Hi George.
PWI's exposure to Enron for "potential" non-payment on November physical product deliveries is slightly less than $900,000 (30 days of gas sales @ 7,500 GJ/d @ $3.97/GJ). That is, of course, not a very nice hit to perhaps take but still, relative to total November sales revenues, it certainly is not catastrophic.
Regarding the 8.8 BCF of hedges\fixed sales that PWI had\has with Enron, it looks like PWI simply drops from 58% hedged on its 2002 gas volumes to about 50% hedged. At Friday's natural gas and futures prices, this loss of hedge is expected to reduce gas revenues by a total of only $3.9MM. That averages just $156,000 per month throughout the 25 month term. Again, certainly not too nice but also not catastrophic.
Bottom line, what's the magnitude of a PWI unitholder's exposure to Enron ?? I estimate 0 to 1 cent per unit in 2001, 2 to 3 cents per unit in 2002, and 1 cent per unit in 2003 (Eg. If the ANNUAL distributions would otherwise be say $2.38, $1.60 and $1.60 for 2001, 2002 and 2003 respectively, then ANNUAL distributions risk dropping to $2.37, $1.57, and $1.59 respectively without the hedges\fixed price contracts).
JMHO but Enron's pending Chapter 11/7 doesn't really appear to be the biggest concern PWI unitholders will have over the next 12 months.
Have a great day.
Later,
grayhairs |
