Subject: Re: Summary of Tom Brown Meeting
From: [email-masked]
To: [email-masked]
Cc: [email-masked], [email-masked], [email-masked], [email-masked], [email-masked]
Date: Wed, 2 Aug 2000 07:07:00 -0700 (PDT)

Confidential Work Product - Attorney Client Privilege

Dan,  Our letter was definitely structured to encourage a quick solution.  As 
the situation stands now, Wildhorse's possible responses to the letter are as 
follows:

1.  Declare Unprofitability wrt to the gas covered by the amendment.
 If they do so, then they have the obligation to provide alternatives to 
Crescendo, one of which is release of the gas.  You are right, there is no 
time frame in the contract under which they must resolve these alternatives.  
That is a risk I pointed out early.  However, in our letter to Wildhorse, I 
proposed a time frame to resolve these issue of 2 weeks.  If Wildhorse is not 
working with us in good faith within a commercially reasonable time then we 
will have to make a choice:
  A.  Go for a Declaratory Judgment to have the gas released from the 
contract.  This will take time.  Depending on court docket loads, 6 months   
to 1 year.

  B.  Inform Wildhorse that we have been unable to reach an agreement within 
a commercially reasonable time and they have not negotiated in   good faith 
and we consider the gas released (contract breached by Wildhorse) and that we 
will build our own system.  Then Crescendo would   build its own system and 
risk a suit by Wildhorse. 

2.  Not declare Unprofitability
 If Wildhorse does not declare unprofitability, then they have the obligation 
under the contract to take the gas in accordance with its terms.  The only 
complication is that under the contract, Wildhorse's obligation to take the 
gas is subject to the downstream carriers ability to receive the aggregate 
gas stream.  Depending on Wildhorse's flow dynamics and our plant placement, 
Wildhorse could use this as reason to refuse delivery of our gas.  After your 
field meeting and our engineering assessment, hopefully we will have a better 
understanding of that situation.  If Wildhorse does not declare 
unprofitability, we would demand evidence and assurances that they will be 
able to take the gas upon start up of the treating plant.

If Wildhorse does not declare unprofitability, but continues to discuss 
renegotiating of this deal, I would very directly ask them "under what 
provision of the contract do they believe they have the right to renegotiate 
any fees?".  They don't have a right to renegotiate under the contract 
without unprofitability.

	Dan J Bump@ENRON
	08/01/2000 05:23 PM
		 
		 To: Gerald Nemec/HOU/ECT@ECT
		 cc: Scott Josey/Corp/Enron@ENRON, Brian Redmond/HOU/ECT@ECT, Joan 
Quick/HOU/ECT@ECT
		 Subject: Summary of Tom Brown Meeting

I wanted to provide a summary of my meeting with Tom Brown today.  I met with 
the Business Development Director, Bob Mustard. 

1)  Tom Brown (as 45% owner of Wildhorse) is pushing Kinder Morgan to come up 
with solutions to the production problems (quality, pressure, et al) 
currently being experienced in the Piceance Basin.

2)  Tom Brown is also encouraging KMI to develop plans to take Crescendo (and 
other producers) low Btu gas; they see these as a new business opportunity 
for Wildhorse.

3)  Tom Brown is focusing their drilling efforts in other regions of the 
Rockies, therefore TBI would be interested in discussing Entrada development 
ventures with Crescendo.  Bob worked at Amoco with Ken Krisa and is very 
familiar with the nitrogen treating technology.  (I passed all this info on 
to Ken/Jim).

4)  Here's the interesting part...Bob discussed (confidentially) that for the 
past 6-8 monthsTom Brown has been trying to negotiate a buy-out of Kinder 
Morgan's interest in Wildhorse (they have a right-to-match provision in their 
LLC agreement).  The snag is on the last increment of valuation which is now 
being negotiated by the very top mgmt (Kinder & Evans).  If they are 
successful, (which he thinks TBI will be), then TBI will turn-around and look 
to spin off the non-strategic systems (like the Piceance Basin assets) to 
third party purchasers.

This conversation with Tom Brown led me to a worst case scenario with regard 
to our negotiations with Wildhorse..............Wildhorse has been 
slow-playing negotiations since I first met with them in late May and #4 
above may be the reason why.  Now that we've sent the letter recently to 
Wildhorse requesting (essentially) to clarify their understanding / status of 
the contracts so we can get to work, my feeling (based on the transaction 
between KMI & TBI) is that Wildhorse may try to continue stalling until their 
transaction with TBI is complete, (how much longer will this take?).  Of 
course, if the transaction is completed, TBI has already made it clear they 
would like to sell this system, so even if ENA is interested, will TBI 
negotiate a gathering deal during this transition period or delay until the 
system is divested?

The point is this......I'm anticipating a generic, non-commital response to 
Crescendo's letter from Wildhorse.  Although I realize there are no time 
deadlines in the contract, could you suggest anything we can submit in 
writing to encourage a quick resolution to our contractual issues in the 
event my above worst case scenario begins to play itself out? 

I'm off to Grand Junction to meet with Wildhorse.  I'll keep you informed of 
any developments.

Thanks.

Dan