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Project Grand Slam Meeting Agenda

Project Grand Slam Meeting Agenda. Description of Transaction Structure/Benefits of Transaction Agreement of Transaction Execution/Timelines Next Steps Miscellaneous. Page 1. Project Grand Slam Description of Transaction.

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Project Grand Slam Meeting Agenda

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  1. Project Grand SlamMeeting Agenda • Description of Transaction • Structure/Benefits of Transaction • Agreement of Transaction • Execution/Timelines • Next Steps • Miscellaneous Page 1

  2. Project Grand SlamDescriptionof Transaction • Enron Corp. sells MTBE Plant and Mt. Belvieu Storage to EOTT for $100 MM • MTBE Plant Purchase Price and current book value: $65 mm • Mt. Belvieu Storage: $35 mm • EGM assumes all commodity risk from EOTT for MTBE Plant • EGM sells Normal Butane 10 year fixed price • EGM sells Fixed Price Methanol until conversion to Iso Octane (assume Q1 2004) • EGM buys Fixed Price MTBE until conversion to Iso Octane (assume Q1 2004) • EGM buys Iso Octane after conversion (assume Q1 2004) Page 2

  3. Project Grand SlamDescriptionof Transaction • The economics to EOTT embedded in commodity hedges are as follows: • $0.192 covers operating costs • $0.04 covers return of invested capital of $65 mm • $0.04 covers 14% fixed rate of return • Total hedge costs incurred by EGM will equal $0.272 per gallon. • EOTT to receive approximately $45 million in net cash flow for the life of contract. Page 3

  4. Project Grand SlamDescriptionof Transaction • Option to convert to Iso Octane • The option to convert owned by EGM and assumed to be $50 million. • EGM to pay premium for option to convert and value of option will be reflected in a reduction in total hedge cost to Iso octane should option be exercised by EGM. • Capital Expenditures covered by EGM through commodity hedge • Return of Investment of Iso Octane Calculated in Initial 10 Year period • EGM has option to extend hedges for years 11 - 20 Page 4

  5. Project Grand SlamDescriptionof Transaction • Should EGM not want MTBE or to exercise the option to convert the MTBE Plant: • EOTT maintains $0.08 for remainder of 10 year term of contract • Unwind of Hedges for remainder of 10 year term • No supply or off take commitments from EGM • EOTT is free to manage their asset at their sole discretion. Page 5

  6. Project Grand SlamStructure/Benefits of Transaction • EOTT • Aquires an asset base with fixed return & positive cash flow • Platform for further growth (Storage, Iso Octane) • Diversification of business • Enhanced shareholder value • Increases fixed dividend • Arrangement allows for off balance sheet financing • Reduces existing accounting/overhead costs • EGM • Commodity price risk in liquid, well known commodity areas (MTBE, Iso Butane, Methanol, Nat Gas) • Provide opportunities to EOTT for expansion (Storage, Iso Octane) • Long dated trading positions • ENE • Clean fuel assets off of the balance sheet • Participation in upside on markets • Cash Page 6

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