We are positioning ourselves to release a new Product Type that we will refer 
to as a Flexible Physical Gas product. Legal is in the process of drafting a 
GTC and Product Type description that will be used with this Product Type. I 
will start the building process once Legal provides the GTC and Product Type 
description; but in the interim, here's a broadstroke description of how the 
transaction works:

Party A and Party B exchange gas during the month of June 2000.

Party A buys 10,000 MMBtu per day (or 300,000 total MMBtu) at TCO Pool Index

Party B has the right to notify Party A of when Party B wants to take 
delivery during the month of June, and may take delivery in one of three 
forms: 3-day delivery, 5-day delivery, or 10-day delivery. The gas nominated 
for each such day would be a percentage of the total 300,000 MMBtu (i.e.; If 
Party B chooses 5 days for nomination, Party A would deliver 20% of the 
300,000 MMBtu on each of those 5 days for a total nom of 100%).  Party B pay 
TCO Pool Index PLUS a premium.

I understand that this type of transaction is currently done 
over-the-counter. Scott Mills has previously issued an explanatory e-mail of 
Sitara concerns and we should begin to address those issues.

Bjorn - if you could ask someone to prepare a Sigma Factor in advance, then 
my turn around time to for the Product Type should be reduced. Also, due to 
the varying 'optionality', do you think these three different products will 
require three different Product Types?

Please feel free to call if you have any questions.

Dale
3-9746