1. Confidential & Proprietary ENA UPSTREAM 17 April 2000

2. 2 Confidential & Proprietary ENA Upstream Objectives Commercial: Arbitrage gas commodity, transport, storage opportunities Facilitate new supply/demand for gas Effect cross commodity plays Provide value-added services Financial: Increase ROIC Increase capital velocity Increase asset liquidity

3. 3 Confidential & Proprietary ENA Upstream Today Most of our upstream positions are mature asset positions that are difficult to liquidate, and must be managed: HPL - goodwill has prevented asset sale, ENA has monetized much of the asset value. LRC - Use as a trading header and lack of firm contracts makes 3rd party valuation difficult Mature assets compete based on cost of service and access to supply/market Difficult to establish a lasting competitive advantage Response time, price, and customer service is critical Mature assets require close coordination of functional resources to capture value in a competitive market: Supply - Must be driven by market / trading needs Marketing - Must focus on optimizing transport and supply position Trading - Must have access to market, supply, operating information Engineering & Operations - Must manage the asset to best meet the needs of its marketing and trading customers

4. 4 Confidential & Proprietary ENA Upstream Today Additional upstream capital investments must either: Earn a sufficiently high return Allow us to capture a strategic advantage Enable us to develop a platform to expand our trading or origination capability Additional investment in our mature assets will be limited based on these considerations Our gas assets have enabled us to develop a tremendous knowledge and skill base with respect to the N. America gas market. We need closer coordination with the gas marketing/trading functions to identify/capture upstream opportunities across ENA We need closer coordination with other origination/support groups in ENA to better leverage our combined resources/services We need to use our knowledge of the gas market to create the most value while deploying the least amount of capital.

5. 5 Confidential & Proprietary Upstream Markets & Opportunities ENA Opportunities Asset ownership positions Capacity ownership positions Commodity ownership positions Service contract positions Markets/Customers Pipelines Producers Storage Companies Gathering/Processing/Treating Companies Oilfield Service Companies Originate transactions to capitalize on the following: Rapidly changing supply/demand for gas Expected shortage or oversupply of asset related capacity Ability to create liquidity of asset/commodity position Opportunity to offer value added services (outsourcing, risk management, marketing, operations, financing)

6. 6 Confidential & Proprietary ENA Upstream Strategy Strategy for managing mature assets: cost reduction/efficiency JV with other industry players to gain economies of scale and access to markets/supply Understand and aggressively manage cost and revenue structure Create new products and services ahead of industry trends to differentiate our upstream asset position vs. competition Strategy for upstream deal origination: leverage our upstream knowledge ENA’s view of gas transport, storage, processing, treating capacity? ENA’s view of gas supply sources, gas markets and cross commodity spreads? ENA’s view of capital and services? Strategy for managing upstream positions: create liquidity Use existing skills and resources to grow and optimize asset value Create trading positions or gain contractual rights to assets or commodities Recover invested capital for redeployment

7. 7 Confidential & Proprietary Upstream Business Model “Upstream Origination” “Mature Asset” HPL, LRC Upstream Competencies Structuring, Risk Management, Commodity Trading, Marketing, Asset Development, Finance, Construction, Engineering, Operations, M&A, Optimize, Redeploy Capital Trading Positions & Liquid Asset Positions $$$ Invest, Grow, Structure, Redeploy Capital $$ $

8. 8 Confidential & Proprietary Upstream Orig. Resource Deployment GAS TRADING WEST /CENTRALEAST TEXAS OFFSHOREHPL ROCKIESNon- HPL (OGC) AllenShivleyNeal Martin / East / Texas/Martin / Schwieger SchwiegerCentral REGIONAL ORIG. TEAM LEADERS BierbachTBDBertram TBD Byargeon Sharp PRODUCT EXPERTISE Transportation: TBD Storage: Bieniawski + Compression: Courtney + Supply/Gather/Process: Sharp + Witt Bilberry +Zivley Legler Bryan Hoff Riley + Outsourcing Services: Bertram + Day Rate Hedging: Peyton + Gas vs. Power Grid: Tapscott + Facility Engineering: Cocavessis + Reservoir Engineering Cocavessis + Operations Schneider + Permitting/Reg/ROW Schneider + Risk Management: LaGrasta + Systems Pearlman + Finance: Thompson/Jakubic+

9. 9 Confidential & Proprietary Power Trading Financial Derivatives Industrial Services Power Development Munis & Utilities Trading ENA Origination HPL Producer Services HPL Industrial Marketing HPL Generation & Utility Marketing Other Industrials, IPPs Utilities & Munis Other Industrials, IPPs, Utilities & Munis Storage Texas Gas HPL Transport Producers on or near HPL Industrials plants on or near HPL IPPs on or near HPL Munis & Utilities on or near HPL HPL Orig. Resource Deployment

10. 10 Confidential & Proprietary ENA Upstream Organization

11. 11 Confidential & Proprietary Summary Opportunity to capitalize on upstream opportunities driven by: Rapidly changing supply/demand for gas Expected shortage or oversupply of asset related capacity Ability to create liquidity of asset/commodity position Ability to offer value added services Opportunity to focus existing upstream origination resources: Coordinate customer and market intelligence with trading Deploy resources to meet market needs consistent with stated Enron preferences Opportunity to leverage existing skills and knowledge of the gas market: Technical resources and systems must be cost competitive Lessons learned allow for faster growth and redeployment of capital ENA Orientation- Natural Gas & Transmission Assets