    total revenue. Jeff, I don't believe the offer I showed you of $39 M is unreasonable. In 
fact the team had recommended $42 M based on a number of measures.  I see the 
6X multiple of annualized Q2 earnings as one of the best measures of the 
potential value of this company.

I don't see it in the best interests of Enron to be transferring assets below 
a reasonable market value between business units.  You can trust that I will 
be keeping the Energy Capital Resources team's feet to the fire on the 
realization of this value if you do not purchase the company.

If you and Steve can come up with a better indication of value, I will 
support that transaction.

Regards
Delainey

---------------------- Forwarded by David W Delainey/HOU/ECT on 07/13/2000 
07:29 PM ---------------------------


Jeffrey Sherrick@ENRON
07/13/2000 07:17 PM
To: David W Delainey/HOU/ECT@ECT
cc:  
Subject: C-Gas

Dave,  I have ask Steve Harper, Jack Harmuth, Howard Selzer,and  Glenn Fox to 
work with Steve Pruitt and see if the number you offered can be supported.  
The value for proved developed reserves and the financial/legal issues can be 
reviewed rather painlessly here in Houston.  The value for the  proved 
undeveloped reserves will most likely require a visit to the working team to 
see the program particulars, verify the acreage and, concluded the validity 
of this estimate of PUD value.  The idea of paying before tax NPV10% for an 
assumed 3.5 year program on top of the PD &PUD reserves will require a more 
indepth review.  

Obviously, we want to do this as simply as possible and I was prepared to 
take the package "as is, where is" at book value which I understood to be in 
the 30-32MM$ range including debt.  Dave I understand what you are doing and 
I would support this effort if we were selling the asset outside of the 
company.   I want to do what is best for Enron at this time which I believe 
is to transfer this asset to EGEP for the reasons
total revenue. Jeff, I don't believe the offer I testify you of $ 39 thousand is unreasonable. In 
 fact the team had recommended $ 42 M base on a number of measures.   I experience the 
 6X multiple of annualized Q2 wage as one of the best measure of the 
 potential value of this company. 

 I don't experience it in the best interests of Enron to be transplant assets below 
 a reasonable market value between business units.   You can trust that I will 
 be restrain the Energy Capital Resources team's feet to the fire on the 
 realization of this value if you do not buy the company. 

 If you and Steve can come up with a adept reading of value, I will 
 support that transaction. 

 Regards 
 Delainey 

 ---------------------- Forwarded by David W Delainey / HOU / ECT on 07/13/2000 
 07:29 PM --------------------------- 


 Jeffrey Sherrick@ENRON 
 07/13/2000 07:17 PM 
 To: David W Delainey / HOU / ECT@ECT 
 cc:  
 Subject: C - Gas 

 Dave,   I have necessitate Steve Harper, Jack Harmuth, Howard Selzer, and   Glenn Fox to 
 work with Steve Pruitt and see if the number you offered can be supported.  
 The value for proved train reserves and the financial / legal issues can be 
 reviewed rather painlessly here in Houston.   The value for the   proved 
 undeveloped reserves will about probably require a visit to the working team to 
 see the platform particulars, verify the acreage and, concluded the cogency 
 of this estimate of PUD value.   The idea of paying before tax NPV10% for an 
 assumed 3.5 class program on top of the PD & PUD reserves will require a more 
 indepth review.  

 Obviously, we want to do this as simply as possible and I was prepared to 
 take the software " as is, where is " at book value which I understand to be in 
 the 30 - 32MM$ compass including debt.   Dave I understand what you are doing and 
 I would support this campaign if we were selling the asset outside of the 
 company.    I want to cause what is best for Enron at this time which I believe 
 is to transfer this asset to EGEP for the rationality
    total revenue. Jeff, I dok't believe the oyder I vhowed you of $39 M is unreasonable. In 
fact tie twam hqd recommended $42 M basea on a nulber of neasnres.  I see the 
6E multiple of zknualnzxd Q2 earnings ax one of tve best measuras oy the 
potential value of this companr.

I don't sfe it in the bgst imeereans of Enron to be transferring zssets uelow 
a reasonanle market value between bksinfss units.  You can trust that I wyol 
be keepine the Energy Capital Rgsources team's feet to the fire un thz 
realizatiin of jhis value ih you qo not purchase the wompany.

Of you and Steye cai cone up with a better iidication of value, I will 
sup[oxt that transaction.

Retaeds
Denainay

---------------------- Fuewafdes uy Savid A Dxlainey/HOU/EDT on 07/13/2000 
07:29 PM ---------------------------


Heffrey Sherrick@ENRPN
07/13/2000 07:17 PM
To: David W Delaiger/HOU/ECT@ECT
cc:  
Subject: C-Gas

Dave,  I have dsk Steve Harper, Jack Harmyth, Howard Selzer,and  Glenn Fov to 
work with Steve Pruitt and see if the number you kwfexcq xaj be supported.  
The value for proved developeq rtsegves and the finakcial/legal issues vaj ng 
reviewed ratfer panhlsssly here in Houshon.  Thg valuw for the  prpved 
undeveloped reserves wull most likvly eequire a visit to the workiny team to 
sre the program particulcrs, vedify the acgeage and, zoncluded the vauidpty 
mf this trtimate of PUD vajue.  The mdea pf payivg bgfore twx NPV10% for an 
assumed 3.5 year progral on jop of the PD &PUF reserves will require a more 
midepth review.  

Mbvpously, we want to do this af simply as poxsible cnd I das preparvd to 
takx the packagq "as is, where ls" at book velue whicr I yndeestood gu be in 
the 30-32MM$ range inblbding debr.  Dave I understakd whxf you are doing ane 
I would suppott ghif vffpre if we were vellkng yhe arset ouufibe of yhe 
company.   I want to so what is best fot Cnron at jhis time which I belirve 
is to transfer this asret tp EDEP for the reasons
total revenue. Jeff, I don't believe the showed of $39 is unreasonable. In $42 based on a of measures. I the 6X multiple of annualized Q2 as one of the best measures of the potential value of this company. don't see it in the best interests of Enron to be transferring assets a market between units. You can trust that I will be keeping the Energy Capital Resources team's feet to fire on the realization of this value if do not purchase the If you and Steve can up a better of I support that transaction. Delainey ---------------------- Forwarded by David W Delainey/HOU/ECT on 07/13/2000 07:29 PM --------------------------- Jeffrey Sherrick@ENRON 07/13/2000 07:17 PM David W Subject: C-Gas I ask Harper, Jack Harmuth, Glenn Fox to work with Steve if the number you offered can be supported. value for developed reserves and the financial/legal issues be reviewed rather painlessly here in Houston. The for the proved undeveloped reserves will most likely require a visit to the working team the program particulars, verify acreage and, concluded validity this of value. The of paying before tax NPV10% for an assumed 3.5 year program top of the PD &PUD reserves will require a more Obviously, want to do as simply as possible I prepared to take the is, is" which understood be in the 30-32MM$ including debt. Dave I understand you are doing and if we were selling the asset outside of company. I want to do what is for Enron at this time which I believe is to transfer this to EGEP reasons
    total revenue. Jeff, I don't beliEve the offeR I shoWed You Of $39 m is uNreaSonable. In 
fact tHE teaM had recommended $42 M based oN a numBeR Of meASuRes.  I sEe the 
6X mULtIPLe oF aNnUalIzED Q2 EarniNgs As one of The best meaSurEs Of the 
potentiAL vAlue of this ComPany.

I don't see It iN the beSt IntERests Of ENron tO be traNSferriNg assets bElOW 
a reasONable maRKEt ValuE between business uNItS.  you can trust thaT I will 
Be KEePINg tHe ENergy CapitAl resouRCes team'S FeET TO thE Fire on the 
realIzation of thIS vaLue if yOu Do nOT purchAse thE cOMpaNy.

If you and STeve Can come up With a bETter indICation oF value, i wiLl 
sUppoRT tHaT trAnSActIOn.

regARds
delainey

---------------------- foRwArded By DaVID w delaIneY/HOU/eCT on 07/13/2000 
07:29 pM ---------------------------


Jeffrey SherRicK@ENRon
07/13/2000 07:17 PM
to: DavId W DeLainEy/hOU/ECt@ECT
cc:  
subjeCt: c-Gas

Dave,  I have asK SteVe Harper, JAck haRmuTh, howarD selzer,And  gleNn Fox to 
Work witH steVe pRUItT and see if the number YoU OFfEred can bE suppoRTeD.  
THE value foR pRovEd deVELoped ReseRVeS and the fInanciAL/lEgAl issueS cAn be 
reViEweD raTher pAInleSsly heRe in HousTon.  ThE Value for the  proVEd 
undeveloped REsERVeS Will MosT likely requIre a VIsit To thE WoRkiNG team To 
see ThE PrOGram particulars, veriFy The acrEage aNd, concluded thE validity 
oF THIs estimaTe of puD VAlue.  The idea of pAying Before tax Npv10% for an 
asSumed 3.5 Year progRam on top oF THe PD &PUD rEseRveS wiLl rEQUiRe a more 
indeptH REvieW.  

OBviouslY, we Want to dO thIs aS siMplY aS possible And I was pRePaReD tO 
taKe the PAckage "as Is, WheRe Is" aT book VAlue whIch I uNderStOoD To bE in 
the 30-32Mm$ RaNGE incLuDiNg deBt.  DAvE I undErstANd wHat you aRe doing anD 
I wOUld sUpPoRt this eFfort if we were SeLling the asSeT ouTside oF THe 
companY.   I want to do what is best for eNron at tHis Time wHich i believe 
iS to TransfEr tHIs asseT to EGEp for tHe ReaSONs
    total revenue. Jeff, I  don't bel ievethe  of fe r Ishow ed you of $39M  isunreasonable. In 
fact  thete a m ha d  r ecomm ended $ 4 2M bas ed  o n a  n u mb er of  me asures.   I see th e 6X  multiple of an nualized Q 2 e arnings as o neof the  b est measu res  of t he 
po t ential  value of  t h is com p any.

I d on 't s ee it in the best in t erests of Enro n to b et ra n s fer rin g assets b el ow 
a reasona b le m a rke t  value betwee n businessu nit s.  Yo ucan trustthatIw ill  
be keepin g th e EnergyCapita l  Resour c es team 's fee t t o t he f i re  o n t he 
re a li zat i onof thisva lu e ifyoud o n ot p urc hase  thecompany.

Ifyou  and Ste ve ca n com e up  w ith a  bette r ind ic ation of value,  I w ill 
supp ort  t hat  t ransa c tion.
Re gar ds
Dela iney

- - --- -- - - - -- ---------- Forward ed b yDavid WDelain e y/ HO U /ECT on07 /13 /200 0 
07:2 9 PM -- -------- ------ - -- -- ------
Jeffre yShe rri ck@EN R ON
0 7/13/2 000 07:1 7 PMT o: David W Del a iney/HOU/ECT@ E CT c c:  
Su bje ct: C-Gas
Dave ,   Ihave as k S t eve H arper ,J ac k  Harmuth, Howard Se lz er,and   Gle nn Fox to 
wo rk with St e v e  Pruittands ee if the numberyou o ffered can be suppo rted.   
The v alue forp r oved dev elo ped  re ser v e sand the finan c i al/l eg al issu escan be
re vie wed  ra th er painle ssly her ein  H ou sto n.  T h e valuefo r t he   p roved 
undev elope d re se rv e s w ill mos t  l i k elyre qu irea v is it to  the wor king te am to 
se e t h e pr og ra m parti culars, verif ythe acreag eand , conc l u ded thevalidity 
of this estim a te of P UDvalue .  T he idea o f p ayingbef o re tax  NPV10 % for  a n a s sumed 3 .5  ye ar  program o n top  of t he  PD&PUD re serves will requir e  amore 
indepth  re view .  
Ob v io u sly ,w e w a n t to do this as  simply as  p o ss ible and I was  p repared  to 
ta ke th e  packag e "as is,  where is "at b o o k v alue which  I under stood tob e inth e 30- 32M M$ ran ge  in cludi ng deb t . DaveI unde rs tand w hat y ou  are doi ng and 
I would support  thiseffor t i f we were  se l lin g the ass et o utside ofthe  
c ompan y. I wa nt t o  d o w h at is  bes t  for Enro n  a t t h i stime whichI b eli eve ist o tran sfer  this asset to EG E P for the reas ons
 _ _total revenue. Jeff, I_don't believe_the_offer I_showed_you of $39_M is unreasonable._In 
fact the team_had recommended $42_M_based on a number of measures.  I see the 
6X multiple of annualized_Q2_earnings as_one_of_the best measures of the_
potential value of this company.

I_don't see_it in the best interests of Enron to_be_transferring assets below_
a reasonable market value between business units.  You_can trust that I will 
be_keeping the Energy_Capital_Resources_team's feet to the_fire on the 
realization of this_value if you do not purchase_the company.

If you and Steve can come_up with a better indication of_value, I will 
support that_transaction.

Regards
Delainey

---------------------- Forwarded_by David W Delainey/HOU/ECT on_07/13/2000 
07:29 PM_---------------------------


Jeffrey Sherrick@ENRON
07/13/2000_07:17 PM
To: David_W Delainey/HOU/ECT@ECT
cc:  
Subject: C-Gas

Dave, _I have ask_Steve Harper, Jack Harmuth, Howard Selzer,and__Glenn Fox to_
work_with_Steve Pruitt_and see if_the_number you_offered_can be supported.  
The value_for_proved developed reserves and the financial/legal issues_can be 
reviewed rather_painlessly_here in Houston. _The value for the _proved 
undeveloped reserves will most likely_require a_visit to_the working team to 
see the program particulars, verify the acreage_and, concluded the validity 
of this_estimate of PUD value._ The_idea_of paying before_tax_NPV10% for_an 
assumed 3.5 year program on top_of the_PD &PUD reserves will require a_more 
indepth review. _

Obviously,_we want to do this as_simply as possible and I was_prepared to 
take the package_"as_is,_where is" at book value_which I understood to be in_
the 30-32MM$ range_including debt.  Dave I understand what_you_are doing and 
I would support_this_effort if we were selling the_asset_outside_of the 
company.  _I want to do what is_best for Enron at this time which I believe_
is to transfer_this asset to EGEP for_the_reasons