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Gold/Mining/Energy : ABC - Abacan Resources, Nigerian Oil $$$ -- Ignore unavailable to you. Want to Upgrade?

To: Edward M. Zettlemoyer who wrote (2653)	4/5/1999 5:44:00 AM
From: SDR-SI	Read Replies (2) \| Respond to of 3156

Good Morning Ed: It is my understanding, both from company-released information and from personal conversation with key personnel involved in the project, that both Abacan and Enron are prepared to move full steam (no pun intended) ahead as soon as the contracts are signed. However, it appears that one of the principal sources of contract signing delays is related to Enron's negotiating posture in which it has put forth its position as one which provides the client countries with power, while minimizing the risks to Enron. While such a position is one to be sought in any negotiation, apparently Enron has pushed the limits of legal and financial safety for itself beyond what others might interpret as a reasonable standard of admissible risk, and the negotiations have not yet arrived at a completed Power Purchase Agreement ready for signature. Information indicates that recent changes (within the last couple of weeks) made by Enron in its negotiating team and, hopefully, in its negotiating strategy as well, should result in the ability to see definite progress toward completion within the thirty day period which Tim Stepehens set as a goal for re-evaluation of this project. This appears to be a situation in which the client countries' political people are ready and anxious to sign, but that big company conservatism, inertia and negotiating style are slowing things down. Regarding the generating plants themselves, I believe that Enron has previously indicated that they have package plants selected that can be on-site in almost-ready-to-operate condition in about six months. However, actually making them operational and getting them on line and connected into the grid will, no doubt, take a bit more time. It is my understanding that project has also been expanded a bit to include the takeover, rehabilitation and operation of several existing generating plants within the client countries. It has also been indicated that, while the complete project will require development drilling of the Abacan properties, there is enough gas supply now readily available in neighboring Abacan properties to get the actual delivery of power into action as soon as the generators are ready to operate. Although some have indicated that this project is an additional benefit and that Abacan's real value is just in Block 4 and the other properties, IMHO that the power project and its semi-predictable income stream is very important in strengthening Abacan's negotiating position for the best deal on Block 4 and the other properties. The demonstrated existence of this income base will make those interested in Block 4 realize that the company will be able to survive and will lessen their tendency to try to gain the properties at a "fire sale" price or to just sit back and wait for the company to reach the brink of financial disaster. Those involved in the project were optimistic that forward progress would be readily evident in the next couple of weeks. Steve