Message-ID: <17063695.1075844100589.JavaMail.evans@thyme> Date: Thu, 24 Aug 2000 02:01:00 -0700 (PDT) From: lorraine.lindberg@enron.com To: michelle.lokay@enron.com Subject: Revised Transportation Proposal Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Lorraine Lindberg X-To: Michelle Lokay X-cc: X-bcc: X-Folder: \Michelle_Lokay_Dec2000_June2001_1\Notes Folders\Tw-commercial group X-Origin: LOKAY-M X-FileName: mlokay.nsf ---------------------- Forwarded by Lorraine Lindberg/ET&S/Enron on 08/24/2000 09:01 AM --------------------------- Lorraine Lindberg 08/22/2000 10:25 AM To: emeaders@redcedargathering.com cc: Subject: Revised Transportation Proposal Hi Ed - Here is a revised comprehensive summary of the firm transportation proposal between Red Cedar and Transwestern: Term: 5 years, January 1, 2001through December 31, 2005 Year Volume Rate(+option fee) 1 125,000 MMBtu/d* $0.02/MMbtu/d 2 150,000 MMBtu/d $0.025/MMBtu/d 3 150,000 MMBtu/d $0.03/MMBtu/d 4 150,000 MMBtu/d $0.035/MMBtu/d 5 150,000 MMBtu/d $0.04/MMBtu/d Option: Red Cedar shall have a one-time option to reduce its contract MDQ for contract years 4 - 5 to a volume between 100,000 MMBtu/d - 150,000 MMBtu/d. Red Cedar may trigger this option anytime before November 30, 2003. Option fee is an incremental one-tenth of one cent/MMBtu (additive to the above quoted rates) over the five year term. Facility Modifications: The current cost estimate to increase the meter capacity (from 200,000 MMBtu/d to 300,000 MMBtu/d) at the Arkansas Loop Plant into Transwestern is $378,000. * Year 1 capacity of 125,000 MMBtu is dependent upon the completion of these facility modifications. Red Cedar will fund these facility modifications (by a one-time payment of $378,000 payable prior to Transwestern ordering material for the modifications). In order to avoid the tax gross-up of approximately $130,000, the $378,000 will be amortized over the term of the contract and booked as "pre-paid" transportation fees. (The net effect of this will be zero because the slight increase/MMBtu which will show up on the monthly transportation invoice will be negated by the corresponding credit for the pre-paid transportation.) Please call me to discuss. Thanks. Lorraine