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I have a meeting in the morning on this deal to get a price for the 10,000/d. I am hoping that as part of this overall deal I can get a pretty good price on that package. As far as your analysis goes, I have not gotten through it completely, but make sure that you do not add fuel and commodity charges to the transport that does not flow. Our current analysis shows that the reallocation on El Paso should take place in the 1st or 2nd quarter. At that time this capacity will have more value out of the Permian than it does today when it does not flow. The .38 rate you are using is the current full toll rate. The demand charge is actually only $.3595 and it drops to $.2991 in January 2004. The commodity charge for San Juan is currently $.026 and drops to $.019 in 2004. Let's go through this and the other components in the morning.
-----Original Message----- From: Brian Stone [mailto:htebs@huber.com] Sent: Thursday, October 04, 2001 12:50 PM To: Whitt, Mark Subject: San Juan Proposal Mark, Help me out here! I took our current marketing arrangements, selling into the spot market, assuming the worst at EPNG-SJ Index - $0.10, and compared it to the pricing under the three tranches. I realize we are mixing IF and GDA, but IF can be swapped for GDA and vice-versa in the swing swap market. My dilemma is that the firm transportation does not appear to be accretive, in fact it results in $0.05 / mmbtu less than current arrangement (accross the total volume). What is really killing it is the NW basis and discount...am I using the right one? (FYI, I used ENA's mid-market basis for the 12-month strip going forward). What am I missing here?
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