Louise:  I agree with your assessment that this project will essentially be managing the legal risk that accompanies these residual interests.  Since 99% of these interests resulted from deal guys trying to salvage value from troubled assets that never paid out, I initially thought that Lydecker's assessment of any potential value would be helpful.  As you point out, however,  this is Step 2 of the process with Step 1 being compilation of the list which my group can handle alone.  I will let you know when we get the list together.  Thanks for your input!    Rick C.

 -----Original Message-----
From: 	Kitchen, Louise  
Sent:	Friday, April 06, 2001 10:41 AM
To:	Carson, Rick L.
Cc:	Buy, Rick
Subject:	Re: Additional Controls - Residual Assets

I don't quite understand the need for Dick's group -  all we need now is a complete list of everything and then we can decide what to do with it.  There will be items which fall under many different groups.  These are assets which are probably best managed from a legal perspective as essentially all we are managing is the ongoing legal risk.

I really forsee getting the list and making Mark Haedicke responsible for them on a long term basis.  

Tried to call you to discuss.  Let's talk later - of course you can use Dick's group if you think appropriate - I just think this is probably a legal risk issue.

Louise




From:	Rick L Carson/ENRON@enronXgate on 04/06/2001 09:39 AM
To:	Louise Kitchen/HOU/ECT@ECT
cc:	Rick Buy/ENRON@enronXgate 

Subject:	Additional Controls - Residual Assets

Louise:  I spoke with Rick Buy yesterday about improving our monitoring controls over potential assets that we might own due to some residual claim or "clawback" that Enron retained when the primary asset was disposed, i.e. Midwest Gas Storage.  While we don't have hundreds of these situations, I am aware of several deals where we retained overriding royalties, exploration options, calls on cash flow after certain debt is paid off, etc.  Hopefully, most of these have been captured in our Compliance System but as illustrated with Midwest, our system does not appear airtight.

Therefore, I propose that we immediately review all of our current and disposed portfolio for any "hidden" assets or claims that have not been properly captured.  Additionally, we will shore up our  monitoring procedures where necessary.  One of our deliverables will be to provide you and other members of Senior Management with a list and description of potential assets.

In addition to RAC, I would like to have participation from the Commercial and Legal side on our review team and suggest that perhaps Dick Lydecker's group would have the appropriate resources.

I would appreciate your concurrence and feedback at your convenience.    Regards,         Rick C.