Randy,

What we wanted to look at on the gas side would be a three way ring trade that is out-of-the-money on one side and in-the-money on the other. 

For example:

Counterparty A sells to Enron a jan02-dec02 nymex swap at current market + $2
Enron sells to Williams a jan02-dec02 nymex swap at current market + $2
Williams sells to Counterparty A a jan02-dec02 nymex swap at current market + $2

There will be no net position change for each counterparty, but if will replace Counterparty A's Enron credit exposure with Williams.

All the trades would fall within our existing ISDAs. Our lawyers have added some language for the confirms that would tie the trades together. That language is included below. If you have any legal questions feel free to call our lawyer Mark Taylor at 713-853-7459.

If you have any questions feel free to call me at 713-853-7058. I'll ring you latter this afternoon to go over the details and talk about possible counterparties.

Thanks for your time.


Geof Storey


"Each of the parties to this Agreement recognizes and acknowledges that the parties are acting and agreeing to perform their obligations hereunder in reliance upon (i) the timely execution and delivery by [legal name of other counterparty] ("Third Party") and Party A of a transaction in substantially the form attached hereto as Exhibit A ("Third Party Transaction A") and would not otherwise agree to execute, deliver and perform under this Agreement if Third Party and Party A were not contemporaneously executing and delivering Third Party Transaction A and (ii) the timely execution and delivery by Third Party and Party B of a transaction in substantially the form attached hereto as Exhibit B ("Third party Transaction B") and would not otherwise agree to execute, deliver and perform under this Agreement if Third Party and Party B were not contemporaneously executing and delivering Third party Transaction B. The effectiveness of this Agreement shall be subject to the condition that contemporaneously with the execution and delivery of this Agreement Party A and Third Party execute and deliver Third Party Transaction A and Party B and Third Party execute and deliver Third Party Transaction B."