---------------------- Forwarded by Stinson Gibner/HOU/ECT on 01/29/2001 
10:42 AM ---------------------------


Stinson Gibner
01/29/2001 09:47 AM
To: Bob Lee/NA/Enron@Enron, Paulo Issler/HOU/ECT@ECT, Zimin Lu/HOU/ECT@ECT
cc:  
Subject: Erac Koch P+ spread options

Booking spreadsheet in in O:\research\common\projects\exotic2001_0125.xls

Sheet where options are booked is called "index deals".

--Stinson

---------------------- Forwarded by Stinson Gibner/HOU/ECT on 01/29/2001 
09:43 AM ---------------------------


Mark Fondren
01/26/2001 10:53 AM
To: Stinson Gibner/HOU/ECT@ECT
cc:  
Subject: Erac Koch P+ spread options


---------------------- Forwarded by Mark Fondren/HOU/ECT on 01/26/2001 10:53 
AM ---------------------------


Mark Fondren
01/25/2001 12:07 PM
To: John L Nowlan/HOU/ECT@ECT
cc: Spencer Vosko/HOU/ECT@ECT 
Subject: Erac Koch P+ spread options

Price  1    =     WTI Cushing physical cash price  (WTI  Nymex 
contract)       For example,  the April 2001
                             WTI cushing price equals the Apr01 WTI Nymex 
contract.


 Price  2    =    Koch Oil posting for West Texas/New Mexico Intermediate.


Koch P+   =    Price 1  -  Price  2


  Price 2 is calculated by subtracting  3 spreads  from Price 1   
  
       1.    Koch Posting/Wti NYMEX basis spread  
       2.    66.6%   (April01/May01  WTI Nymex spread)
       3.    33.3%   (April01/Jun01  WTI Nymex spread)



Example   using  1/24/2001 WTI settles       APR01       28.31
                                                                              
    MAY01       27.72
                                                                              
    JUN01        27.19 

April 2001  Koch posting   =     April 2001 WTI NYMEX settlement   -   
KOCH/NYMEX basis spread  -  .666(Apr/May)  -  .333(Apr/Jun)

                                                  =       28.31     -    
2.75     -    .666(.59)   -   .333(1.12)
                                                  =       28.31     -    
2.75     -     .3929        -   .37296
                                                  =       24.794

Koch P+    =   28.31   -    24.794
                    =   3.516
  
  Please call with any questions


Mark F
ext   853-1982