From: [email-masked]
To: [email-masked]
Cc: [email-masked]
Date: Thu, 15 Nov 2001 06:54:58 -0800 (PST)

As you can see, the crude P&L is down dramatically this quarter.  Approx. $20 million has been taken out of the portfolio and funded the internal credit reserve for Timber, etc.  Meaning this money is in the building.  

In addition, we are very aggressively getting out of physical options since we don't have the cash to fund a little over 250,000,000 physical product if we were to exercise the in the money options.  The expense is due to lack of liquidity, and few counterparties willing to trade with us.

Further, we have been aggressively reducing almost all physical inventories worldwide--dist in europe, panama, etc.  

As well, we have been taking off Asian positions, consolidating books, and pay to get flat everyday.  

While the P&L is ugly, we have been assuming that any new crude operation will be very small and are working to get there.

Please feel free to call with any questions.

Jeff