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I will be out of the office tomorrow, Tuesday, January 22, 2002, and will return on Wednesday, January 23, 2002.
Chip Schneider will attend the Cash Management Committee as the RAC representative in my absence.
I will have limited access to e-mail tomorrow.
My mobile telephone will be on; its number is: 713-553-3138.
Regards,
| Out of Office Tuesday, January 22, 2002 |
Ted Murphy wants you to call him next week to discuss "stuff".
Are you available to call at any of the following times?
Tuesday 10:00am - 11:00am EDT Wednesday 9:30am- 11:00am EDT Friday 8:00am - 9:30am EDT Set up Risk Management meeting w/ Stan Horton, Vlady, etc.
3:30-4:30pm on Sept. 10.
FYI - Enron Management Conference is November 14, 15 & 16 in San Antonio.
Sarah Heineman trying to set up meetings Sept 11, 12 & 13 in Boston (Fleet & others), Banks in NYC & annual Toronto bank trip (you will be flying commercial) shall I book you to Boston or somewhere up there close from Toronto on the return?
| Ted Murphy Wants Phone Time Next Week & Other Items |
As was earlier announced, we will be bringing all Managing Directors together on a quarterly basis.
Please note on your calendars the first Monday of every quarter from 8:30 a.m. to 12:00 noon for this purpose.
The first meeting will take place on Monday, October 1st.
I look forward to seeing you there.
If you have any questions, please call Joannie Williamson at 713-853-1769.
| Executive Committee |
Good morning - I am happy to announce that Joannie Williamson will be joining Ken Lay's office staff beginning today, August 27.
Joannie is a most welcome addition to our office!
We have identified many new duties for Joannie, but a couple of them will be working closely with the Enron Management Committee and the Enron Advisory Council.
For your information, her new phone number is 713-853-1769.
Rosie
| Joannie Williamson |
I will be out of the office on Monday, August 27th and will return on Tuesday, the 28th.
If you need to schedule a meeting with Rick Buy, please contact Mercy Gil @ 3-5391.
Thanks.
| Out of Office AutoReply: Travel |
Please note the following addition to the credit reserve: Counterpary: El Paso Merchant Energy, L.P. Enron Entity: EPMI Deal#: 750378 Deal Date: 8/27/01 Term: 1/1/11 to 12/31/12 Deal Type: 25MW/h, on-peak, EPMI sale Marketer: Matt Motley Reserve Amount: $20,000.00 RAC - Confirmed under Master Power Purchase and Sale Agreement dated 3/1/01.
Please let me know if you should have any questions on the above.
Rgds,
| Credit Reserve - El Paso Merchant Energy, L.P. |
Hi Richard, I am writing to let you know (if you have not heard already) that over twenty-five former Regional Directors of the Global Association of Risk Professionals (GARP) have formed a new international nonprofit association of risk managers.
The new association, called the Professional Risk Managers' International Association (PRMIA, pronounced as "premia"), will include local chapters in Europe, Asia, the Middle East, North America and South America.
If you would like to know more about the new organisation and how to join please email me and I will be happy to give you more details.
Looking forward to hearing from you.
Regards
| New Risk Managers Association |
Rick - further to our discussion, here is the change Enron Americas are requesting in their limit structure: Eliminate volumetric limits on net open position and maturity gap; Eliminate limits on individual commodities within the business unit; Replace with one limit, expressed in VaR, for the entire business unit, of $100MM.
I am not uncomfortable with $100MM, given the opportunity set and the required returns from this activity.
ETL at this level could be in the region of $340MM.
I think the other things to consider in making the decision are as follows: Does the VaR tell us sufficient about the risk ?
I think it does since we have the ability to see components of it in some detail and it backtests well Tail Risks Generally we have the most data on tail risks for US gas and power and we are most confident about the EVaR and ETL measures for these commodities.
Liquidity This should be a key point in removing volumetric limits because they give us a concept of size.
Our recent analysis has shown that our ability to unload risk in US natural gas certainly is high (50% reduction, 10 days) - but we need to continually revisit this analysis.
Administration of Risk Generally I think we are comfortable - deal capture is good since so many trades are picked up through EOL.
Delegation of authority using VaR limits at desk level is strong But since VaR is so dependent on MTM values and curves I would still recommend a review of: curve validation results; ageing of confirmations outstanding (in and out); flash to actual differences (if any) Compliance with Policy The policy requires limits under the business unit by "commodity groups" in some combination of volumetric and VaR limits.
We also must approve products/commodities for a business unit.
One interpretation of this is to define the commodity "group" as the aggregate of gas, power, coal, crude, and approve those products, in which case the aggregate limit for the business unit is the commdity group limit also - so we can have one limit.
Our concern about the Firm blowing up because everyone is short crude, for example, is covered by the fact that we can still see all the components of our aggregate risk to a single commodity, which is also capped by the concentration limits.
The only question is from a governance standpoint, how you prevent yourself bumping up against those and having to explain it to the board.
Another side of this argument is the "10K analogy" - if I put $100MM into my 10K via a mutual fund I am likely to want them to declare in which markets they invest it.
To summarize, I think we could justify losing volumetric limits for this business.
On the question of level of risk and commodity limits, I think we should talk it over with Greg / Ken.
DP
| Limit Revision - Enron Americas |
Sovereign Bond Spreads: =20 Significant New Issuance - CSFB Commentary: ?=09The emerging debt markets rallied this week as the long expected new IM= F package for Argentina was finally announced on Tuesday.
Argentina will re= ceive US$8bn in new loans from the IMF, of which US$5bn will be allocated n= ext month to reinforce reserves that were depleted as a result of massive s= avings withdrawal.
Another US$3bn will be extended if Argentina obtains an = agreement to cut financing costs through a debt swap and possible buyback.
= The rally in Argentina spilled over first to the higher yielding EM assets = (Brazil, Turkey etc), then helped other credits, although the impact was so= fter.
However, the Argentine problem is far from solved, as the Republic's = government still has to deliver on its promises of a zero budget deficit an= d debt restructuring, therefore the medium term outlook is still cautious.
= The Turkish market traded up after the Argentina package was announced; the= rally was also helped by the satisfactory T-Bills auction results and othe= r positive news from the country.
For Russian assets, the IMF announcement = was also a long awaited boost: volumes increased significantly with prices = climbing by more than 2 points.
The Russian US$ yield curve is getting very= steep because most of the supply that we see is concentrated in Russia 203= 0, while the buying interest is spread across the curve.
Central and Easter= n European asset prices were on average ?
point higher on the week with Pol= and underperforming other countries after the S&P changed its outlook on fo= reign currency rating for the Republic from "positive" to "stable".
The EMB= I+ Index tightened by 50 bps in one session on Wednesday and closed 29 bps = tighter on the week.
?=09On Tuesday the FOMC cut the Fed Funds rate for the 7th time this year b= y 25 bps to 3.50%, the lowest since April 1994.
The accompanying Fed statem= ent pointed at the slowing global growth and weakening business profits and= capital spending in the US, thus suggesting further easing is possible.
?=09As market conditions remain difficult and we are still in a traditional= August holiday period, primary market activity is very slow but expected t= o soar in September with a number of deals waiting in the pipeline.
| Sovereign Bond Spreads, 24 August 2001 |
Attached are your daily market research reports.
Please contact me if you would like to hear about a certain company, or sector, and I will get right on it!
As you may or may not know, we have access now to research from Goldman Sachs, CS First Boston, as well as First Union Equity Marketing Group.
T hank You, Hank Emery
| Daily Market Research Reports |
How well do you know our Code of Ethics?
"It is a condition of employment that each employee accept the responsibility of complying with the foregoing policies.
The Company will require each employee of the Company to complete and submit a statement in a form designated by the Company pertaining to such employee's compliance with the policies set forth in this booklet.
The Company reserves the right to request any employee to complete and submit such statement at any time or as frequently as the Company may deem advisable."
(Enron Code of Ethics, July 2000, page 62) What does that mean?
In layman's terms, everyone employed by Enron agrees to all the policies and standards listed in the current Code of Ethics (July 2000).
Who does it apply to?
The Code of Ethics applies to all employees, third party contractors, guests and licensees of Enron.
Additionally, employees are responsible for their family members and/or personal household who use, own, or have access to Enron's communication services and equipment -- including telephones, fax machines, computers, computer modems, long distance telephone services, cell phones, voice mail, pagers, e-mail, mail and delivery services.
| Code of Ethics -- What Exactly Did I Agree To? |
Attached is your daily market research report.
Please contact me if you would like to hear about a certain company, or sector, and I will get right on it!
As you may or may not know, we have access now to research from Goldman Sachs, CS First Boston, as well as First Union Equity Marketing Group.
T hank You, Hank Emery
| Research Report for Wednesday, August 29, 2001 |
Public Relations / e-Biz called regarding the Risk Management Policy, and wanted to know if they could address it in e-Biz.
Initially I thought no, but perhaps you might want to take this opportunity to highlight other RAC issues of interest to employees.
I was thinking - maybe the roll out of the RAC website, 3-D data visualization tool recently profiled in Risk magazine, etc?
The contact person is Jeanie Mandelker at x36305 if you'd like to discuss it further.
I told her we'd get back to her next week.
Cassandra.
| e-Biz on RAC? |
Hi Rick: I noticed that you were online.
Have you had an opportunity to look at the budget numbers.
Corp called and wanted to get them so they could start building their spreadsheets for the Lay presentation.
They said we could still revise it up to Friday.
I wanted to get your ok to send the numbers to them.
Thanks Rick C.
| Budget Revision 2002 for RAC |
Beginning 8/29/01, we have updated our processes and will be reporting Notifications and Violations on the Executive Reports Viewer for 8/28/01 reporting.
This process eliminates the need to e-mail MS Word and MS Excel documents.
In place of the Word and Excel documents, you will receive an e-mail with a link to the Reports Viewer.
If you do not have access to the Executive Reports Viewer, or have a question about your access level, please contact Chris Abel (3-3102) or myself (5-4541).
Thank You
| Process Change To Violations and Notifications Reporting |
Greetings!
We still have good seats available in this excellent cross discipline course.
Please pass this notice on to employees in your company on multidisciplinary teams who need this training to communicate knowledgeably with their peers.
Or, if you need a refresher in some engineering concepts, we'd be happy to have you join us.
Please complete the attached registration form and fax it to us by Tuesday, 9/04.
FAX: 713-789-6886.
Or you may visit our website and register: www.scacompanies.com.
Petroleum Engineering for the Geoscientist Instructor: Hines Austin
| Good Seats - Petroleum Engineering for Geoscientists - 9/10-13/01 |
Attached is your morning research report for Thursday, August 30, 2001.
Please contact me if there are particular companies or sectors that you are interested in hearing from.
(713-853-2407) Thank You,
| Morning Research Report for Thursday, August 30, 2001 |
Attached is your morning research report for Thursday, August 30, 2001.
Please contact me if there are particular companies or sectors that you are interested in hearing from.
(713-853-2407) Thank You,
| fbThursday.pdf |
Attached is your morning research report for Friday, August 31, 2001.
Please contact me if there are particular companies or sectors that you are interested in hearing from.
(713-853-2407) Thank You,
| fbsummary.pdf |
The following is a report on the Energy and Natural gas sectors from Credit Suisse First Boston.
Please call us at 713-853-2407 if you have any questions.
Thanks,
| Recent report from CS First Boston on Energy and Natural GasCompanies |
Please refer to the attached agenda for the offsite meeting scheduled Thursday, September 6 - Friday, September 7.
Since all discussions will be informal, PowerPoint presentations are not necessary.
Please let me know if you need a room for Wednesday evening.
| Management Committee Offsite |
The 8:30 AM Tuesday risk meeting on 9/4/01 is cancelled for commodity risk groups.
The regular daily status meeting will proceed as scheduled.
Please let me know if you have any suggestions for topics for the following week's meeting.
Thanks.
| 8:30 AM Tuesday Risk Meeting |
Sovereign Bond Spreads: =20 Significant New Issuance - CSFB Commentary: ?=09The emerging debt markets were less volatile this week following the st= abilization in the Argentine financial sector.
Although there was no real p= rogress in improving the country's fundamentals, international reserves and= private sector deposits stopped falling, generating positive momentum for = the market.
As a result, Argentina broke through an important 1400 resistan= ce level this week and the positive tone spilt over into other markets.
The= Turkish Eurobond market had a very strong week supported by dramatic impro= vement in the local market: the Central Bank cut its overnight lending rate= from 62% to 60% after a successful T-Bill auction on Friday and local debt= yields declined sharply.
Most of the Turkish curve was very well bid again= st the background of revived investor activity.
The Turkey 2030 benchmark r= eached its high since the beginning of July at +935 bps spread on Thursday.= The Russian market also gained this week on the back of both the general E= M sentiment and local news on the incorporation of the "financial reserve" = (designed to accumulate US$1.8bn to help the government service its debt in= 2003) into the draft budget for 2002.
Russian assets are now trading only = 1 point below their highs since the 1998 crisis.
For Central and Eastern Eu= ropean assets this was a strong week with good demand especially for sovere= ign bonds, although there was no significant move in prices.
Despite the ov= erall positive sentiment, Friday witnessed some weakening in all the emergi= ng markets, caused mainly by the technical factor of profit taking once the= market reached two month highs.
The EMBI+ Index closed only 4 bps tighter = on the week at +882 bps after touching +861 bps during the Thursday session= .
?=09On its 30th August meeting, the European Central Bank lowered its bench= mark repo rate by ?
point to 4.25%.
European benchmark bonds reacted positi= vely to the announcement and now are pricing in at least another ?
point ra= te cut this year.
This is good news for issuers of *uro denominated bonds a= s the long awaited rate cut will lower European benchmark yields going forw= ard.
?=09Fitch upgraded the Republic of Estonia's rating to "A-" from "BBB+" on = Thursday reflecting its strong GDP growth, fiscal deficit reduction and goo= d fiscal prospects.
| Sovereign Bond Spreads, 31 August 2001 |
Rick and Greg, I met with Sally and Beth on August 24th to discuss the operational risk management initiative requiring a reconciliation across all major risk applications.
This reconciliation is necessary to validate the transfer of all data from source systems, i.e.
risk books, into risk applications which calculate VAR, provide credit exposures, feed Infinity with daily cash flows and ultimately the DPR.
Sally and Beth, along with IT, have initiated a project to improve and monitor the accuracy and efficiency of these daily interfaces.
The scope includes a review of the processes which impact the accuracy of information, timing of interfaces, production performance issues, inventory of books and improved controls over changes to book attributes, and the officialization process.
They have agreed to add a requirement to provide, on a daily basis, this reconciliation across all major risk applications.
The projected timeline to complete this project, including the reconciliation initiative, is 60 to 90 days.
We will need to reassess the decision to combine these initiatives, if the GRMO timeline slips.
This daily risk applications reconciliation will provide four key metrics not currently available: 1) the ability to track data "accuracy" in terms of the percentage of information which transferred and processed correctly, vs. just unique "failures".
How complete is the data?
2) the ability to validate the accuracy of exception reporting (are all failures included on the exception reports?)
3) the ability to validate Infinity cash flows 4) Reconciliation of values (volumes, PRMA &PRML and cash flows), not # of books processed.
Please call me if you would like to discuss.
Wanda Curry
| Reconciliation Across Risk Applications |
Please note that the next meeting of the Enron Advisory Council is October 30-31 in London.
If you plan to be in London on other business you are welcome at attend, but your attendance is not mandatory.
Please contact Joannie Williamson at 713-853-1769, or via e-mail if you plan to attend.
The final agenda is being developed and will be distributed well in advance of the meeting.
Ken
| Advisory Council Meeting - October 30-31, 2001 |
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You will learn how to navigate through the Northern Light site, how to access the Special Collection, and how to set up custom folders and Search Alerts that are specific to your business.
Attend one of our Introduction to Northern Light Clinics: September 11 8:30 - 9:30 AM EB564 September 11 9:45 - 10:45 AM EB564 September 11 11:00 - 12:00 PM EB564 Seats fill up fast!
To reserve a seat, please call Stephanie E. Taylor at 5-7928 The Cost is $25.00 Per Person No Shows will be charged $50.00 ?
Please bring your Northern Light login ID and password.
If you don't have one, a guest ID will be provided.
?
To obtain a FREE Northern Light password, email Stephanie E. Taylor with your name, extension, company number, and cost center to stephanie.e.taylor@enron.com.
Northern Light passwords allow you to access and download Special Collection documents.
| Northern Light and World Markets Energy Training |
Rick, I know you are just getting back in - I don't think anything requires your immediate attention - although I could use some help on the important but not burning issues like budgets, personell, trends in the business, what's up with Enron, initiatives that you think we should be undertaking..... Just to give you a sense Profit wise this has not shaped up to be a good quarter - we will be scrambling for some pretty big numbers in order to make the quarter - likely candidates are: a look at the major curves (price and volatility) in UK power deals with the major offtakers of TPL - British Energy, London Electricity.... a couple of portfolio deals in enroncredit a significant alumina/aluminum swap with China National Container - I believe we have boxed the credit risk reasonably well.
what else??
I'll keep you posted.
Continue to see a ramp up in activity and requirements for coal and global products I have talked to the new origination team working for Randy Maffet here and they are looking at some big and complex deals a al GAF Haven't heard anything on project Nero (public EIM deal) since I left you that message.
Lots of activity on the Continent particulary with EdF auctioning capacity New deal in EBS - $4.3MM dollars in capacity payments - bad credit NEOS EWZ joint venture looks likely to be signed.
The inflow of humans is starting - 2 new people monday, 2 more on the 17th, couple more before month end.
Sr. Director for Metals/Global mkts starts 10-15 have verbal offer acceptance from Sr. Director/Credit with focus on UK just recieved - probably a nov start.
We had an all-RAC EEL meeting with Michael Brown which seems well recieved.
Also did an initial cut of a 'risk review' of Enron Credit with Michael that went well.
Plan to do with you next week.
This month's Risk Magazine features 3 RAC employees - Daid Port and Rudi Zipter in an article about risk visualization and Christine Stanchus in an article regarding collateral managment.
let me know if there is anything you need from me or anything I should be thinking about.
Ted ps I'd pay admission to your meetings later this week.
| Quick Update |
Please note the following addition to the domestic credit reserve for September 2001: CP: Reliant Energy Services, Inc. Deal No: 758917.1 EOL No: 1802392 Deal Date: 8/31/2001 Deal Specifics: EPMI to sell 50MW On-Peak Power into ERCOT for Calendar Year 2004.
Term: 1/1/2004 thru 12/31/2004 Volume: 50 MWs On-Peak Price: $32.25 Delivery Point: ERCOT Trader/Mid-Marketer: Doug Gilbert-Smith Credit Reserve Amount: $20,000 (twenty thousand US dollars) RAC: transaction confirmed under Executed EEI dated 9/22/2000.
Please call w/any questions.
Regards,
| Reliant Cal 04 Reserve for EOL |
Enron Energy Services has one single entry point for all customer leads and service issues - The EES Business Center.
Your assistance is requested in routing all retail customer calls to this center.
The Business Center can manage general customer service requests or provide information on EES product offerings.
The number for the EES Business Center is 800-337-7837 (800-EES-SVCS) or internally, calls can be transferred to x59390.
E-Mail address is: EESBusinessCenter@enron.com Thank you for taking the time to route these calls appropriately.
Your assistance is critical to Enron's customer acquisition success and to ensure our customers' satisfaction.
| Routing of Calls to EES Business Center |
Rick: Lynn and I have completed personal demos of PortRAC for the following executives: Mark Frevert Louise Kitchen Mike McConnell Jeff Shankman Ray Bowen Jim Hughes Kevin Garland Jeff Donahue We attempted to schedule but had declines from the following people: Greg Whalley, Jeff McMahon, Jim Fallon, John Lavorato.
Andy Fastow has expressed an interest in seeing the demo and we are getting on his calendar.
Once we get enough EES info to be meaningful we will attempt to schedule Delainey and Dietrich and now that Horton has Global Assets we will try to schedule him.
Olivier and Ted have been helping publicize the sytem in the London office and we have had several requests for access from London.
The response from those execs that have seen the demo is very favorable!
They think that it is a great tool.
All have expressed a concern about who can access the data and we have completed a security enhancement that allows us to "firewall" PortRAC by business unit.
We are working with each business unit to get a list of their approved users.
Please let me know if you have anyone else for which you would like to demo PortRAC.
Rick C.
| PortRAC Update |
Please note the following additions to the domestic credit reserve for September 2001: CP: Williams Energy Marketing & Trading, Inc. Deal No: 766023.1 EOL No: 1827603 Deal Date: 9/7/2001 Deal Specifics: EPMI to sell 50MW Off-Peak Power into CINERGY for Calendar Year 2004.
Term: 1/1/2004 thru 12/31/2004 Volume: 50 MWs Off-Peak Price: $20.75 Delivery Point: CINERGY Trader/Mid-Marketer: Fletch Sturm Credit Reserve Amount: $23,000 (twenty-three thousand US dollars) CP: Williams Energy Marketing & Trading, Inc. Deal No: 766019.1 EOL No: 1827597 Deal Date: 9/7/2001 Deal Specifics: EPMI to sell 50MW Off-Peak Power into CINERGY for Calendar Year 2004.
Term: 1/1/2004 thru 12/31/2004 Volume: 50 MWs Off-Peak Price: $21.00 Delivery Point: CINERGY Trader/Mid-Marketer: Fletch Sturm Credit Reserve Amount: $23,000 (twenty-three thousand US dollars) RAC: transaction confirmed under Executed Master dated 2/1/1997.
Please call w/any questions.
Regards,
| Williams Cal 04 Reserve for EOL |
Sovereign Bond Spreads: =20 Significant New Issuance - CSFB Commentary: ?=09The first week of September was extremely positive for the region with = a significant increase in secondary trading volumes and bond prices.
Relati= ve financial stabilisation in Argentina removed pressure from Latin America= n and other emerging markets, shifting the focus to the impact of local fac= tors on prices in each region.
It was a busy week in the Turkish market, wh= ich started initially on a weaker note because of the disappointing inflati= on data released on Monday, but then recovered to follow other Eastern Euro= pean markets and closed around 1.5 points higher on the week.
The long awai= ted resignation of the Minister of Public Works added to the positive senti= ment in the market.
The Russian market rallied this week, first on the back= of Latam stabilisation and then encouraged by the Moody's rating upgrade (= see below).
Prices peaked on Thursday, immediately after the upgrade, but f= ailed to stay at those levels due to profit taking and a sliding Latam mark= et, closing only one point higher than last Friday.
Central and Eastern Eur= opean investment grade assets remained stable throughout the week, which is= a good sign given the sell-off in US Treasuries.
Other countries in this r= egion gained around ?
point, with Romania being the best performer gaining = ?
point.
?=09On Wednesday, Moody's raised the ratings of outstanding Eurobonds of th= e Russian Federation to B2 from B3 and changed the outlook for all hard cur= rency instruments to "positive" from "stable."
Moody's noted that Russia's = recent economic performance and tax reforms have generated twin surpluses (= current account and budget) and large foreign currency reserves.
In combina= tion with some debt relief, these factors have made the country's capacity = to service its debt much greater.
| Sovereign Bond Spreads, 7 September 2001 |
Please let us know how much time you will require for your respective committee meeting.
We plan to formally notice the meetings by the end of the week.
Thanks
| Committee Meetings - October 8th |
Please see attached Special Telephonic Meeting of the Board of Directors of Mariner Energy, Inc. for September 12, 2001.
Thank you.
Donna M. Cagle Executive Administrator to President & CEO Mariner Energy, Inc. 580 WestLake Park Blvd., Suite 1300 Houston, TX 77079 281/584-5511 (phone) 281/584-5515 (fax) dcagle@mariner-energy.com <<Mtg.
Notice to BOD - Special.doc>>
| Special Telephonic Meeting of the Board of Directors of Mariner Energy, Inc. |
Please plan to attend a Management Committee meeting scheduled for Wednesday, September 12 at 1:00 p.m. in the boardroom.
Please contact Joannie Williamson if you are unable to attend.
The meeting should last one hour and agenda items include Xcelerator and merchant investment portfolio.
Thanks,
| Management Committee Meeting - Wednesday, September 12 at 1:00 p.m. |
Mark your calendar.
The Enron Management Conference will be held Wednesday through Friday, Nov. 14-16, 2001, at the Westin La Cantera Resort in San Antonio, Texas.
This has been an eventful and challenging year for Enron.
As I've said before, we are a company that continues to look to the future, and there are many exciting things on the horizon.
Please join me at this year's conference to plan our strategy and success for the new year and beyond.
Watch for an agenda and registration information in the next few weeks.
I look forward to a good meeting and to seeing you there.
Regards,
| SAVE THE DATE -- Enron Management Conference, November 14-16, 2001 |
Please note the following addition to the domestic credit reserve for September 2001: CP: Constellation Power Source, Inc. Deal No: 764846.1 Deal Date: 9/06/2001 Deal Specifics: EPMI to buy 50MW On-Peak Power at PJM for Calendar Year 2005.
Term: 1/1/2005 thru 12/31/2005 Volume: 50 MWs On-Peak Price: $37.75 Delivery Point: PJM (Western Hub) Trader/Mid-Marketer: Rob Benson Credit Reserve Amount: $10,200 (ten thousand two hundred US dollars) RAC: transaction confirmed under Executed EEI dated 2/20/2001.
Please call w/any questions.
Regards,
| Constellation Power Source - Reserve Deal #764846 |
Please see attached file on the Swordfish Prospect for use in this afternoon's board meeting at 2:00 pm.
Later this morning, I will be forwarding another attachment on the Falcon Prospect.
Thank you.
Donna M. Cagle Executive Administrator to President & CEO Mariner Energy, Inc. 580 WestLake Park Blvd., Suite 1300 Houston, TX 77079 281/584-5511 (phone) 281/584-5515 (fax) dcagle@mariner-energy.com <<Swordfish.ppt>>
| Attachment for the Special Telephonic Meeting of the Board of Directors of Mariner Energy, Inc. |
Please note the following addition to the domestic credit reserve for September 2001: CP: Morgan Stanley Capital Group Inc. Deal No: 768891.1 EOL No: 1838461 Deal Date: 9/10/2001 Deal Specifics: EPMI to sell 50MW On-Peak Power into SOCO for Calendar Year 2004.
Term: 1/1/2004 thru 12/31/2004 Volume: 50 MWs On-Peak Price: $35.15 Delivery Point: SOCO Trader/Mid-Marketer: Kevin Presto Credit Reserve Amount: $20,000 (twenty thousand US dollars) RAC: transaction confirmed under Executed EEI dated 7/1/1997.
Please call w/any questions.
Kortney x30616
| Morgan Stanley Cal 04 Reserve for EOL |
I plan to distribute at the beginning of each month.
Please let me know if you have any changes.
Note: Greg Whalley will be located at EB3324 and Liz Taylor at EB3322 until September 24.
Thanks,
| Management Committee Listing |
To: All Attendees Due to extenuated circumstances, today's meeting 2:00 - 3:00 pm.
(Enterprise Portal/Information Management Project Meeting) will be cancelled.
We will you with an alternate meeting time as soon as possible.
Thank you for your patience.
Best Regards,
| Enterprise Portal/Information Management project Cancellation Meeting |
Hi Rick.
Hope your holding up.
We are going to have all of the "on-going concern" activities here in the old building on the 30-31-32 floors.
We will be splitting the estate infrastructure into two functions: on-going activities (contracts/assets we will continue to serve and perform under) and wind-up/liquidation activities.
Jim Fallon will be managing the latter function and I believe he is staying in the new building for now.
We need to ensure that we have the appropriate folks from RAC engaged in the on-going concern function.
I'd prefer that we continue to have them located near our floors vs. move to another location (as I hear through the grapevine).
Could you suggest the folks that would be available to focus exclusively on on-going concern activities, and do you want them to stay on the 28th floor or move onto 31 with us?
Thanks.
| People |
Below are the names of employees for whom we have not yet received Mid-Year 2001 Performance Evaluations from you.
Please do these ASAP.
Also, remember that all consolidated feedback on employees will be purged from the system effective 9/15/01.
Thanks.
CARSON, RICHARD L GORTE, DAVID HEATHMAN, KAREN K Shirley Cox Assistant to Sheila Walton 51721
| Performance Evaluations |
We are deeply saddened by the tragic events of September 11th.
No doubt each of us has been affected personally in some way by this.
We would like to report that our offices are presently fully operational and you can reach us by phone, fax or e-mail to address any concerns you may have.
Please let us know if there is any way we can be of assistance to you.
Our strongest support and deepest sympathies go out to all our industry colleagues who have endured the horrors of these past days.
| GGFP Operations |
We are going to have to move Kirk to EB2248A because someone from the Executive team will be ,moving into his current spot at EB2253D.
Please let me know ASAP what equipment needs to be included in this churn.
Thank you.
| Churn for Kirk Merrikh |
Rick I spoke with Mr. Causey this morning and moved over here.
We have been working with your IT people on security but this is a new practice for us that we are having great success in the energy companies.
As we have worked with more companies on the finance side of businesses we have had to eliminate the IT terms so it makes a lot more sense to Risk Managers now.
e-Risk Management starts with a way to manage the risks of e-commerce such that these risks are understood from the technologists to the board room and you can manage it.
Since this is such a new and radically different concept I have found our literature confuses more often than it helps.
It has some basic tenants that are straight forward that can be presented and understood but are not easy to write down.
It is not a product.
First, we are going to define risk as the potential reduction in assets from the threats of e-commerce.
Now, you have more intangible assets than tangible assets so that we have mastered.
So this discussion is on the asset management side and is a key concept to understand.
Everything else is based on that.
Often we get in an income vs. balance sheet discussion.
In your case you have $11B in book value and $27B in market value so you have $16B in intangible assets.
There are two things to do with these assets 1) protect them as you become e-commerce enabled and 2) figure out how to leverage and grow them with e-business.
So this is where we start.
On the protection side e-commerce threats will come two ways.
Your largest threats are going to be on transactions, like trading, asset acquisition or payments.
Other threats will come from vulnerabilities in your network.
So this is both in trading, business strategy and Information technology.
That is the e-Risk management side.
On the growth side once we and you allocate these $16B of intangible assets to categories, strategies can be built to grow selected areas.
Of course, fixed IT assets have a high need to be leveraged also.
Approximately 25% of your IT budget is managing boxes ( fixed assets) that has no competitive value.
That is what we are doing at Chevron.
For protection you can throw an infinite amount of technology dollars at the e-commerce security requirement and not eliminate the risk (if you pin your technology people to the wall they will finally admit this).
However, once you have e-Risk Management you can manage the costs of technology and risk to what we call "The Most Favored Case" investment.
Companies have found this e-Risk concept should be completed before a security policy is developed because until you do understand the asset risk you don't know what to write a security policy to do.
Let me know if you need more.
Many energy companies, especially the utilities, have added e-Risk to Risk Management.
Many recognize e-Risk as the biggest going forward.
This is aimed at getting that elevated Risk Management concept under way.
Normally we would like to come in for an introduction meeting ( 1 1/2 hours) to get the basic concepts covered and then talk about what our e-Risk Practice does.
We are at Keller Springs and the Tollway in North Dallas if you wanted to come here.
Thanks.
| e-Risk Management |
As we discussed yesterday, in our review of our DASH recommendation vs. actual performance we found 36 DASHes that have been approved since late 1999 that carry the recommendation "Proceed - See Other RAC Comments".
Typically the RAC Comments describe substantial issues that must be resolved if the transaction is to be successful.
Given RAC's increased visability and accountability for portfolio performance, perhaps a more forceful description than "See Other RAC Comments" would be desirable which could be something like: "Issues - Sr. Management Approval Required" Therefore, the four DASH categories would be as follows:
| DASH Classification - "Proceed - See Other RAC Comments" |
As per our discussion, the first step was to identify the participants in the retention program.
The next step is to build the business case for why these employees are critical and irreplaceable to your business unit.
Please provided a brief rational for why these employees were selected.
Additionally, if there is a unique situation or circumstance that makes your area more vulnerable, please included in an overall business summary.
For example: if your unit has a limited number of people supporting a critical area necessary to maintaining or increasing the value of the estate or the liquidation of assets, include this in your business summary.
Demonstrate why it would be difficult to train someone else to perform a similar function.
You should also comment on why the employee was recommended for the Milestone Program.
As you know this information is time sensitive, so please try and get it to me as soon as possible.
I appreciate you taking time out of your busy schedule to meet with me on such short notice.
Please call me (5x3662) if you have any questions.
Regards,
| Business Rationale for Retention |
Please note the following addition to the domestic credit reserve for September 2001: CP: Williams Energy Marketing & Trading Deal No: 773737.1 EOL No: 1852957 Deal Date: 9/13/2001 Deal Specifics: EPMI to buy 50MW On-Peak Power from Cinergy for Calendar Year 2004.
Term: 1/1/2004 thru 12/31/2004 Volume: 50 MWs On-Peak Price: $36.00 Delivery Point: Cinergy Trader/Mid-Marketer: Fletch Sturm Credit Reserve Amount: $20,000 (twenty thousand US dollars) RAC: transaction confirmed under Executed EEI dated 2/1/1997.
Please call w/any questions.
Kortney x30616
| Williams Cal 04 Reserve for EOL |
Dave: I read Gordon Bethune's comments is the Chronicle this morning and if he concerned about Continental's solvency, the other carriers must be even more at risk.
As Bill and I are traveling, could you help in asking for a recap of our Airline positions?
We probably should identify the universe of names.
Given the high operating leverage in this industry, coupled with lease leverage, it does not take much to go negative.
For United and American I would imagine access to CP and revolvers would be potentially problematic.
I will be Bill at about 6:45 before we leave, if this is already in process, I'll leave a voice mail.
Regards,
| Airline exposure |
Reviewed all airlines in CAS; the following are our exposures as of COB 9/14/01: Continental Airlines: EES - $33,598 consisting mainly of one very small gas sale (40,510 mmbtu) extending through 8/02 and the related monthly receivable AirTran: ENA - ($7,346,638) consisting mainly of HO and WTI financial swaps extending through 2004 - fairly significant volumes British Airways: ENA and ECTRIC - ($7,882,260) consisiting of mainly WTI finanacial collars extending through 2003 Air Canada: ENA - ($2,703,433) consisting of mainly WTI financial swaps extending through Q1 2002 Jet Blue Airways: ENA ($40,682) consisting of financial WTI swaps extending through this year I have created a tracking group in CAS so that we can run reports easily to quantify our exposure daily, if needed.
Additionally, all airlines have been added to the Credit Watch List as of this morning.
Please advise if you have further questions.
Tanya
| Airline Exposure |
Ray, We are working on revising the DASH template in order that it can be readily used for asset divestitures, contract terminations, and amendments to transactions.
The new DASH, the template of which should be completed early next week, would be prepared earlier in the process that was typically the case in the past, would contain a RAC recommendation, and would then be used as the approval document for the appropriate committee (Transaction Review or Bankruptcy Management) to recommend or approve a transaction.
This is consistent with past practice (although presumably only business unit, RAC, and legal sign-offs would occur prior to committee review) and with your memo of earlier today.
Your thoughts as to how the approval process should occur after a DASH is prepared would be appreciated.
Regards,
| Revised DASH |
Please note the following additions to the domestic credit reserve for September 2001: CP: Williams Energy Marketing & Trading Deal No: 775595.1 EOL No: 1859565 Deal Date: 9/14/2001 Deal Specifics: EPMI to buy 50MW Off-Peak Power from Cinergy for Calendar Year 2004.
Term: 1/1/2004 thru 12/31/2004 Volume: 50 MWs Off-Peak Price: $22.25 Delivery Point: Cinergy Trader/Mid-Marketer: Fletch Sturm Credit Reserve Amount: $23,000 (twenty-three thousand US dollars) CP: Williams Energy Marketing & Trading Deal No: 775263.1 EOL No: 1858493 Deal Date: 9/14/2001 Deal Specifics: EPMI to buy 50MW Off-Peak Power from Entergy for Calendar Year 2004.
Term: 1/1/2004 thru 12/31/2004 Volume: 50 MWs Off-Peak Price: $21.00 Delivery Point: Entergy Trader/Mid-Marketer: Mike Carson Credit Reserve Amount: $23,000 (twenty-three thousand US dollars) CP: Williams Energy Marketing & Trading Deal No: 775260.1 EOL No: 1858473 Deal Date: 9/14/2001 Deal Specifics: EPMI to buy 50MW Off-Peak Power from Entergy for Calendar Year 2004.
Term: 1/1/2004 thru 12/31/2004 Volume: 50 MWs Off-Peak Price: $21.00 Delivery Point: Entergy Trader/Mid-Marketer: Mike Carson Credit Reserve Amount: $23,000 (twenty-three thousand US dollars) RAC: transaction confirmed under Executed EEI dated 2/1/1997.
Please call w/any questions.
Kortney x30616
| Williams Cal 04 Reserve for EOL |
The $95MM profit in Power-Canada on Friday turned out to be release of reserves as well, so total reserve release was $803 MM (vs. the $700 we knew of in Frevert meeting).
$500 Gas $208 EES $ 95 Canada Power 5-day P/L $563, so $240 5-day 5-day loss w/o reserve release.
QTD P/L $775, so $28 QTD profit w/o reserve release.
The $500 Gas & $95 Power reserve releases leaves ~$750 MM in North America's Schedule C & D, although most of that is specific deal reserves.
Cassandra.
| Reserve Release & DPR |
Due to the release of schedule C for ENA and EES, the attached spreadsheet provides the trading p&l without prudency and the associated Daily Loss Limit notifications.
Additionally, the spreadsheet reflects the net effect on the Total Trading line.
If the Corp. Var remains at $100mm, then a Daily Loss Limit notification would be sent out.
However, the current opinion is that the Corp. Var is $150mm, including discretionary Var, which eliminates the notification.
Please let me know if you have any quetions.
Thanks,
| Daily Losses for ENA and EES |
Attached for your information is the latest version of the Watch Report that RAC maintains for EWS.
The format has been revised to a more streamlined two page report.
If you have questions or comments, please call me at ext.
3-3905.
Regards, Rick C.
| Enron Wholesale Services - Investment Watch Report |
Rick/Mark: As discussed with you yesterday, the Enron Credit book has exposure to industries which have been negatively impacted by the events of last week.
Credit spreads have widened out in most sectors that demonstrate liquidity and remain unchanged in markets that have yet to find liquidity.
The Enron Credit book is net long protection/short risk which should be beneficial to P/L in the short-term, but there is significant default risk remaining in the book.
The exposures quoted below are gross notional exposures.
There will likely be significant recovery in the event of a default.
The primary risk is in the following sectors: Airlines AMR Corp/Del - Short $10MM protection Boeing Co. - Long $20MM protection British Airways Plc - Short $3MM protection Delta Airlines - Short $30MM protection Deutsche Lufthansa AG - Long $17MM protection Quantas Airways Ltd - Short $10MM protection Southwest Airlines - Net flat The positions that we are concerned about are Delta and AMR.
Continental has announced that it may miss an interest payment early next week.
Insurance/Reinsurance Axa - Short $10MM protection; short $5mm bonds; net short $5mm protection Conseco Inc. - Short $5MM protection; short $4mm bonds; net short $1mm protection Additionally, we have mark-to-market counterparty credit exposure of $5.7mm to CNA, $5.8mm to Ace, 10.7mm to FSL,$3.6mm to MBIA, $10 mm to Mitsui.
Reserves have been taken for all counterparty exposure.
The biggest concern here is CNA.
Lodging/Leisure Carnival Corp. - short $20MM protection Hilton Hotels Corp. - Short $25MM protection Many of the short positions are in the insurance portfolios where we have purchased 2nd loss protection and retain the 1st loss.
Please let me know if you need additional information.
Ted
| Credit Exposure-Enron Credit |
Jim Reilly said he had spoken to you recently after he saw me holding a sign under an I10 overpass.
Would love to get together with you to catch up and figure out what's going on at Enron and elsewhere.
I have attached my resume'.
We've all come along way since the BT days.
I'll call you in the near future to see when we can get together.
<<Resume081401.doc>>
| Brotherhood of Banker Trust is Alive |
Attached in Wordperfect format and pasted below is a letter authorizing the transfer of the files for your case from our old firm to our new firm.
We would appreciate it if you would print the letter (or the text below), sign and print your name, and fax it to me at (713) 654-7690.
If you have any questions, please do not hesitate to give me a call.
Thanks,
| File Transfer Authorization |
Challenge Appetite for credit capacity is much greater than what is justifiable given credit quality of industry and liquidity of transactions.
General Themes Dearth of liquidity in market (bearing in mind that EIM's purpose is to stimulate liquidity) Poor credit quality Highly structured nature of steel transactions (inventory management, illiquid options, etc.)
M-T-M Accounting and incentives related to achieving earnings targets Size, tenor and rating drive credit exposure; size and tenor drive transaction value -- therefore ratings drive credit limits.
| Revised EIM Meeting Notes (inclusive of notes from 9/17 & 9/18 meetings) |
Rick/Bill The steel team (Bruce Garner et al) here is considering a credit insurance product to support their sales into uk market.
Paul Maley, who is from the insurance world, has been part of the discussions and believes that there is a viable product for a portion of the business.
Not a fix for long-dated mark-to-market exposure out of Russia, but probably could release some credit capacity for sales to weak industry names on a delivered/unpaid basis into first world legal environments.
A bit pricey but may be less expensive on a per $ basis if lots of transactions.
He has been in touch with David Marshall in Global Risk Managment (Houston Insurance guy).
I suggested that Paul and I get together with you guys to go through in some detail.
This is encouraging that people are working on such things, but it would be great if we set the pace and organized the process.
Speak to you tomorrow or Thurs.
Ted
| Transactional Finance |
Carter Perrin is back from Italy & will be sailing in the V-15 races on Friday night.
He has promised 10,000 Lira to any HYC'ers who can beat him on the racecourse.
There also will be a DJ, Cash Bar & Buffet afterwards so bring down your friends.
We are trying to beat the record of 22 boats set earlier this summer.
We will be going to Taco Milagro (Westheimer & Kirby) on Thursday night from 7-9 PM.
We are attending the USA vs. South Africa Rugby game at Robinson Stadium (UH) on Dec. 1 @ 2 PM.
HYC Tailgate party & BBQ before the game.
Purchase your tickets online at: www.usa-eagles.org/tickets/index.html DAMIEN GODDARD
| HYC stuff |
Project OZ The deal team is proceeding post-haste to draft a definitive term sheet.
Bjorn - you're correct - term is now 8 years likely to be 10 $40 million working capital facility - advance rate will exceed market - i.e.
a portion of this is really equity crack spreads - will be widened (still fine tuning) Minimum investment case - Morgan Stanley bridge, refinery cash flow to supply capex for Tier 2 upgrades, current volumes After closing, to continue investigating expansion (max capex case) with [option] to hedge larger volumes ( ?- what if we don't agree with expansion plans) RAC draft DASH with deal team's comments expected back this afternoon - will circulate promised model by EOD tomorrow anticipate that deal team will try to get approval delegation at the next BOD meeting (about ten days to get thru RAC process)
| Update from the Wizard |
Everyone, As we stated earlier, this particular virus that is on the internet is causing a lot of issues for Corporations.
As a result, the companies who write anti-virus software are continuously updating their software.
As of this morning, another update has been made available to us.
This update does a better job of protecting your PC than the update we received last night.
At this time, it is extremely important that you again go through one of the procedures listed below to get the latest update.
1.
Logout of the network and log back in or 2.
Click on START>PROGRAMS>ACCESSORIES>Norton AntiVirus Corporate Edition and then click the Live Update button.
This will pop up a screen where you will have to click the "Next" button and then a "Finish" button.
- If you are an EES user, this option is not available to you.
Please use option 1.
The proper version of the update pattern you need is: (9/18/2001, version 30918BL) - You may need to restart the Norton Anti-Virus client if you want to visually insure that you have the latest update.
If you have questions or concerns, please direct them to your Resolution Center.
Enron Global Technology
| Update to Virus Protection Software #2 |
Attached you will find the 2002 Group Plan Meeting Schedule.
Please mark your calendars.
If you have any questions, please contact me at X58113.
Thanks.
| 2002 Group Plan Meeting Schedule |
Rick, A slight clarification on the RoCaR as it pertains to Market/Credit side: The analysis is performed only on DASHed deals, so nearly all of deals going through Market/Credit would end up in Underwriting too, for which Mark Walker is the RoCaR contact.
This analysis is currently not done on traded deals which are not DASHed.
Naveen
| Clarification |
Below please find a summary of recommendations from a meeting held Tuesday 9/17 between Chip Schneider, Joe Deffner and Wes Colwell.
It is contemplated that these or similar recommendations will be implemented to control capital and other expenditures related to transaction development within the Americas: Regional Managers within the Americas (East, West, Canada, Mexico, South America) shall be generally accountable for capital expenditures and other expenses associated with transaction development in their respective regions.
The Regional Manager shall designate one Transaction Leader (Director level or higher) for each individual transaction under consideration and shall be accountable to the Regional Manager.
The Transaction Leader or Regional Manager shall be the only parties authorized to obligate Enron or its affiliates under any contract or to transfer money.
Legal shall provide copies of all draft documents to Accounting, Global Finance and Underwriting.
The Deal Leader shall be responsible for drafting initial DASH, seeking buy-in from management and establishing a time-table for expenditure approval.
The initial draft of the DASH and economic model shall be provided to Underwriting at least ten business days prior to any movement of money (more time may be necessary if financing or ENE BoD approval is required).
Legal shall provide a final Legal Risk Memorandum to Underwriting prior to circulation of DASH.
Global Finance shall provide a final FASH to Underwriting prior to circulation of DASH.
Underwriting shall be responsible for DASH circulation.
Underwriting shall promptly provide Accounting with fully executed DASH to set approved budget limits.
Accounting shall keep records of all expenditures, maintain responsibility for approved budget compliance and sign-off on all contracts and money transfers prior to execution.
Let me know what further thoughts you have.
Regards,
| Recommendations from 9/18 Meeting on Transaction Expense Controls / Delegations of Authority |
Below please find a summary of recommendations from a meeting held Tuesday between Chip Schneider, Joe Deffner and Wes Colwell.
It is contemplated that these or similar recommendations will be implemented to control capital and other expenditures related to transaction development within the Americas: Regional Managers within the Americas (East, West, Canada, Mexico, South America) shall be generally accountable for capital expenditures and other expenses associated with transaction development in their respective regions.
The Regional Manager shall designate one Transaction Leader (Director level or higher) for each individual transaction under consideration and shall be accountable to the Regional Manager.
The Transaction Leader or Regional Manager shall be the only parties authorized to obligate Enron or its affiliates under any contract or to transfer money.
Legal shall provide copies of all draft documents to Accounting, Global Finance and Underwriting.
The Deal Leader shall be responsible for drafting initial DASH, seeking buy-in from management and establishing a time-table for expenditure approval.
The initial draft of the DASH and economic model shall be provided to Underwriting at least ten business days prior to any movement of money (more time may be necessary if financing or ENE BoD approval is required).
Legal shall provide a final Legal Risk Memorandum to Underwriting prior to circulation of DASH.
Global Finance shall provide a final FASH to Underwriting prior to circulation of DASH.
Underwriting shall be responsible for DASH circulation.
Underwriting shall promptly provide Accounting with fully executed DASH to set approved budget limits.
Accounting shall keep records of all expenditures, maintain responsibility for approved budget compliance and sign-off on all contracts and money transfers prior to execution.
Let me know what further thoughts you have.
Regards,
| Update: Recommendations from 9/18 Meeting on Transaction Expense Controls / Delegations of Authority |
Hello Rick, I work with Sheila Walton and she asked me to prepare this information for your performance reviews.
I have attached the information below.
Please let me know if you have additional questions.
Thank you,
| Requested Information |
Please find attached latest update on the Enron Europe risk feed status report.
The report consists of commentary from London Risk Management, RAC & IT Development to reflect the consolidated undertaking currently in progress.
Regards
| Enron Europe Risk feed Status Rpt as at 14 Sept 01 |
Please add the following credit reserve for September.
Counterparty: PG&E Energy Trading-Power, L.P.
Trader: Rob Benson Deal #: 781643.1 Deal Date: 09/19/2001 Deal Description: EPMI selling 50 MW on peak power into PJM (Western Hub) Cal 05 Notional Volume: 204,000 MW Term: 1/01/2005 through 12/31/2005 Delivery Point: PJM (Western Hub) **Reserve Amount** $20,000 (Twenty Thousand US Dollars) Transaction confirmed under EEI executed 03/01/2001.
Thanks,
| Credit Reserve - Deal #781643.1 |
Please add the following credit reserve for September.
Counterparty: El Paso Merchant Energy, L.P.
Trader: Rob Benson Deal #: 783742.1 Deal Date: 09/20/2001 Deal Description: EPMI selling 50 MW on peak power into PJM (Western Hub) Cal 08 though Cal 10 Notional Volume: 614,400 MW Price: $39.75/MW Term: 1/01/2008 through 12/31/2010 Delivery Point: PJM (Western Hub) Reserve per Notional Megawatt: $0.15/MW **Total Reserve Amount** $92,000 (ninety-two thousand US dollars) Transaction confirmed under EEI executed 03/01/2001.
Thanks,
| El Paso Reserve Deal #783742 |
Attached are the updated New Power numbers for COB 9/24/01.
A margin call in the amount of $18MM was made today.
It is still pending confirmation of payment.
Please let me know if you need any additional data.
Thank you
| New Power |
Since my daughter is going over to London it prompted me to see if that would be a good time for me to come as well.
Then week of March 5.
I could stay a day or two if needed.
Any thoughts?
Rick
| RBB Visit to London |
A "Doorstep" inspection of this business was performed in accordance with our procedures and apparently this business is a disaster!!!
We need immediate action on this up to and including shutting it down.
This was the worst we have seen at Enron and I don't even want to put in this email what I heard was going on there.
We need a coordinated solution here asap to avoid a real disaster, if there isn't one already.
I'll speak with Rick Causey here about what immediate action we should take but the more you guys can dig into this the better.
More to come.
Rick
| General Alarm---Enron Metals Recycling |
The above transaction was presented to the Board on 1-29-2001.
There was considerable discussion which I have summarized below.
Returns: were the returns sufficient to syndicate the risk.
I answered positively, which is what the capital price addresses.
The dash return is a blended debt and equity return.(?)
Was the $19 million excess proceeds enough to allow the company to operate.
I answered yes since 85% of reserves are producing and little capital will be needed to develop pdnp and pud reserves.
Is management capable of operating or will they be in chapter 11 again soon.
I answered that the bankruptcy was a result of overpaying for Wyoming deal and low commodity prices last two years which resulted in a bb decrease below outstanding.
We will have to watch this issue carefully.
Are banks reluctant to support KCS and could this cause a liquidity problem?
Answered that all creditors were made whole and likely that someone will come into credit but it was a risk, although for the time being they had enough cash to operate.
This feedback is just for fyi but it does indicate that board is active and not a rubber stamp.
Rick
| Board Review of KCS |
My daughter has reservations at Kingsway House, 71 Eardley Court.
Can you see if anyone knows if this place is a disaster?
She is going with a girlfriend that doesn't have hardly any money so they had to find a place that was cheap which worries me no end.
Tx Rick
| Julie's Trip |
I go away for a day and come back to yet another $40 million of PGE exposure.
I guess the lesson is to not go away.
Where does this end?
This is a painful way to learn about derivative credit exposure.
Please inform all "deal doers" at EES that they better have RAC review their deals (Mercury) in detail before they sign.
This is more out of control than anything else we have at Enron.
Rick
| Another $40 Million? |
You all should have received instruction from Sheila W. on the system for salaries.
I need that info late today so I can look at over the weekend.
Numbers are due Monday am.
Rick
| Saleries |
Are these numbers consistent with your expectations.
We will submit to HR if no onjections.
Traditionally Sutton has looked at the range and made the decision where to be inside the range.
I don't know if Skilling will do the same.
I have a voice mail into him to see.
Rick
| EcoElectrica/Corinto Valuations for Compensation Purposes |
Are your plans to stay on 28?
We are doing some planning on office space.
I have some people in 3 Allen that I would like to move over here but it is not a big issue.
I had heard that you were moving.
Tx Rick
| Space on 28 |
I will be working on all RAC bonuses on Wednesday and ask that each of you review your department's bonuses on Thursday so that all of RAC can be submitted on Friday.
Thanks.
Rick
| RAC Bonuses |
Activity levels in Credit Risk Management (CRM) have never been higher due to very volatile commodity markets, growth in EES and many other factors.
In order to address these market changes, effective now, Ken Curry will transfer from Rick Carson's Due Diligence group to CRM and report to Bill Bradford.
Ken has a strong background in credit related issues and should be able to immediately add value to the CRM group.
It is fortunate that adequate depth exists within RAC to be able to realign personnel as market needs suggest.
Please join me in congratulating Ken on his move and in wishing him success in this new assignment.
Rick Buy
| Ken Curry |
Karen- Wanted to say thanks for the gifts you gave me the other day for xmas.
I know I often appear ungrateful but that's what happens when you have 2 thousand things on your mind.
The pen and leather "thing" for notes are great- I'll use both in my annual attempt to get organised.
Rick
| Thank You Note |
Spoke w/ Skilling re OI "binary" decision.
He is willing to enter into the deal.
His rational is that he thinks we will be ok on OWC in the final analysis.
He did say to reserve for the deal adequately and structure it as appropriate for the circumstances.
He also wanted to know if there is anything different here than on OWC.
I told him that it wasn't significantly different (both strong underlying businesses with huge event risk attached) Lets get dash completed and then I will voice mail Jeff w/ specifics and get his verbal signature.
Rick
| OI |
Louise Kitchen, who is now the President & CEO of Enron Net Works and I had a conversation about the space located at EB2801.
Louise had no objection to RAC occupying this space since her buildout could not occur until May.
The space rental should be allocated to 011/100068 and 011/100052 equally.
Rick
| Info Central Space |
Spoke with John Sherriff this am re prc for London RAC people.
John said they included our people for cross calibration purposes but we could rank our people where we saw fit.
So I don't think there is any issue here.
The Houston PRC rankings should stand unless there was new information brought to light to you Steve that calls into question a person's ranking.
Sheila- please double check with the London HR people that this is straightened out.
Thanks, Rick
| London PRC |
The continued growth of the Enron Europe office and related businesses has prompted a change in the management of Risk Assessment and Control (RAC) in London.
Effective in early January, 2001, Ted Murphy will transfer to the London office and mange the RAC activities which include credit and market risk and underwriting.
Ted will continue to manage the Enron Global Market Risk activities.
Steve Young, currently managing RAC in London, will begin a new assignment within EBS, also in London.
The Houston Market Risk group will be managed by David Port As Enron continues to expand its trading and risk management businesses, it is vital that trading and credit policies are administered in a consistent and accurate manner across the company.
Hopefully this realignment will accomplish that goal.
Please join me in congratulating Ted, David and Steve on their new assignments.
| Draft |
I have two nominations for MD and one for VP.
VP David Port MD Ted Murphy Dave Gorte All of the above would be in the Specialized Technical category.
Call me if a problem, Rick Buy
| RAC MD and VP Nominations --CONFIDENTIAL |
Deal needs to go to Skilling (or OOC) because capital price exceeds return.
Otherwise Frevert could sign.
I am authorised to sign for Jeff up to $25 MM after I leave him a voice mail.
After I review deal I will voice mail Jeff and that should work.
Rick
| Starburst Deal |
Per your voice mail I would like to defer 100% of my ECT Phantom Stock into the Stable Asset fund.
I only want to defer that which I have to defer due to my Section 16b status.
Thanks, Rick Buy
| Deferral |
Mark- here is my response to your request.
Call with questions.
Goal: Total Foreign Exchange Exposure quantified and communicated to BOD.
Performance: Project completed with final tranche of results reported to Finance Committee Dec 11.
The notional exposure as well as impact on potential impact on earnings and CTA accounts have been quantified and reported to the BOD over the past year according to a schedule that has strictly adhered to.
Also, a template and process has been established to be able to easily report changes in the future.
Enron has never had a comprehensive review of FX exposure prior to this activity.
As an aside, there has been a fair amount of hedging activity resulting from this effort.
Goal: Establish risk and trading control processes for risks unique to EES.
Performance: Systems have been established and monitoring controls are in place across EES.
A thorough study of the DSM business has been completed and the results presented to the Finance Committee.
A RAC task force has been put in place which has established a work plan consisting of 53 elements that EES has agreed to put in place to get the overall back office and trading and credit control systems where they need to be.
Significant progress has been made against these recommendations.
DSM projects have been spot tested with outside measurement firm and the results reported to EES.
These tests have highlighted focus areas to determine where the capital dollars are best employed.
Goal: Solidify the global risk management policy beyond Houston and London.
Performance: Complete and Ongoing.
During 2000, Project Doorstep was initiated by RAC which inspected every office within Enron to determine if trading was taking place and if so whether the Enron controls were being adhered to.
A data base system was developed to routinely prompt surprise inspections of these offices and also monitor if the recommendations are being adhered to.
Doorstep was a huge effort involving RAC, AA, and operations to really understand where we have risks.
It also helps in defining where we don't have responsibility such as EOTT, Azurix and The New Power Company.
| 2000 Strategic Goals- RAC |
did i send this to already?
fyi.
this was very contentious at India mtg w/ Lay & Skilling.
We need to understand what our exposure is.
You need to become our India expert.
Tx Rick
| Dabhol Phase II l/cs |
Missed your call today and I will be in RAC PRC all day tomorrow.
Basically Jeff said we must get this exposure down but gave no parameters to the statement.
He did ask if any recent issue is causing us concern to which we said no, and I also said we know more about this company than any other exposure we have (which we should).
I also spoke with M. Kopper today and he thinks the proposed deal w/ TXU to pay slightly more for a plant with the proviso that we get a cleaner contract is a good idea, rather than paying a lot of money to an investment bank.
Moral of story in my opinion is to try and improve deal structure with TXU through the plant purchase or other structured deal.
Do no more (large) deals with TXU that significantly increase credit exposure ($10mm??)
unless we buy a derivative that reduces exposure simultaneously.
Continue to stay on top of TXU with frequent meetings with their management to maintain a close relationship with good communication.
Lets try and discuss Wed if possible.
| TXU Credit Exposure |
Totally supportive of candidate.
I hope we can get her.
Only issue was reluctance to move to Houston or London.
That will hurt us eventually.
Rick
| Candidate |
I was really hoping we could do this on a best efforts basis with all of us covering any issues arising during the month of December.
Since there seems to be insistence on a date certain there is no choice but to have Steve start in EBS on 1-1-2001.
Ted can't physically be there until then.
It will be difficult to have full RAC responsibility without physically being there.
Rick
| Transition |
Please do not extend offers of employment to anyone without checking with me first.
This does not mean a freeze but rather I want to be sure there isn't a person in RAC that may be better suited, or could be with a little training, for a particular position.
Thanks, Rick
| Hiring People |
Thanks for the information on the GB 58.
This boat far exceeds what I want.
After the show I concluded that either a 42 or 46 foot classic is most appropriate for my needs.
Would like to also consider the 36 foot model.
Thanks for the info though and keep me in mind.
I enjoyed talking to you at
| GB 58 |
Karen- please circulate to all RAC worldwide.
Tx Rick It is with great sorrow that I must announce the passing of Andy Knight, manager in the Market Risk Group.
Andy succumbed to cancer on Feb. 22, 2001 and will have funeral services in Florida.
There may be a memorial service here in Houston arranged through his church but details have not been announced.
Please contact Veronica Valdez for details.
Andy was with RAC and Enron only briefly before being diagnosed, but made a real impact especially on those that worked closely with him.
Andy had a warm and personable style, which along with his technical capability, made him a real asset to the group.
He will be missed.
| Andy Knight |
Was speaking w/ Lavo today on a different matter and he mentioned you were a great help to him in managing his world and was quite complementary overall.
I can count on one hand how often this happens in RAC so keep it up.
Great job.
Thanks, Rick
| Conversation w/ Lavo |