Mark,  Thanks for your voice mails yesterday regarding the cash needs of ou= r two organizations, EGEP and EOGIL.
Based on your messages I am a little = confused and if I need to talk with someone else to actually move cash to E= GEP and or EOGIL in the near-term I need to know the process to follow and = whom to talk with.
Here is a synopsis of our situation.
The cash generating company that EGEP manages is EOGIL (our Indian E&P sub)= .
EOGIL generates about $5 to 6 Million dollars of before tax free cash fl= ow each month (depending on oil prices and variable operating expenses) tha= t is deposited into a New York EOGIL account and immediately swept to an En= ron Corp. account (currently EDF).
Therefore, this sub is self sufficient = and should be able to handle all planned 2002 extra-ordinary capital or ope= rating expenses.
The only near-term issue is our estimated tax payment tha= t is due 12-15-01 of 6.4 MM$ for the 4th quarter of 2001.
Since all of ou= r money is immediately swept to EDF, we do not have these funds on hand and=  we will not receive enough cash prior to the 15th to make this payment.
T= herefore, if we want to be self sufficient, a) we need to retain any new fu= nds in our EOGIL account and, b) any deficit can be borrowed from EGEP (ass= uming it is funded as described below) and repaid to EGEP from 2002 cashflo= ws.
EGEP is the Houston based technical arm and management for EOGIL.
We have = 40 people that work directly on the EOGIL assets (we had over 100 people la= st year and have cut staff to current levels as we sold assets) and these p= eople are currently pledged to British Gas for a 60 day transition period i= f and when we close the sale of EOGIL to BG.
All of these people will be s= evered after the transition period and they all know this is their fate (th= ey have known this since October 2000).
The reason they are still here is = for two reasons; 1) Divestiture agreements and 2) Severance payments.
If w= e can not guarantee pay-roll, severance and divestiture we will lose people=  immediately.
Most of the staff can walk to EOGR at any time and without s= ome comfort regarding severance and divestiture, I know they will leave whi= ch puts us in jeopardy for a) maintaining our operations and operatorship, = b) being able to fulfill our contractual commitment to BG, or c) losing the=  talent necessary to re-market if we can't close the BG deal.
=20  Operatorship is a very valuable commodity and retaining it for re-sale is w= orth $50-75 million even if we elect to sell to an Indian company.
In orde= r to retain operatorship it is vital that we retain the current staff.
I realize this may seem trivial in the larger scope of things, but in light=  of the reasons we are looking into this matter of keeping our cash generat= ing subs operational, having money for these items will be essential.
EGEP= 's monthly G&A is approximately 1.8 MM$ per month.
Enron's obligations to = the employees in the form of severance and divestiture is approximately $10=  million.
Therefore, I would recommend that we deposit $15mm into the EGEP=  account to cover known commitments and we will bill future months of EGEP = G&A either to EOGIL or BG, whichever is appropriate.
Furthermore, EOGIL ca= n use the $15 million to draw against if we need any near-term funding befo= re we build any cash reserves.
I hope this helps clarify our situation.
I am available to discuss this is= sue at your convenience and can be reached at 3-5934 or my cell 713-569-471= 3.
Let me know if I need to talk to others in the organization.
Thanks

EGEP & EOGIL Cash Needs