Stan:  I understand completely, and we will do our very best to achieve your 
desired approach.  The problem is this: Regardless of what the MOU says,  we 
will have to go through a size/probability analysis on this deal.  The deal 
is clearly material to EOTT.  From an SEC perspective, the duty to disclose a 
pending deal depends upon how material the transaction is and how likely it 
is to occur.  If a deal is very material, a lower degree of probability is 
needed before disclosure is required.  The MOU itself is not totally 
determinative, although signing a document which looks like an LOI will 
increase the chances of having to disclose.  In the present case, if 
Equilon's Board gives the go- ahead to deal with us exclusively, I feel there 
would be at least a 20% chance of closing a transaction (based upon past 
dealings with these folks). Accordingly, if/when that happens, we will need 
to take a hard look at the disclosure issue.  We do not want to disclose 
prematurely, but I am pretty sure that this deal would be considered 
"material," and if we go forward with Equilon, I believe that we will need to 
disclose it at some point prior to closing (certainly after signing a PSA).  
We can delay disclosure for a period of time for legitimate business reasons, 
and the MOU we sign may not rise to the level of an LOI, but at some 
point---if we go forward with Equilon---we are going to reach a point where 
the size and probability of the deal will mandate disclosure.  We don't need 
to make a decision at this point, we just need to be aware of these 
circumstances and manage the process accordingly.

From a different perspective, we want to sign some kind of LOI with Equilon 
as soon as we feel comfortable doing so because we want the HSR waiting 
period to begin running.  Equilon wants to close by November 1st.

Please advise if you wish to discuss further.  Thanks.  SWD



	Stanley Horton@ENRON
	Sent by: Cindy Stark@ENRON
	07/12/2000 02:04 PM
		
		 To: Steve Duffy/Houston/Eott@EOTT
		 cc: 
		 Subject: Re: Phoenix/Equilon Deal; CONFIDENTIAL ATTORNEY/CLIENT 
COMMUNICATION AND ATTORNEY'S WORK PRODUCT

Steve:

Let's start thinking about how we could structure the MOU so we wouldn't have 
to disclose the deal.  I would rather not disclose a "tentative deal".

Stan



From: Steve Duffy@EOTT on 07/11/2000 01:47 PM
To: Dana Gibbs, Lori Maddox/Houston/Eott@Eott, Stanley Horton/Corp/Enron@Enron
cc: Joe Richards, rbaird@velaw.com, Susan Ralph 

Subject: Phoenix/Equilon Deal; CONFIDENTIAL ATTORNEY/CLIENT COMMUNICATION AND 
ATTORNEY'S WORK PRODUCT


	

Joe R. will be sending out something in greater detail shortly, but it 
appears that Equilon's management would like to pursue a deal with us on an 
exclusive basis and that this decision is being forwarded to the Equilon 
Board for approval.  If this acquisition goes forward, we will need to get 
organized---in the near term---on a number of logistical/due diligence tasks, 
but one thing we should start thinking about now is the "disclosure" issue.

If the Equilon Board gives the go-ahead for Equilon to pursue this 
transaction , Equilon will probably want  to sign a memorandum of 
understanding with us, and this may put us in a "disclosure" posture because 
at that point, we would be looking at a $65 million deal (approx.) with a 
closure probability of no less than 20% (in my judgment, based upon our past 
dealings with these people).  Even without a signed document, the 
"size/probability" test would still be an issue for us to deal with.  
Everyone should be thinking about this issue as we await word from Equilon's 
Board. Thanks.   SWD