Message-ID: <18189172.1075857534835.JavaMail.evans@thyme>
Date: Mon, 23 Oct 2000 01:14:00 -0700 (PDT)
From: jeffrey.shankman@enron.com
To: jennifer.burns@enron.com
Subject: Re: tax structure pre-pays in the north sea
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please print
---------------------- Forwarded by Jeffrey A Shankman/HOU/ECT on 10/23/2000 
08:15 AM ---------------------------


Chris Mahoney
10/20/2000 03:20 PM
To: Chris Mahoney/LON/ECT@ECT
cc: Jeffrey A Shankman/HOU/ECT@ECT, John L Nowlan/HOU/ECT@ECT, Mike 
McConnell/HOU/ECT@ECT 
Subject: Re: tax structure pre-pays in the north sea  

In addition to this business below there is a very good chance that we are 
going to get a short of 1.4 mil bbls per year
of low sulfur fuel oil barges for 2001-2004.  We think this will be a good 
deal for us to get on the books since the bulk of the
hedging interest that the continental gas desk is bringing to us is customers 
looking to buy fuel to hedge natural gas prices. 
Continental gas are anxious to close this deal because the gas contract is 
well in the money and would like to book this
deal for this quarter.  There are var issues that need to be considered 
though so we need to address this at the beginning
of the week.

Thanks

Chris.



Chris Mahoney
10/16/2000 11:03 PM
To: Jeffrey A Shankman/HOU/ECT@ECT, John L Nowlan/HOU/ECT@ECT, Mike 
McConnell/HOU/ECT@ECT
cc:  

Subject: tax structure pre-pays in the north sea

corporate finance in London (primarily Chris Harris) has been looking for 
about 6 months into approaching the small north sea 
producers to do pre-pay purchase contracts that would enable the producers to 
significantly reduce their tax liability to the uk 
government.  These producers (talisman, kerr mcgee, lasmo, hess, enterprise, 
and a couple of others) are
currently paying some 65-70% of the value of crude oil back to the government 
and they feel the cost savings to the producers is 
something on the line of 25% after financing costs for the pre-pay.  I have 
asked them to do a presentation to you, as if you were one
of the producers, for how this structure would work.  Can you advise when you 
would be free for this?  The volumes could be large
(potentially upto 25 million bbls) and there is considerable basis risk in 
hedging these physical volumes.  we are looking into the
price that we could bid them for their physical oil that covers the basis 
risk.  It would be nice to try to combine this with some long-
term gas supply contract on the continent that would require us to be buying 
fuel and gasoil as the hedge and we are approaching
some of the large natural gas buyers in continental europe to see if the 
recent spike in oil prices has encouraged more hedging.
please let me know your thoughts on this and when/if you could be free for a 
presentation from chris harris.  

thanks,

chris.