Kim,

Stewart and I met with Tom Lee (tomlee@ncpa.com; 916.761.4220) of NCPA yesterday.  NCPA is looking to restructure a power deal with Calpine and a gas basis deal with Pan Canadian.  The following summarizes the gas transaction and the re-structuring as proposed by Tom.

Current Gas Structure

Term:  		January 1, 2002 - December 31, 2002
Quantity:	5,000 MMBtu/d
Delivery Pt.:	PG&E City-Gate
Price:		NYMEX + $3.37/MMBtu

Re-Structuring Option 1

Extend the term through 2004.  What is the blended basis?

Re-Structuring Option 2

(Kim, please note that the following structure is Tom Lee's creation).

ENA assumes NCPA's position for Q2 2002 only (April-June):  5,000 MMBtu/d @ PG&E City-Gate @ NYMEX + $3.37/MMBtu.

ENA buys 3 puts from NCPA involving 5,000 MMBtu/d @ PG&E City-Gate over a 3 year term ending 2004:

a)  Exercisable on Dec 15, 2001, ENA has the option to put 5,000 MMBtu/d to NCPA in Q1, Q3 and/or Q4 of 2002.
b)  Exercisable on Dec 15, 2002, ENA has the option to put 5,000 MMBtu/d to NCPA in Q1, Q2, Q3 and/or Q4 of 2003.
c)  Exercisable on Dec 15, 2003, ENA has the option to put 5,000 MMBtu/d to NCPA in Q1, Q2, Q3 and/or Q4 of 2004.

What is the strike price?

Re-Structuring Option 3

(Kim, this is my idea.  That is, I think this makes more sense than Tom's).

ENA assumes NCPA's position for Q2 2002 only (April-June):  5,000 MMBtu/d @ PG&E City-Gate @ NYMEX + $3.37/MMBtu.

ENA sells NCPA 5,000 MMBtu/d of gas at PG&E City-gate for calendar years 2002 through 2004 except for Q2 2002.  Given that we are absorbing the $3.37/MMBtu basis for Q2 2002, what is the all-in fixed price for this sale?

Tom is looking for an answer ASAP.

Is the above confusing enough?  Call me if we need to talk about this.

Laird