I have discussed this with McConnell, who has advised that Skilling will 
probably not approve this deal if it requires Enron equity to appraise 
reserves and if Sherrick is not willing to put equity in.  I have asked 
Sherrick to define his minimal "bottom line" position so that we can discuss 
it with Atlantis.

Sherrick's people got overly aggressive about this and tabled directly with 
Atlantis a new (and in my opinion, way over the top) proposal without my 
knowledge while I was in the air late last week.

Atlantis announced Saturday that they were walking the deal because EGEP's 
request is so outragious.  David Wilson, head of Atlantis,  immediately 
departed Houston for the UAE.  He is here now and is peddling the deal 
actively to others.

I met with David today and got him to agree to give me a couple of days to 
sort this out with Sherrick.  If I can't either get Sherrick on board or get 
UOG to agree to a restructuring that does not require any front-end Enron 
equity, we risk losing this deal.  

At the same time, we have reached agreement with UOG that they will put up 
70% of the $40 million front-end reserves appraisal equity and they will pay 
Enron a promote and front-end success fee that will give us a return close to 
30% and them a return of 18%.

We risk losing this deal over $12 million of Enron equity to appraise 
reserves (and hopefully I can push a bit more of this risk onto UOG to reduce 
the number a bit more.) The deal would also give UOG and Dolphin a strong 
kick-start, and UOG is anxious to get it done.

Will advise after I talk more with Sherrick, UOG and Atlantis.  This deal 
will live or die this week.  I will have major problems with UOG if it dies.

Rick 




David Haug
09/18/2000 03:53 PM
To: Rick Bergsieker/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Maurizio.La.Noce@enron.com 

Subject: Re:  

This is probably OK but we need to discuss. -  - DLH



Rick Bergsieker
09/16/2000 10:53 AM
To: Albert Stromquist@ENRON, david.haug@enron.com
cc: Maurizio.La.Noce@enron.com 

Subject: Re:  

FYI:  Jeff Sherrick has decided not to invest EGEP equity in Atlantis.  He is 
still ready to endorse the technical viability of the project and to provide 
upstream technical services to us, but is unwilling to invest with us unless 
he has the right to step in to all other Atlantis properties in the region as 
majority interest holder and operator.  

I have felt that EGEP's willingness to be in the project as an equity holder 
would give Joe and you the assurance that this deal was solid from an 
upstream perspective.  However, I plan to continue developing this 25%-30% 
IRR project with only Enron Middle East (30%) and UOG(70%) as equity 
contributors and simply rely on Jeff to endorse the upstream numbers and 
provide upstream tech services.

Rick



Albert Stromquist@ENRON
09/14/2000 09:20 AM
Sent by: Albert Stromquist@ENRON
To: Rick Bergsieker/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Maurizio La 
Noce/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Howard D 
Martin/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Rafi 
Khan/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Daniel R 
Rogers/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Todd 
Culwell/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Kenneth 
Krasny/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Terence H 
Thorn/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Jeffrey Sherrick/Corp/Enron@ENRON, 
Horace Snyder/Corp/Enron@ENRON, Stephen Harper/Corp/Enron@ENRON
cc: Brenda J Johnston/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Christina 
Grow/Corp/Enron@ENRON 

Subject: 

All

I visited with Jeff Sherrick yesterday on the Atlantis project and want to 
share with the team my understanding of EGEP's decision and what will be 
EGEP's role in the project.  First, Enron Global E & P has elected to forego 
an equity role in the Atlantis project.  From a technical view, EGEP has 
independently verified the structure and gas column in Sharjah/Ajman and has 
an optimistic preliminary view of Umm al Qawain subject to 3-D confirmation. 
EGEP believes that the Atlantis concesions in the UAE offer significant 
upside potential outside of the Sharjah /Ajman and Umm al Qawain Production 
Areas.  It is EGEP's view that Atlantis's greatest expected value is through 
NEWCO, and on the strength of NEWCO's (Enron's) leverage in the negotiation,  
it should not be unreasonable for NEWCO to expect Atlantis to concede express 
farmin rights to Enron to develop and produce new reserves in Atlantis's 
concessions.  Jeff and team are dissappointed that Atlantis has rejected the 
concept, especially since David Wilson appeared to have reacted favorably to 
the idea when Jeff layed it out at the London meeting in July.   EGEP 
believes that the NPV to NEWCO does not provide a sufficient hedge against 
potential slippage due to factors such as price uncertainty, precessing 
tarif, capex, gas GHV, etc, risks which could be mitigated and managed 
through Enron(EGEP) majority ownership of the upside, i.e. earned by farmin 
to the concession blocks.  EGEP has ranked Atlantis against its other 
upstream opportunities based on the current deal and Jeff has decided to 
conserve his limited equity for other investments.  This decision is 
independent of EGEP's commitment to support Enron upstream investments with 
or without equity and EGEP is continuing to develop the Technical Service 
Agreements with Atlantis and NEWCO to fulfill this responsibility.

Best regards,

Bert