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Project OZ Enron Global Markets Presentation to Enron Corp Finance Committee October 8, 2001

Project OZ Enron Global Markets Presentation to Enron Corp Finance Committee October 8, 2001. Project OZ. Transaction Overview. Farmland Industries has agreed to sell its Coffeyville, KS refinery to GAF Refining (GAF) via a management buyout

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Project OZ Enron Global Markets Presentation to Enron Corp Finance Committee October 8, 2001

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  1. Project OZ Enron Global Markets Presentation to Enron Corp Finance Committee October 8, 2001

  2. Project OZ Transaction Overview • Farmland Industries has agreed to sell its Coffeyville, KS refinery to GAF Refining (GAF) via a management buyout • Morgan Stanley is providing a $150 MM acquisition bridge loan and underwriting $150-200 MM 144A (10 yrs, BBB- or higher) bonds as refinancing of acquisition and to raise capital for plant improvements • EGM is proposing to provide the following: • 75-90 MBD physical crude supply (10 yrs) • 45 MBD physical gasoline off-take (10yrs) • 38 MBD physical diesel off-take (10 yrs) • 85 MBD financial crack spread swap (10 yrs) • $40 MM inventory financing (10 yrs) • EGM will manage total position by range trading and liquidating rateably over the term Proprietary and Confidential

  3. Project OZ Strategic Benefits • $65 MM MTM earnings from below market entry price on crack spread • $45 MM MTM from crude optionality • Establishes physical presence in PADD II/Group 3 (“Group”) market via combination of physical long and short positions • EGM will control base crude slate providing ability to arbitrage physical crude markets (i.e.,light/heavy spreads) • Creates physical presence in Cushing crude markets enhancing crude arbitrage, storage opportunities and market information flow • Enhance mid-market capabilities in the Group and capture incremental margin and new origination from products sales • Provides avenue, which doesn’t exist today, for EGM to transact with other companies (Canadian producers, PdVSA, Pemex, Aramco, et al) as sole source supplier to a refinery • Current market offers immediate short-term upside opportunities incremental to the mark • Opportunity to develop long-dated forward market in crack spreads • Opportunity to extend EOL products into the Group Proprietary and Confidential

  4. Project OZ Transaction Economics (estimates) • MTM Value: $110 MM (PV10) • Crack Spread: $65 MM (PV10) • Crude Optionality: $45 MM (PV10) • Accrual Value: • Refined Products Sales: $2.5 MM/yr. • $16 MM (PV10) • V@R: $50 MM • Credit Reserve: $40 MM • Sources/Uses of Cash: $40 MM 10 yr inventory finance • Potential Upside: $50 MM residual cash (not in current MTM) sweep at end of term (80%) Proprietary and Confidential

  5. Project OZ Risks & Mitigants Proprietary and Confidential

  6. Project OZ Recommendation • EGM recommends the Board approve allocating the necessary discretionary V@R (est. $50 MM) required to execute this transaction • EGM recommends the Board grant authority to Office of the Chairman to approve and execute this transaction subject to completion of all conditions precedent/subsequent and definitive agreements within the defined economic scope and risk profile summarized herein and further detailed by the attached DASH Proprietary and Confidential

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