13 01724

01200000000380


“Be ztrunos

ss

w

02z0z og ‘uoBujyseyy,

fee Wooy

MAN ‘enuany BiueAASuueg 00st
Aunseauy yo Wweunedag “gp
Aunseay LL @Yy Jo Aeiavag
4IGNY "3 weqoy ®I9BIOUOH oyy

9000 1a ‘uepBarysesy
008 FS NAN ‘pms ay €7 74

2,
%

00100000000257


Nickoloff, Peter

From: Sharer, James

Sent: Tuesday, January 15, 2002 4:43 PM

To: _DL_Market Group; Andrew 0. Sacher, David Griffiths; Eric H, Otto; Jay Hoffman; Lundsager,
Meg; Phillippa Malmgren; reidjp; Sheviin, Thomas; wallarjg; waynesa

Subject: Financial Markets Night Report 1/15/02

~ U.S. equities moved higher, bolstered by strength in financial and bank stocks.
- Treasury prices moved higher ahead of tomorrow's slate of U.S. economic data.

U.S. equity markets closed with modest gains in active trading, aided by strength in financial and bank issues. Analysts
await earings news after the close from Intel Corp. and Juniper Networks, The NYSE suspended trading in Enron Corp.
and plans to delist the stock following the financial collapse of the firm late last year. K-Mart fell 13.7% to $2.45 and is
down 55% since December 31 on expectations the firm may soon file for bankruptcy. The best stock performers today
were financial, bank, software, oil, Insurance and computer issues.

Analysts expect tomorrow's CPI report for December will be unchanged following an unchanged report in Novemoer The
December core CPI is seen up 0.2% after rising 0.4% in November. The December industrial report

expected to be unchanged, while capacity utilization is seen edging down to 74.6% from 74.7% in November. The Fed's
“Beige Book" report is scheduled for release at 2 PM tomorrow.

Treasury coupon prices were unchanged to up 5/8 point in moderate trading. Traders noted reduced concerns over
inflation, the unwinding of corporate hedges and remained influenced by Fed Chairman Greenspan's recent words of
caution regarding the Us S. economy. Treasury auctioned today $6.0 billion 4-week T-bills 1o pay down $6.0 billion. The
results were as

Awarded rate: 1.605% Coverage ratio: 4.59 times

Today's awarded rate compares with last weck's awarded rate of 1.660%.

The January Federal funds futures contract was unchanged at 1.72%, while the February and March contracts rose 2 bps
and 1 bp lo 1.61% and 1.59%, respectively.

The February crude oil contract edged up $0.01 to $18.90 a barrel ahead of API oil inventory data tonight. The February
natural gas contract rose $0.04 to $2.29 per million btu. Spot gold fell $1.00 to $284.10 an ounce.

The dollar appreciated 1.3% against the euro and was 0.5% weaker against the yen. The dollar was 0.6% firmer against
the British pound and 1.0% firmer against the Swiss franc, The Canadian dollar firmed 0.4% following today’s BOC 25 bps
easing. The BOC has eased eleven times since the start of 2001 for a total of 375 bps.

Latin American equity markets closed mixed, with the Bolsa outperforming by climbing 2.9%. Mexico's peso firmed 0.3%
‘on news that Fitch boosted the country’s debt rating to investment grade (to BBB- from BB+). The Argentine peso was bid
at 1.90. Brazil's real firmed 0.8% and Bovespa edged lower by 0.9%.

The EMBI+ spread widened 3 bps to 732 bps over the comparable Treasuries. Other EMBI+ sub-indexes narrowed on the
day, including Argentina (-38 to 4639), Brazil (-9 to 863). Mexico's sub-index was flat at 319, while Turkey's sub-index
rose 15 bps to 702 bps.

Tomorrow's Events: Time Consensus Expectation Previous Period
JPN BOJ Policy Board Meeting
UK Claimant Jobless, Dec, +7,000 mim +4,800 mim
US CPI, Dec. 8:30 AM unch unch
US Business Inventories, Nov, 8:30 AM 0.7% ~1.4% mim
US Industrial Production, Dec, 9:15 AM unch 0.3% mim
en PM pat

' 01780

01200000000436


NI
NI
NI
nt
NI
NI
Nr
NI
nr
NI
Nr
nr
nr
NI
NI
NI
NI
NI
NI

Codes:

CNG
NRG
‘TX
Gov
cos
us

orL

UTI
sEC
acc
NYSE
BCY
GAS
pre

#<7991>48

-0-

(BN } Dec/10/2001 16:15 GMT

242

01484

01200000000138


Nickoloff, Peter

From: Nickoloff, Peter

Sent: Thursday, December 20, 2001 10:16 AM
To: Carleton, Norman; Schulthess, Heiditynne
Subject: Yesterday's Samuelson Op-Ed on Enron

Enron's Creative Obscurity
By Robert J. Sanmelson
Wednesday, December 19, 2001; Page A39

The collapse of the energy company Enron has inevitably become a metaphor for many of the sins of modern
capitalism. It may be, but the story is more complicated than a simple tale of victims and villains. Capitalism
derives its strength from the power of self-interest and the ingenuity of the human spirit. But its weaknesses also
stem from human nature, which can convert the quest for riches into self-deception and dishonesty. The dangers
mount in periods of economic and financial exhilaration when -- as we've just experienced -- the stock market
seems the fastest path to instant wealth. People year for thcir pot of gold and, to get it, stretch rules and lapse
into wishful thinking.

The cult of share prices seduced managerial elites, ordinary investors and workers alike, with often disastrous
consequences. Among top corporate managers, it led to widespread embcllishing and doctoring of financial
reports. Accounting rules were twisted or evaded to enhance reported profits, because higher profits would
(presumably) mean higher share prices. Creative obscurity became commonplace. The same spirit gripped many
investors and workers. People suspended skepticism and counted their paper profits. The dot-com and telecom
debacles are well-documented results. Now Enron joins the list.

To work well, capitalism needs accurate information. Even with ideal information, markets make mistakes.
Miscalculation is inevitable, because risk implies failure as well as success, But false or misleading information
compounds the dangers, and the booming stock market inspired a boom in misleading information. For
example, there's EBITA -- earnings (profits) before interest, taxes and amortization (debt repayments).
Companies emphasized earnings on this limited basis in their news releases and played down the more complete
reports. The justification was that investors wanted to see a company's raw "operating profits" without the
clutter of debts or taxes. The trouble, of course, is that companies have to pay debts and taxes.

The Securities and Exchange Commission and the Financial Accounting Standards Board, an accountants' self-
policing organization, did little to check these abuses. By and large, people wanted to believe the best, and the
temptation to present the glossiest face was Enron's undoing, At its peak, the company's stock traded at $90 a
share; now it's selling for about 50 cents. The simplest explanation for its bankruptcy is a loss of credibility in its
financial statements. Fitch, the bond-rating agency, gives the following chronology. On Oct. 16, the company
announced it would take a $1 billion charge to reflect losses in "broadband" communication and water
businesses, among others, It also announced another $1.2 billion loss on a transaction outside its balance sheet.
On Nov. 8, the company said its profits from 1997 to 2000 had been overstated by $591 million.

Though large, these losses shouldn't have single-handedly devastated a company that had reported $2.7 billion
in profits between 1997 and 2000 and claimed year-end 2000 stockholders’ equity of $11.5 billion. But the
revelations destroyed the faith of customers and creditors in Enron's numbers. Were other losses lurking? If you
fear not being paid, you stop dealing with Enron or lending to it. Once that happened, the company collapsed.
The skepticism was warranted. At the end of 2000, Enron reported debts of $10.2 billion on its balance sheet. In
its bankruptcy filing, it listed debts of almost $40 billion, including $22 billion on its balance sheet, nearly $7
billion “off balance sheet” and almost $11 billion for “project financings.”

rips 01494

01200000000148


6ZETO

10/P/T1 /AUYUOTuNoesuel | uUQUOIUTINOG y FuNayeW/Ss0p/wos-autjUOMOIUT AMM

OA YUU) GOUd @yy C} dn JeyO UE yRUGNE 0] NOA MOE jj UES sity | “13 30 Ang Oo] ayo UE ywgNS NOK
UdYM UoRdS SHUbYy B2Lq GY} 29}@S OF $} UOQGO suo YEU] SpUBWANOW BOUd ;Oge PeUeoUOS ae NOK
JL-NOA 0} @{QesONey Qu0uW soud a4 1H Spr GulEg SB JEYO OU) JEAN) IPM LOIUS LOY} JEYyO yey] SasSROONd
WEISAS OUUQUOIL SYA EWN BU) PUB "UOILZ O} 1/98 40 Ang oy Jay ayy WUIqns NOK BUI se) USEAYEG
NOK O} suqRUOWEY JOUUEW EU} SACU Goud 84 PUR ROUED JO BINOaKy aeipawW], JDe/9s NOK yy

21124 48440 AW IIIA 21 329)9S 0) BulAy we | se Senow aoud 8y} JI suoddey JeEUM “9

“AYJEUOOUTY YAUBeS LOgesues) ay asn aseaid “jou 20 payejdweo UO_IeSUER e JaYyVEYM Cy Se IQNOP

Up 2908 BE NOA 4] “VOROUNy YOzEeg LOQIESUEL | Oyj Bursn suorsses saKO UI Peya}Guco SUOQIESUeR:

ANeeA UES NOA JESMOIG JOA 4 WOWOG @uI FE MOPUIAA SUORIESUEL) GU) ul Jeadde jm UOgIEsUER

Payedwcs a4) ‘VOUS Aq paldeaoe sf pas JO Ang 0} Jey ZOA y ‘UORUe/ueIU! UEUNY OUI “eseqEVEp

SumUQUAIUZ aly Ag Passasoid Si}! ‘PayEWONS 3] UOIUZ Oy YES 10 WO Ang Oy JOYO sNGA UAYAY,
2UOIBSUEL} 84} Pa}dedce SEY OUI]UQUOIUZ J} MOUY | [IM USA, “S

veqeW S71 Le

PESUER 0} QPQEUN eq yim NOK ‘SesO!D UOIGa) PUB AyPOWLUNS Je;NOWEd & 2Oy YW Ee UeYM UAARMOH

RUMALLOS AUEW © SUES S} Gu LQUCAS pueWoU AJeAe JSOWURE OS ‘ass GuIPER epIMpLOM e

5h }{ UadO S] JaUEL Je\noqued ay JeneJaym sUOIESheR LOddNS OF e1GE!EAE Og BM ETS eUUQUOUZ
éEsuonsesuey snoy-pz Woddns eujjuQuoiuy se0g “y

“PUNQUAIU B)A GugsesueL 10) 261819 oO) Sued wuOND OU Sey YOUR
84N{ny By} Ul BUTFUQUOIUA 404 aBseYo 0} BuloB nok ary -¢

‘888008 JBWAPU}

40) NOK @fieus Kew OY Uaplngud BO)UEs JSLUEIU] UE Ujim SpU@WOBUELE UMD UNOK BYU 0} PeoU Avenag Oey
IW NO, "S89} LOKdUISqNS JO UORIESUBQ OU Que a104) “OfiatyD 70 994 pesseqze aq UD BUBUQUOIUZ ee
2euljuQuosug en Buysesue.y yy payejoosse aie $js09 EU “Z spsavo) 1807

. SO RSENS OY,

“Gupoeeuen yo poyjew (ueyUeUa_dUuOD B 8} PU -_
“UOIUZ Uj) SSSLESNG OP OF SueKOFSND INO Jy ABM JOPSEy PUL JOISES UE $! OUIjUO GugsesURR analeg OM kd someasey
‘SPOWURAU /EVOPE.) 0} LOPPE Ul UOUUS Ly SsouEsNq Op oy ABM seqLOUR BapMoid BUIj|UQUOIUS "ON sa0ug § SDNpELy
aucyd ayy 4eA0 UOJ YIM JRSURL} 0} AjIqe Aw yeye sujUQUOUUZ Se0g "|

saINS Supzevwe,

smog sumUQUERA

~~ euljuO BujyoesuesL

WOON ssid | ev aus | JOWANOD

aulUuguosuy

JO | o8ag oUIpUC FuysesuELy - suTjUQUOIUY :

01200000000735


WSJ.com Page 3 of 6

The market for credit derivatives, which barely existed five years ago, has grown to an estimated $360
billion, according to the Office of the Comptroller of the Currency. And it says the nominal value of
derivatives on the books of commercial banks soared to $51.3 trillion at the end of September from $6.8
trillion in 1990, with nearly $20 trillion of that growth coming since 1998,

Behind the Times

Federal oversight hasn't kept up. The Commodity Futures Trading Commission regulates futures and,
along with the Securities and Exchange Commission, options traded on exchanges, but not derivatives
traded off-exchange, or "over the counter.” The latter term describes trades that are privately negotiated
between large financial institutions or corporations. How such derivatives are regulated depends on what
kind of firm sells them. For example, bank regulators such as the Federal Reserve can scrutinize
commercial banks' activity, while the SEC can examine that of brokers who conduct business in the U.S.

Enron — which started trading natural gas, then expanded to electricity, metals and more-exotic
derivatives — fell through the cracks of this regulatory framework. As a publicly traded company, Enron
routinely provided the SEC with general information about its finances. But it wasn't obliged to give the
agency any detailed information about its OTC trading activities. In fact, the CFTC's only peek into
Enron's vast trading operation was through a tiny registered futures affiliate, Enron Trading Services
Inc.

EnronOnline, the electronic marketplace Enron launched in late 1999, also fell outside federal
jurisdiction, The exchange came to control a quarter of all wholesale energy trades among USS, utilities,
independent power producers and other market players. In many ways, the Web-based trading system
resembled its heavily regulated counterparts, such as the New York Mercantile Exchange.

But Enron and its imitators didn't fit regulations written for the likes of conventional markets such as the
Nymex, Those exchanges bring many traders together and cater to a broad range of investors, both large
and small, But Enron's marketplace was limited to big, sophisticated players.

Moreover, Enron jealously guarded its independence. While some companies voluntarily discuss their
derivatives trading with the CFTC, Enron regularly failed to do so, say people familiar with the agency.

Enron spokesman Mark Palmer says the company’s unregulated status was appropriate, "With a deep
bilateral market of sophisticated buyers and sellers, that regulation was not needed," he said, Though
Enron did some trading for its own account, Mr. Palmer disputes suggestions that his firm was similar to
a hedge fund, adding that most of the $19 billion in derivatives contracts on its balance sheet were
commitments to deliver, or take delivery of, natural gas or electricity.

In the roaring 1990s, with the deregulation movement at its zenith, few in
Washington dared even to suggest more regulatory oversight of derivatives. One
of the few who did was Brooksley Born, who President Clinton named to head the
CFTC in 1996. Her comments in speeches and in a discussion paper about the
need for more oversight and regulation of OTC derivatives triggered an uproar
among derivatives dealers -- from J.P. Morgan & Co. to Enron. They quickly
complained to Congress and other regulators that the uncertainty Ms, Born was
creating could destabilize their markets.

The industry complaints got a sympathetic hearing from many politicians and
regulators -- particularly at the Fed and the SEC -- who saw Ms. Born's campaign

http/interactive.wsj.com/archive/retrieve.cgi?id=SB 1008202066979356000.djmactemplate=... 12/13/01

01200000000198


January 10, 2001
Events

© The State of Maharashtra Chief Minister Deshmukh announced during the winter session of
the State Legislature that Phase I] of the Dabhol Project was to be reviewed, Allegations
were made that the high Dabhol tariff was the cause of the Maharashtra State Electricity
Board’s (MSEB) financial difficulties.

© The Government of Maharashtra (GOM) will appoint a committce of experts to reexamine
the Dabhol Power Purchase Agreement, a 20-year PPA to the single buyer MSEB.

© MSEB is currently in arrears for the Dabhol November bill in the amount of Rs 148 Crores
(1,480,000,000 Rupees).

© Phase II of the Dabhol project is 80% complete, with 95% of the equipment on site and $400
MM remaining to be disbursed out of $2.6 billion.

Facts About Dabhol

* By providing 2184 MW gas fired power plant, built to international standards with related gas
facilities, DPC is creating substantial opportunities for the development of a modem
industrial corridor in south central Maharashtra

¢ So far, Dabhol has contributed over Rs 1600 crore to the national and state exchequers and
has brought in Foreign Direct Investment of over Rs 10,000 crore ($2.5 billion) into the
country

¢ In building the facilities, DPC has provided valuable employment to area residents. DPC
contractors on the site currently employ approximately 15,000 workers. A hospital, school
and other community services have been provided to area residents by DPC

Issues

Expert Committee. DPC will cooperate with the GOM-appointed Expert Committee. That does
not mean, however, that the PPA will automatically be renegotiated. To allow the time for such
review, three things must happen: (i) DPC must continue to fulfill is generation obligations under
the PPA; (ii) MSEB must pay the money owed to DPC; and (iii) the project lenders must continue
to disburse funds to finish Phase II of the project.

Cause of MSEB Financia! Difficulties. Dabhol is not the cause of MSEB's financial difficulties.
Those difficulties are due to a number of factors, among them:
- The need for meters to measure electricity distributed to end users.
- The high rate of losses. MSEB currently has approximately 30% losses, a large
part of which is due to theft.
- The State's continuing to grant subsidies on a political basis and not
compensating MSEB therefor.
- The State’s not allowing MSEB to disconnect nonpaying customers.
- The large cross subsidies built into the tariff structure.

00500000002270


To/e/z1 /PUTTUQSupsesues | Out UQuOIA Ng y/FuNeyxFU/SSOp/wOD'aUTTUOUOMUD Manas//-<dNY

EPA USO SY J9psO YW! Bd Aw 41 MOUy |} OP MOH “ZL

“hep au yo pus
84} (UN UseDs SayONb aly MO}eq UOQIeS YAU] GOL 4p UF ABYSS eM suORO wUM aouC JOA

eAeldsIp S19P4O YU] B24q Au [mM B94 “OL

“LORNG QMXINS, 94) Guppy Aq sepvo ei ayefdWIOD «Gg
“SEWNUIW JO PUES SINGY Ui OUg UOHBUIXS oy JEU “y
“eopd ay ses 9
‘pajsejas A\jeayewcyne
24 IIe UORSO Stuy 06 ,GUUNION /eYE MojiY, OF BNEY NOK OAKS 28RD TWIT BON SUR IR, °S
“umoys Ayjuend wnuprew By OF Gn j}68)/Kng oF USM NOA A\RUEND oY) J) “>
UORNG OEY JEDI FLT] Gel BEAD, BLY HKD *E
“SIBOddE MOPLAM LORSIWONS Ul Z
“woud Sy UO 4919 PUB rede nea hao agone
40 PIG 94f} 2900 SsnOU INOA exc ‘sUpUQUAIUZ BIA |NPoud seynoqed & yes 30 Ang oF 1

e49P1O YUU] Bd & Op MoH ‘St

“SuNOY Z| OF Gh Spouad 40) j85 aq ABW sUEPIC UT] GOL “BLY Aue Je Pe_QoUED og UES EPIC,
WAur] @oud yNses ew VORIESUB B DUE JOO INA \j1, 0} Aq AyonRUO;Ne yA SUNUQUIUT ‘a|qEEeAR
‘SEWED Peyoeds NOK sovd yy W “@U|UQUOIU UO STONPOId 204 JODIE WAU] GOUe B GOB UD MOA,

HOM SIBPIO HUNT] BI1q OP MOH “PL

“SUSUNDOP BUYUO BY} JO jWeWeeUby Ja}Sey) NOK U) Payoeds se ‘aUOUde_e; BY) 4aN0 BUOP
‘SUOPAIESUEL] JO} PINOM NOA Se usy GUWES OY) }E SUOHIESUER UBUD INOA JO} BOPONU] JNO BABII IM NOA
COUIJUQUOIUT BIA BUOP SUOHIESUELY 10} SHOAL! UB BAJSIG4 | [IM USUM “EL

“DUYLUQUOIU EIA popu NOK
‘SUO/DESUEY] 6L) eS WED AUedUcS 4NOK Ww sIeSF] BOYIO eg ap PUR (s)asK sa]SEyy GUY ‘NAA AjUo ‘ON,

Esuonoesuen AW MBIA SIQWIOISND 104y}O ULD “Zp

“oBed $7) FEWUCD Big BIA SN YORE eseayd “JEDI

30U Si Gunes 40) UOStes aug 4] “payoeds nod ebue soud af epsyno “VoRSUNY .aGUEY Souq

Srteasenoy. eu peen nov assim “40 popeRs NOK goyd ay) Woy ABE yUAWeAOW eQEVOABYUN
'S1 JEU ‘NOK OF aqEIONE, JOU 8] FEL JONPOUd Buy JO} Goud OY} UF ediUBYD e Buped seu ost .

Ypa.d Jo Buipey peysyqeise wnOK epjs¢ne NOK eye} |INOM ‘UdUy Aq peydace opens at .

auququotna Xp poysas 9s 20 Ang 04 Jeyo NOK eu oug pUE y PEDO} NOK ew ox UOSMIER,
ANUEND sinUS a4 400} SOWOISND ZxRO ING UOACO ,eUWIN|O |EREG Weooy, auy pesn nok ©
“SUNY Snowy 4O BLUR LOREVIGXB PeY!20ds NOK je peace :op20
8 PUE SYWWH PaYHOdS UNFWR yay ZOKU Goud BL ING "~VOROUTY J8PIO WUT] GIUd, By PSN NA @
Speymads Nok soud oy) Fe OGRTENE
JoNpaid ey 40 AyuENb juBIOMINsU! SEM G2E4) ING “UORIUN, ,CUILJON 10 [fy, SLB PESN NO @
“apneU UOIUZ Aq paydaace aq jou Kew jas 40 Ang 04 494y0 aNOK Aym SUOSEON
2Pe}e/dwos oq 0} jou UOADSesUey e asnes Aew yeu “|)

T8ETO

Jo ¢ ofeg suYUO Sunoesues] - suUQuosy

01200000000737


~ U.S, equities moved higher, bolstered by strength In financial and bank stocks,
~ Treasury prices moved higher shead of tomorrow's slate of US. econamic data

U.S. equity markets closed with modest gaine in active trading, sided by strength in financial
Sed bénk sues. Analysts await eamings news after the clowa trom intel Corp. and Juniper
Networks. The NYSE suspended trading in Enron Corp, and plans to das! ®e stock
following the financial collapse of the firm tate lust year. K-Mart fell 13.7% to $2.45 and is
cown 85% since Dacesnber 31 on expectations tye firm may soon fie for bankruptcy. The
best siock pertormars today ware financial, bank, software, oll, insurance and computer
issues.

Analysis expect tomorrow's CPI rapart for December wil be unchanged following an
unchanged repart in Navember. Tha Oecamber core CPI is seen up 0.2% after rising 0.4%
in Novernber. The December industrial production repeet is expected to be unchanged,
while capacity utlkzation is ween edging dawn to 74.6% from 74.7% im November. The
Fee's "Beige Book" report is scheculod for relaate at 2 PM ormorrow.

Tremsury coupon prices were unchanged 10 up 4'8 point in moderate tracing, Tracers noted
fecuced concems over inflation, the unwinding of corporate hedges and remained
influenced by Fed Chairman Greenspan's recent words af caution regarding the U.S.
econcmy. Trsury auctioned today $6.0 bition 4week T-blls to pay down $6.0 bilfon.

The resus were as follows:

Awarded rate: 1.605% Coverage ratio: 4.59 times

Today's awarded rate compares with last wouk's awurched rate of 1.660%,

The January Federat funds futures contract was unchanged al 1.72%, while the Fabruary
ed March contacts 1000 2 Bes and 1 bp to 1.61% and 1.98%, respectively.

The Februtry crude 08 contract edged up $0.01 to $18.90 a barrel ahead of API cil
inweetory dala tonight. The February natural gas contract rose $0.04 to $2.28 per milion,
bau. Spot gold fell $1.00 to $284.10 an ounce.

‘The dollar appreciated 1.3% against the euro and was 0.5% weaker against the yan. The
dollde wes 0.6% firmer agsinst the British pound and 1.0% firmer against the Swiss franc.
‘The Canadian dolar firmed 0.4% following today’s BOC 25 ops easing. The BOC has
eased eleven Gmas since the set of 2001 for a total of 375 bos.

Latin American equity markets dosed mixed, with te Bolsa outperforming by climbing
2.9%. Mexico's peso firmed 0.3% an news that Fitch boosted Pe courrky’s debt rating to
iewastenent grade (lo BBG- rom BB+). The Argentine peso was bid at 1.90. Brazil's reat
femed 0.8% and Bovespe edged lower by 0.9%.

The EMBI+ spread widened 3 bps to 732 bps over the comparable Treasuries. Other
EMBt+ sub-indexes narrowed on the day, including Argoniina {-38 to 4639), Brazt [-9 to
863}. Mexico's sub-index was fiat at 318, while Turkey's sub-index rose 15 bps to 702 bes.

Dua
Neda

SRP 500
‘Wikcbive Tot bir
DMA Yat
Canadian TSE
‘Menieus Bub
Braniiss Rove,
Gerreas Dax
French Cac-40)
UK. FTSE
Nike: 225

W1SMI2 4.10 PM

4PM
Eres)

24ar
1086
10,606
14 629,900
Tae
eons
nen
Saez
4508
5.066
19,208

Gangs
o30%
asin
ones
ose

eam
290%
24%
20%
ars
Lame
ams

Cernig rete

combat inp He

Feteusey Fed Feeds

Isto
iss Mane
Canadien dete
Mexican peas:

SEM
ne
anno
1396
167
183
on

Tomosrow's Events: Tine
JPN BON Paicy Based Moetng

US Industrial Production, Dec.

For interral Use Onty

UK Cisimant Jobless, Dec. +7,000 min +4800 mim
US CPI Dec. S304M weh unch
US Business Inventories, Nov, 6:90AM 0.7% 1.4% mim

Ieaedined NYMEX

(Drafted by: Jin Sharer
11802 4:39 PM

01782

01200000000438


Page 2 of

It didn’t take natural gas markets long to react to Enron's problems. Word leaked on Oct, 25 that Enron was drawing
down $1 billion on available credit lines and seeking more cash to avoid a liquidity crunch. Open interest in the Nymex
Henry Hub peaked that day, then fell off a cliff, down 12% over the next four trading days (see graph).

According to the Commodity Futures Trading Commission (CFTC), commercial long and short positions dropped by
65,429 and 56,195 contracts, respectively, over the Oct. 30 trading week. Open interest in the full Nymex Henry Hub
strip dropped by 64,095, to 457,990 contracts.

The bleeding continued last week, CFTC Friday said open interest fell a further 10,662 to 447,328 contracts through
Nov. 6.

There are two explanations for this contraction in open interest. The most obvious is that Enron itself is unwinding
positions to boost cash on hand. The one-to-many brokering structure of Enron's EnronOnline platform makes liquidity
particularly critical.

“It's an effect that they are a dealer that creates all the counterparty credit exposure," said Randall Dodd,
director of the Derivatives Study Center at the Washington, D.C.-based Economic Strategy Institute. "If they're
the dealer then they are the liquidity."

If Enron was net short on Nymex and began unwinding contracts, the effect would be to spark a price rally as these
shorts were covered. And a price rally is precisely what transpired.

To the surprise of many market watchers, the front-month November contract shot up nearly 20% over the span of a
week, from $2.68/MMBtu on Oct, 23 to $3.20 on Oct. 29, when it went off the board. Most November bid-week deals
were indexed to this higher Nymex price. Storage levels were approaching record highs, and forecasts were uniformly
calling for widespread warm weather through the first half of November,

Energy economist Philip Verleger was among the many analysts expecting gas prices to drop. "I've been following
these things for a long time, and the oil statistics make a lot of sense and the gas statistics never seem to tell me a
thing,” he told Natural Gas Week. "I suspect that's because of Enron.”

Whether Enron was net long or net short is not known. Verleger believes they were net short. "Presumably they've
written a lot of puts to producers,” he said, who wanted to hedge against lower gas prices. Enron would have to open
corresponding short positions to balance these contracts.

The other explanation for the open interest drop is that jittery players are simply pulling out of the game. Apache is
among the few companies that has admitted to this, unwinding options that it used to hedge past property acquisitions.
It realized a net gain of $70 million from the transactions, Apache spokesman Bill Mintz said.

That a producer would be nervous holding open contracts with beleaguered Enron is understandable. Except none of
the positions Apache liquidated were with Enron.

“We were worried about some credit risk and counterparty risk due to rippling effects from Enron," Mintz said. Apache
had only one transaction outstanding with Enron. "We're still working on that one," he said.

Apache is not the only interest thinking along these lines. “You're hearing in the business guys trying to roll out of
small positions directly with Enron and having a hard time making it happen. Or Enron is saying ‘Well, we're not going
to do this,” said David Pursell of Houston-based Simmons & Co. "That is making a lot of people nervous."

“The concern in the market is that all roads lead to Enron,” he added. "The threat of counterparty risk says | have a
hedge in place, but ultimately if Enron is involved in that trade, maybe I won't get paid.”

Risk of a Snowball Effect
No one knows how the "Enron effect" will play out in gas prices. But all agree that, by definition, less open interest in a
commodity market means more price volatility.

1/16/02 i¢) 1 2 6 1

01200000000617


maY @3 1999 @8:@7 FR ENRON INT FR DEPT 713 646 6554 TO S12e@28283372 P.@2/e2
5/82/88 23:22 JOHN AMBLER-ENRON + 7136466594 NU. eee a“

FROM: JOE HILLINGS
ENRON CORP.
WASHINGTON, D.C,

Enron International Statement on

US-Japan Enhanced Initiative on Deregulation and Competition Policy

Enron satuted today the government of Japan and the office of the United States trade
representative for their progress in their dialogue to deregulate and open the Japanese

energy sector to constructive competition. These reforms being discussed should reduce
electricity prices, which are among the world’s highest, and provide a fundamental boost

to Japan's economic recovery. “We regularly see demonstrations of how free and open
markets provide lower cost and more innovative services to consumers,” said Joseph W.
Sutton, chairman and CEO of Enron International. “We applaud this initiative bythe *
governments of Japan and the United States. Clear, cansparent, non-discriminatory rules
and regulations in the power sector will iocrcase competition to the benefit of all

consumers,

Enron is one of the world’s leading integrated electricity and natural gas companies, The
company, which owns approximately $30 billion in energy related assets, produces
electricity and natural gas, develops, constructs and operates energy and water facilities
worldwide and delivers physical commodities and risk management and financial
Services to customers around the world, Enron's Intemet address is www.enron.com, and
the stock is traded under the ticker symbol, "ENE."

S

00100000000256


WSI.com Page 1 of 3

January 16, 2002

Commentary

Watchdogs and Lapdogs

By Burton Malkiel. Mr. Matkiel, professor of economics at Princeton, is author of "A Random Walk Down Wall Street,"
7th ed. (WW. Norton, 2000).

The bankruptcy of Enron -— at one time the seventh-largest company in the U.S. -- has underscored the need to
reassess not only the adequacy of our financial reporting systems but also the public watchdog mission of the
accounting industry, Wall Street security analysts, and corporate boards of directors. While the full story of what caused
Enron to collapse has yet to be revealed, what is clear is that its accounting statements failed to give investors a
complete picture of the firm's operations as well as a fair assessment of the risks involved in Enron's business model and
financing structure.

Enron is not unique. Incidents of accounting irregularities at large companies such as Sunbeam and Cendant have
proliferated. As Joe Berardino, CEO of Arthur Andersen, said on these pages, "Our financial reporting model is broken.
Tt is out of date and unresponsive to today's new business models, complex financial structures, and associated business
risks,"

Blind Faith a

It is important to recognize that losses suffered by Enron's shareholders took place in the context of an enormous bubble
in the "new economy” part of the stock market during 1999 and carly 2000. Stocks of Internet-related companies were
doubling, then doubling again. Past standards of valuation like "buy stocks priced at reasonable multiples of carnings”
had given way to blind faith that any company associated with the Internet was bound to go up, Enron was seen as the
perfect "new cconomy” stock that could dominate the market for energy, communications, and electronic trading and
commerce. "

T have sympathy for the Enron workers who came before Congress to tell of how their retirement savings were wiped
out as Enron's stock collapsed and how they were constrained from selling. I have long argued for broad diversification
in retirement portfolios. But many of those who suffered were more than happy to concentrate their portfolios in Enron
stock when it appeared that the sky was the ceiling.

Moreover, for all their problems, our financial reporting systems are still the world's gold standard, and our financial
markets are the fairest and most transparent. But the dramatic collapse of Enron and the rapid destruction of $60 billion
of market value has shaken public trust in the safeguards that exist to protect the interests of individual investors.
Restoring that confidence, which our capital markets rely on, is an urgent priority.

In my view, the root systemic problem is a series of conflicts of interest that have spread through our financial system. |
there is one reliable principle of economics, it is that individual behavior is strongly influenced by incentives.
Unfortunately, often the incentives facing accounting firms, security analysts, and even in some circumstances boards of
directors militate against their functioning as effective guardians of shareholders’ interests.

While I will concentrate on the conflicts facing the accounting profession, perverse incentives also compromise the
integrity of much of the research product of Wall Street security analysts. Many of the most successful research analysts
are compensated largely on their ability to attract investment banking clients. In turn, corporations select underwriters
partly on their ability to present positive analyst coverage of their businesses. Security analysts can get fired if they
write unambiguously negative reports that might damage an existing investment banking relationshin or dieeourage a

http://interactive,wsj.com/archive/retrieve.cgi?id~SB 101 1145236418110120.djmé&t 0 1 34 5 1/18/02
01200000000701


YK-[(b(2)KFAC No. ¥K-[(O2)] )

NOTE TO FILE:

This is a request for a license authorizing U.S. employees and
U.S. affiliates of Enron Corp. to assist Enron's UK subsidiary in
the purchase and sale of [(b}(4)]

No license would be required if the work was to be done entirely
by the UK subsidiary and ite staff. it is represented, however,

that the assistance of the U.S. personnel and the U.S. affiliates
is required.

((b)(5)]

00400000000180


No person has been authorized to give
any information or to make any representa-
tions other than those contained In this Pro-
spectus, and, if given or made, such informa-
tion or representations must not be relied
upon as having been authorized. This Pro-
spectus does not constitute an offer to sell or
the solicitation of an offer to buy any securi-
ties other than the securities described in this
Prospectus or an offer to sell or the solicita-
tion of an offer to buy such securities in any
circumstances in which such offer or solicita-
tion is unlawful, Neither the delivery of this
Prospectus nor any sale made hereunder
shall, under any circumstances, create any
implication that there has been no change in
the affairs of the Company since the date
hereof or that the Information contained
herein Is correct as of any time subsequent to
its date.

TABLE OF CONTENTS

Page
Available Information ............65 2
Incorporation of Certain Documents
by Reference 2
Prospectus Summary 3

Price Range of Common
Stock and Cash Dividends . . .
Business :
Selected Consolidated Financial and.
Operating Information ............ 20
Management's Discussion and >
Analysis of Financial Condition and
Results of Operations 2
Management .........
The Selling Stockholder
Relationship Between the
Company and Enron Corp. ......-
Description of Common Stock ve
Certain United States Federal Tax
Consequences For Non-United
States Holders of Common Stock.. 39

:

Enron Oil & Gas Company

Common Stock
(par value $.01 per share)

PROSPECTUS

00900000000316


http://www.stratfor.com/latinamerica/commentary/0201152240.htm

Militant Links May Inflame Singapore-Malaysia Tensions

Singapore and Malaysia have been working to improve bilateral relations.
But developing details linking Jemash Islamiyah, a Muslim militant group

based in Singapore, to individuals or groups in Malaysia may subvert

recent efforts to reduce tensions and revive their respective economies,

http://www, atratfor.com/asia/commentary/0201152130.htm

NEED INTELLIGENCE FOR YOUR COMPANY?
Navigating The Challenges Of Globalization?
Click Below To Learn About Our Multi-User Packages
hetp:// .

MEMBER OF THE MEDIA?
Click Below For Expanded Access to STRATFOR
http: //wew,stratfor. com/MEDIA/newnub htm

cONTACTS AND CUSTOMER SERVICES:

STRATFOR
700 Lavaca, Suite 405 Austin, TX 78701
Phone: 512-744-4300
Internet; http: //www.atratfor.com/
Email: info@stratfor.com

PRIVACY NOTICE:
While all e-mail from STRATFOR and its partners includes
an opportunity to opt out of future communications, you can
edit your information and preferences at any time. If you do
not wish to be contacted by STRATFOR, or its approved third
parties, regarding value-added benefits, products and services,
please follow the inatructions to “unsubecribe" provided in all
e-mail messages.

SIGN-UP:
Get the free, daily Intelligence Briefing by STRATFOR:
http://www. stratfor.com/home/giu/subscribe.asp
Stop receiving the Intelligence Briefing by visiting:
http://www. stratfor.com/home/giu/subscribe2.asp

ADVERTISE:
For information on advertising in the Free Intelligence Briefing
or any section of the STRATFOR website, please email us at
advertising@stratfor.com

(c) 2002 Strategic Forecasting

, 01788

01200000000444


DEPARTMENT OF THE TREASURY
WASHINGTON, D.C. 20220 APR - 5 2000

OFFICE OF FOREIGN ASSETS CONTROL
CORRESPONDENCE ACKNOWLEDGEMENT

Beverly J. Rudy Tel. 202-383-0100
Sutherland Asbill & Brennan, LLP Fax 202-637-3593
1275 Pennsylvania Ave, N.W.

Washington, DC 20004-2415

LICENSING DIVISION Fax: (202) 622-1657
OFFICE OF FOREIGN ASSETS CONTROL ("OFAC")

U.S. DEPARTMENT OF THE TREASURY

1500 PENNSYLVANIA AVENUE, N.W.

WASHINGTON, DC 20220

RE: PAC No.  IA- [(b)(2), (b)(7)]

Thia is to acknowledge receipt of your correspondence
dated 03/31/00. Please refer to the PAC number cited above and
the date of your original correspondence if you need to contact us

or send supplemental information.

Please note that filing an application for a license or
requesting information about the transaction prohibitions contained
in Executive orders or regulations administered by OFAC does not
suspend or excuse compliance with the prohibitions or requirements

contained therein.

We look forward to serving you.

Note: Information on sanctions programs administered by OFAC can be retrieved at any
time from our automated fax-on-demand system by dialing (202) 622-0077, or from
our World Wide Web home page on the internet at www.treas.gov/ofac,

Fax to:

Page 1 of 1

00400000000022


License No. Cu-[(b)(2)] - Page 2 of 2 -
Licensee: Enron Corp.

SECTION 1 - AUTHORIZATIONS: [(b)(4)]

Authority: 31 CFR §§ 515. [(b)(4)] 515.801.

SECTION 2 = CONDITIONS: [(b)(4)]

SECTION 3 - RECORDKEEPING AND REPORTING REQUIREMENTS: [(b)(4)]

SECTION 4 - WARNINGS: (a) Except as authorized in Section 1 above, nothing
in this license authorizes persons subject to the jurisdiction of the United
States to engage in any transaction or activity prohibited by the
regulations.

(b) This license does not authorize any person or entity subject to the
jurisdiction of the United States to enter into any binding contract or
agreement involving transactions in which Cuba or a national of Cuba has an
interest, nor does it imply approval of any future contract or agreement that
may result from the travel activities authorized herein. A separate
application to the Office of Foreign Assets Control for a specific license is
required for this purpose.
XXXXXXKXAXRAXNKKARKANAAN RAK NXAKEAAANANAANAXARERXANKARAAANANKANNANKAN AA ANARAARAAANAAAAAN KAN

00400000000008


81999 4:27PM «= CHAIBMAN’S OFFICE No, 0452. 2/2

Kenneth L. Lay
Chairman end
nif Excutioe Officer

% October 8, 1999 Enron Corp.
PO Bar 1188
Mowston, TX 77251-11448
(713) 853-6773

Fax (713) AS3S31
The Honorable Lawrence H. Summers ingens

Secretary of the Treasury

U.S. Department of Treasury
1500 Pennsylvania Avenue, NW
Room 3330

Washington, D.C, 20220

Dear Larry:

| apologize that we have not been able to connect by telephone over the last 2 or 3 days.
it appears that our respective schedules are totally out of sync.

The reason | was calling has to do with a matter that just recently came to my attention.
Apparently at a conference of the National Economic Research Association held the week of
July 5* this year, Treasury Department assistant general counsel John Yeutter made some
comments concerning over-the-counter (OTC) derivatives regulation and Enron which were
troubling. He apparently stated that the President's Working Group on Financial Markets in its
pending study on Hedge Funds and Derivatives considered OTC cerivatives regulation an
“open issue”, and it may recommend regulation of “otherwise unregulated entitles, such as
Enron”.

As you would expect, we are troubled by being singled out, but even more troubled by
the notion that financial regulators may be considering any regulation of OTC dealers,
particularly in the energy fied, where we believe derivatives are truly customer based risk
management tools, Enron believes there is no need for any additional regulation of OTC
derivatives dealers in as much as the OTC derivatives markets are functioning very smoothly
today and, based on any information we have, there have been no problems in the energy
derivatives market that warrant regulation. In fact, we believe that derivative products provide a
useful and important risk management tool for our customers and the customers of many other
dealers in the energy industry and many other business areas,

Larry, hopefully the comments made by John Yeutter were just a misunderstanding.
However, if there Is any serious thought of imposing regulation of OTC dealers, we would
certainly like to have an opportunity to make our case as to why we think this is not warranted. |
would very much appreciate receiving a call or note from you if in fact there is any reason that
we should be concerned about this occurring.

| spent some time with Bob Ruben in Shanghai last week and he appears to be doing
very wall. [| must say he looked more relaxed than | have seen him in years.

Warm regards,

fer!

Matiesl ase Blacteicliy, Endlece ancsihilitios

00100000000136


the continuing operations of our trading and other core energy businesses.”

In canceling the proposed merger, Dynegy said it would exercise its option to buy Enron's Northern
Natural Gas Pipeline, something it was entitled to because Dynegy's partner, ChevronTexaco,
pumped $1.5 billion cash into Enron when the Nov, 9 merger agreement was struck.

Many in the industry believe Enron will be forced to file bankruptcy as a result of the Dynegy pull-out.

Enron would not comment on whether a bankruptcy filing is in the works, but the company says it is
reviewing its option to repay Dynegy the $1.5 billion cash, which would allow it to retain Northern
Natural Gas Pipeline.

Should Enron file for bankruptcy protection, it would be the largest corporate bankruptcy in U.S.
history. Enron's third quarter balance sheet lists $61.8 billion in total assets, which eclipses the $35.9
billion worth of assets Texaco Inc. listed when it filed for bankruptcy in 1987.

seeee

November 26, 2001

Reload

October 30, 2000
k.com/transformation:

<http-//www.internetweek.com/transformation2000/cove: >

Enron's Web Retreat

Many of Enron Corp.'s online businesses may not make the cut as the company, exposed to billions
of dollars in debt from off-balance-sheet deals, prepares to be acquired.

Enron's pioneering moves in online trading earned the company the cover of IntemetWeek's
Transformation Of The Enterprise issue in October 2000. At its apex last year, Enron had a market
value of around $80 billion, as it posted $100 billion in revenue.

But Enron's stock plunged over the last month amid revelations that company executives had created
limited partnerships which reportedly left Enron exposed to $3.3 billion in outstanding notes. With its
market value and image decimated, Enron this month accepted an $8 billion buyout offer from rival
Dynegy Inc., which has agreed to inject $1.5 billion to keep Enron's trading desk afloat.

Enron pioneered Web trading of energy commodities with EnronOnline, where the company buys
and sells futures on up to 1,500 products, doing more than $4 billion in daily transactions. Most of
that trading is still in energy products, though Enron had diversified into bandwidth, paper, steel,
freight storage and other commodities. With the Dynegy deal, however, Enron plans to focus on
"core" energy activities and dump other assets.

The first casualty is Enron Broadband Services, which owns about 15,000 miles of optical fiber and
25 network interconnection facilities in the United States. EBS envisioned buying and selling
bandwidth as a pure commodity like natural gas, but bandwidth trading volumes never approached
the level needed for a liquid market. Enron is looking to sell EBS, a spokesman says.

Enron has yet to make a decision on its other online trading businesses, including Net Works, the
incubator that developed most of the technology that underpins EnronOnline. Each business will be
reviewed "based on their capital requirements and near-term growth prospects,” the spokesman

7 01477

01200000000131


exploration, development and acquisition activitiss Primarily from available internally generated cash
flow.

The level of exploration and development ©xpenditures will vary in future periods depending on
energy market conditions and other related economic factors. Based upon existing economic and
market conditions, the Company believes net operating cash flow and available financing alterna-
tives will be sufficient to fund its net Investing cash requirements for the near term. However, the
Company has significant flexibility with respect to its financing alternatives and adjustment of its
exploration and development expenditure plans as circumstances warrant. While the Company has
Certain continuing commitments associated with expenditure plans related to operations in India,
Trey are not anticipated to be material when considered in relation to the total financial capacity of
the Company,

Other

The odst of environmental compliance has not been material to the Company.

In March 1995, the Financial Accounting Standards Board issued SFAS No, 121 -~
{or the impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (the
“Standard"). The Standard requires, among other things, that long-lived assets and certain identifc

00900000000306


Person of the property of EOG or any EOG Successor as an entirety or substantially as an entirety,
til) any statutory exchange of securities of EOG, or any EOG Successor with another Person (other
than in connection with a merger or acquisition): or (iv) any liquidation, dissolution or winding up of
EOG or any EOG Successor (any such event being a Reorganization Event'’), the Exchange Rate
used [0 Getermine the amount payable upon exchange at Maturity for each Exchangeable Note will
be adjusted to provide that each Holder of Exchangeable Notes will receive at Maturity cash iin an
amount equal to (a) if the Transaction Value (as defined below) is greater than or equal to the
Threshold Appreciation Price, 8264 multiplied by the Transaction Value, (b) if the Transaction Value
§s less than the Threshold Appreciation Price but greater than the initial Price, the Initial Price and
(c) if the Transaction Value is less than or equal to the Initial Price, the Transaction Value,
“Transaction Value” means (i) for any cash received in any such Reorganization Event, the amount
of cash received per share of EOG Common Stock, (i) for any property other than cash or securities
received in any such Reorganization Event, an amount equal to the market value at Maturity of such
property received per share of EOG Common Stock as determined by a nationally recognized
independent investment banking firm retained for this purpose by Enron and (ii) for any securities
received in any such Reorganization Event, an amount equal to the average Closing Price per share
of such securities for the 20 Trading Days immediately prior to Maturity multiplied by the number of
Such securities received for each share of EOG Common Stock.

Notwithstanding the foregoing, in lieu of delivering cash as provided above, Enron may at its
option deliver an equivalent value of securities or other property received in such Reorganization
Event, determined in accordance with clause (i) or (il) above, as applicable. If Enron elects to deliver
Securities or other property, holders of the Exchangeable Notes will be responsible for the payment
of any and all brokerage and other transaction costs upon the sale of such securities or other
Property. The kind and amount of securities into which the Exchangeable Notes shall be
able after consummation of such transaction shalt be subject to adjustment as described in the
immediately preceding paragraph following the date of consummation of such transaction.

Enron is required, within ten Business Days following the occurrence of an event that requires
an adjustment to the Exchange Rate (or if Enron is not aware of such occurrence, as soon as

aggregate number of Exchangeable

otherwise issuable in respect of all Exchangeable Notes of any Holder which are changed
Maturity, such Holder shall be entitled to receive an amount in cash equal to the value of such
fractional share at the Maturity Price.

Redemption and Defeasance

The Exchangeable Notes are not subject to redemption or defeasance prior to Maturity and do
not contain any sinking fund or other mandatory redemption provisions.

Limitations on Mortgages and Liens

The Indénture provides that so long as any of the Indenture Securities issued under the
Indenture (including the Exchangeable Notes) are outstanding, Enron wilt not, and will not permit any
Subsidiary (as defined in the Indenture and herein) to, pledge, mortgage or hypothecate, or permit to
exist, except in favor of Enron or any Subsidiary, any mortgage, pledge or other tien upon, any
Principal Property (as defined in the indenture and herein) at any time owned by it, to secure any
Indebtedness (as defined in the Indenture). uniess effective provision is made whereby outstanding

19

00900000000265


= U.S. equities moved higher, bolstered by strength in financial and bank stocks.
~ Treasury prices moved higher abead of tomorrow's slate of US. economic data.

W150 4:10 PM

US. equity markets closed with modest gains in active trading, aided by strength im financial
and bank issues. Analysts await eamings mews afler the closes fom Intel Corp. and Juniper
Networks. The NYSE suspended Iracing in Enron Corp, and plans to delist the stock
following the fnancial collanse of the fern tate last yaar. K-Mart fell 13.7% to $2.45 and bs

down 55% since December 31 on expectations the fim may soon fie for bankruptcy. The | Wilbirs Tor Met
est stock performers today were financial, bank, software, cil, insurance and computer aoe se

“ Mewar theta
Analysts expect tomorrow’s CPI report for Decembar will bo unchanged following an Bruzitae Bowes
unchanged report in November. The December core CPI ts seen up 0.2% after rising 0.4% be

in November, The December industrial production report is expected to be unchanged, =
while capacity uilization is seen edging dawn to 74.6% trom 74.7% in November, The Nn a

Fed's "Beige Bock" report it scheduled for relaase at 2 PM tomorrow.

SPM —CChusage

EIT) 03%
2m asa
Lime 68s,

10.035 ona

164,639,900
7.684 arms
673 2M
018 eS
$062 0.06%
asa 14s
Perry 10%

1208 2%

‘Treasury coupon prices ware unchanged to up S'S point in moderate trading. Traders noted
reduced concems over infation, the umwincing of corporate hedges and remained
influenced by Fed Chairman Gresnapan's recant wards of caution regarding the U.S.
economy. Treasury auctioned today $6.0 bilion 4-week T-bills to pay down $6.0 billion.

‘The results were as follows:

Awarded rate: 1.608% Coverage ratic: 4.59 times

Todsy's awarded rate compares with last wook's awarded rate of 1.660%.

‘The January Federal funds fulures contract was unchanged at 1.72%, while the February
and March contracts rase 2 bps and 1 bp to 1.615% and 7.50%, respectively.

The Feteusry crude oil contract edged up $0.01 to $18.90 a barrel ahead of API oll
ineantory data toraght. The Feteusry nstuesl gas contract rose $0.04 to $2.28 per milfion {Overmighs rase
blu, Spot gold fot $1.00 10 $284.10 an ounce.

Feteuary Fed Fence

The dotur appreciated 1.3% against the euro and was 0.5% woaker against the yen. The
dollar was 0.6% femer against the British pound and 1.0% fener against te Swiss franc.
The Canadian collar fiemad 0 4% following today’s BOC 25 bps essing The BOC has

cased eleven times since the start of 2001 fer a total of 375 big.

Lain American equity markets closed mixed, wit the Bolsa culperforming ty climbing
2.9%. Mexico's peso firmed 0.3% on news that Fitch boosted the country’s debt rating to
inwastmant grade (to BEB- from BB+). The Argentine peso was bid at 1.90. Brazil's raat
firmed 0.8% and Bovespa adged lower by 0.9%,

The EMBi+ spread widened 3 bps to 732 bps over the comparable Treasuries. Other
EMBIt subindexes narrowed on the day. including Argentina (-38 to 4638), Brazt (-9 to
863). Mexico's sub-ndex was flat at 319, while Turkey's sub-index rose 15 bps to 702 bps.

Tomonon's Everts: Tom Consensus Expectation

JPN BOJ Policy Boars Meeting

UK Claimant Jobless, Dec. +7,009 vim

‘US CPI, Dec. 30 AM unch unch

US Business Inventories, Nov. 830 AM 07% 1.4% mim

US Industrial Production, Dec.

For inteenal Use Cnty

Drathed by: Jim Sharer
WISM2 4:39 PM

01781

01200000000437


License No. IA- [(b)(2)] Page 2 of 2

SECTION 1 - AUTHORIZATION: Subject to the Limitations and conditions
herein, this license hereby authorizes Enron Capital and Trade Resources
Corp. and all U.S. persons involved in the transactions for which this
license has been sought pursuant to the Application to engage in only those
transactions necessary to assist or enable [(b)(4)]

SECTION 2 - WARNING: Except as authorized above, nothing in this license
authorizes a U.S. person to engage in any transaction prohibited by the
Tranian Transactions Regulations, 31 C.F.R. Part 560, or Executive Orders
12613, 12957, 12959, and 13059.

SECTION 3 - RECORDKEEPING REQUIREMENT: In accordance with § 501.601 of 31
C.P.R. Part 501, the licensee(s) hereunder is/are required to keep full and
accurate records of all transactions engaged in under this license. Such
records shall be made available for examination upon demand for at least 5
years from the te of each transaction. Such records shall clearly
demonstrate the applicability of the authorization set forth in § 1 hereof.

SECTION 4 - PRECEDENCE: This license is issued on a nonprecedential basis.
EERE R EEE EEE REE EERE ERENT HEN EERE HERE RHERER REWER HERE RHE RE EHO

00400000000053


WSJ.com Page 3 of 6

The market for credit derivatives, which barely existed five years ago, has grown to an estimated $360
billion, according to the Office of the Comptroller of the Currency. And it says the nominal value of
derivatives on the books of commercial banks soared to $51.3 trillion at the end of September from $6.8
tnllion in 1990, with nearly $20 trillion of that growth coming since 1998.

Behind the Times

Federal oversight hasn't kept up. The Commodity Futures Trading Commission regulates futures and,
along with the Securities and Exchange Commission, options traded on exchanges, but not derivatives
traded off-exchange, or "over the counter." The latter term describes trades that are privately negotiated
between large financial institutions or corporations, How such derivatives are regulated depends on what
kind of firm sells them. For example, bank regulators such as the Federal Reserve can scrutinize
commercial banks’ activity, while the SEC can examine that of brokers who conduct business in the U.S.

Enron -- which started trading natural gas, then expanded to electricity, metals and more-exotic
derivatives ~ fell through the cracks of this regulatory framework. As a publicly traded company, Enron
routinely provided the SEC with general information about its finances, But it wasn't obliged to give the
agency any detailed information about its OTC trading activities. In fact, the CFTC's only peek into
Enron's vast trading operation was through a tiny registered futures affiliate, Enron Trading Services
Inc.

EnronOnline, the electronic marketplace Enron launched in late 1999, also fell outside federal
Junsdiction, The exchange came to contro] a quarter of all wholesale energy trades among U.S. utilities,
independent power producers and other market players. In many ways, the Web-based trading system
resembled its heavily regulated counterparts, such as the New York Mercantile Exchange.

But Enron and its imitators didn’t fit regulations written for the likes of conventional markets such as the
Nymex. Those exchanges bring many traders together and cater to a broad range of investors, both large
and small. But Enron's marketplace was limited to big, sophisticated players.

Moreover, Enron jealously guarded its independence. While some companies voluntarily discuss their
derivatives trading with the CFTC, Enron regularly failed to do so, say people familiar with the agency.

Enron spokesman Mark Palmer says the company’s unregulated status was appropriate. “With a deep
bilateral market of sophisticated buyers and sellers, that regulation was not needed," he said. Though
Enron did some trading for its own account, Mr. Palmer disputes suggestions that his firm was similar to
a hedge fund, adding that most of the $19 billion in derivatives contracts on its balance sheet were
commitments to deliver, or take delivery of, natural gas or electricity.

In the roaring 1990s, with the deregulation movement at its zenith, few in
Washington dared even to suggest more regulatory oversight of derivatives. One
of the few who did was Brooksley Born, who President Clinton named to head the
CFTC in 1996. Her comments in speeches and in a discussion paper about the
need for more oversight and regulation of OTC derivatives triggered an uproar
among derivatives dealers — from J.P. Morgan & Co. to Enron. They quickly
complained to Congress and other regulators that the uncertainty Ms. Born was
creating could destabilize their markets.

The industry complaints got a sympathetic hearing from many politicians and
regulators — particularly at the Fed and the SEC -- who saw Ms. Born's campaign

http://interactive.wsj.com/archive/retrieve.cgi?id=SB 1008202066979356000,djmé&ctemplate=.... 12/13/01

01490

01200000000144


Street to turn the stock around, Nobody gave a hoot that Price Waterhouse had approved Tyco's accounting, For that
matter, companies like IBM, GE, Cisco, Amazon and AOL face more or less continual sniping ftom short-sellers about
how they keep their books. These skirmishes ebb and flow, but the market seems resigned to doing its own policing.

Sad to say, the functional purpose of the annual audit these days is only to give the plaintiff's bar somebody else to sue
when a company falls apart. Yet even the prospect of massive civil damages has merely rendered accountants more
adamant in refusing to serve as the system's fraud detectors.

Cries have gone up in Enron's wake for more "oversight" and new regulations, as if somehow piling on more rules can
finally turn the frog into a prince. Critics are especially worked up about consulting fees auditing firms earn from the
same companies whose books they audit, But the auditors themselves are hired, fired and paid by the very companies
they're supposed to be scrutinizing, which ought to strike anybody as the bigger inherent conflict.

The profession's drippy rhetoric would have you believe accountants work for the public good or the Gods of Absolute
Accounting Purity (GAAP), but this is silly. They make a living selling a service to involuntary customers who are
going through the motions to satisfy a federal mandate. The annual audit is a service truly valued by no one: It doesn't
catch crooks and it doesn't benefit honest companies either, because it provides no proof or assurance to investors about
the accuracy and completeness of a company's books, Had it been otherwise, Enron might have been more inclined to
listen to Andersen's advice, in which case Enron would still be around.

When a ritual has so emptied itself of real meaning as to become positively dangerous to its participants, it's time for a
rethink.

An obvious and appealing solution would be to eliminate the SEC mandate altogether. Companies and their
shareholders would have to decide for themselves whether the audit ritual is worth the money, and if not, how to make i
so, Companies, after all, have an interest in presenting their bona fides to investors. If accountants were kicked off the
federal dole, they might have to develop auditing services that investors and companies would find credible.

The alternative is to stop waving vaguely in the direction of the public good and yoke accountants finally to a paymaster
with an institutional interest in uncovering and prosecuting fraud. One Big Five accountant we know suggests the SEC
should contract directly with accounting firms to audit books of companies that want to raise money in the public .
markets. If nothing else, the SEC would finally have to admit that it's functionally impossible to guarantee the trust on
which markets depend.

In the real world, nobody bought Enron's stock because they liked the cut of Arthur Andersen's jib. But accounting firms
are agglomerations of talent and expertise that could be serving a useful purpose in the world, The time has come to free
them from the regulatory non sequitur that inhibits their emergence into responsible adulthood. This might not prevent
the next Enron, but then again it might,

91344

01200000000700


hand, they were able to see some of the prices in the marketplace, there are a number of consumers that are right now
secing the very high prices of power in the Midwest, would voluntarily and on good economic justification, reduce
consumption or shut down, Right now, we just don't have that ability because the markets are not open to price
signals, not open to actual competition.

Ron: All right. Let's talk about how the consumer gets hit by all this. Obviously, reduced availability of power means
you have to cut back on air conditioning and other things as the summer remains hot. What about prices though. Are
people going to kind of open their cyes a lithe wider when they soe their bill in this environment?

Skilling: Anytime you have this shortfall of supply that you're starting to bring on very expensive facilities to meet
the demand, so | would expect that, yes, prices will be a little bit higher as we move through the summer,

Ron: Can you quantify that in any way, shape, or form?
‘Skilling: It's hard to say right now. It will depend a Jot on how this plays out over the next couple of manths.

Ran: I know are you not in the business of weather forecasting but there has been so much discussion of BI Nino and
the coming La Nina, that people are trying to figure out whether this indeed will be a very hot, very humid, very
difficult summer around the country. What is the intelligence that you folks are getting on that?

Skilling: We've looked at the weather patterns and I'm mot & weather forecaster so I'm going a little out on a limb
here, But the pattern so far this year, with the extremely warm winter, suggests that we are in an El Nino cycle. And
‘what is typical is, after « warm winter like we had last year, you tend to have a very hot summer, particularly July and
August.

Ron; Any advice for consumers an how to conserve power and use it most effectively while they are waiting for
slectrons from somewhere else?

‘Skilling; That's up to everybody to decide for themselves, but fundamentally, what we would like to see or what 1
think the industry would like to see is, more open competition and more price signals getting through to consumers
so that they can make that choice rationally. They can look st what the price i and decide if they want to use
electricity or not.

Ron: Under the best of al! circumstances, how long will this process take?

Skilling: The deregulation process?

Ron; Yeah.

‘Skilling: The wholesale markets are pretty much open. And that is a federal jurisdiction, so the federal government
has pretty mech opened the wholesale markets. When you move to the retail side, that is actual consumption by
consumers, that is regulated by the states. And each individual state is om its own timetable. California is open right

now. A number of states in the Northeast are in the process of opening up, But we are probably looking at another 3
to 4 years to make that process complete,

Ror: Mr, Skilling, a pleasure. Thank you for joining us today.

00100000000377


WSJ.com Page | of 6

o.

December 13, 2001
Page One Feature

Enron Lobbied Hard to Limit
Oversight of Trading Operations

By MICHAEL SCHROEDER and GREG IP
Staff Reporters of Tye Watt STREET JoumNaL

WASHINGTON -- A year ago, when most of the political world was obsessed with the deadlocked
presidential election, Enron Corp. was quietly but aggressively lobbying Congress. Its object: a litthe-
noticed bill shaping federal policy toward the complex financial instruments known as over-the-counter
derivatives.

In 1989, the Houston energy giant, originally a utility that produced and transported natural gas and
electricity, had begun shifting its focus to energy trading, It soon came to view the burgeoning market
for derivatives -- financial instruments that derive their value from an underlying commodity or wager
on the future -- as the key to its ambitious expansion plans. And it wanted as little government
interference with that market as possible.

The company’s lobbying campaign was so aggressive that staff members of one congressional
committee asked a lobbyist for an Enron-led industry group to negotiate major aspects of the bill
with regulators. In the end, Enron had provisions inserted in the law that blocked federal oversight of
some of its major corporate product lines, such as energy and metals derivatives, and its EnronOnline

energy -trading network,

Now, once-mighty Enron is in bankruptcy court. Its market value has plunged since last year to about
$500 million from more than $77 billion. But one of the most striking features of its rapid decline was
that financial regulators had little clue what was going on inside Enron. That's at least partly because
Enron -- as much as any company in America -- had invested a lot of time and money over the past
decade in keeping government out of its business.

"Crisis of Confidence"

Wednesday, the House Financial Services Committee belatedly jumped in. Lawmakers heard from
Joseph Berardino, chief executive of accounting firm Arthur Andersen LLP, who said that Enron's
collapse had created a “crisis of confidence” in the accounting profession. And they heaped criticism on
the company and on Andersen, its auditor, for issuing financial statements they said failed to reflect the
shakiness of Enron's condition.

Rep. John LaFalce, a New York Democrat, echoed the sentiments of many
the rise and fall of committee members when he called Enron's collapse a wake-up call. "How

Enron. many more Enrons are out there, and what are the systemic factors that made
this collapse and other future collapses possible?" asked Mr. LaFalce.

y ‘See full coverage of

» Listen to the Enron - a .
nearing in the House, || Wednesday, the Securities and Exchange Commission said it is considering

by arrangement with new regulations this year to require more precise disclosures about

http:/interactive. ws).com/archive/retrieve.cgi?id=SB 1008202066979356000.djmatemplate=... 12/13/01

01488

01200000000142


Ghinal Foverging Markets Performance
TDEwOL 745 AM
Currencies
‘Undt Change fhe tecat careveey
Percent Change (In Dollars per Unit Terms)
Bie Eis ite Letee — Thinzert Thiewewt Thien =n aw
foun RID TSS SG Ri% Ate Mt LIM ILI 113%
Ewe aoe = amO2s IS 0% A 8% he 49% 4%
EureYen eC ad 0% At 13% 44% ARI
uk a rd om 2% SM 1% 25%
Germeny Lime LIST LENS am B6% AS 4%
Avstralia Osiey —OSIM4 ALIN 9% 0% = TSM AAI
Comads 1ser1.seE ants 80% am AT 3%
Geld 2008 TKS as om 19% 2.6% 55%
0% 01% AD ART
em Oa Mite KOM ES
0% 0% outs, cut or
ous 1.0% OR% RIN DIM
16% SH AS% LTH HT
2% 6% AM% Ait 49%
at AI 4% IS 4%
us Ott furts, ut em
a9 13% 60% 203% +
0% ait 13% 56% 1A%
ORs 1% 3s ISSN 5%
ame Or a3 RIN 8%
um Om 75% 7%
9% 07% 22% Mit aim
at ast 1% RL
19% Late 49% 67% “KI%
ants ont 13% em
a4 BS% AVS LAM BRN
ants fits 2% 163% DMO
42% as 06% = 46% TRIN
‘Equities (In local currency terns)
= Percent Cheege
ied ARs ‘Thnk = Theme = Thar ow
Oa% oat 4% a 282%
1a% 14% 29% 98% ASEM
1A% aa 25% MIM aN
18% 20% 2% 1 78%
32% 1% 2% 39.1%
33% 34% Wa suit
4% 44% 33% aa 34%
am ons “15% 100% TRI
on ons 41% 23% IRM
ae 1% 2A TN eat
1% 02% 1% 29% oka
2% 2% eam 8%
Pray 29% 20% 36%
eam 10% Ta% THON
1% 34% 43% 320%
om “wn an si9%
1% 15% 26T% 2H9%
2% 21% 1% 0.1%
eum em am 139%
a1% a1% 20% 33%
1% 1% 4a%
Poland a ad an 28% 9%
Hongary net m2 AM O0% 05% a%
Covet a2 wa SS “1% 28M M2%
Rowe 28 1s 12% 1% 19% s2% W74%
Sout Africa 19s23 (10406 Au 1% 13% 3%
Tutkey 12762 13702 Au 00% 9.9% 454%
Greece 2555 2563 ats Am A2% 12.2%

* Foomion bogie acing in raat, Argerting, and Wesco at B00 a, 200 a.m, ard 2:30 are Essien bre resem ively

Trewaury Marks Roo

er

01729

01200000000385


NFPARTMENT OF THE TREASURY
WASHINGTON, D.C. 20220

License No. IA-[(b)(2)]
IRANIAN TRANSACTIONS REGULATIONS

LICENSE

iGranted under the authority of 50 U.S.C. §§ 1703-06, 22 U.S.C. § 2349aa-9, Executive Orders 12613,
32957, 12959, 32 C.F.R. parts 503 and 560, and Executive Order 13059.)

To: Enron Capital and Trade Resources Corporation
c/o: Sutherland, Asbill and Brennan, LLP
1725 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404 Attn: Beverly J. Rudy, Esq.

1. Based on a November 17, 1998 letter to the Office of Foreign Assets Control] from the firm of
Sutherland, Asbill, and Brennan, LLP (the “Application"), and information otherwise available to the
Office of Foreign Assets Control regarding the subject of the Application, the transactions delineated
on the reverse hereof, and if any, the page(s) attached hereto are hereby authorized.

2. This License is granted upon the statements and representations made in the Application, otherwise
filed with or made to the Treasury Department as a supplement to the Application, or based on
information available to the Treasury Department, and is subject to the condition, among others, that
the Licensee(s) comply in all respects with all regulations, rulings, orders, and instructions issued
by the Secretary of the Treasury under the authority of Section 505 of the International Security and
Development Cooperation Act of 1985, Section 203 of the U.S. International Emergency Economic Powers
Act ($0 U.8.C. § 1702), the National Emergencies Act (50 U.S.C. § 1702], and the terma of this License.

3. The Licensee(s} shall furnish and make available for inspection any relevant information, records,
or reports requested by the Secretary of the Treasury, or any other duly authorized officer or agency.

4. Thies License is not transferable, and is subject to the provisions of Executive Orders 12613, 12957,
12959, and any regulations and rulings issued pursuant thereto. It may be revoked or modified at any
time at the discretion of the Secretary of the Treasury. If thie License was issued as a result of
willful misrepresentation on the part of the applicant, it may, at the discretion of the Secretary of
the Treasury, be declared void from the date of its issuance, or from any other date.

5. This License does not excuse compliance with any law or regulation administered by the Office of
Foreign Assets Control or another agency (including reporting requirements) applicable to the
transaction(s} herein licensed. nor does it release Licensee(s) or third parties from civil or criminal
liability for violation of any law or requlation-

Issued by direction and on behalf of the Secretary of the Treasury:
OFFICE OF FOREIGN ASSETS CONTROL

wv bihed Mpcroul) 3/2 0/8

R/ Richard Newcomb
Director

Attention is directed to 18 U.S.C. § 1001, 50 U.S.C. § 1705, and 31 C.F.R, § 860.701 for provisions
relating to penalties.

00400000000089


Nickoloff, Peter

From: Nickoloff, Peter

Sent: Friday, November 23, 2001 12:08 PM

To: Carleton, Norman; Schulthess, Heidilynne
Subject: Enron and risk management

From ERisk.com

November 20, 2001

There's a much-loved moment in the world of cartoons when the heroes and villains chese each other way beyond the
edge of a cliff or high building, sustained by their momentum. It's only when they notice the crop beneath them that their
confidence fails, their legs stop moving and they plummet like a stone.

It's no surprise that the economic boom of the 1990s, followed by the sharp slowdown and geo-political turbulence of the
past 12 months, have given rise to a few moments like that in the corporate world. It's more worrying that institutions
whose principal skills are to identify and manage risk have also managed to ‘walk on air’ for an extended period.

The latest ai walker to come to grief seems to be international energy giant Enron, which after a difficult few months
¢ si 8683> is preparing to be swallowed up by Dynegy in an act that will
trong eaten by golden Sommentators bettas to pet gut,
glob K 0g ery=enron> this week that though the deal will
probably go through, it's not yet a certainty, TL deponds upon no adverte huteral changes becoming apparent with regard
to the SEC enquiries, Enron's balance sheet, litigation and so on.

It's too early to be sure at any forensic level what went wrong with Enron. But even more vertiginous drops have happened
this year across a spectrum of industries that has, al its heart, the competent management of financial risk. Some headline
perl ae ere the epeem ied of the UK's ir pang ed Insurance, the liquidation of Australia’s HIH Insurance

% ence/cas ln.2sp> and the fall of Superior Bank in the US.

The link between these diverse cebacies is a failure in corporate reporting. In a firm that manages risks this is important
for two distinct reasons. The first is that most risk management companies - and not just banks, as Enron is discovering -
depend heavily upon market confidence in their creditworthiness in order to reise and preserve funding, and to make
transactions in the markets that are thek lifeblood, When that confidence disappears, a vicious spiral of rising funding
costs, asset deterioration, counterparty worries and liquidity risk begins to suck a company down. (The mechanism is
discussed in this <http:/www.erisk.com/news/featuresiiquidity pdf> ERisk feature.)

The second distinct reason is that the way in which companies report risk in internal and external accounts is critical in
companies that are, in essence, portfolios of intangible risky assets and liabilities. Last week Ellen Seidman, retiring head
of the US Office of Thrift Supervision, used her pager an speech to make that BOI

chttp:/www.erisk.com/news/dail sm. ti4

KEYWORD. Missing.xm|> with regard to a aman failure of Superior Bank. She said that the ‘approval of
‘Superior's accounts, despite the bank's optimistic valuation of a highly volatile subprime lending portfolio, points to a larger
problem with bank accounting.

Across the risk management industries, risk-based transactions and portfolios are becoming more complex, valuations are
increasingly based on models and estimates, and in turn risk estimates are increasingly used to justify complex risk
retention or risk transfer strategies. Without a framework of sophisticated risk reporting and corporate governance, the
books of a firm can prove a world of smoke and mirrors, held together by a collective act of faith in the executives or
boards that rule the corporation.

Occasionally, that faith proves unjustified. And when that happens, history shows that equily investors have often walked
hand-in-hand with executives to the edge of the cliff.

Investors, unlike other stakeholders, are often happy that a company becomes more risky so long as its prophecies of
future rewards are growing even faster. Executives know that leveraging a firm's future risk/reward profile can be achieved

‘ 01701

01200000000357



_ Enron execs saw controversial deals as key to maintaining firm's growth Page 3 of 4

cash flow or earnings for a number of years,” the
document said.

Out of such needs were born in 1999 the so-
called LJM partnerships, which were run by Fastow.
The Enron documents show that an early transaction
involved the hedging of the value of an Enron
investment in Rhythms NetConnections Inec., a data-
communications company. According to one
document, Fastow discussed how Enron could protect
the value of that holding through a complicated swap
arrangement that also involved Enron stock and a $50
million LIM payment,

Ina filing last November with the SEC, Enron
said that it had incorrectly accounted for the
Rhythms/LJM transaction. As a result, Enron
retroactively reduced its reported net income for 1999
and 2000 by about $100 million, or around 5 percent.

The internal documents show that the board and
top management were aware of the possible conflicts
of interests in having Enron’s chief financial officer
running partnerships that eventually did hundreds of
millions of dollars of business with the company, One
document, labeled as part of a June 1999 presentation
to Enron’s board, also laid out the huge pi6fit
potential in Fastow's partnership compensation
formula, under which he stood to reap as much as
half of partnership profits in addition to management
fees. Enron has estimated that Fastow made over $30
million from his partnership activities.

To avoid
potential conflicts

* News from your back yard of interests on
and local angles nationwide Fastow’s part,
Enron set up a
review procedure
for any Enron deals with the partnerships. Among
other things, all transactions had to be approved by
Skilling and two other senior Enron officials,
according to one of the company documents.

In interviews with several media organizations
last month, Skilling, who resigned as Enron’s
president and chief executive officer in August,
indicated that he wasn't fully aware of all the LIM-
related dealings and was also surprised by the size of
Fastow’s partnership remuneration. Tuesday, a
spokeswoman for Skilling said that while he was
familiar with the structure of the LJM partnerships,
“he wasn’t aware of or intimately involved with
details” of particular transactions. Those matters were
“handled at a lower level” of the company, she added.

Fastow couldn’t be reached for comment. But a

01440

hittp://www.msnbc.convnews/680656.asp?0si=- 1/3/02

01200000000796

Local business news


Taking advantage of unseasonably warm weather, homebuilders began
construction on new houses at a stronger-than-expected pace in
November, the government id on Tuesday, a sign of the housing
market's resiliency in the face of a recession. (source: Fox News)
http://www. investorguide.com/egi-bin/daily.cgi?08473

General Electric's new chief, Jeff Immelt, on Tuesday laid out an
aggressive expansion strategy for 2002 and 2003, saying growth from
cost wings and acquisitions would offset the drag of a weak economy
and any potential slowdown in the global power market. (source: Yahoo)
http://www. investorguide.com/cgi-bin/daily.cgi?05474

Analysis:

Smack-dab in the middle of the holiday season, the economic statistics
are beginning to register more pluses than minuses. This doesn't mean
that the U.S. economy is about to come roaring back, but it does
suggest that we will enter 2002 in better shape than many expect.
(source: MarketWatch)

http://www, investorguide.com/cgi-bin/daily.cgi?0sa75

On Monday, the Nasdaq announced that it would be kicking 13 slumping
tech firms out of the much-followed Nasdaq 100 index, on which the
exchange-traded fund called the QQQ is based. Of the replacements, 8
are health-care and biotech companies. According to thia columnist,
the Nasdaq's rejiggering of the Nasdaq 100 makes the index an even
lees reliable proxy for tech than it already wan. (source: CNNMoney)
http://www. investorguide.com/egi-bin/daily.cgi?08476

Did Enren have something contagious? On one hand, it makes sense that
Dynegy and others in the energy industry would get a hard second look
after the dramatic implosion of ita strongest player. On the other
hand, wasn't Enron, in both its glory and its fall, supposed to be a
unique beast, a unicorn in a world of hogs and heifers? (source:
Forbes)

http://www, investorguide.com/cgi-bin/daily.cgi?05477

In Briet:

- Wireless technology leader Motorola announced that it would suffer a
loss this quarter and cut 9,400 jobs, but that it expects to be
profitable in 2002.

If you have any friends or colleagues who would appreciate getting
this news every day, follow this link (or if you prefer, simply
forward this issue to them):

http://www. investorguide.com/cgi-bin/recommenddaily.cgi

You can research companies mentioned in today's news by following

these linka:

Dynegy http://www. investorquide.com/cgi-bin/r.cgi?name=DYN
Enron http://www. investorguide.com/cgi-bin/r.cgi?name=ENE
General Electric http://www. investorguide.com/cgi-bin/r.cgi?name=GE
Motorola http://www. investorquide.com/egi-bin/r.cgi?name=MOT

You can research any publicly traded company by following this link:
http://www, investorguide.com/research.ht=al

earnings

Tuesday's major earnings reports:

Company Name (Ticker): actual, expected, same q last year
3Cem Corp (COMS) : -$0.14, -$0,.23, -$0.15
Best Buy (BBY): $0.37, $0.35, $0.27
Cintas Corp (CTAS): $0.34, $0.33, $0.33

° 01731

01200000000387


LO/P/TZ1

£JO 7 980g

UN’ [00€ | [WoIUA/WOs"ysemjouaqUT MALY

MaYISA O} YIN OO} sem UOJU sdewad ‘yaysew AByeus al00 sy!
uj ‘puejssepun Ajjeou },upIp yi yeu) ‘4oded pue suoMesuNWWOD9|9}
@)| ‘Seuysnpul UI Ayeroedse ‘Guryew-jeyew youseyu)

49309 0} @doY JeAeU PjNod ‘UOReAOUU jURSSEOU! Jo POYS ‘UOIUy

“MOUEU
SU/BJeW youd “eyesoders Aue yeysew 0} sueWeg ‘dn Yyoyeo pue
NWI pue Wes] sJOWQadWOD “Bunsay ae Guvayjeb-uopewoju!
pue ABojouyss) Jouedns Aq pesejyuce seBejueApe ‘euouweyyn4

"umop Buijquiny

SWeD UdJUS Puy “‘AuedwoD 94) UI SOUBPJUOD js0) (sIgUed pUe
SIO}SAAU! Se [JOM SB) SJAWO}SNO -- SBu|WeS ayeyU! 0} $9998} JOYJO
ul BuiGeGue pue 3jeep jeeys aoueleq-jo Bulop -- sjeroueuy sy!
Ua ysey BulAejd sem uouug yey} Yeremoy “Y6)| 0) owed }] OUD

‘sBuly

2S0u} dajyueeNG pjnoo ‘uoneyndas pue sdiysuogejas poyomyjeu
‘asqpedxe sy jo enyiA Aq ‘uouug ,sionpoud Ayjpowwes yy
ynoge Auom ajdoed sBuity omy ayy sue yUSLU|YINy Jo AyuIepaD pue
uoynoexe jo Ajujepeo, ‘obe seek e yoosyjousajuy pio) Buyyys sy

“sesjwoud Aenep

pue oopd S$} jeawW 0) AUedwos ey) paysnuy sssWO}sNd auljUO
@sne2aq 3nq - afpa-Huipes; paepisuoo si woyejd auyuQualUy
Aseyeudoud oy) YBnouy -- ABojouYyse} poo pey y esneseq

YONW OS JOU JAN By} UO paledsoud UOUUy ‘a}!Gey ae pajquesse
UOJUZ PUL) 8U] JO SBOR\djayJeW JoUazU| xejdwOd ‘Gury @uo JO4

Z9SIWAP S,udJUZ Woy Wee Aysnpul AueAe ul sajuedwoo
Paujdsul-jow9}U| UD JeYM WYBIspUY OZ/OZ JO IWEUEG OY) YM
Zpamey Ayejuewepuny ,japow sseursng Jayeq, $,UQUy SBM OS

*Aquanjosui
40 JUIOd 94} 0} J}95y) PapUa}XesaA0 “BQVeWy Ul SajUBdWOS
SANEAOUU! ]SOW GUY JO BUD SE SJ9yjO pue Yeayyjouse}L/ Aq payeu

1007 ‘OF sAqUIDAON < VOM [FY UPI] }UIIIUL OY, < yaaQyowseyy]

01414

01200000000770


1O/P/Z1

ZJO | adeg

/PUTPUQUOIUA NO y /FuNsyIewW/ssop/WOS suT[LOUOTUa AMMy/:dyy

SE POYIOGKe oq iM JOPIO AOA YEU MOUY C] ]UEM MOA JSR] BAOW SPEWEW USA,
SOPIO WU) BOG

JENUEYyUGS pUe aunsas yay que

SUONIESUER INA Fey} SUBSW ABOYOUYZe; LOMUDUe pul sum/US euNDeS “(7SS)
2048") 7905 OuNIeg JO OSM UNO Puy “Seay VORdYISgNS 20 UOISS}WWOD OU BIE
SJAUL “@SNOW B JO SYOYO May B 1SN/ YRYA POM a4 puNcUe s}NpCad AypoUUICD
JO Spaupuny yes pue Ang o} zemod ey) NA sany6 aveyeyU) esn-O}-a)dw)s NE
UO!INIeXZ GING ‘wey ‘|Se4

DUET OU He SINPOAd
mou pue syoyseus
mau Buippe o1,074
“weeny pue omy
‘ottosng ‘swoueury
ayy wt yayseur ABsaue

(yeveg 8 Uy BUNB) JO WO) @ yO Buy Jo eUOYydalay
dn Gupaid nouym-Aqueysuy-ues Nod ‘eoud B UO
Pe! OF Apeas a1N04 veUyy “suNOY joyEY je) BuUNpD
sjonpaud jo speupuny 404 Seoud euwg-Eas “any

0} S88208 SHONUQUCS OAeYy NOA ‘euyUQuaUZ WI
Burg ewLy-j/eey

sofew Auena youre
S49A09 auNjUQUOS

oug 04) We S}ONpoud Mau pUe sFeEW Mau GuIppe a1eyy, "yn GUNS jou

21,0 Duy "PYOM au) Ul yexveLU AfueUS Jofew Asana soUe sIaNOD SUyUQUOIUZ
‘QJ0U PUL [007 ‘SOAHEALEP PED "SONPEAUEP JBLYZEM 's/e}OW “seded pur dind
[eameu “sese6 wnejojed

pue "oO “samod ‘sed Guipnyou

PHOM aug JNO |IF SIOVEW JBADD BA “BUIIUQU
PUY D} UIEWEO JOW/E B,NOA ‘88 20 ANG OF jUEM NOK AYPOWWIOD JBUM JEWEW ON
eurt 3 id ®@ajsueyesdWion y

UEDEN ejQeetipe/moux es0w & NOK eyew 0) aDe)eweW oy) JO SURE INO ory suTuQuoNa

suoddey 4 St UaKe-pyom ap Pundie Gujuaddey SJeym Jo oGpajmouy 2nOK eseaZDU) FEY) 8/00) UOBEZRUOYSND

PUB VORBUUO)LY BAYSUBPCS YyM SORNIGEDES UOGIeSUE BUR-E3) SAUQWOS SoVueS PEseq-qay, 21O “ANUED YS

pue Adis 'Appinb segipowwos 2830 PUE S}oNpod payejes-ABioUE Busey 204 |00) 1S9q INOA s1 BUUQUAIU

6ul|jUQUOIU jnoqy

ouljuquosu3

auljUQuUOINY Nogy - FUTUQUOIT

01411

..

01200000000767


SELECTED CONSOLIDATED FINANCIAL AND OPERATING INFORMATION

ended September 30, 1994 and 1995. This information should be read in conjunction with the consofidated
financial statements of the Company and related notes thereto incorporated by reference herein (see "
tation of Certain Documents by Reference") and “Management's Discussion and Anatysis of Financial

Condition and Results of Operations” included elsewhere in this Prospectus. Financial information for each of
the five years in the period ended December 31, 1994 has been derived from audited financial statements.
Financial information for the nine-month periods ended September 30, 1994 and 1995 has been derived from
unaudited financial statements. The interim data reflects all adjustments which, in the opinion of the manage-
Ment of the Company, are necessary to present fairly such information for the interim periods, Results of the
nine-month periods are not necessarily indicative of the results expected for a full year or any other intern
period.

Months

Year Ended December 31, September 30,
7990 1991 “1992 183 1984 195
(in Thousands, Except Per Shere Amounts) ——

‘Statement of income Data:
Net operating revenues
Natural 988.0. -,- $ 301,645 $ 321,003 $ 388,988 $ 505,162 $ amoess $ 365.68 $ a92,015
Cruds condensate and natural
ques 66.165 6238 SBT 88,834 76,338 $2,692 90,342
31,002. 14,983 60a7 13,318 Seon 52,212 62,546
3,525 3,168 5,074 6,708 S578 3842 7,433
403,137 402,588 458,028 581,020 @2s.a23 AT4340 492,342
43.006 © 49.922 49.408 59,344 0,304 4472 52.918
35,031 «31470 33,278 = 3928 418tt 29,647 31,890
10,766 = 18,388 17.197 10,808 8,586
15,198 = 20,487 24.998 17,984 20.453
179899 © 240,704 242.182 181,845

36,548 45,274 51418 38,050 ;
28,348 35.396 2m284 22910 25,608
353417 465,401 466,182 344901 398.214
105,609 115.559 189,641 = 130,099 «154,128
G47 6.835 2783. ha38 (1.143)
22.289 9.921 8489 61 8.810

79.806 112,273 163.935 126,168 144,175
(17,798) _ (25,752y2)___8.937(9) 20.728 53.4444)
$97,500 $ 138,025 147,008 $ 105.438 § 110,731

s $ 33 $ Ss os)
154.533 159.996 169.845

$1,468.011 $1,566,045 $1,684,811 $1,697,762 $1,843,150

1,731,012 1,811,162 1,861,867, 1,855,819 © 2.109.971
Ad 25,000 28,000 16,320
150.0001 153.000, 165,337 158,062 247 562
01,395 227,528 184,163 195,109 224,085
626,906) 939,073 1,043,419 1,019,712 1,140,205
(Continued an next page)

20

00900000000294


Nickoloff, Peter

From: Eichner, Matthew

Sent: Thursday, December 13, 2001 2:35 PM

To: Schultheiss, Heidilynne; Nickoloff, Peter, Carleton, Norman
Subject: WSJ on Enron

Here's today’s article in electronic form

amp

243

01487

01200000000141


day of crude ol, condensate and natural gas liquids. At September 30, 1995, deliverability from this
area net to the Company was approximately 32 MMct per day of natural gas and 3.6 MBbI per day of
crude oil, condensate and natural gas liquids. The Company holds approximately 27,900 net acres
and expects to maintain an active drilling program in this field for several years.

Vernal Area. \n the Vernal area, located primarily in Uintah County, Utah, the Company
Operates approximately 195 producing wells and presently controls approximately 79,000 net acres.
For the first nine months of 1995, natural gas deliveries net to the Company from the Vernal area
averaged 24 MMcf per day which represents deliverability. Production is from the Green River and
Wasatch formations located at depths between 4,500-8,000 feet. The Company has an average
working interest of approximately 60%, The Company drilled 20 wells in the Vernal area in 1994 and
has maintained a comparable drilling program during 1995.

Caneda. The Company is engaged in the exploration for and the development, production and
marketing of natural gas anc crude oil and the operation of natural gas processing plants in western
Canada, principally in the provinces of Alberta, Saskatchewan, and Manitoba. The Company
conducts operations from offices in Calgary. The Company produces natural gas from seven major
areas and crude oll from three major areas. The Sandhills area in Southern Saskatchewan is the
largest single producing area where 160 wells were drilled in 1994 resulting In deliverability net to
the Company from the field of approximately 38 MMcf per day at December 31, 1994. Canadian
Natural gas deliverability net to the Company at September 30, 1995 was approximately 70 MMct
per day and the Company held approximately 350,000 net undeveloped acres in Canada. The
Company expects to maintain an active drilling program in Canada tor several years.

Outside North America Operations .

The Company has operations offshore Trinidad and India and is conducting exploration in
selected other international areas. Properties offshore Trinidad and India comprised 100% of the
Company's proved reserves and production outside of North America at year end 1994.

Trinidad. \n November 1992, the Company was awarded a 95% working interest concession
in the South East Coast Consortium ("SECC") block offshore Trinidad, encompassing three
undeveloped fields, previously held by three government-owned energy companies. The Kiskadee
field has been developed, the Ibis field is under development and the Oil Bird field is anticipated to
be developed over the next three to five years. Existing surplus processing and transportation
Capacity at the Pelican field facilities owned and operated by Trinidad and Tobago government-
owned companies is being used to process and transport the production. Natural gas is being sold
into the local market under a take-or-pay agreement with the National Gas Company of Trinidad and
Tobago. In 1994, deliveries net to the Company averaged 63 MMcf per day of natural gas and
2.6 MBbI per day of crude olf and condensate. At September 30, 1995, deliverability net to the
Company was approximately 166 MMcf per day of natural gas and 8.0 MBbis per day of crude oil
and condensate. The 's net ion from offshore Trinidad was approximately
100 MMcf per day of natural gas and 6.2 MBbi per day of crude oil and condensate at September 30,
1995. The Company held approximately 71,000 net undeveloped acres in Trinidad. .

The Company recently has been awarded the right to develop the Ua) block adjacent to the
SECC block and is presently negotiating the terms of a production sharing contract with the
Government of Trinidad and Tobago.

India. in December 1994, the Company signed agreements covering profit sharing, joint
operations and product sales, and was granted a 30% working interest in, the Tapti, Panna and
Mukta blocks located offshore Bombay, india. The Company is designated operator of all three
areas. The blocks were previously operated by the Indian national oll company, Oll & Natural Gas
Corporation Limited, which retained a 40% working interest. The 363,000 acre Tapti Block contains
two major proved gas accumulations delineated by 22 expendable exploration wells that have been
plugged. The Company has initiated a development plan for the Tapti Block accumulations. The
106,000 acre Panna Block and the 192,000 acre Mukta Block are partially developed with 30 wells
producing from five producing platforms located in the Panna and Mukta fields. The fields were
producing approximately 3.5 MBbI per day of crude oil net to the Company as of September 30,

13

00900000000287


Kes folding $3.9 bifon which prt
monly consist of $2.4 bilion af debt
fn Osprey trust ond $915 mifian of
debt in Martin Water Trust” >

This ind of contingent funding
was faple to be porticviarly dam
oging in the case of Enron, be-
couse rolings Wiggers were also
prevent in mony ot Enron's whole
sale energy trading contracts.
Indeed, investors ond crecitors
knew that tne whole of the cash
flow from Enron's counterparty:
based busmeses were contingent
vpon confidence in both Enron's
short-term liquidity and the continu:
GACE Of its inwestment Gade credit
rating

Structured financings aren't only
© Question of liquidity, but ato of
trust. Analysts know Mot it such
deat oe nat siuctued appropd
ately, thay Can allow companies to
*elon economic rks Mot are not
reported ekewhere, There ik
donges, therefore, simply in the
mpenerailty of compicoted otf
balance sheet financing,

Erron's on-bolance sheet levels
of debt did not look especialy
ueheaithy in spring 2001, and the
ratios of Gabt-to-equity and so an
of the Company were consideratty
below the ratios thot it hod once
endured a: a heavily indebted
Pipeline company. But o1 Ihe share
price fel, and uncerainty about
the level of offtociance sheet com
mritmments increased, the crecibiity
of Enron's top executives became
increasingly vital.

The trap closes

Much of Enron's strategic vison
began fo fall apart with the jourst-
ing of the dotcom Dubble ond the
travails of the global telecommuré
cations industry. but there was o

[ie enh TORRE? [ene oy me octvarn eet
balance sheet transactions with

partneeshiga formed in 1999 to make off-
Enron] perchased dark fikre optic cable from Enron for a
purchase price of $100 million. LJM2 paid Excon $30 mnillion im cash and the balance in an
interest-bearing note for $70 million. Enron recognised $67 millicm in pee-tax earnings in 2000
related to the asset sale. Pursuant to a marketing agreement with LIM2, Enroo was compensated

for marketing the fitee to others and ‘and maintenance servioes to LIMZ with
respect to the fibre. LIM2 sold a portion of the fibre to industry participants for $40 million,
which resulted in Exeon ising agency foe revenue of $20.3 million. LIM2 sold te
Temaining dark fiber foe $113 milleos in December 2000 to an SPE [special pacpose entity] that
was formed to acquire the fibre. Im December 2000, LJM2 used a portaon of the to pay
in full the note and accrued interest owed to Enron. At the time of LJM2's Sule of the fibre to the
SPE, Enrom entered into a derivative contract which served as credit support for the benefit of
some of the dete holders of 9 third-party investor im the SPE. This credit support paved i
lender with a specified rate of return. As a result, Enrom’s credit exposure under

note was replaced with $61 Salba ta sation erpsons clas ke aetabie socks LIMA. LM2
earned $2.4 million on its resule of the fibre

ERisk.com —

Biron, restatement of accounts, see biip.itaww.caros com/corpisec

delayed reaction in the equity mar-
kets to the significance of al tvs, In
Apri 2001, however, the company
started to cut hundrects of jabs from
is broadband uni, and os the cuts
continued they underined how
Jong Enron might have to wait for
Payback on its expentive invest
ments.

Trough early 2001 the price of
Enron's shores took a humble but
few of the hedge funds that had
started to sel Enron's stock short
thought that the energy gant was
fkely 8 go bust. Surely, most ono-
tysts thought, Its profitable core
energy and trading services bush
ass would suppor the shores ot
round $20 o shore or some such?

The softening up of confidence in
Enron wos under way, however. 1's
lear with hinckight thal on impor
tort moment was whan arvatysts"
uncertainty began to be voiced In
mainstream publcotions such as
Fortune In March 2001

The questions bagan fo be asked
with renewed force when Jott
Stiling, appointed as CEO in
February. resigned just sx months

later. Skiting’s August deporture
faked questions about Enron's
management structure. Much
wore, @ gave crecibilty to anciysts
who nad bean wondaring out loud
for some months about the propre
ety of how Enron had structured its
off-balance sheet venicias. Worst of
of, fhe penon at the centre of
some of the most pointed questions
wos Enron's che! financial officer
Andrew Fostow, who had oveneen
its off-bolonce sheet activites

Odidly. Fastow and other execu»
ves had taken personal stakes in
some of the investment portner-
ships that formed the counterpar-
Ses to Ervon's off-ociance snect
dent. That meant that. as Enron
moved inlo o crucial stoge of crisis
management in ate 2001, Fastow
ond ofner kay executives Could not
credioly reasiuve the market cbout
the size, stucture ond purpose of
Erron's abilities ond particuiarty its
off-baance sheet machine. Se‘ting
aside Enron's oucitors, these execu-
fives ware cho the crily rect guar-
antors of Enron's reported earnings
since the kote 1790s.

01798

01200000000454


InvestorGuide Daily is designed to keep you informed of the latest
investing news. It includes a market summary, top news, IPOs, earnings
and more...everything you need to invest better, every day. You can
also find thie newsletter every evening at

http: //wew. investorguide.com/daily, html

This strictly opt-in newsletter ie published by Investor@uide.com
(http: //www.investorguide.com), and is sent only to those who have
specifically requested it. No information gathered from newsletter
subscribers, including e-mail addresses, is ever shared with or sold
to any third-party. If you know others who might like to receive
InvestorGuide Daily, feel free to forward this issue to them. To
subscribe, send any message to daily@inveatorguide.com. To
unsubscribe, send any message to investorguidedaily-off@mail-list.com.
If you would like to advertise in this newsletter or on any of the
InvestorGuide websites, please contact advertise@investorguide.com

InvestorGuide.com has no control over the sites we link to, is not
affiliated with these sites, and cannot take responsibility for their
quality or suitability. The news, earnings, and IPO information is not
meant to be comprehensive, and data provided is not guaranteed to be
accurate, We are not responsible for claims made by advertisers and
sponsors. Anyone who makes investment decisions based on what they
read here does so at their own risk and cannot hold WebFinance Inc-
(DBA InvestorGuide.com, Inc.) or its employees responsible. For the
complete disclaimer please see

http://www. inveatorgquide.com/disclaimer. html

01738

01200000000394


wn"

90002 “Da "worTinysmyy
Og AIS “MN Masas ag Sree

00100000000378


Drilling and Acquisition Activities
During the years ended December 31, 1992, 1993 and 1994 and the nine months ended
September 30, 1995 the Company spent approximately $396, $430, $494 and $401 million, respac-
tively, for exploratory and development drilling and acquisition of leases and producing properties.
The Company drilled, participated in the drilling of or acquired wells as set out in the table below tor
the periods indicated:

Ended
Year Ended December 31, mer 30,
—__1992 1993 i 1995

Gross _Net_ Gross Wet Gross Nat_ Gross Net
Development Wells Completed

352 279.00 308 24423 99 77.78

45 1901 34 2957 36 3206
69 4683 41 3215 38 30.80
456 344.84 383 305.95 173 140.64

227 (19010 250 190.30 116 107.66
4 350 11 5.10 13 B21
it 760 13 1150 11 8.38

242 201.20 274 206.90 140 124.25
698 546.04 657 51285 313 264.89

17.75
587 483.73

11 872 16 «1003 «13 980k
1 40 3 250 3 257 3 263
18 1342 32 2208 23 1817 6 447
28 (2254 «449° «3461 «39054 13S G2
7 875 14 1140 9 790 2 124

4 369 2 90 4 50 2 200
4 285 10 735 14 125 5 _ 370
15 1229 26 1965 24 2090 9 694
43 3483 75 54.26 51.44 22 16.56
630 518.56 773 600.30 720 564,29 335 281.45
82 6075 82 61.09 45 28.79 53 38.72
712 579.31 855 661.39 765 593.08 388 320.17
SS SSL BS O88 785 503.08 388 320.17
641 597.29" 44 «= 26.44" 4140.90" 271 97.37"
28 2580" - 1280° 60 3899 5 93"
869 623.09 44 39.24 101 _79.89 276 _98.30

. includes the acquisition of additional interests in certain wells in which the Company previously
held an interest.

All of thé Company's drilling activities are conducted on a contract basis with independent
Grilling contractors. The Company owns no drilling equipment.

9

00900000000293


Cireudt City (CC): $0.10, $0.06, -$0.32

Micron Tech (MU}: “$0.44,  -$0.41, $0.58
Red Hat (RHAT): $0.01, $0.00, -§0.01
Wednesday's major expected earnings reports:

Company Name (Ticker): expected, same q last year
Coldwater Creek (CWTR): $0.14, $0.64

FuelCell Energy {(FCEL): -$0.14, -$0.05
InterVoice (INTV): $0.04, $0.03

Morgan Stanley (MWD): $0.68, $1.06

Palm Inc {PALM}: -$0.07, $0.04
Quiksilver (ZQK): $0.09, $0.42
Riverstone Ntwrks (RSTN}: $0.02, N/A

Saba Software (SABA): -$0.10, -$0.32

For more earnings information, check out
http: //wew, investorguide.com/earningscalendars.html

word of the day

agreement among underwriters - A contract between members of a
syndicate, appointing the originating investment bank as the lead
underwriter, defining the members‘ proportionate liability, and
authorizing the manager to allocate units to a selling group.

For more financial terms, please visit http://www. investorwords.com.

on this date

December 18, 1899: The Dow Jones Industrial Average suffers its Sth
worst single-day drop, 8.7%.

nmotable quotable

"When the forecast comes in close to the actual, one or the other is
suspect." - Economist Edgar Fiedler

Copyright 2001 by InvestorGuide.com, Inc.

InvestorGuide Daily is designed to keep you informed of the latest
investing news. It includes a market summary, top news, IPOs, earnings
and more...everything you need to invest better, every day. You can
also find this newsletter every evening at

http: //wew. investorguide.com/daily.html

Thig strictly opt-in newsletter is published by InvestorGuide.com
(http: //waw.investorguide.com}, and is sent only to thoge who have
specifically requested it. No information gathered from newsletter
subscribers, including e-mail addresses, is ever shared with or sold
to any third-party. If you know others who might like to receive
InvestorGuide Daily, feel free to forward this issue to them. To
subscribe, send any message to dailySinvestorquide.com. To
unsubscribe, send any message to investorguidedaily-off@mail-List.com,
If you would like to advertise in this newsletter or on any of the
InvestorGuide websites, please contact advertise@investorguide.com

InvestorGuide.com has no control over the sites we link to, is not
affiliated with these sites, and cannot take responsibility for their
quality or auitability. The news, earnings, and IPO information is not

18

01732

01200000000388


approximately $83 mittion. This 16% reduction in average wellhead natural as prices reflects the
Overall decline in the United States natural gas markets during the last half of 1994 and increased
volumes offshore Trinidad sold under @ long-term contract at a price considerably below North
America spot market prices. A 42% increase in wellhead crude oll and condensate volumes over
1993 added $22 million to net operating revenues primarily reflecting development activities offshore
Trinidad and increased production in the United States. A 5% Gecrease in wellhead crude oil ang
Condensate average prices decreased net operating revenues by approximately $3 million.

Other marketing activities associated with sales and purchases of natural gas, Natural gas and
crude oil price swap transactions, other commodity price hedging of natural gas and crude oil prices
utilizing NYMEX-retated commodity market transactions, and margins relating to the volumetric
Production payment added $50 million to net operating revenues during 1994. This increase of $41
mallion from the same period in 1993 primarily results trom a gain of $11 million on natural gas
commidity price hedging activities utilizing NYMEX-related commodity market transactions in 1994
versus an $18 million loss during 1993 and increased margins associated with other natural gas
Marketing activities. The average associated costs of natural gas marketing, price swap and
volumetric production payment transactions, including. where appropriste, average wellhead value,
transportation costs and exchange differentials, decreased $.26 per Mct. The average price
recelved for these transactions decreased $.19 per Mcf. Related other natural gas marketing
volumes increased 10%.

Gains on sales of selected oll and gas reserves and related assets were $54 million in 1994 as
compared to $13 million in 1983, White the quantity of equivalent reserves sold in 1994 was slightly
tess than 1993, higher average proceeds received per equivalent unit in 1994 as compared to 1993
Primarily contributed to the increased gain recognition. In continuing its strategy of fully utilizing its
assets in optimizing profitability, cash flow and return on investments, the Company expects to
continue the sale of similar properties from time to time.

1983 compared to 1992. During 1993, net operating revenues increased to $581 milfion, up
$122 million as compared to 1992.

Average wellhead natural gas volumes increased approximately 26% compared to 1992 primar-
ily reflecting the effects of exploration and development activities relating to tight gas sand forma-
tions. Wellhead natural gas delivered volumes were curtailed less during portions of 1993 than for
the comparable periods in 1992 due to the significant increases realized in wellhead natural gas
Prices in 1993. Average wellhead natural gas prices were up approximately 22% in 1993 over those
received in 1992, adding approximately $87 million to net operating revenues. increases in wellhead
natural gas volumes in 1993 added $83 million to net operating revenues compared to 1992.
Average wellhead crude oll and condensate prices in 1983 were down 9% compared to 1992,
reducing net operating revenues by $6 million. increases in wellhead crude oll and condensate
volumes in 1993 added approximately $2 million to net operating revenues compared to 1992.

Other marketing activities associated with sales and purchases of natural gas, natural gas price
‘Swap transactions, other commodity price hedging of natural gas and crude oil and condensate
Prices utilizing NYMEX-related commodity market transactions, and margins relating to the
volumetric production payment added $8 million to net operating revenues during 1993. This
decrease of $54 million from 1992 primarity results from shrinking margins associated with sales
under long-term fixed price contracts and amortization of volumetric production payment deferred
revenue due to increases in market responsive natural gas prices associated with volumes supply-
ing these dispositions and losses on natural gas commodity price hedging activities utilizing
rrarketing price coe end rokorem cransections. The average sssocialed costs of nature! gas

) Price swap and volumetric production payment transactions, including, 8 appropri-
aon, averige wellend wave, wenpercenon sorts Cod tere cares mchaing, were spprops
Mcf. Related other natural gas marketing volumes increased 15%.

24

00900000000298


Abbott Labs (ABT): $0.52, $0.48
Advanced Micro (AMD): -$0.05, $0.53
AMR Corp {AMR): -$4.75, $0.34
Apple Computer (AAPL) = $0.11, $0.73
Bank One (ONE): $0.65, -$0.44
Brio Tech (BRIO) = ~$0.03, ~$0.02
Compaq (CPQ): $0.06, $0.30
Continental Air [CAL]; -$3.81, $0.61
DigitalThink (DTHK): “$0.06, ~$0.17
Extreme Networks (EXTR) : $0.02, $0.12
Genentech (DNA): $0.20, $0.16
General Motors (GM): $0.60, $1.18
Harris Corp (HRS): $0.30, $0.30
Inktomi (INKT);: $0.06, $0.01
JP Morgan Chase (JPM): $0.12, $0.37
Knight Trading (NITE); $0.11, $0.28
Macromedia (MACR) ; ~$0.17, $0.29
Mercury Computer (MRCY) : $0.16, $0.30
Redback Ntwrks (RBAK) + -$0.20, $0.05
Sonus Networks (SONS): -$0.04, $0.00
SouthTrust (SOTR) ; $0.42, $0.37
Symantec (SYMC}; $0.78, $0.78
Travelocity.com (TVLY);: $0.09, -$0.05
Yahoo! (¥HOO) : $0.03, $0.13
Thursday's major expected earnings reports:

Company Name (Ticker): expected, same gq last year
Avaya (AV): -$0.03, $0.16

Bank of NY {BK}: $0.46, $0.50

Boise Cascade (BCC): -$0.05, $0.29

Briggs & Stratton (BGG): $0.32, $0.52

Citigroup [(C): $0.73, $0.65

Echelon (ELON): $0.13, $0.03

Ford Motor (F}: -$0.50, $0.64

General Electric (GE): $0.39, $0.36

IBM (IBM): $1.32, $1.48

Tomega {IOM): -$0.07, $0.15

Legg Mason (LM): $0.54, $0.61
Microsoft (MSFT) : $0.45, $0.47

Network Assoc (NETA): $0.08, -$0.87

Nortel Networks (NT): -$0.17, $0.30

Puc Bank (PNC): $1.01, $1.06

R.J. Reynolds (RJR): $0.93, $0.99

SABRE Grp (TSG): $0.02, $0.25

Sage (SAGI): -$0.08, -$0.01

Sears, Roebuck (S): $1.97, $1.91
SmartPorce (SMTF): $0.04, -$0.03

Transmeta (TMTA) + -$0.18, -$0.20

Unisya Corp (UIS): $0.11, $0.41
Willamette (WLL): $0.41, $0.78

Por more earnings information, check out
http://www. investorgquide.com/earningscalendars html

word of the day

inverted market - A futures market in which nearby month contracts are
selling at higher prices than those of deferred months; except for an
interest rate futurea market, which is inverted when distant contracta
are at a premium to near month contracts,

For more financial terms, please visit http://www. investorworda.com.

° 01851

01200000000507



meant to be comprehensive, and data provided is not guaranteed to be
accurate. We are not responsible for claims made by advertisers and
sponsors. Anyone who makes investment decisions based on what they
read here does so at their own risk and cannot hold WebFinance Inc.
(DBA InvestorGuide.com, Inc.) or its employees responsible. For the
complete disclaimer please see

http://www. investorguide.com/disclaimer.html

01746

01200000000402


You can research any publicly traded company by following this link:
http: //wew, investorguide.com/research. html

tommenta

One of the best ways to become a better investor is to attempt to
predict what will happen, record your predictions and your rationale,
and then look back later to see whether you were right or wrong and
why, in order to increase your chances for succ next time. The
turning of the calendar is a great time to do this, so if you have ten
minutes free sometime this week or next, jot down a few predictions on
where some of the stocks and indices that are important to you will be
one year from now, along with your rationale. You might also want to
specify a confidence interval (for example, the range that you are 75%
eure the price will fall within)... no one is right all the time, but
successful investors are able to judge when they're most confident
about a prediction so they can place bigger bets at those times.

Por additional investing ideas and insight from the CEO of
InvestorGuide.com, visit http: //wew.tomments.com

earnings

Wednesday's major earnings reports:
Company Name (Ticker) : actual, expected, same q last year

No major earnings reports.

Thureday's major expected earnings reports:
Company Name (Ticker): expected, same q last year

No major earnings reports scheduled.

For more earnings information, check out
http://www. investorguide.com/earningscalendars html

word of the day

Negative Pledge Clause - A covenant in a bond agreement whereby the
borrower agrees not to pledge any a: ts if such pledging would result
in less security for the agreement's bondholders. also called covenant
of equal coverage.

Per more financial terms, please visit http://www. investorwords.com,

on this date

January 2, 1863: The New York Stock and Exchange Board ig renamed the
New York Stock Exchange (NYSE).

notable quotable

‘Why shouldn't the American people take half my money from me? I took
all of it from them." - Edward A. Filene

Copyright 2002 by InvestorGuide.com, Inc. 01 737

re)

01200000000393


treated as effectively connected with the conduct of a trade or business within the United States
because the Company is or has been a “United States real property holding corporation” for United
States federal income tax purposes (in which case, withholding of such tax may also apply). The
Company believes that It is currently, and is likely to remain, a United States real property holding
corporation. The preceding sentence notwithstanding, under currently effective United States fed-
eral income tax laws, gain recognized by a Non-United States Holder will not be treated as
ettectively connected with the conduct of a trade or business within the United States (or subject to
withholding) unless such Non-United States Holder held, directly or indirectly, at any time during the
five-year period ending on the date of disposition, more than five percent of the Common Stock.
Non-United States Holders should consult applicable tax treaties, which may provide for different
rules (including possibly the exemption of certain capital gains from tax).

Indi

in addition to the rules described above, an individual Non-United States Holder who holds
Common Stock as a capital asset generally will be subject to tax on any gain recognized on the
disposition of such stock if such individual is present in the United States for 183 days or more in the
taxable year of disposition and either (a) has a “tax home" in the United States (as specifically
Gefined under the United States federal income tax laws) or (b) maintains an office or other fixed
place of business in the United States to which the gain from the sale of the stock is attributable.
Certain individual Non-United States Holders may also be subject to tax pursuant to provisions of
United States federal income tax law applicable to United States expatriates.

Federal Estate Tax

Common Stock owned or treated as owned by an individual Non-United States Holder at the
date of death will be subject to United States federal estate tax, unless an applicable estate tax
treaty provides otherwise. : -

Information Reporting and Backup Withholding . :

The Company or its designated paying agent (the “pay ") must report annually to the United
States Internal Revenue Service and to each Non-United Holder the amount of dividends paid
to and the tax, if any, withheld with respect to such holder. That information may also be made
available to the tax authorities of the country in which the Non-United States Holder resides.

United States information reporting requirements (other than the reporting of dividend pay-
ments described in the preceding paragraph) and United States backup withholding (imposed at a
31% rate) generally will not apply to dividends paid to a Non-United States Holder at an address
outside the United States, unless the payor has knowledge that the payee is a United States person.
Otherwise, information reporting and backup withholding may apply to dividends paid on the
Common Stock to @ Non-Unitéd States Holder who fails to furnish certain Information, including a
tax identification number, in the manner required by United States law and applicable regulations.

Dagens of Be proceeds of a dlepositon. of Common Stock by a Unied States oftice of a
broker Is subject to backup withholding and information reporting, unless the holder certifies to the
broker under penalties of perjury as to its name, address and status as a Non-United States Holder
or the holder otherwise establishes an exemption. Neither backup withholding nor information
reporting generally will apply to a payment of the proceeds of a disposition of Common Stock by a
foreign office of a foreign broker that Is not a United States Related Person (as defined below).
Information reporting requirements (but not backup withholding) will apply to a payment of the
proceeds of a disposition of Common Stock by a foreign office of a broker that Is @ United States
person or a United States Related Person, unless the broker has documentary evidence in its
records that the holder is a Non-United States Related Person and certain other conditions are met,
or the holder otherwise establishes an exemption. For this purpose, a "United States Related
Person” is (a) a foreign broker, 50% or more of whose gross income for certain periods is effectively
connected with the conduct of a trade or business in the United States or (b) @ foreign broker that is
4 “controlled foreign corporation” for United States federal income tax purposes.

40

00900000000314


As of November 1, 1995, there were approximately 270 record holders of EOG's Common
Stock, including individual participants in security position listings. There are an estimated 5,100
beneficial owners of EOG's Common Stock, including shares held in street name.

Following the Initial public offering and sale of its Common Stock in October 1989, EOG paid
quarterly dividends of $0.025 per share beginning with an initial dividend paid in January 1990 with
fespect to the fourth quarter of 1989. Beginning in January 1993 with respect to the fourth quarter of
1992, EOG has paid quarterly dividends of $0.03 per share. The determination of the amount of
future cash dividends, if any, to be declared and paid will depend upon, among other things, the
financial condition, funds from operations, level of exploration and development expenditure Oppor-
tunities and future business prospects of EOG,

Enron makes no representation as to the amount of dividends, if any, that EOG will Pay in the
future. In any event, holders of the Exchangeable Notes waill not be entitled to receive any dividends
that may be payable on the EOG Common Stock until such time as Enron, if it so elects, delivers
EO0G Stock at Maturity of the Exchangeable Notes and the record date for such dividend
occurs after such exchange. See “Description of the Exchangeable Notes.”

OESCRIPTION OF THE EXCHANGEABLE NOTES

The Exchangeable Notes are one series of debt securities to be issued under an Indenture
dated as of November 1, 1985, between Enron and Harris Trust and Savings Bank, as trustes, as
Supplemented by a First Supplemental Indenture dated as of December 1, 1995, between Enron and
Harris Trust and Savings Bank, as trustee (the “Trustee") (the Indenture dated as of Novernber 1,
1985, as supplemented from time to time, the “Indenture"). All references herein to “Indenture
Securities” shall refer to debt securities issued under the Indenture. The following summary of
Certain provisions of the indenture does not purport to be complete and is qualified in its entiraty by
reference to the Indenture, a copy of which |s filed as an exhibit to the Registration Statement of
which this Prospectus is a part. All capitalized terms have the meanings specified in the Indenture,

General

granted by Enron to the Underwriters (see Underwriting”), The Stated Maturity of the Exchange-
able Notes is December 13, 1998. The Indenture does not limit the amount of Indenture Securities
which may be issued thereunder. The Exchangeable Notes will be unsecured and will rank on a
parity with all other unsecured and unsubordinated indebtedness of Enron. The right of Enron, and
Fence the right of creditors of Enron (including the holders of the Exchangeable Notes), to partici-
Pate in any distribution of assets of any subsidiary of Enron upon its liquidation or reorganization will
be subject to the prior claims of creditors of such subsidiary, except to the extent that the claims of
Enron itself as a creditor of such subsidiary may be recognized.

Each Exchangeable Note, which will be issued with a Principal amount of $21.75, will bear
interest at the rate of 6'%% of the principal amount per annum (or $1.36 per annum) from
December 13, 1995, or from the most recent Interest Payment Date (as defined below) to which
interest has been paid or provided for until the principal amount thereof is exchanged at Maturity
Pursuant to the terms of the Exchangeable Notes. Interest on the Exchangeable Notes will be
Payable quarterly in arrears on January 31, April 30, July 31, and October 31, commencing
January 31, 1996, (each, an “Interest Payment Date”), to the persons in whose names the
Exchangeable Notes are registered at the close of busine: on the January 15, April 15, Juty 15, and
October 15 immediately preceding such interest Payment Date; provided that interest payable st
Maturity Is payable to the person to whom the principal is payable. interest on the Exchangeable
Notes will be computed on the basis of a 360-day year of twelve 30-day months. if an Interest
Payment Date falts on a day that is not a Business Day (as defined below) the interest payment to be
made on such Interest Payment Date will be made on the next succeeding Business Day with the
same force and effect as if made on such Interest Payment Date, and no additional interest will
accrue as a result of such delayed payment.

00900000000261


Change Auditors

One possibility is to require that auditing firms be changed periodically the way audit partners within each firm are
rotated. This would incentivize auditors to be particularly careful in approving accounting transactions for fear that
leniency would be exposed by later auditors,

And, in the end, we need to create a powerful and effective self-regulatory organization with credible disciplinary
authority to enforce accounting rules and standards. It would be far better for the industry to respond itself to the current
crises than to await the likelihood that the political process will do so for them.

URL for this Article:
http://interactive.wsj com/archive/retrieve.cgi?id=SB101 1145236418110120.djm

Copyright © 2002 Dow Jones & Company, Inc. All Rights Reserved.
Printing, distribution, and use of this material is governed by your Subscription Agreement and copyright laws.

For information about subscribing, go to http://wsj.com

01347

01200000000703


shall be owned by Enron or by one or more Subsidiaries or by Enron ano one or more Subsidiaries,
The term “Principal Property" is defined to mean any oll oF gas pipeline, gas processing plant or
chemical plant located in the United States, except any such Property, pipeline or plant that in the
opinion of the Board of Directors of Enron is not of material importance to the total business
conducted by Enron and /ts Subsidiaries. “Principal Property” does not include any olf or gas
Property or the production or any proceeds of production trom an oil or gas Producing property or
{he production or any proceeds of production of G&S processing plants or oil or gas or petroleum
Products in any pipeline.

The term “indebtedness”, as applied to Enron or any Subsidiary, is defined to mean bonds,
debentures, notes and other instruments representing obligations created or assumed by any such
corporation for the repayment of monsy borrowed (other than unamortized debt discount or
Premium), All indebtedness Secured by a lien upon property owned by Enron or any Subsidiary and
upon which indebtedness any such corporation customatily Pays interest, even though such
corporatieh has not assumed or become liable for the payment of such indebtedness, is also
deemed to be indebtedness of any such corporation. All indebtedness for money borrowed incurred
by other persons which is directly guaranteed as to payment of principal by Enron or any Subsidiary
is for all purposes of the Indenture deemed to be indebtedness of any such corporation, but no other
contingent obligation of any such corporation in respect to indebtedness incurred by other persons
is for any purpose deemed indebtedness of such corporation. Indebtedness of Enron or any
Subsidiary does not include (i) amounts which are payable only out of all or @ portion of the oil, gas,
natural gas, helium, coal, metals, minerals, steam, timber or other natural resources Produced,
derived or extracted from properties owned or developed by such corporation; (i) any amount
representing capitalized lease obligations; (iii) any indebtedness incurred to finance oil, gas, natural
gas, helium, coal, metals, minerals, steam, timber, hydrocarbons or geothermal or other natural
resources of synthetic fuel exploration or development, payable, with respect to principal and
interest, solely out of the proceeds of oil, gas, natural gas, helium, coal, metals, minerals, steam,
timber, hydrocarbons or geothermal or other natural resources or synthetic fuel to be produced,
Sold and/or delivered by Enron or any Subsidiary; (iv) indirect guarantees or other contingent
obligations in connection with the indebtedness of others, including agreements, contingent or
otherwise, with such other persons or with third persons with respect to, or to permit or ensure the
Payment of, obligations of such other persons, including without limitation, agreements to purchase
or repurchase obligations of such other persons, agreements to advance or supply funds to or to
invest in such other persons or agreements to pay for property, products or services of such other
Persons {whether or not conferred, delivered or rendered) and any demand charge, throughput,
take-or-pay, keep-well, make-whole, cash deficiency, maintenance of working capital or earnings or
Similar agreements; and (v) any guarantees with respect to lease or other similar periodic payments
to be made by other persons.

The term “Funded Debt” @8 applied to any corporation means all indebtedness incurred,
created, assumed or guaranteed by such corporation, or upon which it customarily pays interest
charges, which matures, or Is renewable by such corporation to a date, more than one year after the
date as of which Funded Debt is being determined; provided, however, that the term "Funded Debt’
shail not include (i) indebtedness incurred in the ordinary course of business representing borrow-
ings, regardless of when payable, of such corporation from time to time against, but not in excess of
the face amount of, its installment accounts receivable for the sale of appliances and equipment sold
in the regular course of business or (ii) advances for construction and security deposits received by
such corporation in the ordinary course of business.

The foregoing limitations on mortgages, pledges and liens are intended to limit other creditors
of Enron from gbtaining preference or priority over holders of the Indenture Securities issued under
the Indenture, but are not intended to prevent other creditors from sharing equally and ratably and
without preference (“pari passu"’) over the holders of such indenture Securities. While such
limitations on mortgages and liens do provide protection to the holders of the Indenture Securities,
there are a number of exceptions to such restrictions which could result in certain assets of Enron
and its Subsidiaries being encumbered without equally and ratably securing the Indenture Securities

21

00900000000267


earnings

Thursday's major earnings reports;

Company Name (Ticker): actual, expected, same q last year
AVX Corp (AVX): $0.02, $0.02, $0.94
Cree (CRBE) : $0.08, $0.09, $0.18
Infosys Tech (INFY): $0.32, $0.31, $0.26
Rambus (RMBS): $0.06, $0.05, $0.12
Rational Sftwr (RATL): $0.07, $0.06, $0.20

Friday's major expected earnings reports:
Company Name (Ticker): expected, same q last year

BB&T Corp (BBT) > $0.62, $0.58

For more earnings information, check out
http://www. investorguide.com/earningscalendars.html

word of the gay

emerging market - A financial market of a developing country, usually
a small market with a short operating history.

Por more financial terms, please visit http://www. investorworde.com,

on this date

January 10, 2001: U.S. regulators approve the merger between America
Online and Time Warner, creating the AOL Time Warner media powerhouse.

notable quotable

“Necessity never made a good bargain." - Benjamin Franklin

Copyright 2002 by InvestorGuide.com, Inc.

InvestorGuide Daily is designed to keep you informed of the latest
investing news, It includes a market summary, top news, IPOs, earnings
and more...everything you need to invest better, every day. You can
also find this newsletter every evening at

http://www. investorguide.com/daily. html

This strictly opt-in newsletter ia published by InvestorGuide.com
(http: //wew. investorguide.com), and is sent only to those who have
specifically requested it. No information gathered from newsletter
subscribers, including e-mail addresses, ia ever shared with or sold
to any third-party. If you know others who might like to receive
InvestorGuide Daily, feel free to forward this issue to them. To
subscribe, send any message to daily@investorguide.com. To
unsubscribe, send any message to investorguidedaily-offe@mail-list.com.
If you would like to advertise in this newsletter or on any of the
InvestorGuide websites, please contact advertise@investorguide,.com

InvestorGuide.com has no control over the eitea we link to, is not

affiliated with these sites, and cannot take responsibility for their
quality or suitability. The news, earnings, and [PO information is not

° 01745

01200000000401


OFFICE OF FOREIGN ASSETS CONTROL
CORRESPONDENCE COVER SHEET

FACNo.: — CU- {(b}(2)] Other ref:

Dated: 07/11/00

Received: 07/17/00

Due date:

From: Orlando Puig :

Org. Enron Caribean Basin

Address: 333 Clay Street (wv {(b)(2)]
Suite 1600
Houston, TX 77002-7361

Actual Party:

Subject: {(b)(4))

DISPOSITION = -CC__ Special: Control Copy to Director
initial assignment | Reassign 2 Reassign 3 :
Blocked Assets :
Civil Penalties

i
Compliance '
Enforcement
Int'l Programs

Licensing {(b)(2)}
Plans & Policy
a n
Chief Counsel |
Sr. Advisor
Stevenson
Notes:
[(©)(5)}
Disposition: File name/location: Initials: : ‘Date:

00400000000012


Nickoloff, Peter

From: Nickoloff, Peter

Sent: Friday, November 02, 2001 1:16 PM

To: Carleton, Norman; Schulthess, Heidilynne
Subject: Another Enron story

The New York Times

November 2, 2001

The Rise and Fall of Enron

Earlier this year, most companies would have loved to have Enron's problems, Californians resented the cnergy
trading company’s huge profits during their energy crisis, and Democrats in Washington raised questions about
Enron's influence within the White House and about the cozy relationship between Enron's chairman, Kenneth
Lay, and Vice President Dick Cheney. Nobody seemed better positioned to thrive during the Bush presidency
than this Houston-based apostle of deregulation.

Wall Street was impressed with Enron's strategy of swooping into formerly regulated markets to broker
contracts for natural gas, electricity or unused telecom bandwidth. The company was celebrated as a paragon of
American ingenuity, a stodgy gas pipeline company that had reinvented itself as a high-tech clearinghouse in an
ever-expanding roster of markets. Enron's push to force utilities into the Internet age with its online trading
systems, at a seemingly handsome profit, became an epic tale of the dot-com revolution.

It now appears that Enron's tale may be more cautionary than epic. Enron envy has crashed, along with the
company’s stock price, as serious questions emerge about its bookkeeping. Enron disclosed earlier this month
that $1.2 billion in market value had vanished as a result of a controversial deal it entered into with private
partnerships nun by its chief financial officer, Andrew Fastow.

Most alarming was Enron's reluctance to shed light on management's wheeling and dealing. "Related-party
transactions," as the accountants call them, are fraught with conflicts of interest. Though much remains to be
Icarned about these transactions, their scope and lack of transparency suggest that Enron may have in effect
created its own private hedge fund to assume some of the risk and mask the losses of its complex trading. The
extent to which company insiders profited ftom the partnerships is not yet clear,

Enron has scrambled to dampen Wall Street's concerns, acknowledging its credibility problem while insisting on
the health of its core businesses. On Wednesday it brought in William Powers, the dean of the University of
Texas School of Law, to review the transactions, The Securities and Exchange Commission has launched its
own formal investigation, Mr. Fastow was forced to resign, following Jeffrey Skilling, the man credited with
driving Enron into new cutting-edge businesses, out the door,

Enron's former admirers on Wall Street, mindful of recent scandals involving high-profile companies doctoring
their earnings, and of the spectacular collapse of the Long-Term Capital Management hedge fund in 1998, are
alarmed, Carole Coale of Prudential Securities summed up the prevailing sentiment when she told The Times:
"The bottom line is, it's really difficult to recommend an investment when management docs not disclose facts."
Analysts, as well as the media, are not entirely blameless. Enron did mention, albeit in passing, the troubling
related-party deals as early as March 2000, But few analysts bothered to raise questions at a time when the
company’s revenues, profits and stock price were soaring.

Harvey Pitt, the new Securities and Exchange Commissioner, must pursue the Enron inquiry aggressively in
order to assure investors that he will be as vigilant as his predecessor, Arthur Levitt, when it comes to protecting

01695

01200000000351

1


FOCUS Enron case sparks Congressional push for energy derivatives regulation Page | of
Schultheiss, Heidilynne

From: Randall Dodd [RDodd@Econstrat,org)

Sent: Wednesday, January 15, 2002 4:38 PM

To: Randall Dodd

Subject: DSC -- In the Press about Enron and Derivatives

Derivatives Study Center

Rascal Dodd 1401 H Street, NW, Suite 360
Director Washington, DC 20006
202 526 8555 rdodiiecowstrat. org
January 16, 2002
Dear friends and colleagues,

The Derivatives Study Center is in the news again. This time in an article reporting on new legislative efforts to
address the need for the prudential regulation of derivatives markets (see article below). Hopefully, with good luck and
hard work the failure of Enron will more beyond a scandal in order to become a catalyst for meaningful regulatory
treatment of the over-the-counter derivatives markets.

Sincerely,
Randall Dodd

FOCUS Enron case sparks Congressional push for energy derivatives
regulation

----by Justin Cole---—

WASHINGTON (AFX) - The collapse of Enron Corp has sparked a push in Congress for more Federal regulation of
one of the company's key areas of operation, that of over-the-counter (OTC) energy derivatives, Congressional aides
and lobbyists said.

Enron, through its EnronOnline internet marketplace which it launched in 1999, came to control a quarter of all US
wholesale energy trades, but the OTC derivatives trades fell outside the regulatory scope of the Securities and
Exchange Commission and the Commodity Futures Trading Commission.

‘The Houston-based energy firm had lobbied federal regulators, Congress and the White House for years to exempt
its derivatives trading from oversight, they said.

Enron was able to hold at bay members of Congress who had been trying to regulate OTC derivatives markets since
1994, including Democratic Congressman Edward Markey.

Now, in the wake of Enron's collapse, Markey and his allies are planning a new regulatory push, a spokesman for his
office said.

"He's just as interested in it as when he proposed regulating them in the first place. He's going to reintroduce his bill
and see if he does any better this time than last time," the spokesman said.

He declined to address any specifics that Markey’s bill is likely to address.

"| can't address the scope yet, cause we're still mulling it over, and taking the old bill and working on it,” the
spokesman added.

The value of Enron's OTC energy trades is difficult to quantify because the company did not discuss its derivatives
trading, but the market for credit derivatives has grown in value to some 360 bin usd, according to the Office of the
Comptroller of the Currency,

1/16/02 01 273

01200000000628


Year Ended December 31,

10 1991 __ 1992 1a 1904
Operating Date:
Wellhead Volumes snd Pricos
Natural Gas Volumes (MMct per day}
Urmed States(7) ax 466 sae Ss 613 609 sue
Canaca _. 8 28 » LJ 7 ca] 1s
Tririgad . - > os 2 an.
« ant EZ
Total?) bod u S64 709 49 743 oneeZ!9
Average Natural Gas Prices women
Unaed States... -- = $18 $138 $161 $197 sim $i79 sis
Canmda ge eee ceeeee 147 132 118 1.34 142 151 95
Trinidad seceeeens - ba : 89 3 9 or
Composite 62.6 1s 7 1.58 1.92 1.62 199 123
Crude’Comdensate Volumes (MBDI per
cay)
58 59 63 66 60 75
24 23 22 22 20 19
- - - 4 25 26
- - - - a -
82 82 as 126 120
iid =_=_ = >
$21.95 $19.24 $18.29 $16.96 $16.08 $15.64
21.01 17.58 16.90 14.63 14.05 13.72
- - - 1436 15.50 1520
- - - - 15.70 -
21.67 18.78 17.90 1637 15,62 1824
4 3 3 2 3 2 12
- 3 “4 4 4 5s a
4 8 7 s 7 1s
$10.59 $10.79 $11.58 $13.85 $12.45 $12.50
- 12.48 10.05 946 645 7.86
10.89 11.64 10.689 14.02 990 9.43
(1) Includes benefits of $17 muilion, $43 mition, $65 miltion and $35 milion in 1991, 1992. 1993 and 1994, re: and
fzeraon ar $10 ion nt e-noh erin ande Sic’ $1984 ard oe respectively, relating to tight gas sand
fedaral income tax credits and million and $7 milion in 1980 and 1. respectively, essccisied with the LAr oo nat
Operating loss carryforwerd,
@ OF colerred fee ret nerente Cee sey ono the Companys deterred federal federal income tax liability from @ reevaluation
of deferred Jax requirements an to adjust the
Company's accuPaled Golerred Incoove tex 7 tor ho tecvoaae tn we carports Weare Saves tae trom 34% to 35%.

e Includes a beret of approximately $8 mBion related to {erluced estimated state Income taxes and cortain franchise taxes, 8 portion of
which «¢ treated as income tax SFAS No. 109 ~ “Accounting for Income Taxes”, and # $5 milion benefit from the reduction of the
Company® Gelerred federal Income tax liability rutting from & roavaluation of delerred tax requirements.

(4) includes @ $12 milion benefit associated with the successful resolution on audit of federal Income taxes for cartain price years
19) oo naey 1998. Se er en ere cena « tao-tor.one soit of the Company's Cormmon Stock to be affected as # non-taxabie

of one share for each share outstanding. Gharoa ware innued on tune 18,14 to harahoicers of recor fecord as of May 31, 1994.
Sn'share and por OC ete ae ae (anecied on & post-op vests
© in Auge SRE. the Company completed sale of 86 additional 8.2 millon shares of Common Stock 1 rooutting Jn apateaate net

Somes iecbarunatemet rer sae in eel proveode of pprovimatety $327 milton used to repsy nae

term debt and for ather general

includes 28 MiMct mh 1992, 81 MMct in 1993 and 48 MMcf per Beets ecane mor pasion eruied
() September 30, 1998 and Biel or da 89 ard 48 et pr de 194 an nn amended.

21

00900000000295


/ DEPARTMENT OF THE TREASURY MAY - 5 1999
WASHINGTON, D.C. 20220

irre
OFFICE OF FOREIGN ASSETS CONTROL
CORRESPONDENCE ACKNOWLEDGEMENT
Beverly Rudy Tel. 202-383-0100
Sutherland, Asbill & Brennan LLP Fax 202-637-3593

1275 Pennsylvania Avenue, N.W.

Washington, DC 20004-2415

LICENSING DIVISION Fax: (202) 622-1657
OFFICE OF FOREIGN ASSETS CONTROL ("OFAC")

U.S. DEPARTMENT OF THE TREASURY

1500 PENNSYLVANIA AVENUE, N.W.

WASHINGTON, DC 20220

RE: FAC No. IR- [(b)(2), (b\7XC)] Your ref: [(b)(4)]

This is to acknowledge receipt of your correspondence
dated 05/04/99. Please refer to the FAC number cited above and
the date of your original correspondence if you need to contact us

or send supplemental information.

Please note that filing an application for a license or
requesting information about the transaction prohibitions contained
in Executive orders or regulations administered by OFAC does not
suspend or excuse compliance with the prohibitions or requirements

contained therein.

We lock forward to serving you.

Note: Information on sanctions programs administered by OFAC can be retrieved at any
time Erom our automated fax-on-demand system by dialing (202) 622-0077, or from
our World Wide Web home page on the internet at wew.treas.gov/ofac.

Pax to:

Page 1 of 1

00400000000031


——_—_—_—_—__

No person has been authorized to give
any information or to make any represente-
tions other than those contained In this Pro-
spectus, and, if given or made, such informa-
tlon or representations must not be relied
upon as having been authorized. This Pro-
spectus does not constitute an offer to sell or
the solicitation of an offer to buy any securi-
ties other than the securities described in this
Prospectus or an offer to sell or the solicita-
tion of an offer to buy such securities in any
circumstances in which such offer or solicita-
tion is unlawful. Neither the delivery of this
Prospectus nor any sale made hereunder
shall, under any circumstances, create any
implication that there has been no change in
the affairs of Enron since the date hereof or
the information contained herein is correct as
of any time subsequent to Its date.

TABLE OF CONTENTS

Page

Available Information............... 2
Incorporation of Certain Documents

by Reference ................., 2
Prospectus Summary 3
Risk Factors Relating to

Exchangeable Notes . 5
Enron Corp. .... 6
Recent Events .. ceerecceee 8
Selected Financial Data of Enron .... 10
Capitalization... 0.60.06... eee ee eee "1
Relationship Between EnronandEOG.. 12
Use of Proceeds .................5 14
Ratio of Enron's Earnings to

Fixed Charges .... 2... .cccceue 4
Price Range of EOG Common Stock

and Cash Dividends.............. 4
Description of the Exchangeable

NOME .cccccnccsenccncsccassece 15
Certain United States Federal Income

Tax Considerations .............. 24
Underwriting :....... 27
Validity of the Exchangeable Notes... 28
Experts... 20... 2c c cee eee eee eee 28

Prospectus Relating to
Common Stock of Enron Ol
& Gas Company........... Appendix A

10,000,000 Exchangeable Notes

ENR
CORP

% Exchangeable Notes
due , 1998

Goldman, Sachs & Co.
Merrill Lynch & Co.

Salomon Brothers Inc
Representatives of the Underwriters

00900000000246


Additional disclosures:
Volumes attributable to volumetric
production payment ..........., ' 70.9 _ = _- -
Net proved reserves at December 31,
1994, including volumes attributable to
volumetric production payment....... 1,378.3 296.6 206.2 3 1,910.4

Liquids (MBbIX1)

Net proved reserves at December 31, 1993 13,172 5471 2218 20,861
Revisions of previous estimates ...... 2.179 (177) 465 - 2457
Purchases in place,..--....00...... 358 - - 7,617 7.975
Extensions, discoveries and other
ge additions... 5,332 2,848 2.687 - 10.867
Sales in place . . . (257) - - - (257)
Production... ca, 12.997) (905) (931) _(82) (4,865)

Net proved reserves at December 31, 1994 17,787 7.237 4429 7.585 37,038

Net proved developed reserves at

Natural Gas (Bcf)
December 31, 1993 2.0.2.0... . 1,079.8 250.6 71.4 - 1,401.8
December 31, 1994 0... 1,128.2 268.3 206.2 - 1,622.7
Liquids (MBbIX1)
December 31, 1993 ................ 11,165 5.409 1,591 = 18,165
December 31, 1994 ..,.. sea eeeeeres 16,770 7,003 4,429 7,585 35,857
. United States Canada Trinidad india ‘Total
Net proved developed reserves, inciudi
amounts ceed to volumetric pr
a
Natural Gas (Bcf)

December 31, 1993 .. 1,167.3 250.6 714 - 1,489.3

December 31, 1994 .. 1,199.1 288.3 206.2 - 1,693.6
Liquids (MBbI\1)

December 31, 1993 . 11,165 5,409 1,691 - 18,165

December 31, 1994 . . 18,770 * 7,073 4,429 7,585 35,857

(1) Includes crude oil, condensate and natural gas liquids.

Estimates of proved and proved developed reserves at December 31, 1993 and 1994 were
based on studies performed by the Company's engineering staff for reserves in the United States,
Canada, Trinidad and India. Opinions by DeGolyer and MacNaughton, independent petroleum
consultants, for the years ended December 31, 1993 and 1994 covering producing areas containing
65% and 59%, respectively, of proved reserves of the Company on a net-equivalent-cubic-feet-of-
925 basis, indicate that the estimates of proved reserves prepared by the Company's engineering
staff for the properties reviewed by DeGolyer and MacNaughton, when compared in total on a net-
equivaient-cubio-feet-ot-gas basis, do not differ ‘materially trom the estimates prepared by DeGolyer
and MacNaughton. Such estimates by DeGolyer and MacNaughton in the aggregate varied by not
more than 5% from those prepared by the Company's engineering staff. All reports by DeGolyer and
MacNaughton were developed utitizing geological and engineering data provided by the Company.

There are numerous uncertainties inherent in estimating quantities of proved reserves and in
Projecting future rates of production and timing of development expenditures, Including many
factors beyond the control of the producer. The reserve data set forth herein represent only
estimates. Reserve engineering is a subjective process of estimating underground accumulations of

7

00900000000291


WSJ.com Page | of 2

@ _

January 16, 2002

Business World

Welfare Reform for Accountants

By HOLMAN W. JENKINS JR.

Wi ars gone wrong with accounting? This is the question on every lip since it began to seem that Arthur Andersen &
Company stood mutely by as Enron hid debt and exaggerated profits,

More apt is the question: What has gone right since we handed accountants the federal gravy train of the mandated
annual audit of public companies? Folks, this is not the first time auditors have failed to step forward and blow the
whistle on some intransigent management, warning investors to run for their lives.

Accountants didn't blow the whistle on Cendant, Waste Management or Rite Aid, the savings & loans of the 1980s or
the casualties of the go-go '60s. They haven't blown the whistle on any sizeable company, ever, at least not until
problems were already apparent to everyone. So why the professions of surprise at every Enron that comes along?

Poor Joseph Berardino, Andersen's newly installed chief, is about to become more famous than
any accountant should. He has already been hauled before Congress and the evening news once,
and that was before document disposal became a hot topic. Suddenly, the most obvious target for
criminal charges isn't Enron but its accountant.

This train wreck has beh 65 years in the making, since 1937, when pharmaceutical maker
McKesson & Robbins went belly up and congressional investigators were flummoxed to learn
that the SEC laws they passed didn’t mean accountants were supposed to be in the business of
detecting fraud.

Let's not pretend to know more about Andersen's destroyed documents than we do. But still:

ry When auditors have reservations about a large and successful company's books, they don't blab to
Joseph Berardino the press or shout an announcement from the rooftops, blowing a hole in a stock owned by
thousands of investors. No one would ever hire them again. The missing emails may well contain a record of Andersen
wringing its hands hopelessly over this dilemma, as accounting firms have done since time immemorial.

This is an impossible bind, made more so because accountants have been prepared to live with cognitive dissonance
rather than give up a federal meal ticket. Nothing new here: Carl D. Liggio, who went on to become general counsel of
Emst & Young, first coined the term "expectations gap" in 1974 for the fact that the public thinks accountants are
supposed to catch crooks while the accountants say they aren't.

A vast academic literature soon sprouted to explore the "expectations gap." AICPA, the accountants’ trade group,
launched a series of "expectations gap roundtables." This flubbering has continued for two decades without ever
tripping over the real trouble, namely vagueness and uncertainty about the purpose of the public audit. Instead, such
inquiries invariably conclude with the accounting profession calling for more "public education" -- that is, the public
should be educated to stop blaming accountants for accounting scandals.

This paradox of the auditing process has been hanging out there forever. But market behavior suggests investors are not
such fools.

When Tyco's accounting was under assault two years ago, it took an SEC investigation and the cheerleadine of Wall

http://interactive.ws}.com/archive/retrieve.cgi?id=SB 101 114707587236960.djm&temp (@) 1 3 4 3 (18/02
01200000000699


Exhibit 1
DEPARTMENT OF THE TREASURY
ipaa WASHINGTON, D.C. 20220
ce

License No. IA- [(b)(2)]
TRawtan TRANSACTIONS REGULATIONS

LICENSE

(Granted under the authority of Section 505 of the International Security and Development Cooperation
Act of 1985 (22 U.S.C, § 2349aa-9), Section 203 of the U.S. International Emergency Economic Powers

Act ($0 U.S.C. § 1702), the National Emergencies Act (50 U.S.C. § 1601 et 8eq.) Executive Orders
12613, 12957, 12959, and 13059, and 31 C.F.R. Parts 501 and 560.)

To: Enron Capital and Trade Resources Corp.
c/o: Sutherland, Asbill and Brennan, LLP
1725 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404

1- Based on the April 17, 1998 letter to the Office of Foreign Assets Control by Sutherland, Asbill
and Brennan, LLP on behalf of Enron Capital and Trade Resources Corp. ithe wApplication"!, 31 C.F.R,
5 560 [(b\(4)] and information otherwise available to the Office of Foreign Assets Control regarding the

Subject thereof, the transaction(s) and activity(ies) delineated on the reverse hereof are hereby
authorized,

2. This License is granted upon the statements and representations made in the Application, otherwise
filed with or made to che Trea: lucy Department as a supplement to the Application, of based on
information available to the Tr lury Department, and ig subject to the condition, among others, that
the Licensee(s) comply in all respects with all regulations, rulings, orders, and instructions issued
by the Secretary of the Treasury under the authority of Section 505 of the International Security and
Development Cooperation Act of 1985, Section 203 of the U.S. International Emergency Economic Powers

Act {80 U.3,.C. § 1702), the National Emergencies Act (50 U.S.C. § 1702), and the terma of this
License.

3. The Licensee(s) shall furnish and make available for inspection any relevant information, records,
OF Feports requested by the Secretary of the Treasury, or any other duly authorized officer or agency.

4. Thia License is not transterable, and is subject to the Provisions of Executive Orders 12613,
12957, 12989, and any regulations and rulings issued pursuant chereto. It May be revoked or modified
at any time ac che discretion of the Secretary of the Treasury. If this License Was issued as a
result of willful misrepresentation on the part of the applicant, it may, at the discretion of the
Secretary of the Treasury, be declared void from the date of its isnuance, or from eny cther date

5. This License expires May 31, 1999, it does not excuse compliance with any law or regulation
administered by the Office of Foreign Assets Control or another agency (including reporting
requirements) applicable to the trangaction(s] herein licensed, nor does it telease Licensee(s} or
third parties from civil or criminal liability for violation of any law or regulation.

Issued by direction and of benale of the.Secretary /bf the Treasury:
;

drezce OF

Attention is directed to, inter alia, 18 U.S.C. § 545, 18 U.S.C. 1001, 19 U.S.C. 1992, and 19 U.S.C.
1595a, 50 U.S.C. § 1705, and 32 C.F.R. Part 560 for Provisions relating ro penalties.

00400000000101


Nickoloff, Peter

From: Nickoloff, Peter

Sent: Monday, December 17, 2001 9:48 AM

To: Carleton, Norman; Schultheiss, Heidilynne
Subject: Enron and Netting

From ERisk...

Unwinding Enron’ 's Tangled Web

December 12, 2001 Enron's lenders,
counterparties and investors have been quick to estimate their exposure to America’s biggest corporate bankruptcy, but
replacing those estimates with actual losses will take rather longer - and observers suggest two main sources of
uncertainty,

First, the sheer scale of Enron's involvement in the derivatives market promises to be the first real test of the industry's
preferred method for closing out transactions when one counterparty goes bankrupt - and there's no certainty that the
industry will find an ally in the US bankruptcy code.

Despite the best efforts of the International Swaps and Derivatives Association (Isda <htto:/www isda orglindex html) to
promote legisiation that would give industry practice legal certainty, lawyers are advising concerned counterparties that
their ability to terminate transactions by calculating a net gain or loss is not guaranteed.

Second, Ve waespread use cf Enron's cept os collatora mn sir ciuies Cred.
http://www. > transactions means 2 long wail for holders of
that paper, arik cornineertan abate ees acai s S00 1-06-16 Lt aso ve love of recoveries,

It doesn’t end there, The two issues overlap to a considerable extent. Synthetic collateralised debt obligations (CDOs) - the
structured credit instruments most badly affected by Enron's bankruptcy - rely on credit default swaps to pass on exposure
to investors, and credit derivatives documentation is arguably the most legally unproven of aff derivative products.

ne 5
dispersed? nimi> issued by rating ‘agency Standard % Poor's {S&P chitin So Ee cave} cr on the Enron
collapse reflects the difficully in divining the extent of the exposure faced by the energy firm's lenders, counterparties and
investors: “Credit exposure to Enron likely exceeds the $33 billion on Enron Corp's balance sheet.” A more precise
estimate is not offered.

For investors that have exposure to Enron through structured credit, the picture is perhaps the clearest - all of the rating
agencies moved quickly to assess the impact of Enron's demise on the notes they cover. "We currently expect 20 cents on
the dollar to be recovered,” says Mitchell Lench, manager of Fitch's <http://www.fitchratings.com/> European CDO team in
London, who confirms that synthetic CDOs have been hit hardest simply because they tended to incorporate exposure to
Enron on a routine basis.

Synthetic CDOs are issued most often by European banks, keen to shift some credit risk to what is usually @ small,
sophisticated pool of investors, he explains - and in that context, Enron was a favourite name because the banks were
expected to build the pool of debt by including representatives from a diverse range of industry sectors, and Enron
continued fo be seen as one of the strongest energy companies until very recently.

Although synthetic deals are generally composed of up to a hundred names, all of whom will generally be investment-
grade, Lench says that Enron's bankruptcy could be enough to prompt a downgrade of the deal. “If Enron is 1 per cent of
the deal, and you're losing 80 cents on the dollar, that's 80 basis points of credit enhancement you no longer have,”

them synthetics, Nik Khakee, a director in S&P’s structured finance group in New York, says that the total notional value of
the 44 deals exposed to Enron is $79 billion - but the total ammount of Enron's exposure included in those deals adds up to

‘ 01705

01200000000361


says,

- 'YD <mailto: jcmp.com>

November 30, 2001

The Internet Didn't Kill Enron

By ROBERT PRESTON <MAILTO:rpreston@cmp.com>
"We have a fundamentally better business model."

That's how Jeffrey Skilling, then president of Enron Corp., summarized his company’s startling
ascendancy a year ago, as Enron's revenues were soaring on the wings of its Internet-based trading
model.

It was hard to find fault with Enron's strategy of brokering energy and other commodities over the
Internet rather than commanding the means of production and distribution. EnronOniine, its year-old
commodity-trading site, already was handling more than $1 billion a day in transactions and yielding
the bulk of the company's profits. At its peak, Enron sported a market cap of $80 billion, bigger than
all its competitors combined,

See Also
Forum: Enron E-Biz Meltdown: What Went Wrong? <http://wwws > More Enron Stones
shito sw. internetweek .com/enron.htm>

Today, Enron has filed for bankruptcy, the status of EnronOnline is touch and go, ENE is a penny
stock and Skilling is out of a job. Last year's Fortune 7 wunderkind, hailed by IntemetWeek and
others as one of the most innovative companies in America, overextended itself to the point of
insolvency.

So was Enron's "better business model" fundamentally flawed? With the benefit of 20/20 hindsight,
what can Internet-inspired companies in every industry learn from Enron's demise?

For one thing, complex Internet marketplaces of the kind Enron assembled are fragile. Enron
prospered on the Net not so much because it had good technology — though the proprietary
EnronOnline platform is considered leading-edge -- but because online customers trusted the
company to meet its price and delivery promises

As Skilling told InternetWeek a year ago, "certainty of execution and certainty of fulfillment are the
two things people worry about with commodity products." Enron, by virtue of its expertise, networked
relationships and reputation, could guarantee those things.

Once it came to light, however, that Enron was playing fast with its financials -- doing off-balance
sheet deals and engaging in other tactics to inflate earnings -- customers (as well as investors and
partners) lost confidence in the company. And Enron came tumbling down.

Furthermore, advantages conferred by superior technology and information-gathering are fleeting.
Competitors learn and mimic and catch up, Barriers to market entry evaporate. Profit margins narrow.

Enron, short of incessant innovation, could never hope to comer Internet market-making, especially
in industries, like telecommunications and paper, that it didn't really understand. In its core energy

178 01478

01200000000132


DEPARTMENT OF THE TREASURY
WASHINGTON, D.C. 20220

License No. IA- [(b)(2)]
IRANIAN TRANSACTIONS REGULATIONS

LICENSE AMENDMENT

(Granted under the authority of 50 U.S.C. $$ 1701-06, 22 U.S.C. § 2349aa-9, Executive Orders
12613, 12857, 12959 and 13059, and 31 C.F.R. Parts 503 and 560.)

To: Enron North America Corp.
(formerly known as Enron Capital & Trade Resources Corp.)
c/o: Sutherland Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, DC 20004-2415
Attn: Beverly J. Rudy, Esquire

1. Based on the March 31, 2000 letter from Sutherland Asbill & Brennan
LLP, on behalf of Enron North America Corp., to the Office of Foreign
Assets Confrol, the expiration date of License No. IA{(b)(2)] as amended by
License No. IA-[(b)(2)], is hereby extended to May 31, 2001.

2. All other terms, conditions, provisions and limitations of License No.
TA- [(b)(2)] as amended by License No. IA- [(b)(2)] are unaffected by the
foregoing and remain in force.

Issued by direction and on behalf of the Secretary of the Treasury:

OFFICE | OP) FOREIGN ASSETS CONTROL
i

. 5 /1/o0
* a sohard AN /

Attention is directed to 18 U.S.C. § 1001, 50 U.S.C. § 1705, and 31 C.F-R. § 560.701 for
provisions relating to penalties.

00400000000020


CAPITALIZATION

The following table sets forth the capitalization of Enron and its consolidated subsidiaries as ot
September 30, 1995, anc as adjusted to give effect to the issuance on October 11, 1995 of $100
million aggregate principal amount of 67%% Notes due 2007, and the issuance of the Exchangeable
Notes offered hereby anc, in each case, the use of the proceecs therefrom.

_—__] As Adjusted
‘fin thousamda)
Short-term debt
Notes payable $s -— $ =
Current maturities of long-term debt . Le _
Total short-term debt... 0.22... occu . _
Long-term debt
Enrogs
Amount reclassified from short-term debt 587,032 277,566
Notes due 1996-2023 (6%% to 10.75%) . 1,753,139 1,753,139
Exchangeable Notes due 1998 (6'4%). _ 217,500
Notes due 2007 (676%) .......... . - 100,000
Subsidiary companies:
Notes due 1998-2005 (4.52% to 9.2%)... 636,000 636,000
Notes dus 1998-1999 (floating rates) . 55,000 55,000
Other 53,674 53,674
Enron:

Senior subordinated debentures due 2005-2012 (6.75%-8.25%) 360,000 350,000
Unamortized debt discount and premium........... see . (9,641) (9.875)
Total long-term debt ....... bo cdceeeeeeenenes 3.425.204 3,433,004

Minority interests... .. 315,821 315,821
Preferred stock of subsidiary companies . 395,750 395,750
138,605 138.605

* 25,373 25,373

1,792,544 1,792,544
1,574,335 1,574,335
Cumulative foreign currency translation adusiment . . (149,570) (149,570)
Common stock held in treasury... .........005 . (62,827) (62,827)
Other, including Flexible Equity Trust .

Total shareholders’ equity...

3,107,491 3,107,491
$7,244,266 $7,252,066

"

00900000000257


asked of boord level obout contro!
over jorge Wansactions.'

But it wor not energy price risk
management that was te bring the
company Gown, There ware more
tundomental problems developing
In its business strategy, corporate:
level financial engineering and
shategic investments.

it wos clear fom me mic-1P%05
that not all of Erron’s investments
ond new morkels were going to
poy off, The most notorious single
investment was Its 65 percent stake
in India's Dobhel Power Project.
which agen construction in
December 1976 but led to a nun
ning bettie wen the project's onhy
Customer, @ state utility, in the tate
1990s. Other physical amets that
were port of Enron's strategic vision
sumed Out *0 offer ftte in he way
Of ErONT OF Cashtlow - ond not only
in the power markets, Enron's foray
into the word woter ond woste
monogement industry, via pur
chases such os Wessex Water in the
UK. offered pedestrion returns while
sucking up valuable capital

Indeed, by the late 1990s there
was @ Ganger that Enron woukd be
S8EN OS GN Cwkward congioenera-
fon of three Dusinestes: 0 collec-
fon of physical assets that offered
returre thot varied tom pedestrian
to loa-mating: 0 profitable energy
Yoding end fis monegement bus
ness that mace money ond offered
exciting. but not exoonentic.
growth; and an investment portto-
lio of entirely speculative and cap
to-nungry oright ideas, Meanahie,
the core energy toding and ris
management busines: thot held
the company fogather wos crit
cally dependent upcn Enron's con-
fining monagement crecibiity
‘ond creditworthiness.

To make its creoms recl, and
meet its seifanticted earings and
shore price forgets. he company
knew thot it had to recycle Ihe
Copia Sed up in mundane amets
into more exciting investments in
new commodity markets, electo-
nic troding infrastructures. ond
expendve Numan skits,

So. Ike many other major corpo-
rations in the 1990s, Enron began to
joke Many Of its assets and Sabiities
ofits reported balance sheet. itdid
10 using © series of special purpose
entities and limited pormeships
thet enabied Enron to goin finance
ling in various nowal ways. The com:
pany wos open cbout the fact that
it wed off-balance sheet vehicles
fo access capital and to hedge risk
But # cho knew Mott # folowed
certain accounting nies it woud
not have to fevect many Getals
obou" these “stuctured financings’,
of the compfected Wensactions
that they spawned,

Meanwhile. the growing market
copltaikation of the energy giont
wos tuming into a haney top. With
the Internet Boom in full swing,
fon shores stored fo be
ascribed G5 an “Internet play’, os
the Company svesied its Inwest-
ments in the broadband industry
thot would support the “New
Economy’. ond ils development ot
‘online trading, By 2000, Enron
‘Onine had become estoblahed os
@ leading web-based service that
offered traders in energy and other
markets information. tronsoction
serices ond toding tools, The
company wes obo trying to
become ¢ morkelmoker ond price
Fak Tanogement provider in oond-
‘width trading 11 the some way that
ithod become dominant in natural
gos os that industry deregulated. tt

ERisk.com

February 2001; Jet? Sicifing, one of the architects of the
company's seancgy, thes aver as chief execusive offer.

March D001: Fortune rues a story, "ts Ensen Overpriced” that
beings sume analysts’ comperts te a wider audience and makes it
clear bow little credit analysts seers to understasd about the
financial engineering ard trve level of earings weccese of the
ceergany, Story quotes ove anaiyst as saying that if Eerus dex ect
treet its earings expecatioms, its riock price “oveld irepiode”,
Most analysis stilt rate Enron strongly, but are disappointed when =
ead unter uehich foams would have datritused lcckcbunter mervacx
‘over te Ineerne: falls apr.

April 2001; Cracks begin to appear in confidence about Exeon ast
Gecloses that it mowed $570 million by te banka Californian
power utility PG&E. Enron CEO Jet Skilling beccrnes irate with
hexige flnd analyst for asking critical questions about de valve of
-asoets thas secure Enron's off-balance sheet financing vebiches
‘Some analysts ave becoming concerned at Baron CPO Andy
Fasterw suffices & conMliet of interest fom bis pesuoeal smabe in some
of the off-halanee styeet vehicles that Envon Ras deployed.

Ampunt 14: Jeff Skilling reaigres ss Eran CEO alter waly se
rromtts in the job, citing perumal reassea; chairman Kermit Lay
Tesernes the CEO job Saat he'd held betire Siting took ower, for
harwever bong right take fo find a muccamser, Steck ae $42.91,

‘Amqunt 2001; Exron's stock falls below $40 as acailyats fear ever
wont ‘ings abost the degree of bchind-tbe-seenes frnancial
engincering and the ‘quality’ of reported earnings

‘October 16, 2001: Enron adteiss in an cummings report that i will
have to write off $1.0 Billion on investmeres, and some millions as
avemalt of cotnples finkacing partsershiqes set up by Fastow and
-apgwove by the board. On Oxtaber 22, Enren acknowledges the
SEC is lrwestigating its off-balance sheet activities.

‘October 25, 2001: Enron CEO Lay bolls « conference call that
tenderrnitecs Eroen's credibility still fertvse Analysts art dismayed
iby the offhand way in which the corrpany mentions an xéditional
$1.2 billion equity weisdown, in addition to the $1.01 ievestment
‘wriiederan, a8 a rea of terreiraring aaveatment parmervtips that
brad been set up by Fusion

Octaber 23, 2001; Moody's puts the rating of Ereon’s debt on
‘wate, By now, reany of Enron's ccurterpurties in its core eneray
and other rrarients are resmensing ier creciwortiness Al exacily
the time feat ii has bacoree clear that Enron's value lice in its come
‘eowngy rearkets need x tracing relatiornbipm, thove cermparerts of
the company are being corroded by the growing credit and
‘comporaen governance scandal, The liguadiny ap is chewing tet,

‘October 24, 2001; Pastow tales "Weave af absence’

‘October 25, 2001: Encon says Gut i is druwing os a Billiow-dellar
‘creck ine im an attereps tn reasmare the muskets it will wat run oul ef
money,

‘October 31, 2001: SEC investigation becomes & formal esguiry ax
Enron's stock price hits «nine-year low of arvana Sil.

1
i

01796

01200000000452


Nickoloff, Peter

From: Nickolof, Peter

Sent: Tuesday, December 04, 2001 12:02 PM

To: Carleton, Norman; Schultheiss, Heidilynne
Subject: Some EnronOniine stories from Internetweek.com

In no particular order...

Friday, November 30, 2001, 5:52 PM ET.

UPDATE: EnronOnline Still Trading
By Jade Boyd

While a bankruptcy filing by troubled energy trader Enron Corp. is widely expected, the company
says it continues to trade more than 400 products at its online trading exchange, EnronOnline.

An Enron spokesman said Enron traders are still actively making trades via EnronOnline in 472
products. Most trades are in core energy products like natural gas and electricity, but Enron also
continues to trade paper and forest products, said company spokesman Eric Thode.

Enron averaged about 5,000 trades per day on its site prior to November. The company conducted
about 1,000 trades Thursday, when only 62 products were sold online, Thode said.

Analysts say traders from other companies aren't establishing new positions with Enron, so virtually
all of Enron's current trade volume represents trades by people who are closing out existing positions
to limit exposure to Enron

Since Enron did a huge volume of trade online -- about $600 billion since EnronOnline went live in
November 1999 -- it may take weeks for trading to wind down completely, said Peter Fusaro,
president of the energy consulting firm Global Change Associates.

The bigger question is how long Enron can finance its trading operation. Fusaro said a bankruptcy
filing might make it easier for Enron to raise the cash it needs to fund trading operations, but that
won't restore trader confidence in the company.

Since Enron is a party to every trade on its site, either as buyer or seller, it's vital that trading partners
have confidence in Enron's ability to stand behind the deals it makes. Analysts say that confidence is
lacking, and an infusion of cash won't be enough to restore it.

Wednesday, November 28, 2001, 4:15 PM ET.

UPDATE: Enron-Dynegy Deal Collapses; EnronOnline
Temporarily Halts Trading

By Jade Boyd

Dynegy Inc, has cancelled its proposed $8 billion merger offer for fellow energy trader Enron Corp.
Trading on Enron's pioneering exchange, EnronOnline, was halted temporarily today in response to

° 01475

01200000000129


The Company has been included in the consolidated federal income tax return filed by Enron
Corp. as the common parent for itself and its subsidiaries and affiliated companies, excluding any
foreign subsidiaries. Consistent therewith and pursuant to a Tax Allocation Agreement between the
Company, the Company's subsidiaries and Enron Corp., either Enron Corp. has paid to the
Company and each subsidiary an amount equal to the tax benefit realized in the Enron Corp,
consolidated federal income tax return resulting frora the utilization of the Company's or the
Subsidiary's net operating losses and/or tax credits, or the Company and each subsidiary has paid
to Enron Corp. an amount equal to the federal income tax computed on its separate taxable income
less the tax benefits associated with any net operating losses and/or tax credits generated by the
Company or the subsidiary which were utilized in the Enron Corp. consolidated return. Enron Corp.
has paid the Company and each subsidiary for the tax benefits associated with thelr net operating
losses and tax credits utilized in the Enron Corp. consolidated return, provided that a tax benefit was
realized except as discussed below, even if such benefits could not have been used by the
Company’6r the subsidiary on a separately filed tax return. The Company entered into an agreement
with Enron Corp. providing for the Company to be paid for alt realizable benefits associated with
tight gas sand federal income tax credits concurrent with tax reporting and settlement for the
Periods in which they were generated. The Tax Allocation Agreement applies to the Company and
each of its subsidiaries for all years in which the Company or any of its subsidiaries are or were
included in the Enron Corp. consolidated return. To the extent a state or other taxing jurisdiction
requires or permits a consolidated, combined, of unitary tax return to be filed and such return
includes the Company or any of its subsidiaries, the principles expressed with respect to consoli-
dated federal income tax allocation shall apply. The Tax Allocation Agreement will cease to be
effective from the time at which deconsolidation occurs for future periods, but will remain In effect
with regard to periods prior to deconsolidation. For issues not addressed in the original agreement,
the Company has entered into a supplemental agreement with Enron Corp. clarifying future potential
adjustments associated with the final settlement on audit of taxes far periods prior to the decon-
solidation. The Company does not believe that the cessation of consolidated tax reporting with
Enron Corp. and effectiveness of the Tax Allocation Agreement concurrently with deconsolidation
will have a material adverse effect on its financial condition or results of operations.

For a discussion of transactions between the Company and Enron Corp. and Its affiliates, see
the Company's Annual Report on Form 10-K for the year ended December. 31, 1994 Incorporated
herein by reference. See “Incorporation of Certain Documents by Reference.”

Conflicts of Interest

The nature of the respective busiriesses of the Company and Enron Corp. and its affifiates is
such as to potentially give rise to conflicts of interest between the two companies. Conflicts could
arise, for example, with respect to transactions involving purchases, sales and transportation of
natural gas and other business dealings between the Company arid Enron Corp. and its affiliates,
potential acquisitions of businesses or oil and gas properties, the issuance of additional shares of
voting sécurities, the election of directors or the payment of dividends by the Company.

Circumstances may also arise that would cause Enron Corp. to engage in the exploration for
and/or development and production of natural gas and crude oil in competition with the Company.
For example, opportunities might arise which would require financial resources greater than those
available to the Company, which are located in areas or countries in which the Company does not
intend to operate or which involve properties that the Company would be unwilling to acquire. Also,
Enron Corp. might acquire a competing oil and gas business as part of a larger acquisition. In
addition, as part of Enron Corp.'s strategy of securing supplies of natural gas or capital, Enron Corp,
may from time to time acquire producing properties or interests in entities owning producing
properties, and thereafter angage in exploration, development and production activities with respect
to such properties or indirectly engage in such activities through such companies. Enron Corp. may
also acquire interests in oll and gas properties or companies in connection with its financing

00900000000310


InternetWeek > InternctWeek 100 > Services > Trader Reaps Benefits Of E-Market Leade..; Page 3 of 7

Enron isn't just moving physical product on the site. Much of its
online deal-making is in financial derivatives and risk

management.

For example, Enron is now in the market for DRAM chips. But it
doesn't buy and sell the chips; it sells financial instruments that let
companies lock in a price for DRAMs for a set period. Ultimately,
Enron hopes to buy and sell the chips itself, just as it buys and
sells gas, electric-ity and other commodities.

Energy Trading Redone

Enron is reticent about disclosing exact volume figures for the
different commodities traded on its sites. The large majority of
trades are still conducted in natural gas and electricity.

The Internet Is transforming energy trading from something of an
art form, dominated by person-to-person deals negotiated over
the telephone, to an automated science. By openly displaying its
"bid* and "ask" prices--and the spread between them-—Enron
drove trade volumes through the roof in 2000. Forrester Research
estimates that the “notional value" of online energy trades grew
750 percent in 2000, with EnronOnline accounting for most of
them.

But competing energy firms are banding together to form online
marketplaces oftheir own. American Electric Power, Aquila, BP
Amoco, Duke Energy and others joined with Goldman Sachs and
other financial firms to form Intercontinental Exchange, while Axia
Energy, Coral, Dominion TXU and Williams have formed
TradeSpark.

While these consortia may view each other as competitors, they
see EnronOnline as complementary, says Forrester analyst Jim
Walker. "Everyone loves to have Enron trade on its site because
Enron brings the most valuable thing to the market, which is
liquidity," Walker says.

Enron has purchased physical assets to ensure its own supply in
several key markets, such as pulp and paper and metals, Piper
says. Metals trading, he says, is up to about 1,000 transactions
daily, representing about 25,000 metric tons of steel.

Enron conducted 580 bandwidth trades in the first quarter,
compared with 321 in the past year, and it expects to handle more
than 2,200 trades in 2001.

However, Enron's total online trading volume represents
everything from storage services to long-haul circuits to dark fiber
to IP services. None of the bandwidth commodities has achieved
liquidity yet, notes Kevin Hannon, president of Enron Broadband

http)//www. intemetweek.comy'100-01/serv.htm 0 1 404 12/4/01
01200000000760


In this connection, we have heard that relations among the Bolivian government, civil society,
international NGOs, and the project sponsors are extremely tense, due to the general lack of
transparency over the past year, and, in particular, the way negotiations over the CFCC were
conducted, While numerous meetings may have been held, it appears that appropriate
documentation and time for review by at least some interested constituencies may have been
lacking. OPIC would be better served if it were to address directly the questions about improper
community consultation, how reported violations in stated procedures are to be mitigated, and
how future violations will be prevented,

In addition, I would urge that OPIC ensure that al! heretofore involved or interested indigenous
communities, municipalities, NGOs, SERNAP and any other relevant Bolivian (and Brazilian)
government authorities have the Board’s resolution, the two Supplemental Environmental
Assessments, and the environmental mitigation plan. The public (not just authorities) should
have sufficient time to fully analyze and comment upon these documents. Also, if the CFCC
proves viable under Bolivian law (an absolutely critical issue), it would probably help to diffuse
tension and enhance prospects for success if representatives of affected indigenous and
municipal communities as well as the Government of Bolivia were invited to join the Board of
the CFCC.

Tis also vital that the independent review of the primary forest classification be credible and
timely (before construction gets far enough to preclude significant changes). We appreciate that
OPIC has hired a well-qualified scientist for this purpose. We want to ensure, however, that the
reviewer has all of the relevant information (both Supplemental Environmental Assessments in
their entirety, and any other relevant reports or data) and that the terms of reference cannot in any
way be viewed as rigging the outcome. Therefore, while the independent reviewer should judge
the adequacy of Dr, Navarro’s conclusions in the context of the definition of “primary forest” he
received from OPIC, we urge that the reviewer be free to comment on the appropriateness of all
of the concepts and methods used to operationalize the definition, not just the conclusions based
on them.

Finally, Treasury strongly urges that the Board-requested process to refine the definition/
operationalization of “primary forest” be transparent, including all interested parties and with
special expertise. At this point, it is important to avoid the appearance of special status for any
particular organization (¢.g., WWF or the World Bank) in the process.

T hope that you and your staff will give these suggestions careful consideration, and look forward
to OPIC’s response.

Sincerely,

ene
Timothy F. Geithner

Under Secretary
(International Affairs)

01700000000006


DESCRIPTION OF COMMON STOCK
Authorized and Outstanding Capital Stock

The authorized capital stock of the Company consists of 160,000,000 shares of Common Stock,
$.01 par value, of which 159,799,955 shares were outstanding on October 31, 1995. The following
summary description of the capital stock of the Company is qualified in its entirety by reference to
the Restated Certificate of Incorporation of the Company, as amended, a copy of which is filed as an
exhibit to the Registration Statement of which this Prospectus is a Part.

The Common Stock possesses ordinary voting rights for the election of dirctors and in respect
to other corporate matters, each share being entitled to one vote. There are no cumulative voting
rights, meaning that the holders of a majority of the shares voting for the election of directors can
elect all the directors if they choose to do so. The Common Stock carries no preemptive rights and is
Rot convegible, redeemable or assessable, or entitied to the benefits of any sinking fund. The
holders of Common Stock are entitled to dividends in such amounts and at such times as may be
declared by the Board of Directors out of funds legally available therefor,

Upon liquidation or dissolution, holders of Common Stock are entitled to share ratably in all net
assets available for distribution to stockholders after payment of any corporate debts. All outstand-
ing shares of Common Stock are duly authorized, validly issued, fully paid and nonassessabie.

The transfer agent and registrar of the Common Stock Is First Chicago Trust Company of New
York, Jersey City, New Jersey.

Umitation on Directors’ Liability.

. Delaware corporation law authorizes corporations to limit or eliminate the personal ability of
Girectors to corporations and ‘their stockholders for monetary damages for breach of directors’
fiduciary duty of care. The duty of care requires that, when acting ort behalf of the corporation,
directors must exercise an informed business judgment based on all material information reason-
ably available to them. Absent the limitations authorized by such laws, directors are accountable to
corporations and their stockhokiers for monetary damages for conduct constituting gross negli-

(i) for any breach of the director's duty of loyalty to the Company or Its stockholders, (il) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing violation of law,
(lif) for unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in
Section 174 of the Delaware General Corporation Law, or (Iv) for any transaction from which the
director derived an improper personal benefit.

This provision in the Restated Certificate of Incorporation may have the effect of reducing the
likelihood of derivative Stigation against directors, and may discourage or deter stockholders or
management from bringing a lawsuit against directors for breach of their duty of care, even though
such an action, If successful, might otherwise have benelited the Company and its stockholders.

00900000000312


Largest Corporate Bankruptcies

—_—

BankruptcyDat

Subscribe!
Home

tiber Benefits

Find A

Court

Bankruptcy

Court Links

Publications

Re rch Cent

Calpndar
Profe
DIP Financins

Contact Information

ionals

Page | of 1
a.Com
A Divsion of New Ganwration Research, Inc.
‘Sample Issue of Bankruptcy Week Newsletter! Click Here!
The Largest Bankruptcies 1980 - Present
Compan: Bankruptcy) Total Assets | Filing Court
(click for more info) Date Pre-Bankruptcy| District
Enon Cop? _12/2101_| $63,392,000,000 NY-S|
Texaco.inc. 4/12/1987 | $35,882,000,000 NY-S
Financial Corp. of America _|_ 91811988 | $33,864,000,000| _ CAC
|_ 4/6/2007 |'$21,470,000,000] CAN
[MComp ___ | 531/1989_| $20.2 8,000,000 TXS|
First Executive Corp. 5/13/1991 | $15,193,000,000] CAC
Gibraltar Financial Corp. 18/1990 T i,
: rT 3/7/2001 | $14,050,000,000] .
HomeFed Cop, _|orz2ii992 ['$13,685,000,000)
‘Southeast Banking — | 9/20/1991 | $13,390,000,000

D Holdings, Inc. | 6/12/2001

of America

First | Capital ings
Baldwin-United

| presiise0 1s

9/26/1983 |

$9,383,000,000]

O#H-S|

* The Enron assets were taken from the 10-Q filed on 11/19/2001. The
company has announced that the financials were under review at the time

of filing for Chapter 11

Source: BankruptcyData.com
New Generation Research, Inc. Boston, MA

(617) 573-9557

SIGN UP TODAY! FREE BANKRUPTCY NEWS!
Home | Search | Samples | Rasearch Center | Headlines
Bankruptcy Courts | Feedback | Contacts | Publications

Copyright 2000 - 2001 New Generation Research, inc.

01445

http.//www_bankruptcydata.com/Rescarch/1 5_Largest.htm

12/19/01
01200000000801


1o/r7z1 PULECSuMoVsuEL | STTTUQUOITAINEY y ZupsxIeW/sop/Os sUI|UOUOIUS-MMAYy/:d TY

Be,
é48PsO Hut] 221d Aw ees Jopen uosUZ BY; UED “ZZ

YJe0p oO eSessow oy UO MED
Labessaw Buyyos9s pobueyd smyeig 49psO WWI! @d14q O43 JO pls }eH | OP MOH “LZ

“aGueL snyys ay) B95 NOK GUAR aU) PUB PeuKdxe Sey s9p0 INOA awy OLY UBdMYAg ABjOp syrULL
Om] 8 BIUaLEdxe 0} NOA JO} aAQISSOd $1 1) “exOFOVeYL “OINUIW Lana PayEPdN S| STIRS J9pIC WWI]
épeBueyp jou sey snyeys ay ynq pasidxe aney pjnoys 4epsQ Ww] e2Ud “Oz

"SS3029 PR!  PUE x UB Of VOD) UeaIO e puke y Ue Woy

@BUEYD 1M JOVED/PU! STYEYS BY) "UONIES SYEPIO YUU!) doug oy} Ul PEBUEY SnyEVS JopIO uN] Bou,

“Bupg}s ueaos Sajonb oy) ancqe Aejdsip jjya oGessew Guyosos & ‘pasdxe 5] 2ep0 yu}] BOC B UEYNA
epauidxe sey 19p1Q WU] e244 Aw yy PoUOjUy eq | IM “6L

“uneuss Saj0Nd

21g MO}eg LO}DSS UORSesUes, SAPO) OL) UF UONRSURN ese ARKisD mm 1 pay Ayemed 40 ‘Deny 5

sopu0 }1UWl] Goud & YOY “OsTy “UCS! @GuEIO UB PUB JEW 4OSYyo B Of UOo UBeuD eB pue YY UE Woy e6ueY>

11M JOTES|PU! STEWS BU “VONIES S39PAD YUI!) BIg OY) UL -PREVEYD SEIS JePIO UIT POVd,, ‘Sugeys

use29¢ SajONd oy anoge Andep mm abessew Gupjoios @ peymexeypepy s} 2epO pull) ep eB LEY
EPeINISXe/PaIy S} 49P4O YUP] S2}4q AW J} POUIOJU] OG | IIIM “BL

“UORIES SUPE PUT] GON Oy Ut SABKESH Jey VOTING Aey STIEIS, & 8] BOUL

voor uees6 pue eSues0 put 4 leued
‘S805 pe) pus x pau

‘868)/6 uncy pay pue D paipouRD

uo; uea6 pus y any

yoo eGuev0 pus YeW 484D pewnoeny

e8€ro

JOFED1PU] SMES 40P4O HAUT] O94 JO SMES

“SJOPEDIU! ST}EYS HUMOROY OY] YM PA|OUBP 9q IIIM JAPA PUY INOK JO SMAERS OUL

pJo p a8eg oulug Suysesuely - ouuQuomy

01200000000738


DEPARTMENT OF THE TREASURY
WASHINGTON, D.C

SECRETARY OF THE TREASURY November 22, 1999

Mr. Kenneth L. Lay

Chairman and Chief Executive Officer
Enron Corp.

P.O. Box 1188

Houston, TX 77251-1188

Dear Ken:

Thank you for your letter regarding remarks made by John Yetter, a Treasury Department
attorney, at a conference sponsored by National Economic Research Associates, Inc. in July.

T understand that Mr. Yetter’s remarks at the conference reflected language © intained in the
Report of the President’s Working Group on Financial Markets, Hedge Fund:, Leverage, and the
Lessons of Long-Term Capital Management, which was published in April. | am enclosing a
copy of the report; the discussion concerning derivatives dealers unaffiliated with a federally
regulated entity is found at pages 42 and 43.

Lee Sachs, the Assistant Secretary for Financial Markets, and Mr. Yetter met with several of
your colleagues on October 6 at Enron's request to discuss the concerns that ;you subsequently
raised in your letter. I understand that there was some discussion of the fact that the Working
Group's report on over-the-counter derivatives would be completed shortly. Mr. Sachs has also
informed me that he recently spoke with you on the telephone about your cor.cerns,

The new report, Over-the-Counter Derivatives Markets and the Commodity I xchange Act, was
released on November 9. A copy of this report is also enclosed. As discusse:l at pages 34 and 35
of the report, the Working Group is not recommending legislative action with respect to
derivatives dealers that are unaffiliated with a federally regulated entity at this time.

If you have any further questions or concerns, please do not hesitate to contact us.

Si s

Lawrence H. Summers

Enclosure

00100000000139


Welthead Volumes and Prices, and Lease and Well Expenses

The following table sets forth certain information regarding the Company's wellhead volumes of
and average prices for natural gas per Mcf, crude oil and condensate, and natural gas liquids per
BbI, and average jease and well Sxpenses per Mcte delivered during each of the three years in the
Period ended December 31, 1994 and the nine-month periods ended September 30, 1994 and 1995.

Mine
Months

Year Ended December 31, September 30,
“ioe 1983—ta08 tetas

Volumes day)
Natural Ga tenet)

534 649 614 609 534
30 58 72 71 75
= 2 63 63 110
564 208 749 743 719
63 66 8.0 75 9.1
22 22 20 1.9 24
- mI 25 28 48
- = A = 23
wwf _89 _126 _120 _ 188
3 2 3 2 12
4 4 4 5 3
7 6 7 7 15

— Se oe

$ 19 $ 19 $ 20

ca 35 3

A7 5 14

13 - 1,59

20 20 23

1) Includes 28 MMctf in 1992. 61 MMcf per in 1993 and 48 MMcf per day in 1994 and
(inte nine-motih Boreas andeg Seperter BE, ba we oe ea MC! Bar day In 1994 and

volumetric production payment agreement effective October 1, 1992, as amended.

includes an avi juivalent wellhead value of $1.70 per Mef in 1992, $1.57 per Mct in 1993,
 BPET por Mel ee teee aes ors per Mcf and $.76 per’ Mct in the ning-montty pentoas arene
Reptember 30, 1994 and 1985, respectively, for the volumes described in note (3), net of

15

00900000000289


License No. YK~ [(b)(2)} Page 2 of 2

SECTION 1 - AUTHORIZATION: All transactions are hereby
authorized to enable the Licensee and its U.S. affiliates,
including certain employees who are U.S. persons, to participate
in transactions by Enron Capital & Trade Resources, Ltd. relating

Eo [(by(4)]

SECTION 2 - REPORTING AND RECORDKEEPING REQUIREMENTS: The
Licensee is subject to the recordkeeping and reporting
requirements of, inter alia, 31 C.F.R. §§ 501.601 and 501.602,
including the requirement to maintain records concerning the
transactions undertaken pursuant to this License for a period of
at least five years.

SECTION 3 - PRECEDENCE: This license is issued on a non-
precedential basis.

SCIPIO ii rrr ir rir irri rrr

00400000000178


than 819,000 charities, with 45,000 new ones added in just the past
year alone. How to cheoge? Which of the noble-seeming goals are indeed
worthwhile, and which charities work toward them with the skill,
innovation, effectiveness, and strategic insight that you'd expect
from a for-profit company you would consider investing in or working
for? Which charities, in short, are deserving of your support? Worth
presents the 100 best charities from the past year (and a few to
avoid). (source: Worth)

http://www. investorguide.com/cgi-bin/weekly.cgi?0$527

looking back: 20901 investing

MarketWatch's year-in-review includes sector wrap-ups, winners and
losers, and economic analysis. A writer also takes a comprehensive
look at the advertising market. Finally, there is some commentary and
@ look at the year ahead. (source: MarketWatch)

http://www, investorguide.com/cgi-bin/weekly.cgi?05526

CNNMoney presents a series of stories wrapping up 2001, summing it up
as "a year of loss." Alongside the top stories of the year and reviews
of the markets and the economy are picks and predictions for 2002.
(source: CNNMoney)

http: //wew, investorguide.com/cgi-bin/weekly.cgi?05529

For an instant take on how 2001 treated investors, all you had to do
was flick on your TV, Gone were the frenetic performance-touting spots
of years past, It was another tough year for investora. At least the
turmoil in the markets flushed away some really bad ideas. Fortune
presente the best and worst of investing. (source: Fortune)

hetp: //www. investorguide,com/cgi-bin/weekly.cgi?05530

advertiee with investorguide

Operate a financial web site? Want more traffic, more subscribers,
more customers? There's a simple solution: advertise in this
newsletter. It's a great way to reach over 60,000 online investora...
and best of all, we're offering a 25% discount for all placements
reserved in January. Email advertise@investorguide.com and mention
promo code J0274 to lock in this special rate. (Availability ia
limited, so thia is a first-come, first-served offer.)

looking ahead: 2002 and beyond

Forbes editors and writers lift the lid on 2002. Some of the
most-knowing minds in the business give you a head start on running
your business better and investing more profitably in the coming year.
(source: Forbes)

http://www. investorquide.com/cgi-bin/weekly.cgi?05531

As a public service, this columnist sticks out his neck and proposes a
list of 10 potential surprises in the new year. In a show of holiday
spirit, they're not even all negative. (source: The Street)
http://www. investorguide.com/cgi-bin/weekly.cgi?05532

There is plenty of evidence to suggest that companies are rejigging
their IT budgets in response to the dismal economy and the ongoing
terrorist threat. Accordingly, two old buzzwords -
return-on-investment (ROI) and security ~ will be heard more
frequently next year. IT budgets may be tight, but finance chiefs
can't afford to ignore these ten tech innovations. (source: CFO)
http://www. investorgquide .com/cgi-bin/weekly,cgi?05533

‘ 01693

01200000000349


privatization efforts,” said Forrest E. Hoglund, chairman, president and chief executive
officer of EOG. "As a low-cost operator with a proven record in offshore oil and gas
development of this type, we feel EOG has the capabilities to add significant value to India's
assets in a timely fashion.”

EOG, with natural gas equivalent reserves of 1.9 trillion cubic feet and 1993
production of 709 MMcfid, has experience in the Gulf of Mexico offshore Texas and in the
Caribbean Sea offshore Trinidad. The company operates 15 platforms currently producing
85 million cubic feet per day (MMcf/d) of natural gas in U.S. waters. It also operates the
Kiskadee platform offshore Trinidad which is producing 50 MMcf/d from two wells.
Additional Kiskadee wells are being drilled, and an additional platform is being constructed
to develop the Ibis field upon conclusion of the Kiskadee development.

“We are particularly proud of our track record in Trinidad where it took us less
than one year to have natural gas flowing to the Trinidadian marketplace after signing the
original contract with the government of Trinidad and Tobago in November, 1992," Hoglund
said. "We anticipate using this same philosophy in India to accelerate the flow of crude oil
and natural gas supplies, which should benefit India’s rapidly developing economy.”

Prior to final negotiation of a production sharing contract with the government,
EOG and RIL anticipate cooperating with ONGC immediately to coordinate transfer of
operations in the currently producing Panna and Mukta fields. Major commitments for

drilling and platform construction will be finalized after the agreement negotiations are
completed in the next few months.

Enron Oil & Gas Company is one of the largest independent (non-integrated) oil
and gas companies in the United States in terms of domestic proved reserves. The
company’s reserve base is 85 percent domestic and 93 percent natural gas. EOG is listed on
the New York Stock Exchange and is traded under the ticker symbol, "EOG."

— Hit -

01000000000892


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following review of operations for each of the three years In the period ended December 31,
1884 and for the nine-month periods ended September 30, 1994 and 1995 should be read in
conjunction with the consolidated financial statements of the Company and notes thereto and other
financial data incorporated by reference herein, See “Incorporation of Certain Documents by
Reference.”

Results of Operations

Net Operating Revenues

Wellhead volume and price statistics for the specified periods were as follows:
>

Nine Months
Ended
___ Year Ended December 31, September 30,
1982 1983 1 1 1995

Natural Gas Volumes (MMcf per day)

5640 ¢C~CSTTF H(t

— 2 8 _110
564 709 7490 743719
= = 8 _”*
$ 158 $ 192 $ 168 $1.76 $1.28
- 89 93 $s 97
158 «6192162 1.691.238
8s 88 100 «9411.8

- Aa 25 26 48
: = aj - 23

8.9 12.6 12.0 18.6

85
$1790 $16.39 $ 15.65 $15.25 $17.01
- 14.36 15.50 15.20 16.16

- — = 15.70 = 16.82
1790 16.37 15.62 15.24 «18.77

'1) Includes 28 MMct in 1992, 81 MMcf per day In 1993 and 48 in 1994 and
(1) RNS nive-mones periods ended Pa ate ee eae dphered oncer'twe terme ot
volumetric production payment exchange agreements effective October 1, 1992, as

Includes an a equivalent wellhead value of $1.70 per Mct in 1992, $1.57 per Mcf in 1993,
© $127 pee Met 1984 and $13 per cl and 6.78 pe Met the ine month prods ended
September 30, 1994 and 1995, respectively, for volumes detailed in note (1), net of

Nine months 1995 compared to nine months 1994. During the first nine months of 1995, net
operating revenues Increased $18 miflion to $492 million as compared to the same period in 1994,

Average wellhead natural gas prices for the first nine months of 1985 were down approximately
27% from the same period in 1994 reducing net operating revenues by epproximatety $90 milion. In
addition, a decrease of 3% in wellhead natural gas volumes from the first nine months of 1994
reduced net operating revenues by approximately $11 million. The Company voluntarily curtailed its
United States wellhead natural gas delivered volumes by an average of approximately 140 MMct per
day during the first nine months of 1995 compared to approximately 110 MMcf per day during the

22

00900000000296


MEMORANDUM FOR DEPUTY SECRETARY EIZENSTAT

FROM: Timothy F. Geithner
Under Secretary (International Affairs)

SUBJECT: Talking Points For Call From OPIC President Munoz
(September 14, 2000)

[(b)(5); outside scope]

BRIEFING

00500000000213