1. The Wedge... We Get… 0.48 MMTA (24 BCF/Year) and potential option on up to 0.6 additional We Give… Price - (potentially fixed but most likely tied to Brent, WTI or NYMEX) Callback option on same base quantities Some other diversion rights

2. The option: wedge appearance vs. reality Wedge AppearanceWedge Reality FOR SALE TO EAST ASIA UNDER LONG TERM CONTRACT In other words, by agreeing to bid with a call back provision we are effectively writing a put in exchange for a contingent premium that would be paid only in the event of non-exercise.

3. Basic Economics if the cargoes are put to us Potential Sell Side… –US Strip 3.33/MMBtu –Zeebrugge Indicative 2.75 –Spain - Crude Based –India - Crude Based –East Asia - Most likely off limits Shipping –To US $1.80+ –To Huelva $1.50+ –To Zeebrugge $1.60+ –To India XXX

4. Joys of Being Long FOB Australia LNG Metgas is most likely India project to be online by 2005; great, but… if none of the India projects are up and running by then it will mean potentially 10 to 20 MMTA of available supply at either Gulf or Southeast Asia looking for a home. Between the time we sign up the LNG and the time we load the LNG our Europe natgas price point could have moved away from Crude. The US is a reliable sink hole for LNG. (NYMEX prices should serve as basis for our value at risk assessments). In that sense we’d be long Henry Hub and short Crude - so we could hedge via HH to Crude spread option. We should not kid ourselves about the potential for having these cargoes put to us and then placing them in Asia. We could, however, enter into a destination swap with a Middle East producer with cargoes bound for Japan or Korea.

5. The alternative… call it what it is. Let’s see if they will just be willing to purchase a put from us. –We could probably hedge against (not to mention value) a concisely written put contract much more efficiently than we could the purchase-callback structure. –We could seek to move all of our margin up front into the premium and then agree to make a market in these cargoes (if needed) at a netback to the highest available market. (I.e. forgo our diversion rights in the event that we do take the cargoes.)