-----Original Message-----
From: 	Oh, Grant  
Sent:	Wednesday, October 31, 2001 11:53 AM
To:	Le Dain, Eric
Subject:	FW: ENE comps

I asked Derek to pull some data together...  FYI

 -----Original Message-----
From: 	Lynn, Derek  
Sent:	Wednesday, October 31, 2001 11:48 AM
To:	Oh, Grant
Subject:	ENE comps

Grant, ENE trades at 7x 2001 expected recurring earnings and 0.9 times book value.  This is far lower than a quick industry average of 15.5 times 2001 expected earnings and 2.8 times current book value (industry includes Duke, EL Paso, Williams, Dynegy, Kinder Morgan, and Aquila).  I think what these ratios demonstrate is the risk of the unknown that is being priced into ENE.  For example the current price to book seems like a suspect ratio to use for ENE given that it is unclear what is on our books and what else needs to be written down.  If you look at ENE on a price to earnings after non-recurring items for 2001 it looks far less attractive at 22.9 times.  If you take ENE's earnings after "non-recurring" items and slap on the industry average multiple of 15.5 times ENE's share price is $8.51 (ouch).  Now obviously not everything in the non-recurring events are actually recurring but there is talk of some wholesale losses being buried in the "non-recurring" loss.

ENE's long-term debt to equity is 0.9 times but if you include all the off balance sheet leverage and the leverage inherent in our trading business the true number is significantly higher than 0.9 times.  On a positive note the ENE's debt is trading higher today (price not yield).

Here is a spreadsheet from Bloomberg with the S&P pipelines sub sector P/Es, and P/Bs. and dividend per share (ENE's is 4%, nothing like a share price falling by 85% to get that div yield up).  I have also attached the latest Wall Street Journal article touting Berkshire, Royal Dutch, and GE as potential suitors (do you think Buffet can understand ENE?).

Hope this helps
--Derek