Enron North America Bridgeline 2001 Plan February 2001

Enron North America Bridgeline 2001 Plan February, 2001

Bridgeline - Income Statement - ($000 s) Bridgeline 2001 Plan. ppt 2

Bridgeline - Capital Obligations Detailed * *Only 2 months of capital charge as to be removed Bridgeline 2001 Plan. ppt 3

Bridgeline - 2001 ROCE Calculations u 2001 EBITDA Forecast for BHLP is $56 million, since Enron has a 40% interest, our share should be $ 22. 4 million. u Equity Earnings are net of depreciation and interest u However, when the LRC assets were contributed to BHLP, the accounting entity’s (LRCMIN) balances had to be cleared. Thus, the assets were contributed with no reduction for accumulated depreciation. u Enron’s depreciation schedule associated with the LRC assets is larger than Bridgeline’s depreciation schedule. The assets contributed by Texaco had little depreciation left on their books. Because of LRCMIN, our assets are depreciated to satisfy both book and tax obligations. Bridgeline 2001 Plan. ppt 4

Bridgeline - 2001 Goals & Objectives u Financial – Meet and surpass 2001 BHLP EBITDA target of $56 million – Need to raise ROCE above 3% – Set up a 3 rd party bank credit revolver and cash distribution policy to parents (ENA and Texaco) – Revisit ENA’s opportunity to leverage against its 40% interest in BHLP u Increase Bridgeline EBIT: – Allow full MTM of Bridgeline storage positions • Monetize Pad Gas – Expand origination revenue through product offerings and customer coverage – Restructure trading books to reflect appropriate “demand charge” targets • Current targets (Feb 2001) are conservative • $474, 000 / month for physical • $327, 000 / month for storage – Revise BHLP compensation plan to more closely align ENA’s – Hit financial and strategic targets in 2001 necessary to make BHLP an attractive sales candidate in 2002 – Prepare plan to sell asset by Q 2/2002 Bridgeline 2001 Plan. ppt 5

Bridgeline - 2001 Goals and Objectives u Increase Physical and Trading Volume for 2001 by 15% BGM 2000 Financial and Physical Transaction Volume Bridgeline 2001 Plan. ppt 6

Bridgeline - 2001 Goals and Objectives u Increase Number of Monthly Customers for 2001 by 15% u Categorize Customer List and Identify Opportunities u Sell off Incremental Storage Capacity Bridgeline 2001 Plan. ppt 7

Bridgeline - 2001 / 2002 Goals and Objectives u Chevron's purchase of Texaco will delay ENA’s opportunity to sell their equity interest in BHLP u Calpine has expressed interest in owning Bridgeline assets u Since 40% of Dynegy is owned by Chevron and based on Dynegy’s asset portfolio, Dynegy would be a natural suitor for Bridgeline’s assets u Other candidates need to be identified and pursued u Because ENA’s capital obligation is $270 million, BHLP needs to be sold for $675 million or a 12 EBITDA multiple u Most pipeline assets are sold for a 10 EBITDA multiple u Review March 2002 lock-in to identify other methods of achieving an early sale Bridgeline 2001 Plan. ppt 8