RISK ASSESSMENT AND CONTROL ENRON NORTH AMERICA PORTFOLIO WATCH LIST UPDATE AS OF 2/1412000 Distribution: Baxter, Cliff Bowen, Ray (via cc:Mail) Buy, Rick Donahue, Jeir (via cc:Mail) Hnedlcke, Mark (via cc:Mail) Hopley, John Skilhing, Jeff Sutton, Joe (via cc:Mail) Whalley, Greg PLEASE NOTIFY RICK CARSON AT X3-3905 WITH QUESTIONS OR COMMENTS CONFIDENTIAL Cost & Gamy Valucs asor 12-31-99. Market Values from Merchant Portfolio Repait Dated 2-10-2000. ECTeOO5214816 GOVERNMENT EXHIBIT 24587 Cnm No H 04-0025 EXHO43-O0001 I IEXHIBrTC~O&P5'31 1wrrC45o/1I ~OATE,O.2ke~'/~~ I 2 RISK ASSESSMENT & CONTROL PORTFOLIO WATCH LIST - UPDATE AS OF 2/14/2000 VALUES INDICATED ARE FOR ENRON NORTH AMERICA TABLE OF CONTENTS WATCH ASSETS.....................................................................3-s Bonne Terre Exploration Lewis Energy Group Oconto Fells Cypress Exploration Linder Energy Group WB Oil Company DPR Holding LSI Specialty Corp Ecogas Corporation Mariner Ene~ TROUBLED ASSETS...................................................................5-8 Bngham Exploration Forcenergy Kafus Industries/ Canfibre C-Gas Gasco Distribution Queen Sand Resources CariizoOil&Gas HuaJ~esRawls Repap Crown Energy Ice Drilling Sierra Well Service EnSexCo Offshore Indusixial Holdings Transcoastal Marine Eugene Offshore Holdings LLC Inland Resources TnPoirfl Inc. LOSS ASSETS.......................................................................8-9 Belca Oil & Gas Hogan Exploration Nakomthai Strip Mill Costilla Energy Lyco Energy Qualitech Steel RESTRUCTURING GROUP ACT IVITY In Progress I Partially Completed Restructurings Completed Brigham Exploration Carnzo Oil & Gas C-Gas Costilla Energy Crown Energy Eugene Offshore Holdings, LLC Enserco Offshore Forcenergy Gasco Distribution Ice Drilhng Hogan Exploration Inland Resources Hughes Rawls LLC Repap Enterprises Indusinal Holdings Transcoastal Marine Kafus Industries / Canlibre TnPoint, Inc. Lyon Energy * Qualitech Steel Nakornrhai Stnp Milk Queen Sand Resources Sierra Wall Service CONFIDENTIAL EXHO43-00002 2 3 RISK ASSESSMENT & CONTROL PORTFOLIO WATCH LIST - UPDATE AS OF 2/14/2000 VALUES INDICATED ARE FOR ENRON NORTH AAIERICA WATCH Assets displaying early warning signs of potential weakness that deserve close attention Bonnie Terre Exnloratlon (Limited Liability Company) JEDI II & Balance Sheet a "MOVED FROM PERFORMING" A recent ENA internal reserve report indicates that the Company's PVIO total proved value is only $1 5 MM (two wells currently economically viable). The investment is stiuctured as an LLC with Sam Gary contributing land, prospects and 3-D seismic data worth $20 MM, as well as $4 MM in cash. Enron and JEDI II have committed cash of $36 MM over a two-year period, in return for a 62.5% membership interest in the LLC. The Company has developed a sizablc prospect and seismic inventory, but will require additional capital and I or indusuy trades to develop. Sam Gary, a private E&P Company located in Denver, is the Managing Member with control of operations. A technical evaluation by the gro is ndev~,. Cyoresa ElDioration (Working Interest) Balance Sheet * The New York based investment banking firm of Allen & Co, continues to locate and interview potential investors to place capital (targeting $60 - $70 MM,) into the LLC Enei~y Investment Compmn of Lafa ette LA, will be designated the Managin~ Member, with control of daily operations. DPR Holdlna ComDany. LLC (Senior Debt & Private Equity) JEDI II & Balance Sheet * The slope work at the Eagle seam in the Panther mine has been progressing slower than expected, with full production from this seam now expected in Jwi-2000. On a positive note, production was up significantly for Q-4-99 at the Remington mine. ENA recendy extended additional loans for $~MM~ with proceeds to be used to develop slope work to the Eagle seajn, purchase additional mining equipment at the Dakota mine and upgrade the coal preparation plant at the Remington mine. The lawsuit by Peabody Coal against DPR, regarding the issue of "off-spec" coal has been resolved and were required (rransfcr to ENA CLO #1) S24.324 MM Ecoass Corooration (Private Equity & Revolving Debt) Balance Sheet a "MOVED FROM PERFORMING" Issues have recently surfaced regarding the Company's working capital position, the adequacy of internal controls and budgetary processes. Current liquidity constraints have also put the Company's ability to meet payroll obligations and its required payments to bondholders at risk. Working capital has been impacted by project completion times, permitting delays and delays in obtaining external project financing The Company currently has no sigiificant revenues, as a result of most projects still being under construction. Staffing continues to be a concern, with the Company recently hiring a Controller, but having had a vacant CFO position since Enron made its investment in Jul-99. A due diligence financial and operational review was performed by RAC at the Company's corporate headquarters in Austin, TX on Jan 25,h~27&* ENA has mobilized a financial and coaimercial team to address the issues. CONFIDENTIAL .3 Ft~Tnflt~A214RAR - EXHO43-00003 RISK ASSI~SSMENT & CONTROL PORTFOLIO WATCH LIST - UPDATE AS OF 2/14/2000 VALUES INDICATED ARE FOR ENRON NORTH AMERICA WATCH - (Continued) Lewis Enerwy Grows ("LEG"~ (Limited Partnership & Term Loans) IEDI & Balance Sheet LEG successfully negotiated a 54 MM merease to their credit facility with Compass Bank that will allow them to move forward with a year 2000 cap-ex program - no drilling had been done during 1999, due to capital constraints. LEG paid their $2 MM bullet loan on Feb-2-2000. An offer has been received for the Company from Calpine, that is currently being reviewed. Enron is a 35% owner of the equity (Transfer to ENA CIA) #1) S 4.683 MM Llnder Enerrv LLC: (66.7% Membership Interest) JEDI II & Balance Sheet Distributions have trended up recently with the $709,000 received for the period from Dee- 10-99 to Jan-10-2000, the eat the had been over the ~ paste LSJ Electric Snedalt, Corn (Sr Term Loan, Preferred Stock and Warrants) JEDI II & Balance Sheet * No updates since our last re The Co is current on pnnckpai and interest payments ~4'~ (Transfer to ENA CLO Trust #1) 35.950 MM Mariner Encray (Private Equity & Debt) JEDI I & Balance Sheet * The pro-farina 2000 budget, which calls for cap-es of $70 MM, may require selling Maz-iner's interest in the Zion deepwater project and dropping 2 other exploratory projects. An implication if that strategy is pursued, is a significant decline in year 2002 EBITDA. which could effect Manner's ability to pursue the IPO option. The contemplated IPO is projected to raise up to $200 MM in common stock ~th the proceeds to be usedtor ~and~e~ndinres (Transfer to 1~uana) S 750043MM Oconto Falls (Sub-Debt I Equity & IPC's) Balance Sheet * Minor updates since the last report The second tissue machine is scheduled to be in place and fully operational by May Ban P complete financing for the second machine niie (Transfer to ENA CLO Trust #1) S 5.000MM WE Oil Comnany (Private Equity) Balance Sheet * "UPGRADED TO WATCH FROM TROUBLED" WB has signed a participation a~eement with Coastal, whereby Coastal will pay $300,000 for a 77.5% working interest on High Island Block 85. When drilling commences on the initial test well, on or about Mar-1-2000, Coastal will pay the additional sum of 3300,000. Al the conclusion of drilling operations, Coastal will have the option to continue its involvement in the leases by paying WB, the additional sum of $150,000 The Coastal project will be monitored closely for success and if the feedback is positive, other companies may be interested in WB's proprietary 3-D seismic technology, increasing the potential upside of the investment CONFIDENTIAL ECTeOO52I 4819 EXHO43-00004 5 RISK ASSESSMENT & CONTROL PORTFOLIO WATCH LIST - UPDATE AS OF 2114120041 VALUES INDICATED ARE FOR ENRON NORTH AMERICA TROUBLED - Assets for which the returns are considerably less than originally projected. Brigham Enaloratlon Co. (Sub-debt, Common Stock & Warrants) lED! II & Balance Sheet The ENA Restracturing Group is documenting a revision to Enron / JEDI Ifs Sr. Sub-DebtlWarrant Agreement that will allow Bnghani to close an incremental Sr. Loan from Shell Capital thai will uutially bring 515 MM into the Company This will result in a Sr Debt balance of 370MM (355 MM cuiTently outstandin~. If certain performance levels are achieved, this could go to 375 MM. In exchange for agreeing to the transaction ENA I lED! 11 will receive, among other thin~, a 4% ORRI on all of Brigham's properties and a re-strike of our existing warrants and a cash-less exercise provisiort The anticipated closing is within 2 weeks Brigham common stock is currently trading at 32 1/8 up from alow of 31, recordedon Dec-I 1-2000 £&u (Private Equity) lED! I * The high bid for the Company that was received from privately held Somerset has been rescinded. Enron now plans to meet with certain of the original bidden to attempt to enter into a purchase and sale agreement Somerset's bid for total enterprise value was 543 MM (new bids expected lower - in the high 330's) Backing out C-Gas's long tenn debt of approximately $22 MM, leaves equity value of 321 MM, rouajily 311 MM less than Enron's cost basis Carrizo Oil & Gas (Preferred Stk. & Warrants) lED! II & Balance Sheet * RESTRUCTURING COMPLETED - FINAL REPORT / WARRANTS RETAINED. Enron's 9% Series A preferred stock has been repurchased by Carrizo for $12 MM. ENA retained 250,000 warrants, theexerclsepnceofwhichwasreducedtos4persharefrom $11 50 Crown Easerrv (Private Equity) Balance Sheet * Crown is setting up a "pilot program" at their Asphalt Ridge facility, utilizing a similar process to that used with Canadian oil sand extraction. Crown expects to begin 24-hour testing soon, with full results anticipated in 4-6 weeks. MCNIC has agreed to put up the capital for the project in return for an increase in their e9ij~osiuon EnSerCo Offshore (formerly NorAm) (Senior Term Loan) EnSerCo * No changes since our last report Marketing efforts for the sale of the rig are ongoing Legal pursuit of the e continues foliawu~.~cessfiil mediation Eusens Offshore Holdings. LLC (Sr & Subordinate Revolvers) JEDI I * RESTRUCTURING COMPLETED - lED! and ENA Restructuring have consented to the proposed merger of Magellan Exploration LLC with 3TEC Energy Corp (NASDAQ: "flEW). JEDI will receive 390,000 warrants from 3TEC that will have a four-year term and a 510 strike price (current STEC price: 53.50) Enron retains an exploration option on Eugene Island 30 and a 50% W.L in Breton Sound 34. On Jan-18-2000 3TEC announced shareholder approval of a one-for-three reverse split of the outstanding shares of common stock of the Company. JEDI will also have net exercise rights and ~,i~yheck registration n~hts ~ SyWJbr%IA)Y*~ CONFIDENTIAL S ECTeOOS2I 4820 EXHO43-00005 6 RISK ASSESSMENT & CONTROL PORTFOLIO WATCH LIST - UPDATE AS OF 2114/2000 VALUES INDICATED ARE FOR ENRON NORTH AMERICA T ROUBLEI) - continued Forceneray (Volumetric Production Payment) Balance Sheet Chapter II BanknJptCy. RESTRUCTURING COMPLETED I FINAL REPORT - Total production pa~,went volumes have now been delivered and the proceeds defici of roxiniately $200K has been Paid ifl full. - .. .,~ -. V Gasco Distribution (Term Loan with Warrants) JEDI 1 Minor updates since the last report Loan Agreement currently in default The Restructuring Group received an offer from the Company regarding a Payoff of the loan, equity and trade payable, which has UuizhaBulLLL~ (LLC Memberslup and Senior Loan) JEDI I & Balance Sheet The Restructuring Group anticipates exiting from the debt side of the investment at par ($9.5 MM gross). ENA has notified and extended the payoff under the Sept-98 Loaji Agreement (58.15 MM) to Apr-26-2000 Jedi has agreed to accept payment in full pursuant to the Promissory Note Agreement of Apr-99, in the original pnncipal amount of 51.308 MM. plus all accrued interest, fees and expenses, if such payment is made by r-26-2000 H es Rawla will be the sole remaining Member of the LLC ~ Ice Drillina (Term Loan with Warrants) EnSCrCO RESTRUCTURING COMPLETED A reconciliation of the amounts owed indicates CS 1,057,836 (US$719,616) outstanding on the original US$10 MM (gross) loan after the sale of assets placed in receivership. A proposal from the guarantors regarding the deficiency has been received in the amount of approximately 5200K The Enron Restructuring group deemed the proposed settlement unacceptable ~ue~etheg~arantee Industnal Holdmnes (Term Loan I Currently @ LIBOR + 10%) EnSerCo * The Enron Restructuring Team has completed an analysis of the Company and began meetings with tHu on Jan.28' Price Waterhouse has been retained by Thill to assist them in restructuring their balance sheet. If Enron agrees to extend the loan, we will look to receive a second lien position on all assets, interest escalation features the longer the loan remains outstanding and cost-less warrants. Inland Resources (Cumulative Convertible Preferred) JEDI II * RESTRUCTURING COMPLETED The asset will remain in the "Troubled" category pending performance until Jun-30-2000. If performance in the restructured format meets expectations, the asset will move back to the "Watch" categoiy. Eriron owns approximately 12.6% of the outstanding common stock of Inland (2,920,975 shares) and also holds preferred shares with a face value of $10 MM. Inland recently announced that effective Jan-31-2000, it has sold its subsidiary, Inland Refining. Inc., which owns gasoline refineries in Woods Cross, Utah and Roosevelt, Utah, to Silver Eagle Refining, Inc. The sales price was $500,000, together with the assumption of various refinery liabilities and obligations. Prior to the sale, the existing inventory, cash, accounts receivable and a note receivable were transferred to another wholly owned subsidiary of Inland, and this subsidiary agreed to satisfy various accounts pa~~abIe and hahilities not assumed as of the purchase vn CONFIDENTIAL 6 ECTeOO52I 4821 EXH043-00006 RISK ASSESSMENT & CONTROL PORTFOLIO WATCH LIST - UPDATE AS OF 2/14/2000 VALUES INDICATED ARE FOR EN RON NORTH AMERICA TROUBLED - continued Kafus Industries. Ltd.. Canfibre of Riverside. Inc.. (Debt & IPC's) Balance Sheet "MOVED FROM PERFORMING" The Riverside, CA medium density fiberboard ("MDF") plant has been plagued with constrwxion and technology issues. The mast serious problem is that the high- end fiberboard will not meet quality requirements for smoothness and extraneous content. Production of this product is seveisi months behind schedule and Canfibre is involved in arbitration with Stone & Webster, the EPC contractor Kafus management was in Houston this past week seeking "bndge" financing of $6.5 MM for capital Tixes" to the Riverside facility and an additional $85 MM for other Corporate needs. The Company is expenencing severe liquidity problems that are impacting all of their subsidiaries and will likely need more than the $15 MM to be viable. They are also coiniting on a ~ (Riverside) (Transfer to ENA CLO Trust #1) (Transfer t. Condor) S 17.875MM Oueen Sand Resources. Inc. (Equity - Preferred & Common) JEDI I, JEDI II & Balance Sheet * RESTRUCTURING PARThALLY COMPLETED No updates since the last report Negotiations with third parties continue regarding our equity investment in the Company. The Enron Restructuring Gfoup negotiated the take out of the senior secured debt at par, plus all accrued interest and fees. Queen Sand The shares were down 885% for 1999. Sierra Well Service (Senior Secured Notes with Warrants and Preferred Stock) JEDI II * Sierra continues to work with Andrews & Kurdi lip on the filing of an S-I registration statement. Due diligence also is ongoing regarding the proposed merger (pre-IPO) with privately held, Houston based, Q-Campany. A merger of the two companies would result in a combined Company with an enterprise value of approximately 3150 MM and would give greater visibibty in terms of attracting institutional investors and analyst following The timing of the IPO is likely for Q-2-2000. The "claw- in" feature in the loan agreement will allow Baron to retain approximately 7% of the common in the Newco (Transfer to ENA CLO Trust #1) S50.166 MM Renac Enternrlses (Convertible Note with Wu7ants) Balance Sheet * RESTRUCTURING COMPLETED I FNAL REPORT - Enron's convertible note has been sold to DLJ for approximately $0.48 cents on the dollar. The Repap Agency Agreement has been retained. Repap Agency Agreement S 3.364MM CONFIDENTIAL ECTeOO521 4822 EXHO43-00007 RISK ASSESSMENT & CONTROL PORTFOLIO WATCH LIST - UPDATE AS OF 2/14/2000 VALUES INDICATED ARE FOR ENRON NORTH AMERICA TROUBLED - continued Transcoastal Marine Services (Subordinated Debt with Warrants) JEDI II RESTRIJCTURING COMPLETED Thc asset will remain in the 'Troubled" category pending perfonnance until Jun-30-2000. If perfomiance in the restructured fomiat meets expectations, the asset will move back to the 'Watch" category. The time period for the required $15 MM of mandatory equity infusion has been pushed beck to Apr-30-2000. and in that regaxd, TCMS has received a term sheet and anticipates a private placement equity infusion from SCF Partners for 55MM The second $10 MM tranche will be obtained through a Stockimiders' Rights Offering that will have detachable warrants for the purchase of 3.33 MM shares of common stock at an exercise price of $3.00. An investor will provide a standby commitment for the purchase of preferred stock not closed in the Rights Offering. Anticipated closing date of the Rights Offering is Apr-30-2000. TCMS common stock was recently quoted at 537/S. up from $2 7/S recorded on Dec-31-99 (Transfer to ENA CLO Trust #1) S 20.000 MM Tn-PoInt Inc. (Term & Revolver Loans with Warrants) EnSerCo * RESTRUCTURING COMPLETED / FINAL REPORT Bit-Pro, a private Scottish company, purchased Tri-Poini for approximately $30 MM the week of Jan-3 Ith. The Enron Restructuring Group negotiated the take out of our two loans at par, plus all accrued and unpaid interest In addition Enron received $2 MM for our warrants, which made the all-in IRR approximately 22% *."-~. No future cash flows projected and FMV of the asset has been written off. Residual recovexy possible. Belco Oil & Gas (Warrants) JBDI I * The Belco warrants are out of the money to the extent that it is not likely that any value will be realized unless another transaction is consummated with Belco that would involve re-pricing the warrants, which sinke at $27 50 (Cost Is a Gross Value) Costilla Eneriv (Cumulative Conveitible Preferred) JEDI II & Balance Sheet * RESTRUCTURING COMPLETE - FINAL REPORT - Chapter 11 bankruptcy. On Feb-I 1-2000 the Company filed a proposed plan of reorganization with the U.S. Bankruptcy Court for the Western District of Texas, Midland Division. The plan, which is subject to approval by the Bankruptcy Court, provides for the following: Costilas existing common and preferred stock will be cancelled and will receive no distributions. Holders of the Company's SISO MM of 10 1/4% Senior Notes due 2006, and other unsecured creditors will receive New Common Stock representing 100% ownership of the reorganized company. The Company's bank credit facility will be treated as a secured claim which may be satisfied by either refinancinj provided by other parties or a renewal note with the existing bank group. As a common and preferred stockholder, Enron will receive no benefit under the plan as filed. The Baron Restructuring group was successful in having the Bankruptcy Cowt re-instate (on pine- bankruptcy terms and conditions), a gas contract with Houston Pipeline preserving approximately $2.3 MM in mark-to market value for En.ron. CONFIDENTIAL S EXHO43-00008 9 RISK ASSESSMENT & CONTROL PORTFOLIO WATCH LIST - UPDATE AS OF 2/14/2000 VALUES INDICATED ARE FOR ENRON NORTH AMERICA LOSS - continued bean Ewlorallon (Senior & Ordinary Mcmbership Interests) ECT Balance Sheet Enron has been advised that the Company has entered into voluntary bankruptcy. Enron's analysis * o~n's habilaties exceed total assets and the investment has been written off Lvco Eneray (Private-Convertible Preferred & Common) JEDI I and Balance Sheet RESTRUCTURING PARTIALLY COMPLETED The Enron Restructuring Group negotiated a total payment by Lyco of their outstanding trade payable of approximately $2. I MM, which included accrued interest. Regaz-ding the payoff of our investment in Lyco's preferred I common stock, a "best efforts" agreement for total consideration of $2.5 MM has been informally entered into between the parties. This transaction is antict to close on or about Mar~3ld. Nakorntbal StaiD Mill (NSM1 -Thailand (Subordinated Notes wlWarrants) Balance Sheet RESTRUCTURING PARTLALLY COMPLETED The Enron Restructuring Group has succeasfidly obtained releases from a number of bondholders that had sued the NSM underwriting group, including ECT Securities. Enron's ~B" notes, with a face value of approximately $10 Mlvi, were sold to Oaktree Capital Management for 5100,000 Enron expects a finalized re-capitalization plan for the Company to eanrn~ful recovery for Enron is viewed as unlikely. Ouallteds Steel Cornoratlon (Sr. & Sub. Debt wlcommon stock & warrants) Balance Sheet * RESTRUCTURING COMPLETED / FINAL REPORT Enron is maintaining a gas supply contract to the Qualitech SBQ facility in northern Indiana, however, the Company is required to pre-pay one month in advance CONFIDENTIAL 9 ECTeOO52I 4824 EXHO43-00009