Message-ID: <2189483.1075840868374.JavaMail.evans@thyme>
Date: Tue, 1 May 2001 16:47:00 -0700 (PDT)
From: jean.mrha@enron.com
To: louise.kitchen@enron.com
Subject: Devil's Tower Update
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X-From: Jean Mrha <Jean Mrha/ENRON@enronXgate@ENRON>
X-To: Louise Kitchen <Louise Kitchen/HOU/ECT@ECT>
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Louise,

I spoke with Tom Byargeon this morning while he was at the Offshore Technical conference.  He has spoken with Rick Fowler, Dominion, and plans on visiting him in New Orleans next week.  The highlights from the conversations are as follows :
?	By the end of this week or next, he will have information on two more total depth wells that have been drilled.  Based on the rumor mill, the reserves associated with the Devil's Tower acreage are looking even more promising.  However, nothing is definite until all data is received.
?	Based on the well data, Rick has three financing options :
?	Negotiate exclusively with a company like Enron
?	Synthetic lease financing with a commercial bank
?	Rebid
?	Since Dominion is now 80% owner in Devil's Tower (bought out Mariner's 20%), the credit profile of the project looks better.  (Pioneer is the other 20%.)  Rick realizes his mistake going with a company that has no equity backing and has egg on his face with upper management.  My concern is that based on his experience, he will take the easy way out and align himself with a commercial bank.
?	Enron has the following in their favor:
?	Convergent and Enron's bid were very similar except Convergent had Aker.  (Dominion wanted a guarantee of an Aker spar.) Tom has spoken with Bob O'Sullivan from Aker and he is interested in aligning himself with Enron.  As such, we can bring Aker back to the table.
?	Dominion wants to spend dollars on "steel" for the project by the end of June.  As such, Dominion will have to make a decision quickly because it will affect whether Devil's Tower becomes an on-balance or off-balance sheet transaction.  I think that Dominion would prefer an off balance sheet deal.
?	Dominion won't rebid because the other counterparties were not competitive relative to Enron or Convergent.


So, I think our true competition is against a commercial bank for synthetic lease financing.  Either way,  we will have an answer quickly and since the gossip on Convergent is out, I think it will stregthen our position on other spar bids (ie., Medusa).

Regards, Mrha