IN: Dan, I have reviewed the Wildhorse (Mesa) Gathering, Processing, and Transport Agreement. This agreement is still valid and the gas is dedicated to this Agreement through 2013. The agreement present some problematic issues which I will outline. 1. Gas Quality - The gas quality provisions only require Wildhorse to transport the gas if the gas meets the downstream carriers (in this case Northwest Pipeline) gas quality specifications. We propose to put in a treating plant which would allow the gas to meet the specifications, however there are no provision in this Agreement which allow us to insert a plant between Northwest Pipeline and Wildhorse. Wildhorse could delay are extract value from us for this connection. This is an uncertainty. 2. Wildhorse Obligation to Perform - Based on my understanding of the facts, at some point during the term of this agreement, Northwest Pipeline enforced their gas quality specifications and refused to take the gas at the downstream side of Wildhorse's Gathering System. As a result, Wildhorse shut in Enogex's production and it has been shut in ever since. Wildhorse has a right to do this under this Agreement (see #1 above) and therefore Wildhorse has not breached its obligation to transport under this Agreement. Wildhorse's obligation was suspended when Northwest refused receipt of the gas. 3. Unprofitability - Assuming Wildhorse worked with us to install the treating plant which conformed the gas to Northwest Specifications, they could refuse to provide gathering service under this agreement if it was still uneconomical for them to do so. If they decided it is uneconomical for them to do so, they have the right to provide Enogex with various potential solutions which include (i) renegotiating the terms (ii) allowing Enogex to operate Wildhorse's equipment at Enogex sole cost, expense and risk, or (iii) release the gas from the Agreement. The problem here is that there is no time limit under which Wildhorse must reach a solution with us and no specific solution they must reach. Wildhorse could drag this out for some extended period of time and they could extract significant value. My recommendation is that we make Enogex's resolution of these issues with Wildhorse a condition precedent to closing and funding this deal. I know the timing is late. However if Enron funds this deal and takes on the risk of negotiating with Wildhorse to resolve either a new deal or a release of the gas, everyone needs to understand that such negotiation could take substantial time and Wildhorse will have significant leverage. Let me know if you wish to discuss this further or have any questions.

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OUT: Wildhorse Gathering Agreement

IN: Attached below are the two files for TW CMS/TMS requirements on flow direction and current process for inside/outside the path requirements. Please review these documents and let me know if you have any questions or corrections to apply to either document by COB 8/31/01. Linda, please keep me in the loop on both of the projects since they interface directly with TMS. Thanks Ramona

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OUT: TW requirements for Inside/Outside the Path and TW Flow Direction

IN: Elizabeth - Here are the comments from me and Dede. I have given it to our Credit Dept. and asked for comments but I doubt they will have much to add. Call me if you have any questions with what we wrote. With regard to the full-blown WSPP Collateral Annex, Dede and I think it would be better to get the EEI one in a final form before converting it over to fit into the WSPP. Otherwise, we could be revising the 2 documents in parallel. I am planning to get the short draft WSPP Collateral Annex over to you today. Thanks!

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OUT: EEI Collateral Annex and Cover Sheet

IN: The doorstep audit is not yet complete as I'm having about 25 or so deals "tested" out of the Long Beach office. We should know all final results within the next week or so. Rick-your suggestions are generally on target as we have already begun the process for pulling each specific office's information together-ie: how many offices do we have, who are the specific people in them, what do they transact on (DSM, gas/power commodity, services mgmt., etc), and can we consolidate/minimize the number of offices we have. For example, of the 87-ish offices that we currently have EES folks in, only 14 of those offices have individuals that transact gas or power deals in the EnronDirect sales group (ie: customers below $10 million in energy spend) and there are @ 45 sales folks in these 14 offices. The losses now expected out of the Long Beach office are MUCH lower than initial estimates. If anyone would like to review, please call me directly. We are already well underway in establishing new transaction process' for both gas and power deals. Although we have already put in place and communicated these new procedures to each of the sales offices, we are putting together a "sales package" that will encompass each of the new procedures in detail, each of the new gas and power contracts and rules for use, and a new sales policy which will review in detail the responsibilities for each sales individual. This policy will require signatures from the sales folks in order for them to continue working for EES in a sales transaction role. We are also exploring an independent verification process whereby we would have someone from either Deal Capture or Deal Management actually contact the customer to confirm the transaction. The "McDonald's Hamburger" analogy is quite appropriate here! Just wanted to let everyone know what was already underway.

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OUT:
Remote Offices- Suggestions