Gary,

We are still in the determination phase as far as what we are willing to 
sell.  Obviously, we would like to sell as close to the 10 yr average as 
possible. However, given the recent warmth of the past few winters and the 
forecsts,  this is probably an unrealistic goal.  I will get back to you by 
the end of the week with an acceptable target.

Thanks,

Eric
x30977


   
	
	
	From:  Gary Taylor                           10/16/2000 02:59 PM
	

To: Eric Bass/HOU/ECT@ECT
cc:  
Subject: hobby jan-mar structure

Eric,

I've put a Jan-Mar Hobby $10,000/$2 million swap offer in the market of 635 
HDDs.  635 is the 10 year average.  Given the forecasts for normal to warm in 
the Gulf area this winter - with particular emphasis on warmth in the Jan-Mar 
period - I anticipate that bids will come back, initially, around 560 - and 
that we might be able to sell a swap around 585.  As a frame of reference, 
last year (2000) came in at 412.5 HDDs and 1999 came in at 429.5 HDDs.

What kind of number are you looking for  - do you want to leave an order with 
me where you'd be willing to sell the swap?

If you're interested in buying an option, perhaps you'd like to put a bid out 
on the following structure:

Hobby
Jan-Mar
$15,000/HDD
$2,700,000 Limit
560 strike (1/2 standard deviation from the 10 year average)

I imagine you could get this option for approx. $750,000.  The same option 
with a $2,000,000 limit would go for about $100,000 less.

Let me know your thoughts.

Regards,
Gary
x31511