There are a number of superb initiatives that are being developed and 
implemented 
throughout EOTT that will collectively profoundly change and improve our 
company.
I will give you periodic updates on these initiatives throughout the year.

As an example, Priscilla Norton is doing excellent work to develop more 
accurate and 
appropriate truck cost guides.  This tool is giving us much better knowledge 
about the
true cost to transport crude oil in specific areas across our systems.  As in 
most 
everything we do, this is a real team effort.

I have asked Priscilla to briefly describe this tool and it implementation 
below:
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"I developed the Fleet TIME Tool  because I wanted to allocate costs as 
accurately as possible to the individual lease level.   In the past fleet 
cost allocation was based on district averages allocated based primarily on 
miles.   The TIME Tool differs from past practice because it uses actual 
truck hours spent on every EOTT truck haul.  A district cost per hour is then 
established based on number of truck-hours operated in each district, and 
total fleet operating dollars spent in each district.  Using the hourly 
district rate, the Tool calculates district cost per barrel for each ticket 
based on actual truck time consumed.  The resulting data is vital information 
because even though we may already know a district averages 70 cents per 
barrel, we will now know which leases are $0.45 per barrel and which are 
$1.10 per barrel. This improved understanding of actual cost per barrel at 
the lease level paves the way for a much better understanding of lease 
profitability.   With this information, Marketing  can become more 
aggressive, competitive, and confident about our costs when bidding on new 
barrels, and Operations Managers can more easily identify opportunities to 
optimize fleet costs.  

The Fleet District Managers and Marketing have been receptive to the TIME 
concept  and very helpful in providing feedback.    Although the concept of 
TIME as our key cost driver is still in its infancy, Marvin Mills is already 
using the information to identify opportunities to reduce his costs in 
Kansas.    Willie Seale and Phil Elliot  have been using TIME data to 
identify Stations where EOTT could bid the barrels out at a lower cost than 
EOTT's internal cost, and to identify marginal leases to be rebid or 
terminated.     Bennie Orr has been using the TIME philosophy when 
Ark-La-Tex  bids on new business because the Tool has convinced him that 
mileage, by itself  is not a true indicator of cost.  Our biggest struggle 
right now is just getting adequate timely data to meet our needs.

With the help of Patrick Scales, the TIME Tool is currently being moved to a 
server platform using the new Brio software.  Eventually the Tool should 
allow us to have near real-time data at our finger tips.   Future plans 
include adding pipeline barrels and tariff rates to the Tool in order to be 
able to see both pipeline and truck business in the same tool (essential for 
analyzing customers who have both pipeline and truck barrels).  Within the 
next week, we plan to roll the Server version of the TIME Tool out to at 
least one outlying office to begin testing functionality and accuracy, and to 
identify any performance issues.  

Our goal is that the TIME Tool move EOTT to a much greater understanding of 
cost/profitability at the lease level."

Priscilla Norton