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Enron Mail |
Dan:
With some revision I think this would work for gas. What do you think? Teresa Teresa G. Bushman Enron North America Corp. 1400 Smith Street, EB 3835A Houston, TX 77002 (713) 853-7895 fax (713) 646-3393 teresa.g.bushman@enron.com ----- Forwarded by Teresa G Bushman/HOU/ECT on 12/20/2000 01:01 PM ----- rainj@tklaw.com 12/20/2000 08:23 AM To: Alan.Aronowitz@enron.com, Teresa.G.Bushman@enron.com, nora.dobin@enron.com, Tim.Proffitt@enron.com cc: Subject: Master Oil Contract for Brazos VPP Limited Partnership Here is my attempt to blend together the requirements of our new deal, as expressed in the term sheet, with the old Cactus oil sales agreement, the inserts Alan has sent me, and the sections of the Enfolio contract that seemed to me to be applicable to this kind of financial deal. This draft agreement: 1. has a term that lasts as long as the VPPs. 2. contemplates written Confirmations only. 3. provides a price adjustment mechanism for under-deliveries, but does not characterize under or over-deliveries as breaches that justify damages. 4. does not give Brazos, as Seller, any special remedies if ERAC fails to take. 5. provides for netting across all transactions on a single monthly payment date that matches the settlement date under the interest rate swaps. 6. has a very limited ability for the Buyer to terminate upon default (and even this may be too much for the Banks). 7. includes the limitation of damages provisions and arbitration provisions from the Enfolio Gas Contract. 8. references the Conoco General Provisions. 9. in general, recognizes that the party on the other side from ERAC is a partnership controlled by an Enron general partner. If this draft agreement represents a good compromise, I suspose no one will be really happy with it. In any event, this is my attempt to give the Banks what we said in the term sheet that we would provide and also give as much protection as possible to ERAC. One issue is not covered in the attached draft, and that is what the Contract Price and the Index Price will be. In order to fit well with the other components of the deal, the Contract Price needs to be the floating price that is swapped with ENA and the Index Price needs to be the spot market price that is named as the "Index Price" in each Production Payment Conveyance. If the Index Price named in the two existing Conveyances is not satisfactory to ERAC, I suppose that the oil desk and the VPP origination group will need to settle up outside the boundaries of the deal documents to which the Banks are parties, because I believe the Banks will consider it a fatal flaw in the deal if the Adjustment Quantities of Oil provided under the Conveyances cannot be converted into the necessary amounts of sales proceeds under this Master Oil Sales Agreement. Please let me know how you want to proceed from here with this document. We need to get it to the Banks as soon as possible, but we need to know first whether it is correct. Here it is: (See attached file: Oil Master Agreement Ver 4.doc) John W. Rain Thompson & Knight L.L.P. 1700 Pacific Ave. Dallas, Texas 75201 Phone: 214.969.1644 (Dallas) Phone: 713.653.8887 (Houston) Fax: 214.880.3150 This email and any attachments to it may contain legally privileged information or confidential information, which are not intended to be disclosed. If you are not the intended recipient of this email, please do not read or print any attachments or forward or copy this email or any attachments. Instead, please permanently delete this email and any attachments and notify the sender of his mistake. Thank you very much. - Oil Master Agreement Ver 4.doc
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