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Enron Mail |
Here's the deal:
=20 There is some P&L that needs to be taken whether we sell or not: (1) a depr= eciation catchup (impairment) that has not been taken of approx $647,000 (r= emember approx $4 million was taken in the 3rd qtr, but upon calculation, n= ot enough) and (2) a depreciation catchup for the 4th qtr (thru November, a= ssuming a quick sale) based on a units-of production depreciation method (t= o avoid impairment problems going forward) of approx $2.2 million. These t= ogether are approx $2.8 million of loss, but again, I have suggested that t= hese need to be taken whether we sell or not. The sell/hold decision re: t= he Duke deal is a loss of $1.95 million (adjusted NBV after impairments/dep= r catchup of $16 million, less the $14.1 of sales proceeds) in exchange for= the $14.1 million in cash. So, sale is proposed at below book. Jean/Lisa= would think of the Duke deal as Mariner/Burlington cash flows being discou= nted at 12%, plus a premium of $1.3 million. Evidently they have found some= reserves upside, thus the premium above the base cash flow annuity. Any qu= estions, pls call me - x 37665. -----Original Message----- From: Kitchen, Louise=20 Sent: Tuesday, November 20, 2001 4:26 PM To: Mrha, Jean Cc: Sherman, Cris; Miller, Kevin; Druzbik, Lisa; Josey, Scott Subject: RE: Pluto/ MEGS Update Cris =20 What exactly are the economics of this transaction? =20 If this at, below or above book? =20 Thanks =20 Louise -----Original Message----- From: Mrha, Jean=20 Sent: Tuesday, November 20, 2001 4:16 PM To: Kitchen, Louise Cc: Sherman, Cris; Miller, Kevin; Druzbik, Lisa; Josey, Scott Subject: Pluto/ MEGS Update Importance: High Louise, =20 Please see the attached correspondence below between ENA, Duke and Mariner.= Via facsmille, ENA has received a non-binding offer of $14.1 MM with a pr= oposed effective date as of December 1, 2001, but the transaction would mos= t likely close mid-December. A meeting has been set up between ENA and Mar= iner to discuss data needed to address remaining due dilgence items on 11/2= 7/01. A follow-up meeting with Duke is scheduled for 11/28/01. =20 If you have any further questions, please contact me at my father's house (= 1-716-667-0107) or Ms. Lisa Druzbik (713-853-9620). Lisa has been working = with Kevin Miller to divest of the MEGS flowline and will be working tomorr= ow. =20 Regards, Jean -----Original Message-----=20 From: Druzbik, Lisa=20 Sent: Tue 11/20/2001 3:15 PM=20 To: 'sjosey@mariner-energy.com'=20 Cc: Miller, Kevin; Mrha, Jean=20 Subject: FW: MEGS Pipeline Scott,=20 Thanks for the message. Duke's non-binding offer made today is $14.1MM in = cash with a proposed effective date of December 1, 2001 and includes an acc= eptable premium over the minimum cash flow stream (Duke faxed the offer let= ter, therefore, I cannot forward it electronically). =20 Duke e-mailed their outstanding due diligence items (see attached e-mail); = we need Mariner's assistance to answer many of the questions listed and to = provide appropriate documentation. As mentioned earlier, Kevin Miller and = I would like to meet with you and others at Mariner to discuss the due dili= gence list and action plan; we plan to come to your offices on Monday, Nove= mber 26th at 1:30.=20 Let me know if you have any questions or comments.=20 Thanks,=20 Lisa A. Druzbik=20 Manager=20 Upstream Products=20 Enron North America=20 713-853-9620=20 -----Original Message-----=20 From: Stephen P. Noe [ <mailto:spnoe@duke-energy.com<]=20 Sent: Tuesday, November 20, 2001 11:36 AM=20 To: Druzbik, Lisa; Miller, Kevin=20 Subject: MEGS Pipeline=20 As we discussed, the following is a list of diligence items that we would= =20 like to explore further. This list is not all inclusive and we may need to= =20 discuss additional items as we continue with due diligence. Please let me= =20 know when we could meet to discuss them further. Kevin and I had=20 tentatively scheduled a November 28, 2001 meeting to discuss development of= =20 Purchase and Sale Agreements and possibly some of the items listed below:= =20 Assuming that the MEGS system includes the riser and topside equipment= =20 on Marathon's SP89 platform, we will need verify potential liability for= =20 the same and any agreements addressing such access. We would also like= =20 to review the production handling agreement between Burlington/Mariner= =20 and Marathon to verify the impact it may have on the future operation of= =20 the system=20 We will need a definitive representation from Enron as to the status of= =20 the producers committment obligations as of December 1, 2001 as defined= =20 in the gathering agreements, including any credits due from prior years= =20 excess flows. It is our understanding that for the month of December=20 there will be a $93,000 credit to the payment due Gatherer and there are= =20 no credits due in 2002.=20 In the Gathering Agreement "Project Payout" is referenced from the=20 Producer's JOA. Please provide verification that this payout has=20 occured, the ownership percentage is now 51% Mariner and 49% Burlington= =20 and that there is no future change that could affect the MEGS agreements= =20 Need to review sample invoices, sample gas and condensate measurement=20 statements and demonstration of timely payment of such invoices by=20 producers=20 Have there been any leaks incurred and/or reported on the system? Are= =20 there any outstanding environmental issues on this system?=20 It is assumed that Enron/MEGS will be responsible to obtain any=20 assignments/consents that may be required to complete the transaction.= =20 Please verify that this will be done.=20 The agreement stipulates that the insurance required is to include=20 business interruption coverage. Please provide the coverage=20 declarations of the existing policy in effect for the system as a=20 reference for DEFS=20 Please provide a contact person who can discuss the environmental status= =20 of the system with a DEFS EHS representative=20 Who is the MMS right of way owner and who is the MMS operator of record.= =20 Please verify that the appropriate party has provided the MMS with a=20 "Certificate of Financial Responsibility"=20 We may want to schedule a site visit to SP89. Please provide the=20 contacts to make these arrangements=20 We would like to review any additional pipeline engineering data and=20 material specifications available, inspection and hydrostatic test=20 reports, as-built drawings, environental reports/permits, rights of=20 way/permit documents and other related engineering and construction=20 information=20 I will continue to provide you with additional questions that arise.=20 Thanks and please let me know if you have any questions.=20 Steve Noe=20 Phone: (713) 627-6249=20 Fax: (713) 627-6271
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