Message-ID: <11160395.1075842245661.JavaMail.evans@thyme> Date: Wed, 16 May 2001 10:12:00 -0700 (PDT) From: dan.hyvl@enron.com To: janie.aguayo@enron.com, bryce.baxter@enron.com Subject: Re: Upstream Energy Services Cio, L.L.C. Cc: andrew.edison@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: andrew.edison@enron.com X-From: Dan J Hyvl X-To: Janie Aguayo, Bryce Baxter X-cc: Andrew Edison X-bcc: X-Folder: \Dan_Hyvl_Dec2000_June2001\Notes Folders\All documents X-Origin: HYVL-D X-FileName: dhyvl.nsf Brian Riley contacted me regarding the subject company and the fact that HPL had overpaid them to the tune of $328,508.61and would it be appropriate for HPL to withhold that amount from the next payment being sent to Upstream. The documentation that has been provided to me shows that this amount relates to overpayments made in 1997 and early 1998. The 1997 payments were made pursuant to a spot contract and that they had confirmed a nomination of 500 a day however, Killam Oil Company, the operator of the wells, has made a reallocation of volumes from these wells from the parties that Upstream represents to Enron Oil and Gas Company. The information provided does not indicate when Killam made the reallocation. Based on the reallocation, HPL or its predecessor has paid Upstream for 97,384 MMBtu that has now been allocated to EOG. I am told that Upstream has not denied its responsibility for repaying the money, only that it needed time to collect the money from the parties that it represents. Upstream's attorney, Ty Kelly written correspondence indicates that the Spot contract was not complete because it did not provide a document evidencing the delivery point and volumes. That contract provides that the remittance advice serves as the confirmation evidencing the transaction. He also stated that the volumes should have been sold to HPL under the Big Cowboy agreement which they did not have a copy of. Brian Riley has indicated that the purchase price was the same under the Big Cowboy and the Spot contract. Kelly also indicated that since HPL's agreements routinely provide for arbitration, the issue should be resolved through arbitration. Based on my review of the information available, HPL should withhold the sum of $328,508.61 from the next payment to be made to Upstream and hold such sum in suspense until the issue is resolved. HPL needs to be aware that in the event it is not able to prevail on its claim for such sum, it will need to remit such amount together with interest to Upstream.