Our efforts to sell Pluto/MEGS to Duke

 -----Original Message-----
From: 	Miller, Kevin  
Sent:	Friday, October 12, 2001 9:56 AM
To:	Mrha, Jean; Melendrez, Jesus; Druzbik, Lisa; House, John
Subject:	Duke Meeting - Pluto Line
Importance:	High


I met with Stephen Noe over lunch yesterday to discuss the sale of the Pluto Gathering line.  As per our internal meeting on Wednesday, I questioned Stephen about Duke's evaluation based upon the data provided thus far.  Enron has provided Duke with the Gathering Agreement which contains the guaranteed revenue stream.  I informed Stephen that Enron would like to know a notional type value for the Pluto gathering  line.  We both recognized that the value would be highly dependent upon the discount factor being applied to the revenue stream.

Stephen informed me that Duke's evaluation to date showed a value in the $14 to 15 MM range.  Stephen stated that management had not reviewed that evaluation.  However, based upon the notional value Duke has derived,  it appears that Duke is using a discount factor very similar to the factor Enron is using.  I stated that there should be some reserve upside and future option value.

Based upon this discussion with Duke, I would recommend that we proceed with setting up a Mariner meeting to review geophysical data and begin trying to get Marathon approval for release of the Production Handing Agreement (PHA). I will contact Richard Clark regarding the PHA.

If you have any questions please give me a call at ext. 33541.


Thanks  ... Kevin