Clayton,

It translates into a credit risk for those on the other side of the hedge.
Many producers have a long history of poor timing of hedges.
I could give you quite a long list. They definitely need a bright
adviser who will tell them the price of gas two years from now.

Vince







	Clayton Vernon @ ENRON
	06/29/2000 01:02 AM
	
To: Vince J Kaminski/HOU/ECT@ECT
cc:  
Subject: from today's paper

Vince:

Here's an amazing factoid in today's paper related to the issue of how much 
money you can "make" (sic) by hedging:

...

Other companies analysts say are saddled with hedges include El Paso Energy 
Corp. and Coastal Corp., which are merging. 

A Coastal official declined to comment on the company's forward positions. 

Although El Paso is known for its pipeline business, it produces gas as 
result of its $6.2 billion acquisition last year of Sonat. "More than 90 
percent" of that gas is hedged through the rest of the year, said Bruce 
Connery, vice president of investor relations. The forward contracts are for 
$2.40, he said. 

Hedging in the current market plays to the company's primary aim of meeting 
investors' expectations, Connery said. 

"Our first goal is to deliver the earnings goal that we set out, and that 
dictates that we hedge out commodity volatility," he said. 


...

$2.40??? Are you kidding????

Clayton