At Least Two Bids Seen For Enron Trading Ops - Lawyer
Dow Jones News Service, 01/07/2002

Enron Trading Ops - 2: Bids Won't Include Cash
Dow Jones Energy Service, 01/07/2002
Enron fighting push to move bankruptcy case here
The Houston Chronicle, 01/07/2002
Enron Plans to Release 4th-Quarter Results, Balance Sheet in March
Dow Jones Business News, 01/07/2002

Enron Shareholders File Class Action Lawsuit Vs Dynegy
Dow Jones Energy Service, 01/07/2002

BN Amro's Gaw Comments on the Impact of the Enron Collapse
Bloomberg, 01/07/2002

Trading Places
Forbes Magazine, 01/21/2002
ONGC spurns BG operatorship offer once again
Business Standard, 01/08/2002

IntercontinentalExchange Trade Volume Grew 1,500% In 2001
Dow Jones Energy Service, 01/07/2002

__________________________________________________________________________

At Least Two Bids Seen For Enron Trading Ops - Lawyer
By Carol S. Remond

01/07/2002
Dow Jones News Service
(Copyright (c) 2002, Dow Jones & Company, Inc.)

Of DOW JONES NEWSWIRES 

NEW YORK -(Dow Jones)- Enron Corp. (ENE) expects at least two bidders to come in Monday with offers to jump-start the energy company's trading operations.
"We expect bids today. Probably two or more," said Martin Bienenstock, a lawyer who represents Enron in its bankruptcy proceedings in New York. 
Bienenstock declined to identify possible bidders. 
But a person familiar with the matter said that Citigroup (C), one of Enron's main creditors, would likely be among those bidding for Enron's trading assets. 
Bids are due by 4 p.m. EST Monday. An auction will be held Thursday.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Enron Trading Ops - 2: Bids Won't Include Cash

01/07/2002
Dow Jones Energy Service
(Copyright (c) 2002, Dow Jones & Company, Inc.)

Under a plan designed to bring back some value to its trading operations - including EnronOnline which, until not so long ago, accounted for 25% of all wholesale energy trading in the U.S. - Enron has been looking for a 51% partner with great credit worthiness to form a joint venture. 
Under the joint venture, dubbed New Energy Trading Operations, or NETCO, Enron and its partner would be sharing revenue.
The deal is crucial to Enron's creditors, including Citigroup and J.P. Morgan Chase & Co. (JPM), because it's seen as key for those lenders and others to recoup some of the money lost in the Enron's meltdown. 
Citigroup was first expected to emerge as a stalking horse that could have flamed interest from other parties. But that didn't happened. Swiss banking giant UBS AG (UBS) and Goldman Sachs Group (GS) and American International Group Inc. (AIG) have also been reported as a potential bidders. 
Enron's lawyer Bienenstock said that he didn't expect the bids to include any financial payments from the outside parties. 
"This is not about money," Bienenstock said. "We're getting creditworthiness and they're getting a gigantic value in assets." 
Enron hopes that an alliance with a big-name bidder like Citigroup, UBS or Goldman would bring back customers who began fleeing Enron's trading floors in November when prospects of a merger between Enron and rival Dynegy Inc. (DYN) started fading. 
Although Enron has said that it was looking for a 51% partner, the final structure of the venture may vary depending on the bidders' needs, Bienenstock said. 
"Each bidder has its own particular needs and own desires," the Enron lawyer said. 
Court documents show that Enron intends to contribute software and hardware to NETCO, not specifying what exact assets are up for grab. 
Bienenstock said he didn't expect a lawsuit brought by software company Solarc Inc. against Enron for copyright infringement to complicate the bidding process. 
"If there was infringement, that could be offset against future distribution" of revenue, he said. 
Each bidder will have to make a $25 million deposit to prove the validity of its offer. But that deposit will be returned if a bid isn't accepted or if no cash contribution is part of the actual offer. 
Meanwhile, this week's bidding process will likely affect how much financing Enron gets at the end of the month. 
The energy company is now expected to receive less than the $1.5 billion in debtor-in-possession financing first agreed to after it filed for bankruptcy on Dec. 2. 
As reported, Enron's better-than-expected cash position, now seen around $400 million to $500 million, and continued reluctance by Wall Street to back a new Enron loan are likely to contribute to a much smaller DIP package. 
"We haven't discussed it yet," Bienenstock said of the new DIP plan. 
Final approval of the interim financing is scheduled for Jan. 30. 
-By Carol S. Remond, Dow Jones Newswires; 201-938-2074; carol.remond@dowjones.com

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	


Enron fighting push to move bankruptcy case here
The Houston Chronicle
Jan. 7, 1:58 PM

NEW YORK - Enron Corp. is fighting a push by creditors to move the former energy trading giant's bankruptcy case from New York to its hometown of Houston.

Many of the creditors are located in the Houston area or others parts of the West. They were to be heard today by a bankruptcy judge in New York, where Enron filed for Chapter 11 protection. 
Judge Arthur J. Gonzalez said today as the hearing began that he doesn't intend to rule today but expects to do so by the end of the week.

Large creditors, such as energy traders Dynegy and El Paso Corp., and smaller ones, like the Southern Ute Indian Tribe of Colorado, believe it would be more convenient and economical to hear the case near the location of many Enron creditors and assets. Dynegy and El Paso are based in Houston.

In a motion filed by Dynegy and other creditors, lawyers also say there is "an emotional interest to be served" by moving the case to Houston, where thousands of Enron employees were laid off and many more witnessed the rapid evaporation of their retirement plans when the company's stock plummeted.

Also today, at least two companies were expected to make bids for a majority stake in Enron's wholesale energy trading unit, a lawyer for the company said.

Enron lawyer Martin Bienenstock, of Weil, Gotshal and Manges LLP in New York, said he expects Enron's core business, which needs a credit-worthy partner to resume operations, to fetch "probably two bids or more" by the 4 p.m. deadline. An auction is scheduled for Thursday. 
With regard to the change-of-venue hearing, analysts say creditors are also hoping for a potentially more favorable hearing in Houston, whose economy has suffered as a result of Enron's demise.

Lawyers for Enron, and a handful of creditors opposed to relocating the proceedings, are expected to argue that it would be less expensive and more accomodating if the case were administered in New York, home to the armies of lawyers and bankers working on both sides. 
Howard B. Comet, an attorney for Weil, Gotshal and Manges, said it would also be easier for business partners and potential witnesses involved in Enron's worldwide operations to participate if the proceedings took place in New York.

"The focus of the financial restructuring is here," Comet said.

Citigroup Inc. of New York, Barclays Bank PLC of London and Dresdner Bank AG of Frankfurt are among the creditors opposed to changing venues.

Under the federal rules of bankruptcy procedure, a case may be transferred from one district court to another "in the interest of justice or for the convenience of the parties." The basic criteria considered by judges ruling on previous change-of-venue motions have been: the proximity of creditors, debtors and witnesses; the location of assets, and the cost.

"Judges have considerable discretion in making the call," said Robert Christmas, a bankruptcy expert with the law firm Nixon Peabody LLP in New York.

Christmas said moving the case to Houston would create "an atmosphere of pressure that does not exist in New York."

"That gives creditors the ability to have unhappy employees tramping around the courthouse," he said.

Christmas said few cases of this size have ever been moved, but that Judge Gonzalez could be swayed by the fact that so many of Enron's energy-trading partners are located in and around Houston.

Cases have been moved in the past if there were a lot of small creditors based in one area. However, new technologies have made it possible for interested parties to participate in the proceedings from thousands of miles away. For example, Houston-based lawyers for Enron creditors gave testimony last week via teleconference.

Enron collapsed late last year when revelations of questionable accounting practices and mounting debt caused investors and traders to lose confidence in the company. Its stock price, trading above $85 a year ago, is now firmly below $1 per share.

Enron's filed for protection from creditors under Chapter 11 of federal bankruptcy law on Dec. 2 in the U.S. Bankruptcy Court for the Southern District of New York. One of the company's smaller subsidiaries, Enron Metals and Commodity Corp., is based there.

Lawyers for the Southern Ute tribe, a natural gas supplier, said the decision to file for bankruptcy in New York "is indicative of Enron's desperation to avoid facing the facts at its home in Houston." 

***

Enron Plans to Release 4th-Quarter Results, Balance Sheet in March

01/07/2002
Dow Jones Business News
(Copyright (c) 2002, Dow Jones & Company, Inc.)

Dow Jones Newswires 
NEW YORK -- Enron Corp. doesn't plan to announce its fourth-quarter results until March and breaking with past practice, will also release its balance sheet at the same time, according to company spokesman Mark Palmer.
In the past, Enron (ENE), once the largest trader of energy in the U.S., issued its financial results shortly after the close of the quarter. However, the company normally doesn't release its balance sheet until weeks later, in its quarterly filing with the Securities and Exchange Commission. 
The idea is to announce the results and file with the SEC at the same time, Mr. Palmer said on Monday. 
Enron, which filed for bankruptcy in early December, was criticized by some investors for not providing enough information in its earnings reports. 
The Houston-based energy trader caught investors off guard when it reported a $618 million loss in the third quarter, and a sharp reduction in shareholder equity related to the unwinding of a financial partnership with its former chief financial officer. In the days that followed, information about the company's financial situation continued to be uncovered. 
Eventually, Enron was forced to restate earnings for several years, reducing its net income during the period by several hundred million dollars. 
-By Christina Cheddar, Dow Jones Newswires; 201-938-5166; christina.cheddar@dowjones.com 
Copyright (c) 2002 Dow Jones & Company, Inc. 
All Rights Reserved.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Enron Shareholders File Class Action Lawsuit Vs Dynegy
By Erwin Seba

01/07/2002
Dow Jones Energy Service
(Copyright (c) 2002, Dow Jones & Company, Inc.)

Of DOW JONES NEWSWIRES 

HOUSTON -(Dow Jones)- Two Enron Corp. (ENE) shareholders filed a class action lawsuit Thursday against Dynegy Inc. (DYN) in Harris County District Court in Houston.
The shareholders allege they were harmed, as potential third-party beneficiaries, when Dynegy canceled a proposed merger with Enron in November of last year. 
"Dynegy breached the covenant of good faith and fair dealing by, among other things, its wrongful termination of the merger agreement, its failure to continue with and diligently pursue the merger, its falsely representing that it was conducting its due diligence when it had no right to terminate the merger agreement based upon due diligence, and by raising issues as to Dynegy's intent to complete the merger with Enron and then backing out of a fully negotiated transaction, causing the ratings agencies to lower Enron credit ratings and a dramatic loss in business," according to the court filing. 
Bringing the suit are Bernard Shapiro, a New York state resident who owned 11,750 Enron common shares as of Nov. 28, and Peter Strub, a New Jersey resident who own 553.216 Enron common shares as of Nov. 28. 
Shapiro and Strub are suing on behalf of all those who owned Enron stock on Nov. 28, 2001. According to the court filing, the class may include "several hundred thousand" members. 
The two men are represented by Thomas E. Bilek, of the Houston law firm of Hoeffner & Bilek L.L.P. 
This is the second Enron shareholder lawsuit filed against Dynegy for canceling the merger. 
-By Erwin Seba, Dow Jones Newswires; 713-547-9214; erwin.seba@dowjones.com

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

BN Amro's Gaw Comments on the Impact of the Enron Collapse
2002-01-07 16:19 (New York)

     New York, Jan. 7 (Bloomberg) -- Peter D. Gaw, vice president
and managing director for energy at ABN Amro Holding NV's North
America unit, comments on the impact of Enron's bankruptcy on the
investment community and energy companies.
     Enron, once the largest energy trader, filed for Chapter 11
bankruptcy protection on Dec. 2, after disclosures about its
finances and bookkeeping shook investor confidence. Enron used
``off-balance sheet'' partnerships to shift debt from its books,
for example.
     Gaw was speaking at a conference sponsored by the New York
Society of Security Analysts and the Electric Power Supply
Association.

     ``December 2 was Pearl Harbor for the industry. But the
industry as a whole did a good job of unwinding its positions.
There were no serious problems.''

     On the reaction of the investment community to Enron's
collapse:
     ``We were asking the tough questions of Enron. We just
weren't demanding the answers. Now we are focusing on quality of
earnings, mark-to-market accounting and cash growth. We are
looking for a simplified financial structure, but that doesn't
mean everything on an off-balance sheet basis is bad. But the
financial community will be much more critical.''

     On the response of energy companies and their plans for new
power plants:
     ``Companies are trying to reduce debt, sell assets and make
their financial statements solid and clear, so I don't think we'll
see a lot of new projects in the first half of this year.''

--Mark Jaffe in New York at (212)-893-4159 or at
mjaffe3@bloomberg.net/taw

Companies People Ideas
Trading Places
Daniel Fisher

01/21/2002
Forbes Magazine
52
Copyright 2002 Forbes Inc.

Duke Energy was once considered the hopelessly asset-encumbered version of Enron. Nowadays that's not such a bad thing. 
A year ago Duke Energy was a wallflower in the frenetic dance of the energy traders. As Enron pursued its now infamous asset-light strategy, casting off power plants and pipelines to focus on wholesale trading, Duke remained wrapped in a protective mantle of $34 billion in hard assets. By September 2000 Enron was trading at 67 times earnings, while Duke's multiple was 20.
Suddenly Duke's assets no longer look like liabilities. Enron is bankrupt, and Dynegy and El Paso are struggling to maintain their bond ratings. But thanks to its more cautious strategy--bolstered by ownership of the Carolinas' largest electric utility and an interstate pipeline system--Duke has a shining A+ rating from Standard & Poor's, just one notch below that of J.P. Morgan Chase. 
That allows Duke to keep expanding as rivals pull back. While Enron was melting down in mid-November, Duke raised $750 million in a stock offering--to help pay for the $8.5 billion acquisition of Westcoast Energy, a Canadian pipeline operator. Westcoast, in turn, will give Charlotte, N.C.-based Duke a powerful trading position in California and the Pacific Northwest as gas takes on increasing importance as a fuel for electricity plants. 
Like most of Duke's assets, the new pipeline will serve primarily as a vehicle for wringing more profits out of Duke's $15-billion-a-year trading operation. A pipeline can provide a 7% return on invested capital, but the real money is in selling hedges and derivatives based on Duke's ability to deliver gas. "You don't make money off an asset simply because you own it," says Richard Priory, Duke's chief executive. "You trade around it." 
Trading has been the fuel for Duke's fifteenfold revenue increase since 1995 to an estimated $70 billion in 2001. But don't expect Duke to fill the void created by Enron's collapse. Where Enron made a market in just about anything, from long-term gas supply contracts to memory chips, Priory demands that Duke's traders stick to the commodities Duke transports through its pipelines or generates in its power plants. That unadventurous strategy keeps a damper on earnings growth--Duke predicts earnings-per-share growth of a modest 10% to 15% over a base of $2.10 in 2000 going forward another two years--but ensures it will be around next Christmas. 
Duke's transformation from a geographically constrained Southern utility to trading giant came about during the first rumblings of deregulation. What's surprising is the resolutely conservative biography of the guy who made it happen. Priory, 55, grew up in a single-parent household in Lakehurst, N.J. His mother couldn't afford to pay college tuition, so he landed an engineering scholarship at West Virginia Institute of Technology, later receiving a master's degree from Princeton University. After a few years teaching engineering at the University of North Carolina at Charlotte, he joined Duke Power in 1976 as a design engineer, rising steadily to president by 1994. 
By the time he took charge, Priory was convinced the traditional utility-business model no longer worked. He'd followed the generic playbook for utilities in the early 1990s, slashing employment and boosting efficiency (Duke Power's payroll fell from a high of 25,000 to 10,000). But there was only so much more cutting he could do. Then he'd be stuck in charge of a regional utility with single-digit earnings growth. A rate increase would take you only a little way out of this mire. He could gussy up the utility for sale, or he could pursue some of the outlandish strategies then coming into style, like buying developing-country power plants or investing in unrelated businesses. 
Instead Priory placed all his bets on a deceptively simple concept--convergence between the markets for gas and electricity. Duke wasn't the best place to be thinking such thoughts: The regulated utility still generates almost all its electricity with coal or nuclear fuel. But Priory knew that natural gas would become the fuel of choice for virtually all new generating plants. If he could combine his utility with a gas company, a new world of trading opportunities would open up. When the price of gas rose, he'd buy electricity and sell gas. If electricity prices rose, he'd buy gas and sell the juice. The key was owning the assets on all sides of the trade so he wasn't just speculating with shareholders' money. 
At the same time Priory was looking for a partner in the gas business, Paul Anderson, chief executive of Panenergy, a big Houston gas pipeline company once known as Panhandle Eastern, was looking for a utility. Anderson wasn't coy about his quest: He put a lightbulb on the cover of the 1995 annual report, not because Panenergy was in the electricity business, but because he wanted it to be. "I talked to the CEO of just about every electric utility in the U.S." recalls Anderson, now chief executive of Melbourne, Australia-based BHP Billiton Group. "When I got to Priory, I basically found out he had the same view of the world as I did." 
What made Priory stand out was his commitment to changing the way Duke did business, from a focus on finessing state regulators and running power plants and transmission lines to capitalizing on larger market forces that influenced the values of those assets. Anderson had already put Panenergy through that transformation by acquiring Associated Natural Gas, a Denver trading company, two years before. With Associated's 1,500 traders as shock troops, Anderson had changed Panenergy from an inward-focused pipeline operator into an accomplished trading house. The market had voted its approval by marking up Panenergy's stock fivefold over five years. Could some of that energizing be transferred to Duke with a merger? 
In August 1996 Priory, Anderson and their lieutenants met at a hotel in Memphis to hash out the details. Talking through the night, they arrived at a plan for Duke to take over Panenergy and bring its strategy of asset-based trading to the North Carolina utility. Anderson would be chief operating officer and other top Panenergy executives would still hold key jobs. 
There was grumbling from the utility side. "Some people were saying, 'Hey, I thought this was a takeover,'" Anderson recalls. But the merger went smoothly. It was understood from the start that Priory would remain in charge; so at the end of 1998 Anderson left to run BHP, then an Australian mining conglomerate. (Not surprisingly, he's since acquired a trading firm.) 
The basic strategy hashed out in that Memphis hotel hasn't changed. Duke views every asset, whether it's a pipeline or a 500-megawatt power plant, as holding both intrinsic and extrinsic value. The intrinsic value is the ability for the asset to make money. In the case of a power plant, that includes the location of the plant and the efficiency with which it transforms gas into electricity. Duke can't do much to change the inherent value of its assets, and it assumes competition will eliminate any edge it has anyway. 
The only way to make money, therefore, is to maximize the extrinsic value by trading around the assets (see chart). When it builds a power plant, for example, it sells some of the expected output in the forward market and buys the gas to fuel that output. As construction proceeds, the difference between the price of gas and the price of electricity widens and narrows, giving Duke the opportunity to sell more of the expected output if the price rises or sell output in future years to lock in profits on electricity it has yet to generate. Duke did this with a pair of "peaker" plants it built in Indiana and Ohio, locking in the first year's expected profits before construction was completed. 
If the traders sense a market is becoming too competitive, they may call for the outright sale of the plant. Duke did that in Hidalgo, Tex., where it sold a majority stake in a 500-megawatt plant for $235 million to Calpine in 2000, three months before it was completed, and mothballed five other projects in the face of rampant overbuilding. 
Duke is keeping the undeveloped sites--long-call options, as it were--on the possibility that electricity will become profitable again in Texas. In the meantime it's building 11 more plants around the country, as part of a diversification strategy designed to weather what could be severe downturns in the electricity market in certain regions such as Texas and the Midwest. 
Prices--whether of generating capacity or of energy--fluctuate. The traders with staying power are in the best position to capitalize on these fluctuations. That's why Goldman Sachs can make more money trading bonds than you can. And that's why Duke can make more money than Calpine.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

ONGC spurns BG operatorship offer once again
Our Corporate Bureau MUMBAI

01/08/2002
Business Standard
4
Copyright (c) Business Standard

The Oil and Gas Corporation (ONGC) has rejected yet another offer of the UK-based oil and gas major BG Group Plc, to become an operator in the three offshore oil and gas fields - Tapti, Mukta and Panna - on the western coast of India. 
Subir Raha, chairman and managing director of ONGC told newspersons here that BG had offered a cash settlement on December 20 asking us to respond by December 21. "We have rejected the offer as it was not sufficiently responsive".
This is a second offer made by the BG group. It withdrew its earlier offer of giving 10 per cent stake in an exploratory gas block in Brazil provided it relinquishes its claim as operator of these three discovered oil and gas fields. 
BG Group entered into an agreement with the beleaguered US energy major Enron Corporation to acquire 30 per cent equity in these three fields for $ 388 million. 
The offer is conditional on being granted operatorship of these fields. 
"BG went and made a deal with Enron. BG came and asked us to give them operatorship saying they could improve the running of the fields. We asked them why do you think we can't do the same?" Raha said. 
Elaborating on the cash settlement, another ONGC official said that BG offered to withdraw a case of arbitration where Enron billed $4.5 million as additional expenses incurred on these fields. BG offered to withdraw the case and offered $11.5 million cash in lieu of the foregoing operatorship ONGC claims on these three fields. ONGC owns 40 per cent and Reliance Industries, the remaining 30 per cent in the Panna, Mukta and Tapti fields.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

IntercontinentalExchange Trade Volume Grew 1,500% In 2001

01/07/2002
Dow Jones Energy Service
(Copyright (c) 2002, Dow Jones & Company, Inc.)

NEW YORK -(Dow Jones)- IntercontinentalExchange, an online energy and metals marketplace, grew its trade volume 15-fold and increased the number of participating firms and users more than 400% in 2001, ICE said Monday. 
ICE volume and new-user interest skyrocketed in the autumn as Enron Corp. (ENE) filed for bankruptcy protection and suspended trade on its EnronOnline Internet-based trading platform.
Capping off the year, ICE set a new daily record Dec. 27 with natural gas trading of 500 billion cubic feet, breaking by 18% the previous daily record set Dec. 4, ICE said. 
More than 400 commodity trading firms execute trades on ICE. The platform matches many buyers and sellers, providing less counterparty credit risk than platforms offering the same counterparty in every deal. 
Intercontinental Exchange, based in Atlanta, launched its metals trading on the Internet in August 2000 and its energy trading in October 2000. 
ICE partners include American Electric Power Co. (AEP); Aquila Energy (ILA); BP Amoco PLC (BP); Deutsche Bank AG (G.DBK); Duke Energy (DUK); El Paso Corp. (EPG); Goldman Sachs Group (GS); Morgan Stanley Dean Witter & Co. (MWD); Reliant Energy (REI); Royal Dutch/Shell Group (RD); Societe Generale SA (F.SGF) unit SG Investment Banking; Mirant Corp. (MIR); TotalFina Elf SA (TOT); and Continental Power Exchange, which provided the trading technology and management team. 

-By Stephen Parker, Dow Jones Newswires; 201-938-4426; stephen.parker@dowjones.com

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	



Sarah Palmer
Internal Communications Manager
Enron Public Relations
(713) 853-9843