Drew -- here is Lorraine's update on the Val Verde situation that I mentioned 
in my previous e-mail.   Recall that we've been unable to accept quantities 
of gas from Burlington because of the high temperatures at the interconnect 
in recent years.  I've recommended that we seek amendment of the contract as 
soon as possible to reflect what we CAN do.  

The proposed amendment Lorraine is referring to, which Burlington rejected, 
modified our obligation to provide firm compression sufficient to accept 
250,000 MMBtu.  

//
Burlington Resources - Val Verde Plant - Michelle and I had a follow-up 
conversation with BR Thursday.  I faxed the proposed amendment to BR Monday 
and we hadn't heard from them yet.  They claim approximately $135,000/month 
in lost revenues because we are holding their production down.  Michele and 
Darrell will work to pull together the data on exactly which days we have not 
been able to take BR's gas.  I mentioned to BR that we were putting this info 
together, but they claim since they were told to back off to 180,000 - 
190,000 MMBtu from about mid-June through July, our data would not accurately 
reflect BR's inability to schedule in excess of 180/190.  They will not 
accept our wording in the interconnect amendment, specifically "best efforts" 
and "subject to operating conditions on TW", so we will need to revise this 
further.

We offered alternate receipt point flexibility at Ignacio and alternate 
delivery point flexibility at El Paso Blanco on their Jackrabbit contract but 
they do not think this is sufficient to agree to amend the interconnect 
agreement.  They have suggested we consider giving them a deeper discount on 
their San Juan - Waha contract (80,000/d, $0.14, term 11/30/06).  

The ball is in our court.