We were informed as of the Board meeting this week either you or Mark must
sign all DASH's above $5 million. Early next week will be bringing you a DASH
approved by RAC recommending selling our interest in the PEMEX EPC 63/64
projects in the Gulf of Mexico to Horizon Offshore . We believe this an
extremely good deal for Enron. In essence, it returns our equity and working
capital funding for this project plus halts our risk and improves our project
margin by $1.5 to $2 million. By the terms agreed, we will receive $25.6
million in cash and a complete release and indemnity from liability. We have
a performance bond which at minimum will be protected back-to-back by an
identical bond from the same bonding source, but it is likely Horizon can
assume our bond.
This is such a good deal you might wonder why Horizon would do it. Since
January we have been playing hardball with both Horizon and Pemex. Horizon
is public and their stock has been rising as a oil company service provider.
This project is 35% of their volume. We believe they cannot afford a wobble
with Pemex due the potential impact on their share price. We see no upsides
for us on these projects.
Prior to this collection EEOS year-to-date has $102 million of net postive
cash flow versus a 2001 plan of $83 million. We now believe we will finish
the year at $150 million positive. A little bright spot from NEPCO and the
EECC Collection Agency.
If you have questions, I am here and Brian will be in Houston on Monday.