ML20248K689

Enron 1997 Annual Rept

ML20248K689
Person / Time
Site:	Trojan File:Portland General Electric icon.png
Issue date:	12/31/1997
From:	Lay K, Skilling J PORTLAND GENERAL ELECTRIC CO.
To:
Shared Package
ML20248K675	List: ML20248K689 ML20248K693 VPN-029-98, Forwards 1997 Annual Repts of Portland General Corp,Eugene Water & Electric Board & Pacific Power & Light Co (Pacificorp),Per 10CFR50.71(b).Merger of Enron & Poge Parent Company,Portland General Corp,Was Completed on 970701
References
NUDOCS 9806100225
Download: ML20248K689 (82)

Text

', " '., ' _..

+

.Q

.'l_

..o

' ^

• ' i' V

~

J,.

C-r.

' f ; 'y ; -

Yq :

. [

']

..i, _-

[.,.

3; ;,, - ;.,;,rq..g 4

.%'*'.y "1,&. '. -

t.

.~

3;+, ;.; y;;p. -

,g

^

.,,. g..: :. -"

a -

p

. _.h, u.

. fD..

, l y :. y!'y t

• • ^

h

,.'.s-

~',.,.4. %,.,,

. s. &_. p';); o, -

v.,.

...,.l.

^I' E*

Y,

'^*

, '?,'.

's l...

y."

)

, ?.,

. :. ~3,; ;. ':.

.?

,.

< y.'

, u.. : :. ',.., :.. '.n.,; (4 < hv

.w : F,.'-(..,.

.v..

. e e. ;:...

n.x, :.<

... m ;

9 y

-.,,,9,

~.m. ;.... 7 a ;

g, v. ;.,.;;c.;; ;. :;.

n,.-

,; n. -

s :.

,,,.;f ;; ; %.,

. 3;. 4 d

.M..

. p.;.,W B - : n,. ;.

.l%T.: ;.,.. /;;W :

J.

i. 3 f :; M.:..,3 %.V"f:,.y..i.. j '. d' ' - l Y ' f..

<.Q '...

. 2.'; :f, __ _.,._..;

. \\. ' _ ' n,.

,...?

'.. ;,. ; c. f : ~

. ' R N.%,..

-x. :; j ' - l '.

s, -

j '_.

.l l

l

. ' +

e"

. ',. 'Y

,. f -

l.

l I

I

,].f -

l

• T l_

. a. ',,,

' f /"

>Q

- fi, '

5:

. c f

:..'. ; '...'

G

'-C

,.g.

_y.

. ~ *..

. n.

J. j.

[ _. ;... (;;.

c-

. _. ~.

;j #1

~ _ '.

', ' /* [f G y ^ " ;-

• i- ;:.:.. ' :.. 9,.. ;

z'

' ;;. ~:j.,,.

f.

7 l l ).; %iW -,

f '- ' ' ' {; ; ;..

,,,[..,'

'".'O f,.9 sj i

?

-l t.

I'".' ' I' (p,..

yL _

.x~

- + ~

._3

pm...+,~.

<g

~.

. ; ;.,. ; 7. ' k

,I Q ', ~~

- f'. * * +5 e

_{

p i..!,

^ * '

'\\

e

?.',

'i".'l.

i' *y -

• • .g,.

, y* l y ;', ;

.,mL y._,g f._

,(

}.';

'l

? '

f+

g.g

e' 's

.i -

y '

,f ' + '

,f_

' [ *

, o t,:m e.....

p p'p'h1 r.L 7 '

o.-

^'

1.F ' b -

,...c : -l.

-.. ~

2.-

.L_

_. b:

?^

i f W Qg-f R 8~ sm % f. i ns 4-w) f ~ ~

. h wwl "

_ l -

ll.

i f'

~

c n.nhy;f.

34

%.3, x

3

... m~..

c.

7.#,e 1:

(

1 j

A,, g ;. ;,3 f & ' ' ;

'.i9? q:[ },, -l.

.. x f : j ? y % "g l };[3 [

y

• ..[

f ;l.

J', [.

A

. } g ",,._.__: y g. ;.., ;:7. y,

t

_ ;.4;g g

s y.

.. g.

1 J

..I l

,3 Y

[

4.

~

r r.. g:q.....,' ':-

. ~,,.fQ m.

c m

L..rs ' :

. t;_ p -

.y

%.g.

y

.... ' s.

w s,.,

.g l

... ' _' l 3 ;, :',[_ _\\ ( _ ~ y..

'.:.,'i',':),',.

, '. f., ', :.l t....

,y l_'

l

^:

l c..

-.'}

:.

+

e

.. ~. t;g j -'.. ;.

y

_,g

_ __ y_ ;.*

r.

.. l::.:j.

v',

.,l

,'.' " ::.: g <

..,_.m.

/

u.

.'l-

~I

~. ' ' c

,,, p

'.s f '.' : : &, ' ; :: : '..

?

p.

,,f >

• I,.'.

d t.

.r

(. ;; _;

,a t

, :...v..of

1.: '

a. '

".g:

.s

,l l p_

.* [ "i f:

l-I z.... ;

yy; L

.. - [.... ;

.w... -

_lf

). k

. N'.

~

,.Q, _ f

[

[;

y

j. b. _ ; ;. ; J Q:,..

. y

;. g..

~

.g.

v.

.m 3'..

4

e o

~...

8

.W

_ '.. g -.

~

'/...

1 yy.'

. \\

~..;,.

g l*

. ~.

g!

1 v

,p 6

?

.~

e.

L, ' '. :. _.. _ -,

.,i -

+ ',,

.D

q.. -

[

d

.f.,

j,

. c,.

' ? V f J J. % W:. '

T, y! wr79 M.

9+

'o

..o' l,

Q

• _ _=

p :.

g 3

. R ; j.

,X-

%c f,..

,M :. g,r., -%_

b.

. a

_ j

?N

^

.. ' - i=

-: c, :,g y

. ~.4 4.y

..,. 5. ' ;.,. -..

8 ' :.J

..~., }.

g, _,

. m

. e

\\

A.-u '};.. : '.

_g.,

~.,

,,..l.,,'_. -

'h. '

,.... / -.i,

+

.. l

_e.. +._,

v,..

r :.

3

.,,..,/

g'.;[ -

.g,; h;, p,:; 2.... :. 3.. ~.. ; p

.;:;. c; p,.' ;.y%

• 3g 37 ;_.y ;

3 r;(

. m. ~: ? s.,. n,".;- +

?

- +.:.n.... ; m.s

..:~

.y "y:- y.

.s

z. n.....

3

~. :

+

f y.

..? *.'f:,'4 : %' h,.,, '

f..

)

%,y

..f

-h

.j h

4 f : N I,

'.l.

'}

lI l -

... : nf -

..,'.?,.),.y. :. - /'g ;,..?l[ 9 l '._,'. *.

e..-

. [ ;'

[.-

'. 3,f.

s.

s fl

.s.

n' I

....,, @p.

I i

[.

h,Y h

f' t'

s

~ '

j

/, '

p '.

• w'* '.agg'h ? hy,.

.' y' qW;. Om.m*,, 3mm'

,'p

.,,s'

,[

,h.,.

/ ri 8N y,.

~

, i t'

'..;r.' i'.. i. 'N'" l l '.. *. - ' ',

,=y*'

7 A'*

.. I.. ' C)[' -[

e

.i c '. ' ' f. ',' A

• i

.' P:, - '

' '{2 / l 'a),f.I ( t." M.;(/r

'.,-_..,..=.',)),-

j

_ [,. '

'l'

..h' f h,.,'

. ' ' ; (,

',,, 38 ' '.

g-

', - [y :If. _Qy, h',.._. - )I

,,? ?. 'g, ('.' 'l.Q. j,y;; U.. Q).p.4

. -, +

'.i,,..,. g,' g ] vs', l.{,,,

-Nl g

'?,

.t. a._ f,. + 5 L, ; ' '.7e

b.,

> :[. :[.[:].,p.}..., :(:' ' ' g + - s. .J} g, f, .,_q. '. < r .,.. =,, "t

t.,,y,'}s y.

._._.,v 4 e .c* 8 M 6

p. g i

.i.,, ,,...s._ gl ? e g.. e' .,. {, 4 s- . ' '..f': ..,, / 4,'. p t,...- - g. a + 7 w

p;.g.j, 7,,, -

. g. - - i[ y- .. f 'I . _ f.: .l ^?' ' ^ ' <ei-a- w .v. 3 .~,. l' s... ,'y.. N*, ., '... '..,., < 3.c l ,e I 3.. y . ' " [ _ }

[

,y; ' ::, '.

i - ... .', 'A ' b. j '7 .y 9, ), _ - -, 8. n j .syh, y-.,. ,,s f - l N ,.&,i t v,.g/.....~ . as. ggi;[m '. $... ::,, $ -., 1,.- c., 3 ,s. -,. t i 8 .(

4

.f; Og

• kf.

P. ff 'v . h, '. ' '. l5 .S 4 T i '.. L }g., y; y.$ C." 3, ,'- ". ll% 3 ~. :'.. ', 2,: 3 i .,,Q$W::. Je , f, ' j. 7,'kT'.f * ' i f,J.a f'f.. ; 3. ;,.. f.,. ' t _ n- .g. y c + .[' .t f '...,. ~ i ' 'e ' ' e - - I' / ' .' N *' ".s.', s *'..;-.*,'*..'.,.",',# + ,/

• 'A

,g'- p r., ' ' ; f, ,o y ,.P_..-. ;:., -. +, -, .,.. g ','.}'a. $' ; l '.\\ '" ' ' .a (. 4 .e .o + s f. '.,, y, '/..y, J ' ' '.,,.'_ 7.,.,, ' '. : '.. ' *;.,-., "glp,, g. I.. *-,. -,... - ..;<r ',;. -. g ') [ f. .,b,, ..3

• u9'

.. /. P j}. i. ;y p .,,;,. 3, .3

y ;.,j _ _ _ ;

. <. -.. M 3 g,.-:;. ..t ( 7.9 ? . ;7 4 '*-[

• • }*

_i' . *.,y '. ? p 'e' ..[' / J '. ' [f, , k.k l q f '-l' h' '^'...E 'll. f '.' *, .t' , h '. ? 3 *f E',: , :o? ...-,,',j'.-_. xf',' ', Ml' 4- .... ' :i, $'p ' /. g' r .'I* t e ,...,4(, _ f,.. .p.,.._ -~',..*'t.- l,* _..* [".-, f - - ,W,..',. .1- _,c..,.,ggggy,,, f e. s.. .(.. + J t v^ g . g', kg,.,.7. f :;... -,e..'.,,...c 7 [, .n. .; _,, 3_...h.' .q. . ;3.... w g. g:, 7....,

.e

.n. ., ~;.;. _; , L.

e.,.;..f;, ',',.., "'. ' j ' -.

.-..,,,.. jf u ."..... l y 7..,. _.. y q, .y .. q;_ ..\\. I ... ?N 4 N

• J

.1 [ - r b s,.(. (': I', l.; g 1 7.1.1; phes poww weiect 6a ind6e muswangs tweest ..vv. rN -.. :. ergbesp W*elablishind husthmeses Waalwig intasuhippui .l a \\' ... j ' taastets that alse.prevHis a bases tpr futum dell!very ef. l' I.

.. ' =.1 \\ -

...] . Gneen's mtypated carmmedrty. usk managimoWB and ' ' i ? ~' ] ,', '. ' ' finance producti. The tereg4M mega'wattief she gly 6est. -, 1 'V - *.'. l -spillimagin mmdernal aparationin late 1998. - ' ;. ~ ~ . 4. ,L l. 4. i

~ ----- gf. ~q~3,idt@%@ih.h*hih{fg 4 r ;r 3: e ,y 4 - \\ ~ l \\ We begin with a fundamental belief in ~ 9 ,v@ the inherent wisdom of open markets. We j,c ' i ari innovative. We are all about creati e' i a energy. We operate saf ely and. h l // Wh0lwe are." ~ concern for the environment. We treat oth'ers as we would like to be treated ourselves. We are satisfied with nothing ~ less tlian the very best i1 everything. we do. O 4 e [ Q ? I I

.----r------------- 6 E ? ? = i Y 1 l

.g g e e g0'* h

• /,, f->

f f,,f y. j

k;,p {:,,f^rl dfq t

.. 6

c. b:.

+ 591%;J.;7y (,e:. q ;p. ; ;$ r-

)plg::;dk:'a',*V;Q, ifk;). 3 JL':%

5{ Wo:q:.l,(:;k L. t - _ .u b! y _ _ ;-llyY' 'f':_ N$ f' l ~ t a ry ~;, ( ;< - d'I's j) l p hf,Ib,al1 p, e./ c h<# f,ry yg; q da,* hj.' j I i l l kg I s ) I i e ar ?.

.. _.. m ,y'. . i n'~ c r: 6 r%., %.>

• C.. *y _@ y,,

.,p q'?- ?m,.s. .. e...q,f. NJgfM, , ~ * - y n I s >$h. 4'l'm&'G&l.) pt $,.Y..e w ' Y 'S l't Ns* &v %yg .r .., ' ; dh .,.,W.',. .f... t 1'.C gl~ ' l. <. c.;I, A-

u..

.. +. 9 4 r r

u

,x I e, m., 1 ~ ~. y.

/

"At Enron we are o .r,._ ~' i g .A 9 M to achieving'the superior i returAs to whichour l ~, - shareholders have been ( accustomed in the years ~.. i [ prior to 1997." . ek g

• 1f

.J. g-l - f f.g,. ; 4.... s., 7 4 ,,.,,.'....w e, e .,$.fje'g*- k, l s i,s. <, y 5. L YQ 5; f e_'.![*, ..et l ,. *Q,,.*;q, *,g . y g. ~s 1 ty li g g ew:.~.x ,#.,,. in 4)w, w;m% ' 4 )m,k jer;.'. % _ 3' .ax

5a ry g.

. gp ~ gL,,.:.' e .-J..m?AQ'qA., &.,,r. I seg%l%[j, I.:}.5 '.-kj ..,8f ' - w

,.n~

.m

" financial m m1s1. O O s (Unaudited: in millions except per share data) 1997 1996 1995 1994 1993 Revenues $ 20,273 $ 13,289 $ 9,189 $ 8,984 $ 7,986 Net income: Resutts from Core Businesses $ 585 5 493 489 440 380 Retail Energy Services (a) (g) Items impacting comparability (471) 91 31 13 (47) Total 105 584 i20 453 333 Earnings per Diluted Common Share: Results from Core Businesses 1.98 $ 1 82 1.32 1.65 1.43 Retail Energy Services (8) (0.03) ltems impacting comparability (1.60) 0.34 0.12 0.05 (0.18) Effect of anti-dilution (0.03) Total 0,32 2.16 1.94 1.70 1.25 Dividends Paid per Common Share 0.91 0.86 0.81 0.76 0.71 2 Total Assets 23,422 16.137 13,239 11,966 11,504 h 4 Book Value per Common Share 17.26 13.81 12.01 10.94 10.01 Capital Expenditures and Equity Investments 2,357 1,639 947 941 962 I NYSE Price Range -1 High 45 % 47 M 39 M 34 % 37 Low 35 34 % 28 26 % 22A [ i Close December 31 41 b 43 % 38 X 30 W 29 6 l (a) includes gain on sale of 7% of Enron Energy Serwces shares ($61 mdhon or 50 2I per dduted share) I Ravsnres Earnings Per Share - Diluted Annual Dividend Rate (5 in billions) (in dollars) (in dollars) .90 gg 13.3 lll 9.0 9.2 94 95 96 g7 12.w 12/95-11% 12m-9/95 9/96 9/97 present O Reported 9 Core Businesses

l to our shareholders 1997 was a difficult year for Enron in terms of report-i Increased worldwide oil and gas reserves by ed net income and stock price performance. Our net 12 percent. income of 5032 per diluted share included $1.82 per i Added sizable new oil and gas concession in share of non-recurring charges primarily attributable China. to the renegotiation of a North Sea gas contract. These financial results adversely affected our stock Transportation and Distribution price performance, as 1997 total return to shareholders # Continued our solid record of safe and reliable of (1.5) percent was our first annual negative return operations. \\ since 1991-a year where the S&P 500 also showed 6 Achieved progress on key expansions on each \\ E\\ a negative return. of our major North American interstate natural =; gas pipelines. While we view the 1997 net income results and stock i Completed the merger with Portland General and 1 price performance as unacceptable, we believe the fully integrated its assets, skills and capabilities actions taken in 1997, including the resolution of the into our expanding wholesale and retail electricity 2 long-standing gas contract dispute, were necessary businesses. f to clear the decks of key business uncertainties which overshadowed the excellent operating results Wholesale Energy Operations and Services of our core businesses. I Continued as the largest wholesale marketer of nat-ural gas and became the largest seller of electricity / 1997 Performance: Strong Operational in North America in 1997. A. _omplishments Company Wide i Originated several large energy contracts in 1997 was a year of exceptionally strong performance Europe, further enhancing Enron's position as the in our core businesses, which include Exploration leader in providing competitive natural gas and and Production, Transportation and Distribution electricity supplies and innovative finance and and Wholesale Energy Operations and Services. risk management products in the rapidly These core businesses posted an increase in earnings developing European markets. to $1.98 per diluted share in 1997 compared with e Advanced construction on three international $1.82 in 1996. Each of these businesses achieved power projects and began construction on six addi. j significant operational successes in 1997 and is well-tional international power and natural gas pipeline I positioned to continue superior operating results: projects, representing over $6 billion in capital. e Extended the risk management and finance products Exploration and Production created in North American and European markets e increased North American oil and gas production to the emerging energy markets worldwide. by 10 percent. I Aggressively invested in infrastructure and new e Significantly progressed development of India businesses in select international regions, such as l offshore properties. Europe, India and latin America, to gain footholds I t

6, r _7 ' ~ ' y ye. 3 s . ~-..},. i '. d ' e?,G. _ Y. :* w.. :.. ;a v ..' gg::. '. - ', ...p ,.g., '

p' i;-.%. T '.,.., * ~

<

Y;. .j,..._ y;;p - e M.. '.:.es ,1 -[ ,2.,.,J"c i-, - _ [ y, -.. 3 %' A>,, s^a V a., ,.. +, ; ,'? ~, .'.L 'P' p.,'..,. Y p,"., I. 'h e, , ' 1:.l. n. y -Q.?;y.. 3. ~. l _ M,/g y:, C._. '- - ~.'_y. ~ }l. . ~..

y. -

,7y .l. -[ '.($ f ( l ' ( {.[. h. ,(['/ y... ' - -('. 1 [' - -.'b, _f'. 'l' ]. .hl; - - , !y. ... lg..,, ,s.: ~.: - u 9,,". o;y :.;..;,r c' r ia..'. 5..",' '.,h ' [;;n*L A 't...'f.*..' ';;h*g':l ) i.0 - .f.t.h. lf' l. "' '. ),.

. I

,qe -U.,.'g.((h, +' .Q. L- . 4f$. f. , '., _ w.- .w.,.' n i ' '. ' [ v y G 2:, [.' ' p[,. '., ' :

1. .E 9

..s k ;.;. :,,Q l _

k.,.

! - (',..'. l, .') 4 Wr - J yl. L, ,. Np,. :- W... 1 , ;;\\.; _ ?, ;.,.,;p... .... v .D4; MQt f. l }. ~. ci- ..,...'h.... " ' g ;,^.g . l; h .y.- ..;,iyc; ,,o Y ') .%.,:;P.., ' ' '.. '. -,m.'y-

s. :.

~- b*y:. -e'.. ...q, _ y..?n ,K %,, ' '_ c . ; ' j, .j \\ .....,e..g.', r _.?-

w 4.,

...,g, I :.. _.. '." ,uc. m

g-5';. '-

..-. :.. L. ~.... -, - i.' -.. ' \\. ..,_u,, . =,.. - -.. - J. ' ;G.:[,.l. p. y;..., a.ry..g - p.,,..,._ ..., ; [. ,. ' L :t.._ : 1 7 *. 2,.. n ; *. -... _,',.y... Q:..' [... g, f- .. _. t. _-~ .Y s Y. . ' - ' ^

• e -

. '::Sy:' ., ' fut ;' 'r;;. J., S .',h. ;'l,...- ^ '; '; y.; J. ': Q ; -

4l,.. 'g?' #

A { ': it " * t p*p :. G 1,- $,k. i;. ^ }l * , ' [/- N(

Q

~. - ,f - - ).j;[.h, s.t,; +.# g

:1 '"

t.:, gL .g....' .,.g, l,.jp... g;;7 _ ei q.k,h, f - J. . o. 4 hll l.. 2 .N;y,l 7.., ~.. . : Q.t.,- ?,.. W :,,.,.,:,, ..q; t,- o. n. Q_,.,....:.,).y,.- ?, ..sh',} . y 2:k. _ l.R 'T:.. ; h 4., ' ',..',*,. :: m.

?.

i.-.: ' - 3 j, cc .,,.e. a' - '~ .. ;.~._. ;y{g. c.- f._ ;.f .v ..g ,.y,, } .T,'_ ~ f. :. l.i; f, h,,, ,_ }g t, a . '.?:, $ Q.' s y, ... -... s . '..: ' : ' :l'.} gY_ ' ' .l . p. ..u ?.... ; b ' '. b ', * :pg -c .'.f..-. v '.e, -L ,, e i.,". ' -l *y V I' s,Nu W,. 6:.. n.. :. / ' 4

E... ;

', ' ' ' : 'YY .L f.'h

l. f ?

,'.f..,. ' ' ) ,:_ l,,.._.',..;j.,., .l,:. ;.~f;y. ,,c, * ' 5'. u '. ' ' - r,

s.,

' ky:... _. ., _3'...' ...f. b _j' l, '., $6. ,,.. ^ ^ (._. ', q :, ;) y ;.. ' j. ' l l . ' '.l.1.W { .. y;g ;. ,'( ( .].',.., 7... if '.. :..',.. ; Q. 2

1,

n; t V,0. '_ ; -,., .q .? /;. ~ O ..u_,,'- a t ;,. ;,.:;.,.:,*gy ja:,;.'.:-.,...;,, '.. m. n.,- n-y:y .<:,v -Q,,,,. o t h- -l ._'y l. r,y _y ,,'*r} l-

f.. -

gP p ' ' ' ' ' ' ' * ' '. gn

• n' uG-

.e, ?,'. 7.n M. ' y t ' :7 } :. p,. :.,.. _ ..) .{ ',' i. ,s..;. )f.- l = _., s ' g '.* i ;(,.,,. p - S.q,,,q j:; O- ..;. J., p ',.. lk;_'. 4 ' y.,.. 4.1. h f 't 1,;'.. ' }v.,.. - - '+ ,/ ' 4," b ', g. .,g-y:.., .e- ,hg ;,,.l :.,,o ; '.,.. ' ...t 's,%, O' " s, ,..,[ 's .P t 4.Q J- ,gf0'..

• r' '

'? v ~ .E

s. '

_k ',f;;.,&; ; - .s.. 7 3.dp* Q a. l..,.G.'.:r ;> : Q ? , i:.

• • ' N)...

'l Q +u.,,'.^ h ; Y:;, s ? ,. j.p. .[f,

• _

'e .-.-, N .W , 4 .:.o.g.,_ 'l 1,Y:,1 I" i q',,.liy 7.:;.., l:'.f. ' ' 7 i ~ 5 g'.'._'_' g } e: - [.,;;,. -' -p j v e '..'45 e'?' ..,.,..s, _..y. .w. ,._,Qe,",,, .,4 A .y si * ,.e, '. y

• h. &g r;p;. ', -

"q- _ ; y. y,._:....j. . f' ww;.. ;. -,, 9 ;;.,. _., : .4 ' - c -..,. . -/. .i i, ...O.,4..'g 1 i y /. *

s. :.. - -

..y4: ' p - - &wnawmmaws.p onw %' M. n:...M : ' M? ~ ' -

.p.

f. e

i. - f *_.,. jp i g

g.,. l I

J

,p .x y- -. g; j; a; I **. l' ~ r 'b, 4;z ;y' g' ,3. 3 ,..4 e 7. e s 8

? and franchises for expanded delivery of Enron's Enron's attractive pricing, to result in substantial unique energy pmducts in growing markets. earnings growth in 1998. The volume growth will come from execution of a well-defined, diversified Each of the operations that comprise our core North American and international drilling program. businesses possesses unique capabilities, is the clear leader of its respective industry by almost any The Transportation and Distribution segment is measure and is uniquely positioned to consistently poised for another year of steady growth in earnings generate very strong earnings growth. and cash flow. Due to the regulated environments in which these businesses operate, this growth will In addition to our positive results from these core come from continued selective expansions to meet businesses, we created a new business, Enron Energy customer demands. Services, to capture opportunities resulting from the deregulation of electricity and natural gas sales to Our Wholesale Energy Operations and Services end-use customers, primarily in the commercial and business did not exist 10 years ago. During this period, light industrial sectors. Contracts completed in 1997 we have developed an incomparable North related to this business have associated future American franchise for marketing commodities and \\ revenues in excess of $1 billion. In 1997, we incurred structuring creative energy-related finance and risk start-up costs representing investments in this new management products. This successful franchise and vj retail energy services business of $107 million, or our extension of it to the U. K., the European conti-l $0.24 per share, but we also sold a small minority rent and developing energy markets, coupled with f interest in this business to defray start-up costs and our large worldwide investments in energy-related ~l establish an approximate $1.9 billion enterprise asset development, have positioned this segment for 4 ~ value, which equates to a value of $5.50 per Emon another significant earnings increase in 1998. [ share. We expect the value of this business to increase several fold over the next three to five years. This year, we expect our retail energy services basi-ness to incur start-up investments comparable to We invested $2.4 billion in our businesses in 1997 1997. As evidenced by recent transactions, however, and expect to invest a comparable amount in 1998. we expect this unit to continue signing contracts for i l These investments will fortify our competitive new commodity and service deliveries that assure advantages and enhance earnings growth in 1998 very sizable future revenues and profits. and beyond. Although our business portfolio will continue to pro-1998 Outlook: Strong, Visible and Predictable vide periodic opportunities to capture non-recurring Enmings Growth values, we are committed to generating strong, visible Across Enron, platform are in place for strong earn-and predictable recurring earnings growth year after ings growth in our core businesses, the new retail year. We also are committed to delivering earnings energy services company and other new businesses. growth from our core businesses in 1998 and target an appmximate 10 percent increase over 1997 eamings. Enron has hedged its net exposure to natural gas This growth will exclude one-time earnings items. prices in the Exploration and Production business at attractive levels for 1998 and will continue to as..ess To assist investors' understanding and analysis of our j future years' hedging opporttmities. In this business, operations, we also will continue to more clearly pre-we expect increased volumes, combined with sent the outstanding fundamentals of our operations.

Commitment to Enhancing Shareholder Value At Enron, we are committed to achieving the superior returns to which our shareholders have been accustomed in the years prior to 1997. With a leading market position in each of our core businesses, a proven track record of creating value by establishing new businesses and our large scale and early move into the direct sale of electricity and natural gas to new markets, we believe Enron is the global energy company best positioned to provide superior share-holder value. To this end, our company is equipped with a unique combination of assets, people, skills, market knowl-edge and innovative energy product development expertise. We understand the marketplace and look forward to meeting our customers' needs with / creative products and services. Through these /, l! / customer-oriented approaches, we are confident that we will retain our established position as a leader in

3 each of our businesses and continue to provide i j excellent service to our customers. We are absolutely f8-convinced that our efforts will create superior value 75 for our shareholders.

j j \\t i \\ \\ \\ Kenneth L Lay \\ Chairman and CEO Jeffrey K. Skilling President and COO March 8,1998

outlook: ~ Cleaner Fuels and Expanding Market Opportunities As we approach the 21st century, deregulation of and Europe. By transferring our wholesale gas market developed economies, economic liberalization in expertise to the electricity market, we established developing countries and an emphasis on cleaner similar high-caliber products and services for our fuels are creating significant growth opportunities customers. Today, we are the leading natural gas and for companies such as Enron. As these trends evolve ekctricity wholesale marketer in North America and and alter traditional energy infrastructure require-are rapidly expanding our European operations. ments, energy cor.'panies that take an early lead in identifying these changes and creating solutions for With our wholesale strategy in place, we are now customers are poised to experience significant actively focused on the deregulating retail natural growth. By combining Enron's first-mover advantage gas and electricity markets, both in the U.S. and g \\ with our project development, asset management, Europe. We are once again leading the market in { marketing, finance, regulatory and risk management terms of capturing efficiencies and creating new j expertise, we believe our company is better positioned energy products that are similar to the price, product, than any other to benefit from these significant and service improvements witnessed in the deregu-market changc, lated airline, telecommunication and other indus-tries. Just as the deregulated telecommunications 6 Deregulating monopolies in developed countries industry led to the creation of voice messaging and 7 The deregulation of monopolies in developed caller identification, deregulation of the electricity countries is a large-scale trend from which Enron has industry is leading to innovative products, such as l benefited in the past and is helping to lead today. sophisticated metering technology and real-time I / In the early 1980s, we identified restructuring billing data. opportunities in the U.S. wholesale natural gas market and led our industry in restructunng the Liberalizing policies in developing countries natural gas transportation and marketing functions. In developing countries around the world-places We created market-responsive energy products and such as Brazil, China and India-we are witnessing a services with our strong base of people, financial trerti toward the liberalization of economic policies. expertise, asset management, marketing skills and For the hrst time in many nations, governments are strategic regulatory approaches. The competitive altering their policies in favor of private energy infra-market that evolved from the deregulation of the structure investments that will strengthen their wholesale natural gas market led to the creation of economies and position them to compete in the global high-growth businesses and resulted in lower prices marketplace. These governments want to form and greater diversity of products and services alliances with experienced energy developers and for custorrers. managers who will support their energy needs and maintain a long-term presence in their countries. In the early 1990s, we identified many of the same opportunities in the wholesale electricity market, Through the relationships we have established, and which is continuing to deregulate in both the U.S. with the assets and other energy services we have _ - _ _ - _ _ _ ~

created and are managing in markets such as Argentina, Colombia, Guatemala and Trinidad, we believe Enron is extremely well positioned to suc-ceed in these economies. Our expertise lies in creat-ing markets to better serve local energy customers. As reflected by our current efforts in Bolivia, Brazil. India and other countries around the world, we are developing projects that address substantial energy needs and contribute to broad energy infrastructure. We are willing to invest our time and expertise in assisting governments with their energy programs because we have experienced firsthand, both in developed and developing countries, how these a;liances benefit customers and help our company establish an even stronger base from which to create worldwide 'ntegrated energy solutions. Cleaner fuels / High population growth rates and a concern over ,j rising pollution have caused many nations around lE 'z the world to insist on cleaner solutions for their ! ? \\i energy needs. This clean energy trend has led to J ~ 7 increased demand for natural gas, one of the cleanest 7 fossil fuels available. Worldwide, natural gas j ! demand has increased from 66 trillion cubic feet (Tcf) {i in 1987 to 82 Tcf in 1996 and by 2005 the demand is { expected to increase to 104 Tcf. In addition, rapid \\ improvements in renewable energy technology and i greater economies of scale are lowering renewable energy prices and creating significant market share opportunities for solar and wind energy products. Enron has a successful track record as a natural gas developer, transporter and marketer and maintains a strong leadership position in the development of other clean energy businesses. We design and manu-facture competitively priced wind turbines, partner in a successful joint venture that develops solar encryy applications and are investing in the development of technology that lowers the environmental cost of energy pmduction. We believe these activities, and i others that we are pursuing, have put our company in an extremely strong position to benefit from the clean energy trend.

e... ..,. ~.,,,.......... _ ;; ,.c .,- -... -. ;.. ;.,.. '..._.,.1..- g;..L . ~, .f,,1,,- . : - g.;..,.-.

. ;._ ~

-,' -' ::y;, [.- -......-:,.1*....

r,.

->A.. :.. n ..s ...., _.; : s;- .+.a. .c...- ...., ',.. s. ...,-)._ l,* * #

• ". - '.."'.i..'.*...-.. ' ^..~.b; L :. '. '., '. ;..._,;.>.~-. -...i -, _..

, _.._...,,;' ' ~ L...,; s. .' 'I": '. ' -, ' ;.'. e., :* ,','_L k: . ;,.*.. ',. ~ 9,,'i. -..c' t; u ,...;.....~i,. ;.. '.. ~ ..,... )- a s ,z,....,.. ..o... L ...... g.

• . \\ l?

{'>~. -,;,. :..,.. ~, _. - Q',,, *,[_ :,; ',. ' ... ~,,,_ ' a::' + . l _;;'.. ". L [.. :', - - -[.. [. _. _ : ;.., [_..i. y,,._ -;s ,.? .c_c. L..., " ;,.,,- '..}.'^ ~ *..,.o[.e.+l _ m. .'*n L

• ... + '..,.. '. '

y ;,. ',;y.._ .[;'. y a..-. - .g ..-... - ^... (... ; _' -.. [,. .*,s... 's.-

• '-,. _,,J =

(. _, ;;:. ,. _ '., c. : L..,- '.. _ d, ~.] ~ ' *::~ ~[._; ,,. _'.ll~-,, 3 _-.,* [;, 5 ?: ', l,~, y ;,.'j.,:* .0,.' ;;.;.*-v. c. r._:-

[

'- ' ~ .5 ., ' .m -,.~.,:........

^

, _ ;_.[, l '.._ ' g. - * ' * -- r c _? (. .. -;'?.,:.',, :,.';.'.._ f ,;...? ..+ c. -s..i;_: 'J. ..._'.s. v _, '.,,. : :....- p , _. *...,. ~_ z. s.,, .,;,....,,-.6_ .. s

. ;.....,.,....n

,y,.n .,q ; y,,, s',,., q. ; e. ..e a'... y

. ~.;, '. - ~; - '...,'.:

...3,,.. :

..,.;, ;.., _.,' y

- 7 ' 4 ,.'... - ".: 7 ,1 }..; r..- ,...cy,.;,........,,.;

, -,.., ;4

...,,,.,.,,;y.,,., -.. q., .{ ?,*-, n - -...c ; e,-.. -.,. .';.,,/.~..3..,... 1* ,5,.,, 7, ,.,g., .;y :-.,., -,,,_;,,,-, -

;;. _y

3. ; ; / _..

,U',e

i..

,....,.'.,,,.,.,.,.r...,,.s.'. . 1 ....,...,,,,..... s.. . - l,,.. ; -. .i.c.,, f- ..;-..+ - - -,_,...._ e ; .[.. ..,_r...',; }.. y.. .,g.,. ^~ .y,.,'. i._. ..;. ~; '_. '. ' ' l..l. ' ^. ' ' < t:, ~. '? ' '; _f_l . - k.1. _'[. \\ .s v ,cs .c. 1.,,,.. g* .\\. '. '..^1'. ;. J - *. ;; _..... - 4 -;a , y,._ ,..,-O.. -V ^ ' i;, ' L ;-.i, ; ;.. :; :,. ~ _, - - -

. i

.,.,;,.'.'.,q. ..)J.,. ',, '.,... ;:,) _.,.. _,.,. - ',s...... -...-,. ", -...;.,...*.: c.... ;,,.._.. -.:'.,', + ...,,.L, 1.. * *.., t.l :t.- ' ~. '* - ' -.. v.j. ' : .i,,,..* -....n ... -.. -...,,..... ' ' ;.. :. \\.'. '., !

u- + -

8,- L s .,-n, 4'..,-' ' _.. '

s. :.... - * +.',_.. f ' ',.} l:' *

• _. '. ' ',,. ~ -e.....

..c, ,.; - ' f'.~ ";. N ' Tl.,. ^ f.',; : :' ' : ' : l,0 ..w . ;,, h}.., r': ~~.'*.il'i .L's - ' ~ ' s

• s -...-.

v.....,... . ' 4 : -: ,.e.,',..+ ^ * ..'.3 a

,.. Y.

-4 ~, -.....-..,_.,%.

.... ' _,......... ~ .n

'. -. :r. s... -

_.s...,,........' ;.. ~.,..... s v' y * ? ; _';.... f r: ..r , _.,.....,'.,*.,j,,*'*., ' i y-y ....>*y 'l + e d,, ;' * ,-. ; '.. % Q :',, _,,.._,, ,. t:;,_jj' ,>-.'..~ .s ,_p_ ._c ..,e.

• ,0

.,i...,..,.,., .g. ... 1p,, ; .. ;.d. i ,. ",... +....

f' ';.

. ci,..-c.,.f.,,,.. ..f. .-,...e.= s ',,..y. + - 8 '.-, ' _.. +,- '.T,;' " -..:'. - '. '. 3 s .s ',1 +- -,,' ?' - ~ :. . ; i s.

• s-l } _ ;- e

. ; f.; ' . - [. g,* .1 s. ..r. t - ., '..;,*..'..,,.W'.. ', * .a 'g* - - -*,,,..+ g.,, +*. -p ,O; ,. ';.. v ";, ' _ '.... _. . m. -. ', __,. _..v- + _........ - +..m.-... ' ' *;,-.,5 ,.I s.; ? y

• • [

't :;':*. ', ~,. -. ' -. ' ' ' h I'. 'g -g, l,.* ,l. L '*'..',;?. < 4.-....' :'.. '.. ., ' + 'a ,.<..*'.s.,., : < o ,'i ' -" . ; ;.,, ;g, ', - 5.

,. q

. ', ;+,..,e',.... ...g......y. '. ~...,. ,.t .,.p .s' .. '..~. ?. - l. ..,,e. t.: s + z ,....l..;,- .,'.:. -..<,.,, '..*lv o'.. ^ ,t-.n.~., ..s ' <;. :+, - c - -; .,A ..i.....,,.. e- +t..- 4 .v ~.. - s .......u. v... ... /,. ,.,..,.,._...,.,(,;,,.

3. -

. ~.,.. ,',.,,a.,....,e..,,C~...,'.. s. ,6- ~. < ".a;.. 1.; - - 3, e il ^+.;..,;',,.,, '. e

c..

.. -. ~.. ..e L.+ s.. ..-- f, i ". ~- ' n.7 ,,",.s .,..t'. -......,t -m. ,,.'.9.,. ,. - L ;"

3. ;. :..,~.4.'.i yv u '...

p..,,i, /- ;..

.-.e.,. .,..g ,,i>..,3 u,,. -c. ~^~ ',* **,,,.. i ,s., >,. ' . r \\- ..k.. ', 'l; ' ; 'g' ' ;. ;.' ;.,f :,.:..':: L lc v..

• ; $., i,[*i ' ' * '? :3,W $. -:: :} f..,;:.,,,[',;,G':.)'. 'f., I '

-... h r* .. \\ s 'r.l ~. ', g*;.,.L f ;,.,: y; s'f.::(jf.' '.y,1 ' s.,

7

y1.c r

.[ .. j,'... : ;,.,.. [ '.. - ll [ } ;.. i \\; -. J.3 3. ;,, '_ (; j, "@, ' .'Q'.,f. .~..... ~. ' ;..g.[<_,;...q.:.;. :,,., g., p. ;' 3 w .,..;..:. y..;,. v..:, + ... ; s; >};;c; n *: ;.**':- l r; -',;;..,__-. ,.,y ,l, * :, t W,: T,;. ;. s., f.. 9:. >:.: : - _' '_9.-.),n... *', ;' '

• A,-l.;f..',.

?h...~.,.'. '..'f. - ) \\Q. '*-. : a: . '. " h g.] F' [, '. '. '. *" ' N.1.,.;;;;:p' f. ^.::' ?.. L n.s %.' % ;s ,.. ;, '. :., m.... r. lN. e.'.,p . '. ' ::..;;. :. l:.' . L..\\,.. t c ~ i . L ". '" ::. f.. W t' C,H.:% ~h...::',...',, m :...,.i 2 ::.j. ', b.:::;,'.o., fy e:., +;:::4a :: >>;,J.'. :.. o. -l' : .= .e .w s ' F[ 1

i..-

1 :::,: -.':'.. .g . :,'. v. v -.,[, x D ;,d. '. '.. ;;.. I, ' ;..?.' - .. -[. ~.; ' ',. L ...'f.;.','- 'I i ' S > j,...

• l ~ ' ',..;[. '. '

'e E} [ig'6,;; j[,(,f g[l J,;

x...g,u,. !. i. f.Q-( :

'n%.q,3?l .l. O, ..z.... _ v l.' _ : 1

;_.. q ' '.; - 7..

.*

n ,..e .;p t y :.

g. :._,q.

K ; s :. :. U$,T ? E...-.;.' l J ;. ; j.l.I.l. r..._. ; f._ '.f..\\l fN..,.,.;-: .?, (. . 8.w -~.o.n .v

f. l,,h:..,,; w. l..:. ':j..f%*Y

.l[. . E

L,; ';';;hI. ;h$j

\\*f, h'

,f X*

J.,, ....,f....,.........., ,.a..i.. v q ,1 .3 c..<.,..q 2.i.- ^ ......, _...;, _. i,., 4 _4 f sy. ;,YQ... w'.: y- ;:%p. -.., J.. 'j' ;.' ' e, - 3 4.\\;, :; -,f' a.. -, -.s.'+.- - -.r'.- ,4...

T...

...-...;,.,.;' 9 ;_ g...y.,;.. g. s 4 .._r;,.... r,,.. e [,(;. - ;;...: Q, x :. ,...^ _., q-p. ,y.,, :.. rG f,3 35(1,c ..r, . ~ ~. '.. -[, ) (q:m. [.;::.Q.f, i. l.f.y.Q;;.::".'. _;Q. Q j.l ' f. Q...q ' 4 ' . Q.. }. gL_;;f., Q;.._:;y ;; f g;

.', % (.

~;'.r 9:; ; l,a s. 3.., f_c ;. 4.... ' a :' y ;.;; y,,[.:;; :;.,..Am r. ::.): W. ' ...y,

e

,.. :v b '.Q ,:y,.;... q ; L '.,.53. : &. *l%,,p.y. ;; ; ~. :.,;.. y '. ._ - (([.; y p.}. .,..,j?.:. 5, s r_. [ .s .- [:,[; fr... . :, +.,. ;. ;; ..p. .'. ~ 's. ' il.,::..::_; v. a,.

(

[.',jf,, - :... c ' ;. Y ; . a.. -... f. yo *...- ;,,

a...a.... ;.;,

. w.

7..rg.

.,c. y ......,.;., z ... N,f [. ;, l,....."t.

- :.g yy.;

n 't

'y,.'

.5,

• N',.

.t',.;; 4 g.. 3. ...W. . -j ,l .i...- l -;..,,,..,. ,.,, +,.. ,:. > 3 i: e ...,. ~..-.,..,;',,- - [,,,. : .....-:.~ .e ,~..i.....,*s.. s. .c -- -:.....~.,...,. ~ ',..,..,.-tp...,..k,.. . " :.;." :.. e.. .,i,..W;. ( + _a p ;:, :r. , s..R.?,-,..e

~7:) n; 1..

.,v...., - t p. .p.. w ', : ..#+.-< I.,.*,,.i ' . $.: - -[ '.:: y i9,,,( '; h ~k .. '. x. '.- 'l 1;.g- ~ ^ - +

.3

~. '. *; '. ~ *...T',' ~l., ~ k s. '. t. h V + '. a.......,.'..4., .,. ' s y .....u.. e,.,+-s,*- _ ', -~,.;,,.,,- .......\\..... - - 9. , '.:.e - e +. r,;

.....

..:., ;................r-+

~. ..s e .. - :.,-,,., :g. :.,. p -A e

-c

.. ) s'i,.. *

• o:....

.;., _.... c ...... ~......c..- -...,y; .r. ..: '..,y... .. a.s . c.x. ~ .y . ~ : ....a ;.., . ;.. a, ' ;. [". L- . f~.. , i,,. .s.- '.. - f. _... : ;

,' [. f. ' _ *

• e.:

_+ 4- : . :.. ) ;. ; L ..., ;; '.. ;....4 .,...... ',.,,.;,... ;..y ,,,.,,. - .. i.. -.'-.... '.. -,.. -.-. l... ,.g v., ... I . ; f., $. -. + ;' ' - 1,. [ ' ? Y.! l'l_,_., r.I. 9,

hr, '

" ~,' f., ) ; _ * " c.'_.., ' _... :

~. ~ ....-N. ..*. L. ...' - ' -, ~. ' - i 'b. ? : -w u. '.h __l:. 1 -. g :.. ~ *.s '.;~ 4: .:y ' y;!:.. 'L -.s.g..

• u. v.

7 ~.' l I h,,,s e J 'M..Y ,;? I 1 - .t 5 ...,'.'z.,..,;, . '.,,. '. I < '. $ ' ' I.,. '.. ' r. 's

• \\ ~. ?,

.,. ' ;.~. L. l. t. ', ' I[, ' 7 ,,*.'4- '-_,L (

+

..e ,. ~. ., --.:.j- - i *, - e' :.,* -.~ t-

• I

' +4 . f:. ?- ) Ah {. .a% %,,' t.'. 4."e. v.,..._s ". ~' '..\\',+:,,,. : _-._.- -j 4 .+ .n r., ej.i... %... 4 :&.. 3 Q J. _ i~.,, s; ;,%.:y..,o'.. !, %....., ' '.. ' .T f. '' -., '.. ' -.' c..~ :.., '. I.', ~ :, f,,L,,.. _,.., c: 3 --.,.,,_....I,~ ?.. :. d1~, h:. n,:'h.,.';*'Q *f"_'. Y a ) -l. '. l I..,,' st;; }.. l._

• ...' '.. ' s, :...'T. c..,."

f y, y :: 4l, 1.. ?

• ..h.-

L. l _.. l.""..

.-, +.,.. _.. i

[, , ;; ? l k u ; W. u -b y -.? . :...T:,.,.,:' ?.. {,.c ', : : : N%.t.,,,.-.,..b :...' l.. a .,v.-. . NNf ~ I h' Y YNO' ' - N

• I'

?:. ~ 4 N ' ' ' + ' ~. '? .' ' f f. s l..* ' -~ b# [., l' a L.fs.2 9 c:: 7 gpo*@6oenW'.. u.:y.:i t i i & : a j f.V L tr ::-. - n> d. / /

;..y

_ Q., a..

Q....-: $ [. 2 ;. " Ju.: : b- - : l vyv .y es.p... -....; u

e.. -.

.?s 7~..~,*'.;-

.n.. .,._e-s.

.-, :g\\ g

..;. c(,.. '

.r + .. _.:,.-..,.:..-.';.,.,1_..

• .2..'-

- s-e -

Ly .,. ' 4,% %.. ~.., A... t \\... -i.-,, u...~ 6 ef. V .,w \\ ,-- - -vQ. l, - 7 L ' - e. e i W...,. ....,'l /.,. ...7~. ^.' ' J '.l...

..h._ ).p + s., \\, - c.

• M -'

- 1,...,l:. e.-f : r_, ),':+ :, y ' ',:, ' f' *.:.l ;; &,. .~ :.:.. ' .2 -- w '* : :

g,

., ' '.- i '. -.. p'f {g'.Q &,: : .i'eG ": % " vg ?'.. -. ;,,.W ;f... ' '.;; }_ '

• [.., t' :

4

',.*-l. -

y *:. m>g.}gf'),. ;,'.. '}n.y ).

-.,;.e

,,'..~:..s '.-' m...: > -.:.:; r l.,,. ? ' ..frck '..- '. ( ;. K, ':y f,'. _.,,. ' .u'.. l.,. 4 ' c y."I %;. V., [..,. :j, .' ". ^* Y.. ' : '-. '. ". s '/li.! js., ]$ ;QPpi: 1'c'. '; a ] i '.,..../,7 f ;.

• a, } y, j.r.. 'i ] :' ].'[. ].' .' J '.,. ' l.

. ; ^...

{*U -y% "1; . ' ].. ;.,1, j ,; W

w..i

.%* e _. -y ....7,'... . ': ;.-u.. u...v s. .,- p: >,.. - .o

Exploration and Production Enron Oil & Gas Company's (EOG) strategy is to be one of the most successful, low-cost exploration and production companies in North America and to grow its highly profitable and focused international portfolio. EOG has a long and successful operating history in North America and is experiencing signif-icant international growth. The company increased its 1997 worldwide produc-tion to 889 million cubic feet per day (MMcf/d) of natural gas and 23.8 thousand barrels per day of [ crude oil, condensate and natural gas liquids, or 377 billion cubic feet equivalent (Bcfe) of natural gas. EOG had proved oil and gas reserves of 4.5 Tcfe at ~' year end 1997 and has replaced production by more than 200 percent for three straight years. EOG's l reserves are 77 percent North American and 90 percent natural gas. EOG continues to reinvest all of its strong internally \\ generated cash flow into its business. In 1997, EOG's capital investments totaled approximately 5700 million, and a comparable investment level is expected in 1998. North America Contributing to EOG's North American success is a well-defined and geographically diverse drilling and development program, including almost 70 plays in South Texas, the Rocky Mountains, West Texas and New Mexico, the Mid-Continent, California and the onshore Gulf Coast areas, as well ~ as in Canada and offshore in the Gulf of Mexico. I[ Generally, EOG maintains a high working interest ,A,, 3 'N Y V position in and is operator of its properties. EOG i i

drilkd 520 net wells in North Amer:ca in 1997 and ECC has been active in Trinidad since 1992, and its produced almost 317 Bcfe of natural gas. operations there are well established. In 1997, EOG produced 113 MMcf/d of natural gas and 3.4 thou-EOG added new acreage in South Texas and is con-sand barrels per day of crude oil in Trinidad. The gas tinuing to achieve consistent natural gas volurre from these fields is sold under a long-term contract, growth in that region. In the onshore Gulf Coast producing strong cash flow. EOG expects to drill in a areas, EOG is producing gas volumes from a new new block in Trinidad in 1998, play in the Mississippi Merit field. EOG began operating in India in 1994 after winning in the Rocky Mountain area, EOG made progress on a privatization bid award and signing a production key prospects, including continued successful sharing contract for a 30-percent interest in an off-drilling in the Big Piney area in Wyoming. In shore reserve development program. EOG is the California, EOG acquired 95,000 contiguous acres in operator and participates in the development of the the Sacramento Basin and is initiating a 3-D seismic Tapti, Panna and Mukta blocks off the western coast of program in that area. India. In 1997, EOG produced 18 MMcf/d of gas and 2.3 thousand barrels per day of crude oil and expects The West Texas and New Mexico areas added sigmf-1998 equivalent production to almost triple. EOG has icant new oil production during the year, and the invested $170 million to date, increasing its proven y Mid-Continent area is now realizing the benefit of recoverable reserves in India to 652 Bcfe at year-end j seismic technologies that are being applied to this 1997. In addition, EOG anticipates that the approxi-region for the first time. mate 1 Tcfe of gross recoverable reserves originally f~ expected at Tapti could increase up to fourfold, posi-10 - EOG expects to continue developing its Canadian tively impacting future production after construction [ presence as evidenced by the recent acquisition of of a new 36-inch natural gas pipeline to llazira. This E j 74 Bcfe of reserves in the Blackfoot area of Alberta expansion proposal currently is being reviewed by and continued drilling in the Wapiti area. partners and the Indian government. Offshore in the Gulf of Mexico, EOG successfully In 1997, EOG signed a production sharing contract drilled the second Eugene Island 135 well, in w hich with the China National Petroleum Corporation for it holds a 50-percent interest. A third well is currently the appraisal an'i potential development of oil and being completed. The company has numerous gas reserves within the 1.8 million-acre Chuanzhong j prospects in the Gulf of Mexico and expects to drill Bhick, situated in one of China's oldest producing f three to five wildcat wells there annually. EOG also areas in the central Sichuan Province. This opportu-owns several deepwater prospects and plans to drill nity could have high upside potential. Workover up to two annually. activities are now underway, with initial develop-ment drilling plarmed for late 1998. International EOC's primary international activities are focused in Trinidad, where gas demand is steady, and India, where the markets have untapped demand for com-petitively priced natural gas. Revenues from both activities are paid in U.S. dollars. Similar to North America, one of EOG's international strengths is its low-cost, fast-track, high-technology approach.

l ' } _, : 'p', ' ;J/ Tv '. e .J

q ?l.;..

.L'y, .[;. } y..- ' :' n t.. h ' ' -,.... l~ ., - llll..ll.. ...... f.. gy(' :.+...; ; , _ :3 -- l

• }. '

  i-i

..,; h,. ?

/. G, g;'.l.} j_. [. ... ;g %.ig ...~ ..[ [ [I '. ;. {/ _' _ ],I '.1. ;), ^ ? ^ b L:? . j..:. - y s.. .,i.[.. [.. .;u

3 4;f.

q e: l :..:f .'Q Y'

L..'.  ; '

I l- ~ ' ~ ~ ,. q. }. f,. qq;.,

o

;, _. "..... _ 's; n.

. h% i ' ^

• . :... ~.'

'.. i: h .Q.;. - ..:.a 2-. p jY. y4 ; -[._ ;.;.;_.9,3.y[ ?:.,_,_ _p:,a ):.; ...{...;

, L

,_: - ). s,b ? ).

.}

,'} g }g' J. 3,. ..js. e: ;. :d.f. ". ,y. 4 :. a-

i.. ;.4%.,

i; e n;;

1, - f; " ,:' :.y n ;- );'.'. 1 ' 4).f.v. f::;:,:., l l ~2 J.'

f..

y n , '. e. p u ,. 4_:q,%,4 \\ ..Q. .. v - . ~ ;.,, . q:.; ; -n..

... ?

Q.; L. . > y.g.,".1,.. 2 :, ,~,. _ ......;. '4 .. j.lj ,.;,. ll._ .!: t_ (w ; 3. gg.'. ]; y~'.g.',..,...,',

.., - 7..;;.

,a. 9: p

• * ~. My ?,~

L, . y. ; :: 4..

A :

f: hq,., .s..: m. ... g.;/. .... -^. 6;' ' i,,,. i ._R.y i '.. 'u " s, . ~.

• T:

I.{:.;I. er.1.... ' ' q, ~ ;.; & t m. :. a. ,. l -,,. * <u n, :.. '1 g; e 'l. ~. l, i a , p, e., 4 .J i y....

- _s f:;.

. p- '.['. ::. ?. '.,p,,y ;ff. e;.: ;.. Q .... v s .,.,w. c. ;

r....

• L-f, p " l. ' r.*.l

~' f l } .... '. l ' ff ^ I ; j.Qll .[. E ll /' ~ o t 3.$ ., ;b s3.. .l4 ".) '._.7 '. < -]- . ; ;... a y ',i:; ->..:;.. ',,] -;.f -.'/.'. 0, -,..,yi- [ ,.c- ,3 f k':.. ];' e ; 1 c4 -l . i>-.... .w u. . ~.. m:,. Q.1 1..' ~ . ll ll L' f 4 o: ' .p r.

y

.) [. g- ,.pf;; ..q ;. q ; o a -.-.... ;. ( :.5, L. r .J ,5_: .l + '. ' t n 4,.. ' i ~ 8 +...-, l' l,.. ' '., g: _,.. _.

_u ; '.-

6 ~ .[ m,y;

3. _.

p_'. '~ n _: -. ;.. ; ; p. _ ( l,. - f.. [,,_ c:;. ~,- w %p ),Q;,.'8 _L. f. ; 'c_... .9 . ;... l ; _ e

. W

.? .; g ~ '.l.' yg [ 4'.

3. n V-p, '?"i.

D' 1 e ~ l.l: ' }. % K l' . ~.. p%.,("J. .,,,,.4 'si '. ~ ' p

., y

. i[,,..:, i , ",. i ;,,, .p.. - 1: m ^ s 2 ~ ~ 3 .; 1. . K ; y :.. m ~ v.y.. . mar *... + a, - ~ - ~. ?, g 3-D seismic technology, ... and Y, QI Using a. .N evaluates the~ potential of p natural gas.. - '....';'-.. +;b l', @g'sY, I jU [ providing more detaH about the prospect char s, ....g ' ~~ is" 3-D technology increases the predictabHity of wtIss in . N -'- ' ( J o. ~ drFng and developing reservesX / ,? '1 M,.. 3 s. Y L -% g ) y' / ,[' ,' A M s ~ > ~ e. ,,? x# >~ A, f sW. f NLA '%q-.- l, A) QAh' y.. .x, - 7 y.. J. J. ,,(. N' N'

i L.> *T Mk I i 3 X- .:k.'Jj x* . 7. i .,y; p 3... 2,: \\ > L ~. :r ? o y ' e y ;' $^ s k,_ a 7 p 3,, > " ys '.,. .L bQi 7-D Y W53 d r-q j j g ,,#IN% .a- ?.- P

p ';_A 2.s E

'b Y g ([- ]' j s+ 3 / ,c l v tc; 4 <'.s

"YV y

n ll ' ' 0 }k ' q if, q+ya Aq. k, n -vq ; s-j:Dii.g .t' ~ 1 ..t y- -.y. 'p . j.. Os J ym?4 pa, s .;j -... p/,y [.,,...,.E "'[J. T'fiU '

p -

w

Transportation and tive expansion projects that will continue to increase E.nron's market presence. Distribution The 16,969-mile Northern Natural Gas (Northern) system transported an average of 4.4 licf/d in 1997, serving kical distribution companies, gas marketers and producers. The company has partnered with customers to identify growth needs and gain effi-Enron's Transportation and Distribution business is ciencies from well-planned construction projects. comprised of the company's North American natural Consistent with these efforts, Northern completed gas transportation systems and its ekctricity trans-the first phase of a five-year, 5113 million growth mission and distribution operations in Omgon. Enron plan to expand incremental firm capacity into has a long, successful history in the natural gas trans-lowa, Wisconsin and Minnesota by approximately portation business, which includes four major inter-350 MMcf/d. This expansion is fully subscribed with state natural gas pipelines comprised of 32,000 miles five-to 10-year contracts. Northern also completed a of pipe across the U.S. In 1997, Enron merged with 4,800-foot pipeline crossing under the Mississippi Portland General, an electric utility that has a 100-River at the Minnesota state border to provide year history in its own right and now serves 685,000 increased operating flexibility, In addition, Northern .t customers in oee of the fastest-growing service terri-has a 60 MMcf/d expansion underway, which is /g tories in the nation. Iloth businesses generate pre-expected to be in service in late 1998. l3 dictable earnings and cash flows with steady growth l/? ly~ prospects. Additionally, these systems' excellent safety The 2,660-mile Transwestern system transports gas records and reliable operations reflect company-wide east and west between markets in California and the """' 13 expertise at managing energy-related assets. Texas and Oklahoma region. Transwestern moved { 1.4 Ilef/d in 1997, primarily for kical distribution {f Enron's etrategy for these businesses is to continue companies and gas marketers. Expansion of the San a! offering low-cost service, maintaining safety and Juan lateral in New Mexico ensures access to addi-i reliability and making new investments to serve tional gas supply and provides greater flexibility for growing markets. significant gas volumes to move on the Transwestern system. naginning in 1998, Transwestern's San Juan Natural Gas Pipelines pipeline expansion will add 200 MMcf/d of incre-Enron's four major interstate pipelines colkctively mental capacity from ignacio, Colorado, to Illanco, averaged approximately 9 billion cubic feet per day New Mexico, and 130 MMcf/d of incremental capac-(Dcf/d) of throughput in 1997. These systems trans-ity from Illanco to Thoreau, New Mexico, for a total ported 18 percent of all the natural gas consumed in San Juan capacity of 930 MMcf/d. the United States and delivered gas to customers in 21 states. Florida Gas Transmission (Florida Gas), a 4,449-mile system operated and owned 50 percent by Enron,is l To meet increased market demand, Enron has added the only major pipeline system serving peninsular incremental capacity of approximately 2.1 Ikf/d Florida. System capacity has doubled since 1985. 1 during the past six years and expects to add up to in 1997, Florida Gas moved 1.3 Ilef/d of gas from 1.8 Ilcf/d of new capacity in the five years to follow. Texas across the Gulf Coast states and into Florida, All of the interstate pipeline systems are competi-where it serves a mix of customers anchored by util-tively well positioned as evidenced by their respec-ity generators and kical distribution companies. t L.

Florida Gas also has established new interconnects Enron's western electricity marketing activities have to attach strategic Gulf Coast and offshore gas strengthened E. tron's physical presence and opera-supplies and is identifying significant system expan-tional understanding of that market n gion. sion opportunities. At the onset et nationwide electricity deregulation, Enron owns 8 percent of Northern Border Pipeline PGE is maintaining its commitment to service excel-(Northern Border) through an interest in Northern lence while assisting with the formation of a compet-Border Partners, LP. The 970-mile system, which itive electricity market in the Northwest. Its Enron operates, is the largest transporter of natural Customer Choice implementation Proposal was filed gas from Canada to the U.S. and moved with the Oregon Public Utilities Commission 1.8 Bcf/d of gas in 1997. Northern Border is (OPUC) in December 1997, and an introducers pro-constructing an $840 million project, which will gram has been put in place. The proposal addresses deliver 700 MMcf/d of new gas into the Chicago area five key principles: bringing true market conditions and increase total system capacity to 2.4 Bef/d to the industry, separating the regulated and non-beginning in November 1998. This project is fully regulated portions of utility services, removing the subscribed by 21 shippers with 10-year minimum incumbent utility advantage, transferring commer-transportation contracts. cial customer relationships to competitive energy service providers and allowing the market to deter- ,r g Electricity Transmission and Distribution mine the cost of transitioning from a regulated to a l Enron entered the regulated electricity business competitive environment. The proposal,if approved f through its July 1,1997 merger with Portland by the OPUC, will create one of the nation's first reg- ~ General Electric (PGE). PGE is a premier provider of ulated electricity transmission and distribution com- "~ electric services for its growing service territory, panies focused on delivering, not selling, power. In which includes a significant base of leading high-the proposed new environment, regulated ekctric tech companies with intensive energy requirements, companies would conduct business similar to regu-PGE senices more than 3,000 square miles of 9rritory lated natural gas pipelines. As a regulated electric and approximately 60 percent of Oregon's econorr. company, PGE would continue to operate and main-base. In 1997, PGE delivered 18.3 thousand tain the electricity delivery system and handle outages, megawatts of ekctricity and connected 21,500 new while other competitive companies, such as Enron's customers. PGE's high-quality, low-cost generating whoksale and retail businesses, would market power assets include hydroekctric power, coal and gas to customers over that system. This proposal serves combustion and transmission resources. as a model for ekctric utilities across the natica Enron's merger with PGE affords significant benefits to various areas within Enron. PGE enhances both Enron's global credibility in power markets beyond generation and its insight into customer preferences for new electric products and services. In the U.S. and international ekctricity markets, PGE brings transmission and distribution asset management expertise to Enron, as well as metering, billine and customer-senice knowledge applicable to Enron's expanding retail electricity business. PGE's strategic West Coast kication and the rekration to Portland of l

s ' '<7 A Cl e. - s

• g J

j 4 ^' ' i' - No e.....p. y pp

• g.

+ s / ' ~ .g ~~ . g. ' - 4.g. +QN< .L;. .. A W 3 $, .I ~,,_c _.m"'*, ./!. %%g., w... '~ 'm '.D. , " " ".g~ ~ *' %... .,} .R x.... Z. . &Q.., 'v ~ _ -, - ~ ~ %%-==-- mm h. w _... a Mi, 's lein +.;4...., e w z............. 3%,. .f 'g ,a 'g*,,t ~--, ^~--- + w gr. .s. ,.,4,,,.y., -.. >... - s.2 u, e. s a%

• a ammesium i'i.

3 --a ~.:,... dpM N

• e W 4&E e ditgGW d

O' 8* p 3 ,g ' Csfg,- Na n"... - - .1 ... ' ~ " w- " I 4* '^ ypggtf- 'ggd.dat<,/Ji&W.' 94Se - ...r ave - - * ' ' " ~ ~ 3, . r .x ~.

.p n

),.. J'$, Y.I-.+ " M~ A " " .,w. WID' i.,f,ppepyggegrprerdffh.pases The besmann n .m.we m xp.n, m. y w' '" ~, _ _, _ _ p#

p..,. a. c,9 V - -

9

~'. .'? .}..,..~..,. .. >..,.,.. ;. 9,, 7., '.u..-'..,. '^ . -.,,:. ;. (,:; : :y.._,:: .. . : A *. 1, .~ p e- >..t , 9 .?...........:~.,.,,.. "... . ~ ,.,,e v: ..t. l_ ,y.- 3 ;' _.y ._,._..,,,o,,, e },.f.,... ' _.;* 1 -:. r .. ( s,_,

g. ;.' [;...

..,.e. }_.,.n. .. [;.,"' p ~,;,c.. w ':[ ' ;, : ;,,[.-;; [ _.' - t. .a ,y', - :';(' ,t ...,..:.. p '.,,, ', _ >.., ;' ' _ '.,v. ::, ,'.,,,;.; y.7

.y-

, '.' :..s* a ',v i.,,l y _ ; ; 3.,_ ,'.' e Q.'... :co,..N.'.c,". .[ ;, -, 'q.,, ' l,. y. ', '

7..

/

,,"'.;. ',,, ' - 4 :.;.': ' ..',..,*',.,..,.O3,.3,.,,',.'.',l,,,...,.,..;. r y'.,..-P., *___. ; - * '.".l;,.*'.,..:.'"_' R f. "l ,t ;. $ j' * ". g ;-. 7,,,.- ....,.l e',* ,'y;. .. ',,...t',.' -~......, .J',.'.3,,, .'r t. c *,.' n . ~,...; ', ' L,lj.,, -> '. ?' !.. - '- * ' ' h '.c 1:,,, %-'.i .>l'.;* .. ~ - - <e'-

• * & ' f'. :  ;' ' ' ' _l,.* '.,. 7. '.r ' :. -:.'J..-

.J., -

'..,G..;t. * '....;.,.. [. - -..*.; - ' Q, ' '. % : < * '., /. :. J . =

4.. 'l %. =. C

. ' ];- -, [R _ : ' .,'.. V T.'* .,f.-;...,.'..;'_..',. , -.... }=, -. :,'* ',.:.. ',. L ;. :.,.. .3'- ~.,, ', ; _ .4.,'.- ...:. ^. *..':., ,,,,, - c.,(. '. " ' '., ;. il.,].R m ,.j.'..;;,:, q r . s:, T :.,f : [J_,_>. '..., 4 ' :,. ~ ,o. ' ;,,. '., ; ; \\ }.:.. ' -j- .<,...s.- +. '.,,.-.*. r s. .L ,l- ' l ', ,q ,., ' ' ':..L 'l -. *,, ' ......l- }. l .(..] . f. ... ;.l.,.. ' -. ',,;.l.,. &~ >' c.. e'... - 4 s ,l

• f,. ".
• j <,

',.m ,7 - :3 ;, v ;. :. ....c,. ,.,.,,s. .. ~, '., '.,,..,.,.,.;,,.,,, ;., .,. ' <.' g, ;'_ !., j., *... ,.,,,, e, *.., .., ~. .t s. ."f.. ',..', - .. '., ~ J .,,a .':+ '.. f, ,,,-, t, _.;. +,,,.. -.,...., f 4- ..,;. p n ,,. ' :[ l/ ~ ', ;' I-(,,.,. ,?' ..."J_.S ,...../,,. l ' ~.*,#.. '. * ' ' l

• f:. ' ' _. ',... ;......, L '.~*

's. y i ?'

e,[ ( ',', ;,,< h y,,

N',. i ; h'.,,.'.

• :' ^ l*.3.,'..,,.[... * ;.a ' -

.. ';. i,; '.:. ;l} } - '.bl ' ;,.,. -, ' ...;._[.... ' '.. ' * [;.,- 1 ,.. ~i,,, )' . f. ,'t,..,. 5. l.N:,,. 'f .j,.: },; _. }, y,C q. . p,. '.l ?-, g. 'i L s ,._,l' . : y,,, ' <L', f.

,,,, p..,,, ; '

, [f. 4 -,'y -c '

.... 4..,._ f.y..t 3, '-

y,, ,vf.' - ;;, j.' f,., - c g ,r.' s m. v i.. J. o.. _.e - 7 1- ,,.:t.. 3:,-,. t.,.;,.. S j-A,., -...,:... i. .a.,..:, : m, ,. j,i... q, y. g,.;...,, j ;,r.7,...,.,. .g i, ;,.<. : i... ..iw a- - e,,...... ...s s, 1..-. y , j _,,y / /,;.... qj .y y ..;. p. i1

] y. y.,. l #,iligi,;, rh.'.'E 4.

.p; .'.1 ,7 ,,+' ' k.. *: ,,. 'j A,, ' ', ' ;' h**, ,,...)..:[~ *- _, '. " j// 'p ' ';.lf' _.,.j, t,,,, ',;;.,6 ,., y. ,A, f : - l -f Y:f_,4 g :p [..'.. g. I;' *: '.f a, d'? *: ; i'.'.' l' .' ? ^- ,a. _.,,'y..-),. '[el'.O; _ Yi. l.

?'

,i d,5", ':,- ; .. h % Q!f. :Mi '/. 1 Q-k.'*l'.Q '.,.' '_ y .,o L .L_, .'1'.,..' '.,' .L. .e'- n; y, 'o s..- . % [, ' '. }'Q' ]"., ',9fQ%.f. y: l A ', '... a :_i.'. =l. -...,..'.;,,..,.,j- <r y.' i;, , :. *... } s: - 3

i.  ; *,,.

a s, .I .,.g ,.,.,,, ],'- /.. .q g c ,I*, e, i ..,. /., dl * :p g,,. F' g .y..' , ;.[ __.'..,' ',.... '.'i( ' -. '*.;.. '.,i. '.W. d' i _ [- s. [,

~,

s.. V 6 }; x. L.;' ', '.,p . l , k, ( 41... ' j' ' '., ' <l.,, *.. ' ~.'> 7 .g yl;ti s: ;:r.yy.;;yl.F.ys,.gg?+ ,.. y- ..r .; p.m ? 9 0,l l E. :,'.'.Y f, ti }.,, '*' y~

c. ;

. l, n = ' ?"

,','. N } ?g

F,, *

e' \\:,

,f , ', '. **',.:~. 1l ' i. s

• -
• g,./,jk, g'hf.,',' :h. ! }

r,.

• '*kI E.Wh'-l

, 'I V, la' g i\\ ; I.-

• l' ?. ' '

I' '. '..w',., a ;,.. ', - l ', ' y ', f, e Y. .,3, g,' \\ y..;,. q ;;.'. -

i. '.

_s.- a e ,Id..', .r., 3 4 g ".'A s ...'i.p,- % f ;:. . ',,, y '.' s f;.,,::., ', .y' : * +

.'.-, : *j,.

, _,.. -',,+.,. l,,1!,. '[ ;{ .,,. ),4 .. e,.:. :.., '.*n'. . t.y,.; tV l % '.. -...f.',. .s,. '., ',(. .,:,g1 6., . * * '. ' * ' ? ': ,3 f.. ',Jl, p g .P 'I. ' *.. ' i',. T ': .gi

.,.. -.,...i

• y,.

'.I ' + ' -. ', ;;, l ;

• .s }'

_y $.i . ;. O ' '.

• j '.?

._ i* _.. _. '-..., _,:f.. - t,_ ( '. - =, '.. ~ :: *

• t

_.l,, l ', '. *. ..j- '. ' '., ;) i ",, ,'.*.*',',.'s_l', ,}j. - _., - -.- ' +.~ n... - ' ;, .' ',,.,l.' ^ .,,=n l l- .,...'y,s.: _..l.,

s. ;_ ' ' ;w -. l ' : '[;. l'l 'l ':_ h' \\ *', * {

{,* 4

• C";.*.

.. ;,\\. - _. '~.,.?, > [ g.,,,. -'. .. ? 'z';';,;','. _ ' .f'y.7,.;, \\. ';"' } r ' i.,, . ' yl. 7- ' ',-[, ( 7.y;; 1 ' 'l '- ~,. ,,h e ..'. A l - -(..,. 'l'. f f. ' > r. [,,. f ;.,':. [.. [.. ' [ ', ' }, .,',f.,.'. -},, ,[, . q.~.. ' h.,...,, &.,.T ' W,, L....,-

I'.*.'.7, 3

.K"...s.t ,,,.., p,:,v a ' b,, 4,. '. W s.', _ : [ ' ' ' ' l U'Y .. s ' * :A.I ',' '.h. v:. : ' . f. L '.- - l lll b.. D,.,W* yy, r n.:'. ..,y ,,..j g .,.,9 ' i.. ie, - p:.,,..~.. ..,z: ,i ', ' }..'l '.... l l0,l . "f ' j...y'.*; - -.. * .h ' f, +.. y ,..: ? e. '"\\ '. t. ,.'m.. .;.A ',. :. ',..,,..... \\, k.. .n_ l [ l l f ' ;,., ' :,f ?,,;,;, G,,' ly f l *.; '.[.',lif ; If. ' f,}h, ::: i,[,- l,' *. '...,.:..;,. -

• I jifl,;, '
• 9,.f. y., 3:,

\\*..'.n ,.n, };lg _,[ ';.',}.;*. ',f; ': ,o, }Q ,.l _l. ' ;; _ -l , '. *.;,. ; jj..,.y ! ; ;_', ',... _4 s

..., ;. [, y v. j. ;;' _.,l,' ' p 'i,'..). l

'.r.)pM. *

[ C,h. ' 4 ,qr *F. '[ :,, '}.f y M., ',......,....<,i :.......j._. ._'[.'.'._,.., y

• l ', * ' ;

o, p...-_ ,o ;, .e ' h 7.'lf N, r.th.;,. '".,'a...,,[.' :. A ' '! !f, "",.[L,X*([,[lh.,OUj.g~...[,[?:' 'N. 'l l *. '; E 'd ~. ;. ' ] [, ; ({t ' I 'N, b,;e'3 9,.f g,.. 3.j,} '.>; f i * '.', ;? '. v.l: . _.,N.,. l,:. '.;' i'.lW { ,Dl- [.* k. f,A,.. N '*.ll:, '(S -\\* 1:, i f$..' : "..t.al-l n "',,j, ':. :* ',.****.'y(*

• ?- l.,..

.3,.,., s, n : Q.'(*.. ;.; $,;. T ll '.. ' .l-e ^ .,A .,4-u...p__ 4, 7 .?. h,.'.. '; _,l,., * ' s Nf E. A. . 'l' f. :E?* **l .,, ;l;W');;. %,.y. (l ,y,4..,,,,'o.',,:.: ,^ f.x ,+,.,4 ;_. / e Q- ;',...'. ^ s ',.' - . t ' p;

,,..,-;~,.,.A

_ f :y, '.., ..:? ! ;'a..,,. -.,.,-. ...l ; ;... ; ' '-. t.. ;",'._ _ *%. l:.> s'

• , if'},(' ;',.l,,q}}h ;[, tj ::. ~. '; ' '

> ; :n. ' ' ' *y,:;

T

,',s.:r/. l '? [' ' '.. ;..v. a ..a... _..'.y., A' ' ':

_.,; 9

,3... "l I, flh i' ' y. ! :..y*g 4 .,' [ ;,,';.,.* ' ' y,. f. i. "'. '._}-l~ ,.l .(.%e. , _t ['_ '.?'i $. ' '. ::. '..: ' ,,.'\\ ,y q 9..', ,, g;- . ; ". f., ;;.j,. ;..,.J7- .. ,..!.I~- "'.. y f. a'S '.l... ' 4. b,. ...:','.,l.,'o..,.y'.='.;* . <.. u

f. *.,:

.s 't.,

• . '.. y. 3'y.;...' ?. ',.

3..'f. ( ',.i O.

s.:,>,',,,'s,,,...?a- * *'.;,, ',i... .,. ni, 4,y, /.- l,*,.,,s s...L.., '; '...':,'. ., ',,..'g'-". *. ' f.l $:,'* h,,,Y.' -f ! s, ' W*,i;.'.o.,,,.".t.,,,.'.','*:. ^

l

, I.,, ;,s,i t '.

.,(

t ..._...,,,.l,g,.,,. ,,},;.,.;.,,l'..

j. l; ; :,,,,,

,._;,.,,_.;.v..,.p r.(,,,. ;.,, v.,..,,,

.v y; ;, ;,. ?.,,.

,y n . i ;. _, -a....,., ,.,,,_,.: / - L. ;.,,, 4:';, 9".., ', ';., :.%l.y.

q ' =

. L*;yl4.. ;.,.. :

,,,;.,..',.,..,.,>,.., ~,. -; '.;.,, ;. T - L ( a r,,,,..: .,,,s ,l . _.* h. -. : L ',2 .,g, : ;],. -

• r*.,,,,y,;. _,.

. :. ; '. c.,, '_, ;, ', ,v('\\.., .. ',,,,. _!;.,A., . r ;. i.., - ,l e -_ ",.:...;._,'_.'l.4

,...s.. 7

;,....,.-;..

.-l ,,...p;',c..,'...

f.,/,,.) j.,..

/ is; * :, ' ;;s ,.,, _ e 'v ., y.. ,e'. .v. -. : ;l,..,..;...f'.gf- ..:.l ...,,,31,.!.;,..*', .s ,;,., %lu, e,".,, .. e ,4 ,,e .. c ,,.9,. t.: ..b; , (

s. g-d;. ; ;,.. l,-.,, l,'.. l. : L.. i, ; -.... ;

e _. ..,.i.-. ar

• 1 Y' a

./,'

. ', - ~ - s ' f, ,j.. ,.,.a ,... n. 4 c..'<,..: f..:. p' ~ ~ / .. ', l,.l ;' - ; -.- :',.,, l.;, ' ' ' --... l_ l, '. a:. - ' {, l..'... ' ),., f l. -' ':;. " ',, ' ^1p~ -,- :,.; 3.,':. i * ' s, '^~- - -' .. ), ' ;. "l[l t.' ;_'.ll,_ M: . ; ".;; (. ~ [}', * .',,.-l l ,l ,l' L '.. ' '. ;' ll ' _ ... - _- _ _, ',. }.'

s ;, _

}. ... *:.,;j, - .f d... %. - .L ' - " ' s.i, l l",, }['- fd, ):'. '..; g .../.;*-. '.,.'.,,, l..i. }. s ,s, ., '..+- f.,,.., 3. ' 3 L ' ', ; ' * '. l '..... '_ }. j,, '.; ', g s . -l.. ' N ;.,... _e '.. ~_.. : .g. ',v' (_,[' ' [ I ', l fl ',l ' ~ - - l. f. [ ' ll. '- , l'I f,.. ' '. ' ~ - ' *j. :...' }. ; l p -..

. i

',.l., '( - ' l ' ;,j" ' *lI,f ( l l ' \\ *:,l l '.I: ' ',[}' ,, ' ' ' ^ ' ' l k'::..' : . '. ~ L ~ l..,l. '} ' ,f ,., '_ r. ;':- ' [ '.. h ' _.. ' '. _, '* g. ,'.'y , ~_ \\. : ;,[ ', }.r' Q,, 4. _ . - i , [ _ :..,,';.. s L.; .3._.;. ;, ; [; - j_ [ '.. '[, .,. ')., _.r

.

., " '.,. -... ~. -

q.' '.'.4.,.',.,- ......., ;.,-.. -.' i..,,., g',. s. 7, - ;,..f...' s - -. 1. -.,.,,. j.,; : a e , ;. sg .,..,.,.,.,....,. ; ;y,_.... ' -,'* y c. g - W t - ' ',' - ;. -. '. ' ~ . _'_... '._:'~- _,., ; .,... __.__'; ; ~. '... ' "* '. ~. - _.. :,,:..,'.;~ j.-

l'

'

', L, : -l - at...."'..,.,;. ^ '., r ,'t-3 -. 4 -p '. l 'l '. '. -... ' _, l .,,.e ,? 'l f.. . x.~ r. ' I ' ?. :'. b., 9 '.: 3.. r. n r-. a. ". - ' [* *, ',., $ i.,. .* - 4- _'e' g .'di .e e_ j,,, a c.,. , '. ', s +- ...7,,,. _._;{ J..:.., ',. l.. f. D.., 8. , ' = * ' .,~ b -[.. ~ _ '. f > : _ '. ', [,.: ...... ". _ ' ',..' ~ J;~ _. ~. g. b

+=.,. _,

,,i_,,,j, +

_..,..y .J.. ? g I ..,a, .. -..' '/' + ',.,,e' f,, .$... k.,' hi ... ap a ,.".P'. .{ ,..,4 ,j .e j' b4 h, y:3. g y, y, gr4 e. -4 y 97 [,:,:=';l,,.y. ;.,:._ ? y. ) - o;. ;.. :,j,. m..... .,f R %; p g:l 3BD{.JES ^ M.' [cyd['" 1 '...,': m.

;?.

g" ' i d. [ c . M h $.M h ;' G pS,[h,e;,n .',.)'N,. [ h.

}..

N V,I 47 lh3, '], & ' ; ) ' [ - " i ' 9.* [,' ( e ,. 9':.9.2 % %,, ' p.' ' ; w7 g pi g; :,;.: ;.g W.,.q % g -. L y C { ,w v: S h.: i .., _.. f ';.. Q, _ '. '.,. ,q.,._ . ;,.,,;&y;.,e 4 v,Q 3 4 s ; % b :e :d.m.: /,'._ m

;y M

'd 'z: J,g;. 4 ;; y.. m *.;,,; e. , ~. e : .i. -)..... _.. 1.;. } up_ ;; y, ; g;.10...g. y,.._,.y. ,,, ); 9- .. ~.. < - l3,p,; .s -,,.. g. . _.,., r

,.p~. ;;. s l y... a.,,..,. ; r.3.;,,

r. ....... - y...,...,;,;,.;.,..,,:;.,_..._,-:..... _- n

p. -

. e._ , ;o ' ~.... - + - - a -...~ -.... r. ,m c.. ^[.',..':. "N .... ; ;- :..... U. .l..-( 'w .s r -, $.. .. ~,.;'..,'i,'..'. j. '. _ -..- [ L A. - .a q. s . +,.. -, : :. n;..,... t..,..,;., ... -... ;...: ; _._ ;, ~., s. ,, ~ _ '.. -. 9, _.y. .,. g.., ~~ ..., =..; u . _.. 'q y, v, .,r.. ',..s .., ' ' ~.. ; S. (. : ;. ; + .-*- :~f - ~.. -.; : '. ...... e.' L' ......, -.. v,.: ;.. y. a;.., _.., ~ .. 3 ,..3, _.,.... : 7....,-..... .y v. e1 .a.,,, ...,v...... x.... .......,n.., ,b..z.}....-.... .y.: ;.. c. i.- ' e '. ...... ~,.....: . ' : c. m:. ... p:;.. _:...y w. ~ m.,..... 4.:,:... .x.e .?. :.. u. 0. w. c ,7..,;;. :lc:. -.... y:,.,. n .~

. ? % ' ;;f;a.,...s.. 4 e,.'.,, >.

r .:a .4,. ~ ;,;,c....... . vr..+.: ....r'. p".:.. z. -..: -. '. ~ \\ - m;. r.:.. :.. x -.... ;, :.. a..e :,. :: ' c.. 4. 5. vy., ( t. ~ ' i m.. r.. ..? s, c..; : .. + ' ' e.. ;. .v Y 'l'_ Q *.' ', ' ;_ '(

• 9, L p..:.v., m..

..._ ; c n ;,.;; r z. 7. p{, _ j ; _ ', { *'"}f'[- l ;1..*, -l ' _ l '.. ;., _ -., ; . ' ^ ' '...'...il. .L....;. ; ~ ' x.-~ p ~ 'd

n:r - ;

i ^ .y

• 3"'.:.

[. ;& -.. - _* - -. -..v. 3 .. p...-,

c..... -.....;..-

-..... 3 'J ,'.,. v.. ;- L .,g ~, a .,i-,:>.3 :'f. -... - N. ., '. =.....j '- ~... g

g. g,,.,., r,.. o.

4..,; y.... m. g..v!fg.p..,,y;..., -.,g - p. . n., (, ". '.

,7e..,

.... c . ;.y s. ... x q,, , ;, ;f.. ; :.., ' ?. 1... m/.s.,;', y }: .. ~ ~ ;.. i., ..L. a.':.f.$.J.S,.: ;. ***'..q,), ,....,,;y.-.: ~.':- 4 f... ( L }.' . *. i;.. <.,, .:... ~ ,w-.-

eo,

...M:., b.y.':.ffy. c q.3, y,: ,. _.;l ..7,'..- .h.... .u .. J L.

• '.g '; pl;}g y

,.^

• 'f.'

.. ~M.-*...c, .,.~.Q+,.i a s.: .'g,,~ :s'.....f.s,,*.. ,..'.'.':.~.',.....'.;; * +_ '

l.,

.e,-

wz..y s. ., a.;) s , e,

,.,- } }r

,.L- ., /..:.... ..i v.,, q., q. 4'

o., : :; ;,.

.,s c. f.,-.,,y' *$ ' b. ...,v

• ..,,.gf y. < s.n.,, + k + '.'.'.".,4..'..A.y..,;,. _ _'in', t%.. : y.

. 's.. .,l. w- ._,1: 9 _g,'__ o..l r, ^

- Y

., Wi, ;, .,~,;1 . ~,. }[,cNi' v .Y.. - k.Y _.?, ^ f.?. :+h? p.',6, ~M.. - ); ;_f.',.'. ',+?.'..* *.. '. :c :

• W

+.. '.

• D',

I ' : '.' ' :p L -' ,h, ~.. ,. ; :.. ) c;;,?,. c,&'.,:' ' r, r - ([ .Y y. m.q" ' it -* ' Y.e t,.M.,1,p.'4'u .n ' +. ,'.,,.u! y ,y.,,,b. ~'s s ~,:.., ?f .,c a. ~.\\'~Y cq ;? '. s: q...at

3:1 \\ f,.uu

... &,?.n.,, A P';4f g,4,%,,; s&g c.. '. :.h.. i;

"..~c.

cs,,. M f U U.. '<. - ,,1 s. ...: :s ,.on s y!~ , f,q -. .. '. L '[ e ' '+ -;.., ' c.'sf.,N4...?. J., :'.. s c~ .l .:. ;. h' q,., : ic. ,,'gy' ).. W .n,~ % g Yl Y,,*, :. ',.lm,, '.?.' .: l.. '.. -~, '.. * ; ! ?.., Y.z.i ',. '.C f'..h.. i. '.,,., ;',>. ' d" 5;$A ^: ~ ;. N ' 4 '~ ': - '.;+ y.- - :_,+.:,,....'..e + v':' '~ .1;;;l'g 3 r,4..,[g, f,;73','M.g+.',4 j,.,Qf.n'f,. c,.,.. , 5.,g 7..',> A,.,.. ), .s s. t.'f .s,e..,, *..,..- .c.

• j.,,;,,. -. ' ".

_ _ L :, 'r s ; p.,,, n s f ..y Q, e.. 4.Q Q Q <, 7,, ll. ' ~. y... ' -. \\ '); fj ig;Q;;'L'y *g'.y', n - k; ;,g V. % '] y l, ; '._ ^._ l. :- .L 3.' '.. _, ..'. '.w.-._.. [ _ ; ; l. [ :.: [-. 'L, '..'. [ ' y.' _ M g?g ' n :',( '

.;;,:n ;;q 4; 9 c g' g";. ),, : 2.j,',1,...,**..;,.;,"',

c..'- ; '.,. ~, ', ',.,. + -._ ' s n e.,., +.. -s. ?.. u $.

i. (

b i ' _. Q.3. c i p. s " l.g*%_.,..,.,....A.%;u .n,...k,.., - )'",2 ,l..a. 'l _. - ,.~.*,<.,.',:^.,.. *._._..- _.,. .L. W,. _,;. , b'i o')c,. ' * *.,.. -

'

q..

s.. l'

n. *. '.....,;..

,e r

_..,,'..},*

• .*.D,~:. ' '.'.

/3 l +7 +

'; "('.-

.. ' '... -'. - *,.'U. ? ' ;.. g'.,. :.. :.... - !,;I ". !_ _ ' ' t -..; ,,,.,,,h, .., :...l,4. i:, l.',, L A . I :' ; f. _ : 4 n c. 2,.fQ a< a y g,..;., ',,fRf.. :, p_'). \\(Q [ '& ); *z.L. ' \\.'. ' ;; *,, i : L..., - s, [. d y;g' %, }Y ^ .... o,;..,. p' i a.,.. p.3, ..J,,~?.._ i j. >.j'I.;. MF,?,( * ; ;, '.' l _,., 'l: y. \\.. ;.;'.o..[ ,7

.., i.g;ls;.. '.3 6,,,

...;,o, /w.g ; G,'._.,. ;.}l;"l.*f.. ?"..'.t.f,, _ W' H ; ,".,.]., : F,.;..'; .s t.. '. _ 3 *... {j' .g e; y' ps,.,..;[. Q.i!.}. ~,; :;. : /,.... .d,& , 4.....,+.&n,y, g c.* U,;p'fo. .,,,* L; n ,j y. .O .y: > g., !.,'..,, A M... 4,. v.

a. fr ; :' f:, ', _, f,..

n -^ ";.

• Q... y

. '.. x..I ?*gj. s - yA.,~ ..n:. : 's i...y q. y * #; Q. n - -. t '.;,, g, q'. .a h:n .,1-

.a e

.. -.p.- 3' j'.s >.. ; ,. :' ' } (.. u ,a m [e f. y ..};j. .j y y;;.y ; _g'qg fy., ', y p f.N;',;.. _. 'f;. f (, ' ~'.. ^ l, '.'."_ $, ';f'((, ,,I,, f),l-l'.. ' ~,, '. l '. ". ',. Q.,,,, 2.. ;4 }! n,..l ',.. d_' ..y .4. ;lN[ A '[f ll ' f.,.. 'f.,.,m.f.,4,,.}:.. l,, lJ.:. ~ ^~ '. p a ;.,1,..g?,, e.,...s. . s,.- ..3....,.-- 9:. 'l : .g..y. s..v.,. g.' ; y ;l ;,. a,. -...,.... ,.......t ,.h V h.'. * ;.. j,,i..;;. L w&Q' } : ~- D e. *, .,. ;, K,,.[...,.,.Ql..,,. },y ; &.,. f5,. p. '. [, . ;,l - ..~.,,,'o, ,, [,. 2.

y, 7..,,.,.P.,,.. _ " -..-,3...._

, _ ;+ 9

_._..,c,,-

g. .,,....,.; la g. , ' %,,' 4,h,.;,, g,. y a. ,3..-.x, >. q :,;.,, : ; 9 .,(..,;;.ll,-l.g;/ 7 ,c .t i.- . l $., 3,, , _, ;,,.. I._ ..,,.g f,...;..

• (

.'l. ~

'.d, -. '.,;

. y, $, ..l" ;ild;.. .:'I [i.'fM _' Y ?'1 - 'ffl l l ', I. '. ;.. ~.., .l t ', 3.,', [, j'.','N - ,.k.,' N .. -^ ',;...,.... (;.u ~..,._ .,.,.,............s c 1..- o. ..3,.... ~... ..m ;.,.... ,. 7;,. [. f'.s'.f. ' N I. -.-

• ,. ' '. ' ll

'f,.

l. ' ',.

I'l,l ~ 'I - '...~.' :' :; _/_,. - .r. [ !':;,: t f..(:,..[ .. L '. -.,9 -- u 4-L. .' y *, _6., ; ' N '.. '. '.;.,l, -..q ["' L- _ ] [, .L ; ;. '...';j..'. ..,.. R..<.eg ?.n :. - ~ .c _' 'l .~^. ,,. y, j *,.] t , c '.i., i .~,;.1,,,,,.4 f ;,. ' ;.:.,;.i:,....t,c,..n.',' ...'. : ^-.. . a... ,e. p ','/;, J p ' '. [~ '.. p_.**n:'#. /,'.. ' .f..* ;j ..,...'...:c*. *. :.; ... ;r - ..\\. ( [' .n.- ,.n i c; ..x ....,.:.r m;.,* z v. r g ",.6 .,.,e, 3 .,. + -.;,.~..,. _. ',. .y

).

c ) -s &~

g.. n

. -' ~ a. . ~.. -,.., . :.... : l

[, __';, - ','.

. '. ~ ^ *.. l - * ' ['. ., b . ' +,, _ ' '; ~ _; ;;. G _ ~ - C [ ;> - }l. ~ ' :. _

' I

' ~ ~ .[_.. ^.l.-.. ... ',.,.l,' 2 _~ r.- _ y ..i. .,... ;.. L ; ;- ~ W. ._l.'.'. '.. w. . '. l p', ) _'3 y s.-.-,. c.

s v

o '

; p-u

-t 4, ^.-,.. '. I. - - '.."? ' ;w ~ ^.. -* +- *.' ',( _ ^ * '*.. '. * '. " + _ '... -. '.., '. p =.. +. 9 .,m. o _... .,;_s e .... 1.d 1 1: - - r... temeAmendsW.puespee,sedpes. . asepa4ms 7 ^ wome messemanew.unes,e=1 y.gman, r..- ~ C~'o-:- .). - .ues.a.n amem mie %he%

• i L i 1
• ***9 P N T. W.. a**M 8"

J: O

.m ,...q ..,...s. + ..+, 4 g r ~' '.. '.. \\ .,..h.

k....,

4pe., , ', [ .m . w.. . r.,-.. - [ d e - _4 -. i.. _ l ' { l...-., ;., ; -d ' '.e l . _.*.. _ '. _..:,'.. ~ - i,., '.. '..;*..,,. ^. b + 'l .y ~.

, A, . q: g '. = -.. l [

['

}. ^ ~ YI ' l'. 1 , - e- .s Q _._'- '. ". *W_ .. g&- 5. '.. < - 'f. '.., gp - - _,"'3,, .l ,'? k _.,,# ~ ' .,,muimaliserf - ' 'AubpA88181P"#.. mew

b., *

^ ^ - l ~ *'.. _.. l -.~ .,'g' ' g ',..[ j.[ s ;;, ' ^. ^,' ~. j _,., s W ^' ' ^ ~ s; f.. ~f_ y- . * '~._, ' g...g. ' ^' g

• ,f :,l pQ o' '*',; g
• [

~ - s n.n - y ~ hE = y .;.. :p f.2, 3,( * } J.. * ' j . e vm... .g , [e., ( , 7 l, '.' '.. ' ;A 'j I'I p .k ,.f',-l:5, ..}^. ' f. ' 3. _.n n _ - l. ' ' ' ^ -

• w, -.

'.'v~ l l ' \\ y. l j' QI i. ' - :

1. I-

., f ' ' { ' '., _ _ _ ' ^ ..Y y > + ' + 7 w ; ;,, - ',d.'y '. ' '. * ' ' ,.'_l-4 ~ k' i /' '., y. ~ . %. !. ,I ,'.-. ', 4,: i ' . W'. g f..

• i.}.

.y'- ., p ' ' _ _.t* >l : .;M,

1. ,. : : " [..', ' ' E.. rc. -

.[ 'y ,,.h f' , ' ~ ' '

.Q '. '

, 1h? - ? c'__

_, '. -; y : a '.:.- :

,g ?;b, .' , h _r L I' t' . - - c, - [ ' '.. ',.. gge -f'. ..y.'.. 4 ggy ,.,4 1 g "l.- \\,,, l [,' . _ '..Y~~_'. G l. ^ [_- ?.; - _, _ ;[. J '. -. j. - u4.. . l. b p' d ^ 'I . n I ..} J' ..g,.,,, j ., '. Y 4'. m g.,,,..- 3 Wintent,pdl.enve@enh M9 M 5 ' 9W N.

• E

' "~ 1 ,.,d

• <entr4uted to EntenLQ'

... M ". " ' u M <ukorneWtuiteMS ,JeatNe, ~ ..;..gg,:;,_;:).t.y A L., .? s. i. .4 e,.

Enron is the largest wholesaler of natural gas in North America, and its volumes represent about 15 g yy peicent of North American gas demand. Enron has continued to increase its physical gas volumes by services e,ovie1ns custo m e,s with,eliable coa,t-to-coa,t delivery and predictable pricing in a variety of products and services. Many of Enron's end-use customers benefit from Enron's own natural gas assets, including two intrastate natural gas pipelines Enron's Wholesale Energy Operations and Services - liouston Pipe Line (liPL) and Louisiana business has achieved an unequaled record of Resources Company (LRC) - and two natural gas market leadership and profitability as the premier storage fields representing capacity of 1.6 Bcf. liPL provider of energy products and services world-taps an 8.6 Bcf/d producing region, and LRC wide. Enron's wholesale group operates in North provides strategic access to the lienry Hub, a deliv-America, Europe and developing energy markets in ery point for settlements related to the New York emerging economies. Enron's success at this business Mercantile Exchange (NYMEX) futures contract, has been achieved by its core competencies in devel-This access also enables Enmn to identify and capture oping, constructing and operating energy-related opportunities related to price differentials between infrastructure worldwide; marketing gas, electricity the physical and financial natural gas markets. I and other energy commodities; providing risk man-l agement for commodity prices and delivery services; In addition to these owned assets, Enron has con-and offering financial products and services to its tracted natural gas pipeline capacity and select ~ customers. Enron combines commodity market storage capacity leased from third parties across expertise with a vast physical delivery network and North Amenca. g substantial investments in systems and processes that mitigate risk. By using this strong combination of physical assets and financial and risk management skill sets, Enron The success of this business has resulted in a large is extremely well positioned to provide it customers j earnings base for Enron, which grew significantly in with comprehensive services. This capability includes 1997 and is expected to continue to be a large and managing all of the natural gas transportation, stor-j consistent contributor to future camings growth, age and supply needs of local distribution companies serving large metropolitan areas. North American Markets in North America, Enron is the clear leader in As U.S. electricity markets undergo regulatory and creating energy solutions by offering commodity market changes similar to changes in the U.S. natur-delivery, risk manager, nt and finance products and al gas market in the mid-1980s, Enron's early move services, which are supported by extensive physical into this business has allowed it to capture significant natural gas transportation, storage and electric new market share and extend its product offerings to interchange capabilities. This integrated energy these markets. Also similar to the gas business, i delivery network provides a unique competitive Enron's competitive r.dvantage in electricity is based advantage for Enron and cmates an unparalleled largely on its ability to provide reliable delivery l nationwide franchise for reliable delivery to help tim > ugh a network of ek ctricity transmission capacity customers build competitive energy strategies for rights, alliances and fuel tolling arrangements, their changing market needs.

Enron's customers include independent oil and gas producers, natural gas and electricity marketers, energy-intensise industrials, public and investor owned utility power companies, independent power producers and hical distribution companies. ,l 3 With its leading position in natural gas and 4, %, f n$ g ~ + >jk } electricity markets and well-developed commodity, risk management and finance capabilities, Enron is m. the most effective company in the energy busir'ess e i-m- today at deseloping integrated energy solutions for 1 customers to succeed in their respective competitwe environment 3. In one series of transactions, Enron financed a West Coast fiberboa ~1 manufacturing facility, supplied the facility's power and became an equity investor to benefit with the customer in its innovative business expansion projects. Y\\ 5 \\ To meet growing customer needs, Enron is continu-1 = 3 i ing to extend its established expertise to new i I ,5 i markets. The company is creating new physical

~

I j and forward markets in co.1, pulp and paper and 20 I weather protection. r i f European Markets E..ron's presence in the European natural gas and / ekctricity markets has grown rapidly and is firmly / / established. Enron's European business benefits / trom the same strong emphasis on people and skills and a similar mix of energy commodity, risk man-agement and finance products that have been suc-cessful in North America over the last decade. I Development of a strong energy asset base also has l been an important contributor to Enron's credibility and product flexibility in these newer markets. Enron has expanded its business from the U.K. into the Nordic regions and is enablishing footholds m 3 key regional markets oa the European continent. s w '! I Enron entered the U.K. gas and electricity markets with its 1,875-megawatt Teesside natural gas-fired power station, which began commercial operation in 19G Enron has since become one of the three largest marketers of natural gas in the U.K. and, similar to

k. :.h, . ',;,@ *; ;.. **', *.', ?, f ','

l; ?r . ',. l ','t.l, -' 'r,, G s;l -,,. '. ' * -:' *i. j';. ' 't i ,,.' '.{. *

• f ' ' ll '_

y. ( :f

• l.,'.

' lf". -

._s

.l ;,'.. N i 'l' 3-I' .s 3,':j.'} ,;; ',l' '.,. T '. ;',,/;,, I ' Vf, [* .J.F/ . '.. l } ', ' s.I 4,..- ^ ,(, p, + ! 4. f b:...[ j y [.; '. '..$l:' !.i ff ?p;.' 'i ,f[ *[f_ ';' l_. _ ',. D.., ^l'l. ' I.:.*[ 'G., '.',,'.:.C*., $; ,~,':.'.]. N ' Yil*', _ e *- Q ::.'? Y f

!.,, U. l *. ; * ;, ' '

t, '.\\ l*Y.. ', ' s. " j,1 *r '.a. t;.;.w ;u, :. ;, > -x '. - -, Q ,,'[** ' ;'n:. ' ; s ' ,q v..'.. s. :. s : Q.: :,.

a. g.,. M.*.m;..; ;7 l.c.,.?,:.

v..... p ; _ ~

n c

[f;.;'y : y a. 8 p. ti -. J:;'y, ;' :. f : '[f #, 4.,..l,', .*'f o >~.g.;._. r /}, y",'g..l.1 ; 4.,..

• +'t.j'1-

/,,N

c. 4

.*f

.r. ! z,, h1 4, 4 f; c. _s; .a., .J.; f,q y,

q,..

ek * #... - :. ,. '. ; : 7* a ' : ',.[ 4 ;

v.,,,. 4,,

,c ? f.m;- - - s:

'.

[. <. _ ',q,b,:, l. 4,....;g...y., n: ;

• !. '4;(.. -

L J w, Q v ' j ' no L. ?.p.,/* . y,'- ..t,,;_,,'. j... '. ' ;j; ;...,

5. q,

.,e

9..g..,

e.., ' : y ',: ;,.,f.. l+. 7l, ..... : 7,,.y..-,. y: k.- .n. .,.,..x. . ;. ;,l : .'7.g..,.,,_ 1 _,,, Q. 4.,.; n.. ~..oa f f,. '_.a,, (,, f,. p,,..:,e.,.4'.;;^- y... (,... ;,. v.g.,,, %, %: .~,,y_.... .':s . 2.,l ' '.,, _ n,, '" q. l{ ';,,'.,*i.,; - *.. ,- ~.: ,.,e.- e,i . '. ), 'c;::

: '.un. 'p,'.,'W

f.-),.N .c.. 6 c '.

'c 1.4 s t-

! t c: s'.',-]... ..'.{.,.. .: s :.o;....,.,7 g 2,i p...

f. c. -

c'., _,';.'. - ll '

s -,: .. ?.... _. ;4'.l ..f. E:_ Ql,) ' '{ ; ' Y,,'.e '., _, ' ',.,. ;.,, :e', ' - ( _' f.q.4 ...~'-l'. .., f.,. 'I. l.r.. -.t', L, *,e ,'N.:'.' ' (: - _ ;'. : E*,, .,=iy",'i '- ';. " I. _,.Y_,...,h',** .;..-i*... * ' * *f: : f.,.:;7 f '~ _ '. ;, f, '~,'. ;. " '.. '...".': 3.,., .,.r l ,?' 1"l 0 ** ,. ri /4 '. *l ; o,. .. :s 'y_., _ ' [. l ' b l h " ; & '.. '... * *. ), -( ; ^ ?. !, ..g' $, [ J ': . Nr.

• I. $ Y.l. >*># 1 h,...,.

n. l' S, [ *.,.4, &... .. '.f[ ;, _: bY .;3_ '.l.

r. '.,..

...,,... 7'. '. : e.. m. . s...- .r,,;.... ii..&W. s.. (l Y V,. ...:*.'L ~ ;.'.'.. '.e :. v. J; ; '

• l*'.,

f. ,, yg - .* f w :.. '

• ...- Q.

.L, l'

.,.

, :,:...,.,_ '....'......-U-.: ;.,.-

'.,. ;.1 *,;.,...., (-

..c.' .r wl. ;.,4 .e, _, _.

• o r

.s s R:.,. [ [ * ', _ - (. ',, 4, .? ,,.r. r s. ,...,_. _,. [ ];, . .^:..., llL. :, ' ', '..k..., t'i@lldaQik:'...... ~- ..}:",'.':. _ j.' %..i .[, i. ;':'.. :. Y". l,. N ': :: N: &.l {.l;, ' f, },. l.i.:...l. l ~ f.{.,& - { .l L ' ' lf

W.. e&h?N &f.?f.j;.) _

.'?.0 A.E.. Y..i j.;,~'? ' D !.^. 1 ' ; ' W ',. ' ; [b :' . ! A ' Y ' '.,l. ' ?.. ' ^. I.._ f, ";.,.i. _ '. E [ ' _ f, 2,' i' ,'.;l:{',$.!:' Yl Y. ' N ' E &tf *iY, ' " ':l' l' ' Y h

u.:.',....l-

.. L.'. ; ' * ^ ' ' f,. * ': L ' '*'.l**

• f s '_.

d..-:- ' l _ '!W #

, '..h

^. , - - f

• i, : '.

.-l;.'!',,. l ' ' _ *' ; [ '..,' y l ! > i '!.y '5' 4.,:,i, p,:) 'y. ; {*[, ': [..;7. :y' ;!.,,.'.l,,',, - l'..,. 's. ' ;;..: ' e.i..' Q'E: '?. .a.'. .s.: ? ':'.., f' 'G:-l. 9 ' f ...-

- Q% *er

'..T: . ;.ij l..,,,,".7l (;" _ [ ;: , ' ' _ ; ay

• :g y A

j:!_ ,y, ',; ;. ;:,_. o..~

,...'.,_.;.'.Ty';.'.e

?. y'. w '. : y*,L.t" ',2 n. : v', - '. '.... ' ' ',., L.,L'...' ,.a.... +...s.- ..O:b..- ;;'.' '.. ' : ',:). i, a.. '/.: h, .g., ..a. a. ',-..,;....v..' 'L'~ '. -

• a ; u:. '.; '.

h ipf.. .?' 9,p@i *. ~..$<.*, '. m.m.;. .y > y v_..,.- -.:.....,, _.:... 6 .:" t '.: 4.. V,

(~

..- 1 -.._ b, %_ ; - T y,,.,.. ' ' v. .,_,.~.(., s.-

. }ig.'. ~ _ ;iQgg._, :, ;,,.,...

s n. e-A '.l'. ~ ,,;g....,'*. ., ',,....,;. ',, 7 ; f., _ '(, " - *i... ' S', ',., Q. f [. _ s }} ' n *:', * ' _ '. 'd ~ ; .; ', ' ;..f,, ). ;:] ;'.: y [., p

• '^-

: ;a.':.

• 'kW';- ' b..;.'.':'"

e s ^ ' ' * * ,\\. 4: lp. n . s' ':n ', I. '\\ :. M.- *

• g '..

.A'_.,.m;iw'...'.'.'s.* f' ' :+.l-'. ' ' ' '. ' y.,.'.. <. :W1;- ._lQ":','.'.l,' s-..,;.'.',,',,: a ...g...- ....,..;L.- -.!-{s .Y :: Y,.n"(...'.."sf.,.).','.*s.:<J(._,.y'&'*....l'.,...'.,,i.[.'6. D * '. r C 1 .,'*--:c,.,: y;+ ^ .f' y.> _..,u.e;.h,. c; :.-:c 7 +;. s-

.~, p :. r.:-

'r %.; .f,;y r,.,, ...,.,....,e .',...l.ow,,.,. v.;...; <.e.,. L s ."O * ; .. h ':. )^.

• 'i

! ;f" l. l . l '. f f: , ' j '~; , '.'.'i~~'- ', : ' . _ 'f.kl .a 's" T',

: _ y..s

- '. -Q.:,.'- ,?.

$ $ ;,. L Q., *.. :.. *. '_* *;.

.,g.., 1, Q. u. ,:,.,_,_.,;*'~.,:.4 3 9. y .s'.... .;;..:c.. .. :.' i y,,;f, _ A.'. -, '.,. 1 - e , i, ;.g _, ', r:;;. ' *< ,Q, 4._.4' ' -,. : s (. s. .< ; ~ :.,o,.. '-..,, _. ,- :, _...; ' 5 _.T.*.... *, '. ~.C'., 3 "f.',.._,;g:<.'_..'.6, '. : q ;, 4. ' -. ..".:1,,'..'l l, Ab, z,. ,a_ y ._.,*c,-::..* .,Jy.) '5'

• ,?'

', ::.[ *? ,; ' _. * * * *.,. ' V... y. ; ,:n F..e '.,,,<.,'.,

• r..; n ;

^* y .l ,s. ',. ; a.,, f*. w 7.,.l., ......'. r* _... 7 ', : :, , ;;_...e ;h,. ' ' ' ' *

. ;- l

1.._ y

( !],.., -^;........:: . y ;. ,,L..

• _i;,,i ' ' ,;;,,.,; :

.,s, ...p.-' -;,...'],,[.

• . i j._ : --
• v.}* *

., ' v',.'.'._l.j ' ..._...:~ l < J '.,.(. ;3., ;. Y !!.b...t, hi.'. ;,;, 7 '_"..' '.:g

• l ',?,,, ',, : ':..

{. ?'; ' - ;a *,' : '.':,..;-,,: '.. ;;,i;, - ^..,l L.. .:;4 '.,.g .';. ?.,;,.. ,,,G:'^ _ ' ' ;'. ; c. ^ U. ,..,..;-, r p: ;

• ;[

j,.

• ljD.'. :.

. h.

h., '., ', : *- <-

nu w- .,. ~. -e '.:3.. .e -

t. N.';

r> (. nW,'z..:;,., ' ;..,.. : -;,

+.,.

ra - .e p._ ..y: .h.: .' f'y.],?;:i ';.'? l. ':':'.i .- ' l ', .N[ :& ; j'?':{.l 'f',,L,l);f f :.f-l:: 'N h...,.lk. ?,.. lj:. [ ' .T.f a ;'; ', }.":;,;..' ?

$l';;

' 'N. (;

9.,. ' ? :$ '.W'. '.

$. W:^ 0;,, ". :: I '..E I : .I b' 6.. . Y '...> ;'.,.'. ' A:' ' *I..:l :'.- ll ,:,r : ; :;g t- ~.. .e.. .1 :- * ';, " n. ..,(' .:., f ;,r- ,r.-':.... < :, ;, '....,... q *,7,.. J ', n. c' ~: - .s.'." ,';- '..:....y.y. ' ? 1 a;y X-- v , ? - :' '. - - ' . r,. +-... n e ' 5 : :.....c ;,J

i -

'l 'y - :.; h ; W v.. ..g.. s. 7.,.1

_ _.,,',

l':. N* : '.,,..,;.;, ;-

..q J- '. _

• f.,,G,,. s :- -v

.l",. -3 .,,a . (- . * ' _.. ;. 'e ..s ~>m;- .c,.,'.' ,..,A_ ,. j,.. 'y. .., P,f.. l., ", "_.,, y '.. '. (,.. 3;.., e..,..'. ? ..u;f_ 4 '.. ' *,, ',, - n- ,, ',p..i. s,." i.. '... - ' ..-a.:,. . i .3 !? '~,g.',-- ~.., a. ..s.

s. -

,.c. 4.,,. n[y, ' l... g,j e' '.1-

i -

a d s.g. y ', -l,.. : ..'lc,.' ,,,,..,. - '.l, r..".

g.,,',.,g:.s.,.

i, .r, _-3 j,. .,7r; gi ,;.; y .,4.' s. ,,r, e, , "...,... ":'.,*'.r,i9,.... .;.i.'.. ",,. '. ',,.-,.-,;.,,--..- -.- ;.;

• s...

...i, 7.,, .s...........q. ..r- .'., ".. N 'r

• < ~. -

~ , i..: :. ea .,,.....,s_._....... 'A,; ...,..... ', - e-.o...". ? ' - {' :',': ' ' ' -- -'.... e, ,,,... ' 1, ' : ' g,. ,.. 'I- i- *

,..et

: '

. ' ; i. 4.

i. *' 'i ',

.

• 1. '

vb-" .' '.l: ;, ". '.. : , <! ' / .5..'...,.,,.;.......' ';y - ;. -~.

-3' . -' '- ' - * : *- ':..' *' ' '." ~.. -

. e.w..yh,. i.: .y. '~ ^ n ..s :

...,a

.-y .ma .r -..... ~ ; e ,;...'.m.,.,;- ;. : :.. 1 ; 4. - ~ ... g .'.: ~ ~,,,y

, q.,'.i., -

' A; : ' - :

....,n.,.;;..-..... :'. :,- ,. w, g..., '. 4 ' _ _..;. ..,5_. ' q _';,.; y... .. g _. n,. . ;,. v. - * -, ^ - .i....s,g ....~....;; -.:.;., z -Q$,,e-y.......;,.,, ...... -. *. :.8_. ...j . - - i ?

L ;..... ;. ' -. :.:'. *:

....T,\\,~.

_ - - ~ - :

':_**~..B,.,,.".' _.. m.... A.. ... ' :ir:; 'g.. - y. ; ~.. ; '.-4..r.,,;...v._... -. .... ~,.v.... v .,,.; ; ; y, ;.... ',., _, n ;... r .....S.... .,.,n.- .... '. ' ;.- 7_" ; p -. d-'. g .. h f: xe,.;;.. _.., .;_q ; 'i*:i.* j.1 -.y:, yy y, '? n., [ '.,. , '... s. : q. y.,... .-..v n' v.~~. , s. '.a <. : *.. l <. '.. :..., ' f',.j Q. ' '..O " '..' ll: i-rn .<, t N:v

.^-+"_,.'.,'.

.,: i. L.*'.,' ; ? * [.. _..t_'.,, ' L, ;' _... ;' :.:..9.^'.._. ...i ; q, .....g %.c;_ p...r..l.' i 's'. (

...(.. ' c! '..

an..

'-.... [. -

-; *:.' -f', u, _ *..:: v s.$, % -;,. 6 ;,: ', .: s .... ',w.,_.s. -'. ', -.'.x:-c. ? w f?$,Q, , _ :'f;.h \\ y " ' h :., ' 'i*;f ":'.._,T ' E ' l. - l '. '.*_ '. ' f.. ?. '. ' ' h ' '_ ', :: 'N. ;,.', ;. " ' *., ) ': ? '. [. '.'? f, ^.. '.'.. ' b ' f_ '.'. : J ^ _ y a $.Y ~ '_., w: !,,.k..';\\ ; ' _ " f...;'. Nfh.. -.;l;.y. Y b..,:. :: k _ '.,3

b.,,\\

oh :. I

N N_ "

.k [

k ^ .i ; -:.. y _ ;, f.,. ;..... ...:...;. :-[. ;.., ', ~. ..19.4,.9. y . -n,,.._._ e ..,t p;.p -.. .? o. z. .Y ,,,z..'.'.... a

• .. ' -l '

.y,._.. ,. Y "L l L,.. >

t ;-.,.v_....! J ' ' :.. '.;.:;' :.-...

'.';,c,;,......- F =. Q v,,. : ;.,. ': L.e r* ' y.' -.. - n s' o , 3 : .r,.; .. _. ~. e, ..,.:fg i..;

g.... -

• l

., c. .. c ,- {',;. .c.... _.,.....a -(.. ;.,...' _,.a., 'f

's

~ -, ' -..,:'; p..:.; >..l8, g:

a,.'.......,

.. ;. i. M.p,.. :. c ~ ;~:. :. ; - - ag,.[ ;.y f' ? l.....; s.:l . ; J.. : y:,..

f..'.,

,i- __. f, ;.'.[. pi,s-.' _.....4." ,._.l ?l%. ~ '; :l * ' ',.,_: : ),; ~ ',O .,..':... ;ly., !p..., .. _.l ',*u, ; ,,,4.:..',..,';.,_'., . y_m. ', &,' f.. j _ _ ::. -v.. ? a. *. . '.. '),? .. f j.1 .,l c. ,: ^- 1,ij;.'o .',' :Q. ,, Q - N ' :d:. ' }.tp;..., 7:i.. /. L,/. ; ..M. w-(' .;V. - q j/- .. ; ::' f ...&g ;,f '. ' t ,~,- ';;. i.- - j.., ' :.. : 1 '. ' + .l^. ..';,,.4,.'s.1',e.,... _ ~. __.t ..'.."..,.,b'.- ;.~ w.. ) ". '.. : -^':*'.'A

?.:.

s. -t..~ .:5* ..,4 .' i..K '. LlWi*r s.. c.'...:p 9g .m. e

• 7

.s d's.. . - l,. ;. - ".. !,'. : l...'..,%'; e:.. L p fy. _,o....,. - - < -.:a vs .;.yvt. 1... y _{ ...c. n. r ...., q./ W n, 4 ".: ". '. c.,._p_..~.-> ^^a,^. a'_. g, ;. > g,4.;;. ,.......'. ' ' '. '. P;_ _ :' '. '. =.h s e,- ,,. y ~ a, ,?'r-_ _,: e.. :g. _.,') ,,:c Ayg s '..,,*? c'.. - ; ;i. n .- f. '} kf_.'":' s, '. -Q , - F- ;_'; - ), f .N. l. j., l.l ' ' j.Q s.f, 't - n '. : .,ll l5 ', y .'p, s ;} _ -

f. '. ?.

N. y!... ', '.*. -......s.,.*- ,..: :} i '. '. j_ _., r_. _ }']..-.h. l,; ',.

• l l ' 's..

.a ~ ,..a . ~ i.',.'..',*;..;':,','; .* :.., '. '.*-.. ] ' 6., T ^, n.',,.s'lv.,

l. ;;

u

, '.. ':.7.. ': :' :.. _ s ..,; t.g i s. .I /:,z..,.. "'., ' li.n:.'.'-,!. d . b [ [ ".,.,. ' '.' f.k<,' h f #[.. [.S.b '. ;',. -l, '. .). 3.,. pb,e a , i df. 4.,....:.- yQ v. .' -.. -m '.:,;,; .r-. ..r , i: f x,. g :9 n; m g .... ).' a r.. :. y i :.- ,..?-, e: ..,.....o. \\. r..,>-a 4 v. . u TH.? ,,1.. : . '...,, ' ': s :;....' r'., ..:., n '3; R

h.. q: q. * ? % ':.y ;

y , i} lt:.l. , 3., ;- } '}.g 4_.,{. :,L, ';.J;ylljl- _.., '... 3, *_g;;,'% ;*,,g ';,. .s. ~:d

4.

e

. j.;af...K.,_,3 r .n , q, n,. >..,&. ' :; _.,; y. ,- s% -:'. ' ..,s.. s' . =>.i.. . _ f. ..::b.... ..).-'~ .a -.. r, ;, .......,..',f.'...*.n.- ........$' ;[f,.,,g... .' 0, '...':,,s; .r'

%g. A.,.,, ' _,-..;. - ;>

. < " *:.,. y : :.. n-. a ... '. -...2 s, w , 5.;_ ,s, ; ;.. ~.: ,9;',a , x: .n ,, 4... w, n...

• ,.a..;..

.r s r. ,y v .,: ' ;l f. '^':.. -,. ~ ~,.. .y,.," w s' '.,h _ _ ' ',.,;.,:',.- *' 4y' /n h?,,t.

.l ;_!..,s[...',

[... ',4 _. ll o;

• i?d a,

' ' A. ' ' ' ^' * " ", '

.v.r:4 :.

.. g. _, ;..

-

c; 3. y ;,,; ; ;

-;,;.:.[. p. < : o ;;......_,./... i.. '.. y :.,?. > - ~

.;.. v g.

.m

'....,u. b.y.; m. 3 p - +. :.7., p, .:. ; 7 .::v.. x. ... ;;;..:s ;g.n q- -. w : z.7.' o. ..,. a. . :R... 1:: : : q.

u..v n... J.

. v. :+..-

L v

..::n. ;; '... ~ ; ~. 3: ;;, y y

, ~

.. ;.:.,.,, a .... ~. a,,*. ~ . ~ (, 7 ' M h% y%W. .c. .a.

f.,ff, 7f' [,. -

,,. 4

,..y . g. .....Q;g_,, $ };.j (J}c }(.} -f;... ? Q f [_f l [;;.j,[':.ly 4l,Q ,j, cyg,, n. l.. .). w:, d '. h & ' TI - ?..i ' ~.., +, :. *.,.. c n. n s. w.:. ., l '. b.'" 1.. ~.! ' -[ ' ;3 f *. 'l ' * :, . -. ;'*', '. '. ': l, ":%.,:. ' ...s .:v' v"

/'

l, y. .,i.[ . [, j l.,'-[' .',';; ~r.. :- }f [. 4 . I ': /., ; ). - 5 ( '*,,' N,' ; .- ' :;. ::.. * ' ' l'::.. '. :.c __ :..... 'N 5*'. '~ . :.... e : 3. .L'. . ~.. v' > ). .Y. b } [ ~(.'.* [ ' *.k: s[. ) z l ? . j {b '.l Q.,9 ;;;;.7.jf [; ; f.; 3

..: [ q 7 N y ; ' f ll ?, ( ~ _..

. ~.. i.,._., e.._.... ' b ' '. } ':...,L. [,:f [_.'[ L .}-; 0 e ../.. :. . /.n_f

~ [ ?.4 ' ; } T

[-.

.,: ;-k.1 ; ;..j \\

[:" '.:: }. ( ...v .. l( l ' I: ; '. y l :.'.:.,,;;. f.,.. 6' . :,. a. ; n. :..

3... :... - s:

= - w; :.. :

; _ :. ;. e ; y, K :.. y.;..;.;.

..p

_:

-: _. ;;; 3 4,...;f.; 1. ... ;? ~.v.

_ gg c.

t ;.:...~ _ (_ ;.:,g e ,s c. - ' -;. _ e.. .u:..

v... --,-

.e g.. .c., ..,. ;g a.L- .a.. ), .N. ? ' .. ;. h -lN ^:.* ?.1 5 ,.j '. '.. .~?s*

• ^.

..~* ', ' _.. 'e.

L...

i: -

• hy J. %.. ' $0h, <.

n,. . g.l ' '.g,'. 7J.. ' .g

t

.{ -[ ' '}. ' ' *.: f.g -., ;. ;y. -.v.'*-l. ,., ',,',,-6, c. h. i; ,, [ $ '.' i : *} ' L. ~* 7, :.. . :. 4 :.g ; ;.'.. h,, E '. - w r.

l ; '. f.. l. ^:l L f..; [:Q [...;.

[.:'.

...r G

.c

:n,.

.v . t. ...e o., ,:...:. ;;. '.. f.'. . Q; Q.,y,,.S. y n, : :.. '. . - 3 Q[ :; ':; J. :. 4. .....3 1 -17 r;.

• : '... ; y 0

g %..;p ' 7 Q.,,';. '. ' ' ; ' +.. L, 9...,^ ....,M f', y -.. f.^ g. .f3,, .i l _, u: ; .y ... _.. lf'.:'.,-l._.','.'_, ._..,,'J, {l .)'.- d ..,'.e } g ,t,g. 4,.... g - - '.. W. ..,,,.4 1 l;..;..

l.,

_ y.j, p j b f- ....,q.; ..e v 3. ' s,.....,. - *~;..., _,.i,l.

. '- : ;Y-.

,4 .;-}.-

.. 7s

. r .a.. 7 _;.:.[

..-.....~.'

. '. ::g.y: -... :m.t ~n..% ;n r -_.. . 4.. q:. [ t 1 v

v..

',..._.'..y.,.. ,.:.{'.'_ - "f_ a'. <..vy l } ; ' ~.. * ,. '. y - f . _.'. l- ' *::;.., _,. t; .f., f, ', '.,, '. ' : ' J. '...:.f. ..__.,...c ~ ' _ ' j. '.y* (. D. $} 7 _; { 0. *. ....UJ.<. :G..,V of.f J.s.{,': ' ...n,,.:... : w. \\;..f } ;..b . '. }41 j ;."1 ' ] ..~ A W ,. -,....' ): ., s

,7

?, ..~ Yf, ;._ y

L' ;.

') ' ? ' : l ..l b '.. Y ' N..Y. ' h*; [l. Y: ^ I

.[

u- ,. e. _>;, .. o 4.. r:

m.., ;..

..- -... a (9y

....,, h..

: ' r, y: ',

.a . : J..i. ;p,. t G.g ;:...;. _...;;..x._y [..,,-. . y. .v ;. G

... Q:/ n,-.. ', ' -

w.., t ;;'.,:

.,c,_.

.7p_

s J. '._ _ _.,..,j. [_. y. l,.. _ _._,. , _. _}. _ _.; ;....,;..,[

~

, a; (: '.... ; . ;..{, ,;_ g :. '.,....c.; _._ ; ; - 7.:.;: ~.;._~

...g.

y' ' 4 :'. ..:, y. - ; _,. _,.. _ _~r y.._ ._.} ^ . w -t z u.... , 1, h... ..'.. '.. '. '.' ':...,. ;', b ' &' @.[ '.... -'. ... _ m. u D _. " i*.;. 'I. l N Y O _ , ..y,. '. J ; '.y..

.. y v.... A ; :... :;.; j.7

'j .... a '. ;x ) O [ " I 1 q ;2,... - - 4;D a ^... y..vg: y; n . ; :l '. = :_ - . p..

d. V.

.v % ::.l.L ';' v. / : C. ) -; 7; : ~. }3.. g w.:7 ~ ^ ..., ~. .. f;.* ~.;;n[, ;.. :b. ' ,( q.[, ..Q <;./ ; ;; ; $', ./ GQf;i: :,. ; _,

y 9

. n z.

7.:. 2 7 y.y3 a O; y - a ; w; V. ;.*'-

y.... J,;. : :. f.. ;c :. ", (: :J :u +%

y ;..,c =

e:r.x. z y 9 W'...a.:' 1., c. g .,w.

7.......:.

.. :'. s :: ? %........ - - G. '.:. ? .y yf...

. y

..:. a g.: a >~ 'f _ j,, Y~ t ' ' ( '; ',': ? 'S l;' ;' ^N., f ' ' Y:; ' '.' 9'. y [. l '.). E

i.. O /. p ;.

..} y :.;ff L - p,;Q. ... _ l,-[. Y') ) R... ... i ,G %.[u.. _.; fj:

1. .... a.

..g ~. ; u a..

..t t r.. s..a, ..;e : . g.r.. = ;. o..w......(.. ..m.r '((.

: ^*- L ' m. ~ '.....

s... ,4: ....,, W. .2 a. n .-. y

• 3::

. ^. '.,'. w. { f. _. L.;.. i ' %:.:_y; 1., y. ...,._..'4l. ). y : e. ., :'.t -.. -..;,

• ..,l.

"... :.. 9 f '. d;:.".., '.- t '

. ^ '..

• b

...o '. 5 ;. ;* ,? ...:.Y.: s y- .'t h .:; '.. ; 4 '., ,_, yN j.,:w....?. ; ? ? * '. l., f;._ -: L, [;18 .&9.,.

• ~

1.R p$..'

3 y '.1

^

;' /.-

. eg ,1

?

.q [ ',.,.y [ ? ..f,,']'.}:.; ; K 3 ).,.' ' ';:: . s - . [ u.... ! :

• l.

-.?. " '. L. w.i. , u.... ? '.J. .n .. ~ ty ;. %. t l e 7.3.. ; q ..i. (..t :p.:,. ag ..,;;. _'.f ?.f 'll: y 3 f ;;.. .v

y..

. y.; _.. _z._. ',:; l. f.h; - Y l 'I ma!y; s .cl._ ' Y ' :k i.: ~ ~ -/ \\ i, a... ' 4_ y.. ._: ~ a e.:.w...

$e,..

l m.: o - '.. n p..~ 2 a . / nh S f;.g. ! ; *., ( ;.. /._ )w - Y:,:%- ? ~... :.}-[. ) ~Wl ? 3 /:y.

;.. ~. : wy *l i

9 u .L 7.:. ;.:, n s:'@ . ". -(c......,i.: ? jq .:.s ?.,; y,z.. ; f., -, 2 a

x..;., j;.. - : :. c, 3 x ', ;

~

... M.!

' m - l W _.. v ' ' i::.*2ch '.::..~.. Y b% ?{ . l[ .L : ; ? QE: . "J: ; ]g[w{ - - . n.. g'. m - + Q,.(.h'5 , m:.,/.;;. x....:n}:f ' '.+ ;. ' },.M J f };L.;4 -U 3: y? ." }, ' \\ ).: ? il[.} [ [.j 5 jj -: ../ ~.. ..m. ;y.&.:p:.. :. ..: s.. ; y .,Jr%.a s.. ....,- 1.:. _,. m. c --.,.y ._ %. 39... 3.4 ., =,.. _ p. r .~. .s,,.,v..c.._-., ; ';. p- ', _ ',* ......q u,. 1;r;. ' * -_v ;'C;.., '.. 'N. ? y ,.:_e,.*

• 3 v..

7,. : t..... *

p;'... " '

._ - ft .:.,.m..'..

i.. %..,. :.

q: .:;t... ..y'_ ?.' 1,_ ,,t.'_ _; b y _) .. ~**' ' ~ ' __ ..., ' - [ : ', __, l :'._ ' f ? : ;. l '. f - ' vl*e

• '3

"{ ^ [.l '. O ::[ ![ ^ N ?'N k: ' '.: :.0: ; !)g...;,v #,.k

; ? ' ll.',

L I'. :I..

. ' I _ ql \\ ".. f: 3 ~ .'  ;.; g. ;.. _.. '.., ( . 7,y L -:.;.s 3, ....... ;.j.; : _ _ 3 g.. _ 3. {:_.g (

7 _;

_.. ~.

w. - _._ c.

. 7.y^ ', ;;;; ; n m :.. q. __3 ..y: ....c ;4..... .l.-l4 r. r.. y.s,?. 4... G :. 3.' ;; jill;l, n . ;p

• j.i ;

..' (..: % ;.. 1.. }&:. _._ _ l ' :.. J [. :. ' gt..j ' ;, [.[ _'.,; f : *..).. ; { ' '- ~ i, p.;., y . ; ; \\_ '.L.. w.:./ e. : ;. a.. e 4

• y y...

~. ;... :. 'y _' '.. : sj.-

. ;.;.9@f;.-

y. 7 ; ; v..

,M:: . r -. s. ;.-.. 4y 9,e .r. 7.p ;: a?. ;

n...

s ;.3

s...

q A. ' ^ 's

i

.'? , p :::, , ~. ;.. _ ;., :;; . 9l L '& :y!; i} 3 ~ y.)g., ._ e. g.:. p. - . w.,,., .n .-. _ L. i :, ; - _ ^ ' ;

+ ::. ; ; b.,

~;.,:: q ;; -

.,. ] L. 3,r:.l :...:.

t : ^ 3 g+?..'...' .u q,;. { . ;. :.:4. %..::., :. : pA ' ".. :;. ,'...?'..'. . " :..{: > r ....i s ". '.N &. J ':;p[

. M

.:. -:. Q.f ? 'h % ' + .:1 -. ';. ! ' ' : ^ ).. 9.f ..a, v.

l~-

• Y l

k. R ;.y q.-J&yq.s.3. py3:.;g- }] 3.;.,... t r. ~ .~..;.j' >;& ; },,f;, y:q ~.. ~..:- Q g._ y.;....a _.._'.;,;_,~. ' '.%z.. .::q.; ' : __

h 4

),;::..);p&.:. p, g +h(;W, l ' p& g; ;.

u. y 2..'..

~~ _ . ;j : g ,y i.. :..'%.k.,..f.n......,. j. . :. _ ). _ -..;.

. y.:, ;t

-, v.:. ' }.. ?d ' y... g.. '.'... . ~..,. \\ .'. ",../y:

i ll$.%:

's .y.n ..: j.s y '... :.,. ;>. > n. ..,e. .. g .a .. s....v. p, ,..a, j.e t.. t. ;.~. a.

a..

l g ....'r .g.s. ".c a... i: '. : ~,. .,. g.. , - 4.,.. ,w { .J .,.ia?..< 4'.. ...Y-G f ~, ;w;.. f"' ': **,...., g. '.. .:.. r' ;: ...:..., c ' ? 7.o - Y 6 Q y w',;. ~::?n m ' a..:k, w n., ^ >,, -

..... -p

,'.,<..L

.'l..... 4,.. ..!..~.,;..~ p,"m ; .[.- . -~. p +- 3 4

1... '..r.y issuSWE

'.' *[ h, 'J ,,9.,.p.,;c:' j.fwi. l w.. . w y.. g.;, y. 3,. 4,,y. n.gy,y....,, ....... v..;.. p.. a n, - .. ' }; _. '. l . %'i..j... s. - l-). .* ;, -~ .'". j ^[,; 'j.. ~~'. :,. _......, '*'..:1.

..\\. & Gbi k.j

;-;.;

- ),.. _ _.. _ _. -. ', _ - j ., K l Y y :f '.h..\\' l ::$.' A - ? ' ' ;ll ^ !,l '.[_ l. a r, . ~. 'y l. '.

• . f.;p..l-

-~.

f. '

.. j j f, a

• i' '. 4 ',. _.,R.: ?,., C ' _,, W ' ' T,T { L?:: ~

,l , l '. : ' i, 'I,* : ~.,.... ' f' Y.,,i, '.'l - 4 j.l '. .'pl ' A. _ ' :,{ _ . Q < i ' l.:. . 7:. } l .. ? '.?.:'. ::',, ; R, -...:' *

a. '7:,;. ( ' ' ' ' :.-

~:... ,. ~, .. '. Q-l' e. ^ f. ' ' }. :..j.'. ':' l l[ [ '[ &!

• J. '.,...

... m..._ ,y. i.., . ; L; J. l ;:.: ' I.. J.l ' l . v. ....,.

• y#

...,-[' .ef . *., , 'T: -,",p i

.,. l.

1 Q : l,^ Q. [ :. 1 N.:M6. +.

/ :

• j.. k '. *::

~ ;;, : '?. . :c ; ; y; .,t. ;;.. c..

the early days of the NYMFX natural gas contract in the U.S., has become a key participant in the international Petroleum Exchange natural gas futures contract as it hedges its U.K. energy transactions. Enron's completion of the 790-megawatt natural gas-fired Sutton Bridge power station in March 1999 will provide an additional clean, reliable, low-cost source f of power for Enron's customer base in the U.K. D In the Nordic region, Enron has grown its marketing businese, as reflected in its physical and financial electricity sales growth, from 3.0 million megawatt hours (MWhs) in 1996 to 8.4 million MWhs in 1997. Innovative contract structures have resulted in a number of long-term transactions where Enron pro-vides physical supply and price risk management products to energy customers. / Enron also has entered into a joint venture with /@t r - ENEL, the Italian state-owned electric company, to l>3i pursue initiatives in Italy that could generate up to fj i i 5,000 megawatts of power to customers, providing ! ~ 1 platforms for Enron's electricity and natural gas - 21 marketing business in Italy and the surrounding g regions. In addition, Enron expects its 551-megawatt {f oil gasification power plant in Sardinia, Italy, which is financed and under construction, to begin com-mercial operation in early 2000. 3\\ Similarly, Enron's 478-megawatt power station in Marmara Ereglisi, Turkey, is financed and under construction. Operations will commence in the spring of 1999 The company also signed a 10-year strategic alliance with Unified Electricity Systems, Russia's largest electric utility, which includes a joint financing project to upgrade power links to the utility's key export markets. I

u. x.... \\,;... & ' '.;.. ~A.i:~..ec...'.-c..'..'

+ ~....,,.. %g..r :..?..y< ,,.,.......1,.,,.,~,;/..._........;, _ J,r .~ - ' <,.,. ...t L-

• ,1::,;'..y' j.%.: L.. s.;~g/ : _, ' ;...'. - : y

..' ; f

• i

;

e...'g'. s.,,;. n. o. ;

t - v

• i

{. - g -. y-.: ; n' ..,?, 4.y.. ;_,- 'i.',.'_:.:..'..o. a. )

,.':~*%.~'*

3 '.;.,. k i, ', 'i..,{' .. ~,, 3. ' '_,_, j;;. ', +. '., *_,.,._c,r..,. .,~ ..:.;i;* 'r.,..; % _ $:. ' f i _./ o a' $Jf .J

l.,, [!,

f,.~.. s t [ J n'g' , Y "*WE_..::Qy'f'-,.'.. g,' F X T[V % f M.,,.,,M W,:: % 1 _2 M \\ p ..t, j-c Y. l.

• .. 'j'

-'9, .s f pl '!Y ' hl$ k 4s . h..,.f _.f 'U [.,,,A fi' ~,. c ,f h:

,.

.f&: t *

, f f.,' ' ' 4 ,) 1' .l( l, f :. l4; ' -' J. .. } *', :- l5.

• e'j, [,'lY*/.',., ',, K: '-,,

llmV,.' ;, ; " ';,. ..n .. h.. [.. (((Uh,, U[... h,.1- -k[p[f...', :; p.l.h. j[,. %hf[..Mh. e,. t., y[. Ehg..,c[. [..k] [ .g. ,,g, . t,?., ;, ? g e -,i n,...eg,' 3 ((.. ':.. ',., j .*r... d,s.,3.,.. 7,,. ,, "i,-........,.. ...g"'. .. ' if', .. (ply.,, e' r e .c y

n,:

~','s; .f, .,..".q,.4 . '.... V

. ],,f

ff,,A [q.-,

-. l.- ^ ' ' ' y '.:. c,,;' '* ;..-t 5;. 5 ^.;....., '. ..4m l ~ ~ ' ~....

n. ;;

v.

~; 3

..,; e 3,.,,,v.... e.., . t _ - -, . ') _g. e

y

.y. [ ^ '.,(,.'.,.'.'.9'".- .Y ; - l l.', ,e, .I L'8, ,'s. -' [} ', t: - '. [...,,,,'.,,;. .7I (* ' ?* ', y.. ' y, s j =%"* *,y ', _;... ', ' ' ,, M3 " ' g.,... .t ) ;

• l' u ' 'J ' l l'?

,l j k .:,'_*,.**..'- _.... ' ^ *, f; - f;. '..N s J',.. 4. :. '., ,'o_ .f <

• 1

' p. h'. ' * *'y' ,, y ^ ,;g,

, ;,'. [. )..

eq~ k';, Y .c 's.~

)

'o,.,** , j,' ' '

._,._7; : '.

• }.. :.. '. - l, e Ms,.

4 t.

.4...'-' -'...,;.'_'f'

r

.*.......;...t ["_ 3.,s.y ' 4 ;_ .,aq %. -

• e;. - -

o

.,. 4

,l. 0 '...! h,. - [ l ': l '[ l ,,l s l. N i ,a a+- i. 8, _. [., [,;, j., ~, f;. ' ', '. C, '. ' ', _- " [i ',... ', '. 7;.. c.,. ..s...- v.......- /,, +..'.- ; - ' ' ;'. s '\\ '. .') ~$ ., ' [.. ,',i;.','.'_ - - r,.. t, l l

h. 8D.

l $,,.f..f.... ,"h. k m b, t. ; Y,... y . -,...g ^.. e. f h' '-. H 1.; l..'. l ;',

• I... f ;'; :. [

,V..-.-lx ",.: '(* y*. l, _ '

• _Y' ' :
• w 3R ;. g., '.', ' ' ' Q. t.

,s 'e .l. ' 4 .) ' d : s ,,,C, ',' D.}"l, s. _ g.: ' "... _..). ' k f_ l,' ,1 . '. * ' rg,l g..-

1. ;. ;l. -..

l, [? * \\ :(q , _ - l ', i,,,' fl9,: ,',..',g..1 ..'; ;. ;;/,.i. j:.d.w -gg.f., ' ll ' : ( -

j.,.

..jc., g:S;,7 -.";%'.,..,'.:t ..g..

.. +.. -

%...a. '. / :,... , '.,; !.. ;), /,, q l; J. ._..,.,;',y x cp fa . y .a ;. ' ',.,. i .+^:'. '... ll ;. i .;..g .j, :' '.

• js..

...'ri. .s J., '-, *.; r 4,,,. c } . -; - '~ '_ r

g;,g,

( p',. 4 ..i / i:' - ". ' * -..,.i.......,'.' '4. ;, ,f ,,. g..y.w.. I_ t , p :9 i' :. / f '. * : t iu 'd(. TI' % ::". 'f' ' '.... ' ' '..,;..- ' I' ' ' ' ' ';" i..' r' f. 4 lyl k' M,hlf]' tf 5,.t i $ ',v.,.!;V': n, :F y;.. ' b.W \\ p 'g - lI G., L.' :. L '. *: ' . ~.. ;.. d :. i: ?. ' " '. ', - (... 'f" ".'. ',- VG*:. an

/ UJ-J-

d r.. ;'?; .. y (.j.jg ". l.., t- [;,,. f a,, '. 7 ?. {. ' // -.'.,*, '... ;;, -. :,...

f. ','., ; -' ' [,. ;. "l.:,; ?;j :.]. g i esi=~smag l;

'.,..;h_ {. ';;..f. ['s.? w.W;; ll:, ?. l'.: ay, .,,1,

..i '

'I .[' ' +,',l.g . (., f 'y,. ",' 1 :..?., V [ '..,... i ' ;:(,l... ~-; %.. *:'., '. ' O,, '. ; *. 7 p.4%f j . l" *.- j, y-f' .. M)..: lA... ^;., ' )': h;.. ;l %,j ^. J "y . 'i. e '. ' 5 _; ;..:N fgkY 'g g.L T.Q; l, . 3 ,a, r ...*T; n

..a j g. %,' '. u*

• L 7 ':.;_..

-...j' .& ^ ., - lj { 1,

<

r. ;.;

+ rn, u '._ _. J. ', f _ _,',. ;. R *.. -' -,..,;.- '  :... 1 3' u:. y; .;..~' '

• _._.n..*,,!,, Q',

t t m,.. .. : ;_ ;,g

- y

. Q

.

[,. f'.:, $ :.' l '-:'g,\\ ~. *: .l s___g l 'I 'f.

• l. ?,, \\,.

-. ;. g *," ' {: '.. ' ' f_. i. : _,. %

• n

.%;f [_. };yf:, y,.,y,}a yg. 'j.; }.3 -[.[, ;;f ?[.,Q [j. Ql','{l)2:[j. j.' l. L'._.Q*: <.;y,.\\ '; fg .. ll. , 4, l,l - -,19. : :,. ;.,.... *- ...,:).r...._,..:c.?,:: s. ) - + .,....;.. L.,,,.',,

l..l;,., 7l_ l1.f. ' :.

y.

. f,* Y e

' ~ " " y .q._,f

a... ~ -.,

.....*, - - 9. :j:... '.. ' s. : ,r_ l.l-'

• 'N i.,l; l. '. ;

..... _. f ; ; ".. '. k; .,l ) ?. ':ll u,: /, '. 'b f;' Y:....., fl' ;I.,'.. ...._.l. .. N. .,..'(. ,,,,h.,.'.., _

f. $ d

' I E. 'h ~ ;: U I.

• • ? * :

w '. e,,.. _.* g_ '.., *. f: w ._j.';,.,<,.;.. ].p...I, (.,.' ,,.f '.'.,n': ' ' ' ' '.;.,._,'%','"7.,,,- g(. i. , r,..,.,;'.... '..^1, l_ ,g,,, m.., ,,.y'- '.. - ( ' ,.,,.- ) y .,:.,r :. ....,.p.- '. 7 s.,, - -..,, ;, e..,...g g.,,i'*; ;., g._. .,.,,(,*:.

q

.p. l, *. g ....p! 5.,... .. ' y.; ' ..,... (; ; 1':.;.,. ;,;,,,.,,. '. g. e i. ,i. y y;. : r w.; f:. .',.2:.'.'. , ;g.s**

• _F,.~..

, p,.. .. (i ' }. ,1. ; ;[. ),. ' _,.

.,_"._f,. )x -

a,- c' s t.. J... e,e _ = ' \\ '.. ; ;'::?..':.,:: l - '...},'., ' '.,,

y..N

.,.'[ - ':: _'..; u ) '... n: ~; u !.' V. ~~..,.,,;_,

a...,.

.,_y. zs;.L4 ?.#p.. g ;,, . l ~_.;( ya 1 _i- ,. ~. u. >-c:' O,.3 j ; :.

f.,

.f.; '.I l [/,'. J- - [ (-.,. f t-

p.,b;.-,,

.;.,2 ^ , % y.y 's, ,..g... ..v. -[(:. N.?._....,., .-.,,9,....,- e;3,r.. .4 -(. r ,..;j.. ;. ; j,4. s.g ...,,i..., (. m. g s ..s. ..4 1 r s i pud %.. .,F.. ,o.... .,c n >, .p. ::. .y........ ,,g. y ., y ........ :,.-.....'p, '. - -. 4 .- :,y .r. -.. l:' l' L; ..",,&*_Q 'll,'. E l': . f _,...,,.,,f. ' '..l., [...'.'d c. 'j y, ' '...'. l; L. ' a. 'x f., ' v : g ,':l, -. .1 {; N. / ?. lv.' - ::. : .' '. 3. W ' ? lW, 1 y - }. W.:' ' - ' ?,.Y ^ ~....., .1 4.,

j. : 5

.. 5 . f: _ w. .} } h., c.. l'.l..*. b _.'f',f.l..r, ;.$..;,a...f.- l - ^ \\ L:? ?

4. ;,;

9,..;l,. ++- .,9, ,, 7.; g. ~ -,3 ...c. ,..,-,".g... 3, . Q.. ;,p. fP 7 . ;: e r ; . y ~h ~l%.e ,r-rsews ; . y _ J, ' ' ' .A Q:_, _ ...e .i:j. _.. r. '_'I..l <,,; '-},,..'.;.'.'....,P. ~w ~ r m, . { l. ' ' ' ll N.,:' ' 3; :. "~ <,'.: -.... -:t ,.s. ., ;,..p. g ,V :;;;, -,,, ,4; -,:..... ~- - :; -

;. ',.. ;;...;9,...',.;.-.....

s,-

, p.

~. <.'*,, '. ; :.,...y..'. -;, ;.

• • .,L.s.

..s

. ~ %&.vy m s..~-* .m n - m*-*eow. - ~,. .,... ~, - - -.. ~ ~ ~ ~. *...I:-' '.l.. ' 3. j.k. $ hs.8h ^ E$ hMf Y U. - ^ .l, } 0.:., [

• l l '

.gp ppd g,fpgqq - ' ". _,.. ' ' '.'.'I,_ _.~ Q ~j~.flf fj ; ,,_,,;s _ q..; y 1-

• _ :..: ~ ".

. (, v. ',", $9NE

. - ~ l:: -.A ' : :' _ NI *

. _. g ' _l i... .l.- Q..'" +,..., ;;....,.....,, . : a_ r ... ' ' wl. :. ; b.;,, ; Lh- 'e ' ?. ! '

_; e.

.s ' ' q., :....'..., - - ;. ?, :. *. y '" V ,,.,' [, J. ~ ,.'., ;.;, g.\\.,, =. ; _..,,. ~

, j 5 p, _l;.

-

_ [,_;.;' s ' '. ;. .'.7

,y y;

,s ',M'.'.*.'_r,, f.' ;

.s'.

);,; } : . f' ........ -....., -. , 4. ;. _. -..__.:,c..-.'a~,,. _.. m-3 y,",,. ' '. t

. v.S;;

.'.. (, ;. :; .J. . L ,J. 3. ):,e J: / v.',- ~- c

"In addition to its European headquarters in London, Western Brazil will feed power mto the Brazilian Enron has marketing offices in Frankfurt, Moscow, energy grid at a strategic point with few existing Oslo and Stockholm that further extend its presence alternate generation sources. Enron also has acquired in the Nordic market and on the European continent interests in the Rio de Janeiro municipal gas distrib-and enable it to pursue integrated natural gas and ution company, along with the gas distribution com-electricity opportunities. pany of the state of Rio de Janeiro and natural gas distribution systems in seven other Brazilian states. Evolving International Markets The systems encompass a population totaling 55 mil-Enron has an extensive track record of successfully lion people. Another significant element of Enron's developing, constructing and operating natural gas South American strategy is the company's 35-percent pipelines, power plants and other energy-related ownership in and its operation of the 4,104-mile businesses in worldwide energy markets. In 1997, Transportadora de Gas del Sur (TGS) natural gas Enron progressed construction and financin; on pipeline system in Argentina. TGS connects major several large-scale projects, including the 507-gas fields in southern and western Argentina with megawatt combined-cycle, natural gas-fired power distributors of gas in those areas and in the greater plant in Puerto Rico. In emerging markets, large-Buenos Aires area. scale projects often provide the basis for Enron's delivery of its unique commodity, risk management Enron's regional integrated energy strategy also is in and finance products. Enron's integrated approach place in India, where Enron is developing power jl to international business distinguishes it fror.1 its generation businesses and gas transportation and i competitors. While asset developers and operators, distribution activities. A key part of the strategy is the oil and gas majors or financial institutions may each first 826 megawatts of the Dabhol power project in I offer some portion of Enron's product capability, India. Construction on the project was 82 percent - 23 Enron provides unique value to customers through complete at year-end 1997, and the facility will begin fg i a its comprehensive product offerings. commercial operation in late 1998. The 1,624-1I megawatt second phase of the pet is expected to Enron's integrated strategy is reflected in the South be operational in late 2000 and will include an LNG American region of Argentina, Bolivia and Brazil, terminal serving the west coast of India. Enron has where Enron is building a large physical asset posi-forged strong relationships in India. Additional pro-tion in the regional energy flow, enabling the company jects under negotiation in this region include Enron's to create new maikets for natural gas and electricity interest in a 513-megawatt power project in the state by connecting vast supply areas to population centers of Kerala, India, and a proposed joint venture for the l with growing energy demand. formation of gas distribution companies with state governments in Maharashtra and Gujarat. Major elements of this regional asset platform include Enron's interest in Transredes, a 3,093-mile With its existing integrated regional businesses, mul-natural gas, crude oil and product pipeline strategi-tiple other power plants and natural gas pipeline l cally kicated in Bolivia, an area with large energy assets and $20 billion of projects under development, reserves. Enron also owns an interest in the 1,864-Enron's international group is well-positioned to mile Bolivia-to-Brazil natural gas pipeline, which is continue building integrated businesses that offer under construc. ion and will be a key asset in carry-significant potential upside from the delivery of ing gas supplies from Bolivia to energy-hungry Enron's unique skills, products and services. Brazilian markets. Enron's 480-megawatt power plant at Cuiaba in the state of Mato Grosso in

s',*.. -. A; ',, ';" '. i

• ',?'*;-..*

,.3., l .. :,.,,+.. - ?. L.;_;.. '. ',, ......s. ,,r.,. .~ Y j . .~ f * ,a .,,,;.[ ,.t, ,',{,,',. " '., ', ,'.'s.. , '. - ?* ':i ,n,G',*,,,,',<;,.,.'.',,.,..)-* ,, f.4 ',<.l,. _,,_..;, ;,,... -r,,.,_. y_.,,b. .,.?, '. :... '}',I',,,..O -,,* :, ; ;.. ' y ;,; -; c',., _. 'yl' ) ';, y lc ',i '

• c4f],., ',

'^ '; ' _ ;,.,,'...;l, '._. *.,.

<*t

_,., g. : ': /,' - ,6 I'.h .{. '_'.A' t,. :. o

s..

l l : '.':.'. :n r: ,*s':,,,.g'.g.,,...,..':.,.,',.,,.,','..;.-'n' ' ' ?. Fu,, '-.,,, < +, ,,4.

,..,,.,,"a'.',.,'~*

.h *,. ' s ,;.., i, .. * '*.nv.,,..' -s

• ,. *,,q

.( ......,... ;,.p ' -' ;.;. '( ;.,' '.;'s f .m .p*..... ;,., _,. ' l {: .',.,;,.,._.;\\,~,,r_.., 2 e;,,...,';;i

• _ _, L,.*... :;*,'

..,,..C;,*/',*/ .I [',- -.?e.l. ' : .4.. ' f...,'.l_'4'.',..'.,. *. l _ ;_ +.,;_,,*;,...,.,..o.: -r...,,..,,, ,f: ,y .?- l: ^ ' ~.-', '. 'f'% L:.;:,.I

• ,': -,'.. :.;pQ:.' ' 's,' 'a

.' ' q '. ' o I 'f ' ^ ' ' ' ' ' - ;e- ~ - ,e .', f. ;; 's.'.i %, h.

• L

.,4,; s '.,.. '.',[ ; ',:,.... N * * : ',ll '.,. ;,'s ':ch,, f,.; _,_., _., .n n.9,.; ft'.j,, *;;,. \\. y ', s,,.,.,, -%*r * >,'g. 4.g.* ';,.,> j'.* 't p' p '. l ;j'../'.'^s,e-

l. f,'

.'-};.'.

• "t-

".I., 5 ';'*j' '' ' ' ' ',,, 4 -;s ; %.,= - T * : _., o * . c. 1.. ' l-p 4' _ ' [,'q. f,,,,,*.,). t (.. .. [. ,).., ,,n,,,.',,.'F.,;u;,..' 8..,3 .,U. 4,. ', g.

• . '.b,. ll. : :, n., l,',,yi,.,*

.a. . 2 ~ - .<,1 ~,. ', : 5. \\' n,. ; ",. A ' +.

• '?

'. ' <, ? (

,..s..,n'

. y; ~>;' ',.!; -

,j,,,. _,e l+ ,'*v,.' l' ' t ' - l -., ; :s, ,, m . M,.,, ' ,s'.' .;.,'y 5.

f., '.'

.'..f. l, s' '? l ';_ :. ! ' ' - - l> - ' *,'- ~, ',' . 2 ,-1 '*,'.,,',;e, f . Y

• '&'~A

'.* - _' s '. f l' ' :' R., 's -. ,/?.}..^'.,' *.,.,' ' ', ' s;_,' l.::.:. ,r,.,. , ;, ; '-*.... ' o., '. :. ;,.'.,,,',-.',.'r;.,, e,..,.s.,..,.-l ,, ,.,8 l - .l ,.-.f.J_ ,.'L' r.:q lm ' * *,.,

• c-, ' .'.'.';*"<.;

~ .r

,r s.

m.- ,'{ [ .- ' y ' ? '; Q'8 m.._, '.'p. p' e..*. 4.<.,....:.. R., l% ',f. 'f

[.y ;?-w~'

u.' [. - .-...',,v,. '.:. J w f N 'j:: '[.. &.."V,3 )b,' - ; s ', r,~:, ;, 1 t e s.'

y;.-

o-i4 ,.,. ~ > 'y c.,.- ,=* - J.f * <,, ',.,. m. J.- o '.'7' , Q:.. ' ~ s,*, a '.,;..s..

s.2..

G j;.

'c. ',: 4l..... s q a,. -...,..;,,, }; Q '._ clG.,.-e. d.':J e

l a- , ?:,-, f k :.:.'. 0.9,, ' !,l sl ,.,_.l.," g **g L : _: <; -i.t', ,t .,',;y,".*,['?',,"?,*i.';.,.,.,:,~..'g_,.,,', '. _. -},7 o'n ,.,.. :, ;; _ ~ y.y,;,,, _

• T s:

_,e,. .s,, .i <.,s-:.y,:";,. , _ < l,. ; _... % ',", l I ,i,.- :.c z,,..:.. - gT* 1 ?'*;- 4.. .g.. -.., ,G,.- ~ '_, *...;,.. ;. .LWe ' ', '.,-l:. . [ _.. ~ L.; y _ ' y*. 9,..,. '.; ';'.,.,.,. . Lo - ;, 'L ; 3 [ Gl.6,- r;<'..- o..-? s _.:.Q._,'y ('.,: e { [.b.l'lb l. .q [ [,,,..i,, .,,, - l..'., l;. f',* j^t '.".[ f'.jl.,:!..f.);.f,a,.';l.. j.. V,'. -.e-

• • '..:~.;.'.'t'.'.'.,L,.',',..._,.',.~-.

g', .,- d. ; '. ,y ,,t'+ o .;..* '.c,_;, . l. :s. ' */g.,. ' y,_ , /-, ' ' ' e.,,., .e' ?, e - _.. j 9 y *, _;. .j e.j <._'('a" '. q.

• e y

h , w tl.::: : :., '., * :.. ~, \\ ' ' *l ,.'?. .:&';l... ? f,; s:l:,.,* ! ' :- l* '

. ' ;,g-

'.,:, 4 .s .= r _. ; *,**a' ?. 'l :o.:'*. ',,*...- ', ,, ; j', '..

c

,

,...,.,.,..,.....i..:.*.,,, y.: _- _ * ;-,, k.,'. ;l..:m.N.' _ * '. -+ g. .",,;i.,..'.,.4,.,,y: 's-:.

• y -

t,.. v - 'u ;, " q Jw :%....;, '.:, ... : L;$ Tl. d.' 't e.y-c.

l} '.'

.??,.'.! .L', s %.. '. e ' "'.;- l. ;_,.. ..,.....f.  :'.) $* *.,x

• y r-i.,..,

^ [- } ~,.,. r e-o. e,';,;...,...',..,e.".;^.< .,. j:;3. r. _._:, ' ' ~.. ' ' ,A ,m ,.W.,;. '. u... ',, b., 'l 2* t:., n y,..,. * -.,.h ..g'.,. ',V.:;* a : -' y..,,. - : ,N ...'_.,.,'.to ').. '.

*,. ~-r-

e

~. r .s 4 ..f..v. L.,'i*.',y,'y_.,,; _ ' _. -,;.

7. : 4 :,y*,

.. : f*,. '.f.,,'. ?,,. l' o'.,;'".,,. "'. 3 f, f ;: '4,.%. 4,.1,..:. _._.,,.,. v .__-,., : ' r ..p-3 lL

~.,

, l_

,t:..,. f. g,. D.,i, 1,ws' '..'l'*^l;,.,. r.. y. 'n*,"c,' .. o 4-v.,,...,.,.c, <'*.'.y',- x. 7.,.,.,, .- ;4 _*.. - ' ', - -J.;_,.,f., *,

• l ' :.,f e;

,'.l', ~<.. L x.x.~

e ;; ;.... :n -

,JC>, ~ .: * : s ~ ; e.y. .,u . ~.f - (.; : p

1. } ; 6,. -.;

e ',i.:,;. _ _,.g,.,,.:. -,, } '. 1.;.;-<nc;.,f .,.,4 ; f,y,. j,,,. ., y l* l, j'- v: , } ,' R ,t [,, :';

v....,. ;

7, ?...,;- -;..;.,

^'., ' - + >.. - -..,. '.. '-l' ' m._- -.. y, e ... :: n - ,.' ~ ,,'j.., " '. '- .**..;,',. - *.;l' ~ .:.3

'yll

.

.' ; ;r... w ' --*, ..t. ^l ' f,' ,...,_y..-'., - 4

• '*,)

'] '

L,

^, ', ..e **.-..'-l'& E' p , ;-...,,,..'..?; .l' , I,.,, ' ' } ' - ', _'.6:.. a- .,s, ' ' _..,. +. ._s g, s k. e, . 1, .,.,,. *' ^ .,, ' ', ", k,. s .,,....,. h ' ',.s.f...,.,,;,, ,-...,..p s,. l, -i'.-.t' I.. f g, ..? 9 o M

• . '{ '..

'O ,, -. */, .'.'."fi..s'- [.... ^ A. ';,..,.N. .. } ",. ' % e, ',*,.. ',.' g. e ,1i, ".< :* - - _- [ f. '. ~ t :.. ~, x,., ;,, .s1 ,.i \\,.c. :: '.L.[:. (,;<- 7. *; s .".l J..k ..,,-y...j, v, ' 'g' 7._: a '. ',:'%. '.<.. a e_.. -

.s

'.r, '* { ;,, ' ,:,:, ; ': ;,: ; - '",[. *(,.f.,..4 ,I'. '. -, % ..s

• .;, g,

l:, .'l g, l '- ' r,

, ', t. ) < /.,' *..,

,, ". ; ;..;.g.'.'*. '. 'y ' '..'.p ..y;,~. ;; c , 1 _ 3- '?; , */,, 3 v, , :\\..;j _... - [ q' f '.'.;.. ', ]

,l

, : o.:g. . c'(Il.. { y'." ;.l'. * ; *.

;p... ?; q y

;,,

s

. g }'

.S.','. '.' ,N - '. ' 7',:: 'l,, -av

g. _..w.

.,.,_;,*.c. [ ' r,' 3 ' j j '.' S i'..' ", s- , _ ' J. { *:6, ', ', ',1 ~, ' ; s ". '. ' '. .I '. ' f. '- 1;. ',vi :,g-_** .- Q.

-.,.y.__,,-+

'l J. ', 'f.,I 'fC)Y*,; , q ;,, ;,;{,n', p f,,, % '. z Q g :3 _e.,,; .,. s. s,. r.

7../.:., v <

,.,.',L y.'

e ....s... a,.,,.;...:...,.',[ *: :; %. : y *. : r, .:m,G.,,' + ;l(.:.,9,, '., },[. I ;i ,* :; e. ~ .,'.;h',,' .,*v ,. _,,.,:..,v \\y,..; . :.~ a,.. ..,p iL. gf'",,,'*,.'i.'.,,. V [ f r.,,..;s,,, a; ;l;, @.,'.., y " , ' _ k. ' k ' ;,,' f_.. _..?,.. <.....1 t... .,7 a ;.. .f. ~ f. ;i.},. c ~' ' ['.. ' .?'.. : :1.' ' ).. [;.',7';i;lg..f.',. * *,(" Q. .x.. _,.;... _,' [,, [ i;. - .-s>-.sc. a',- ..,,..~:........ g, ~....,_.y....., f Y s.. r... V.

; t y

,2, -<:...W./m....,...-.. ~.,..<f,i,.,e, e... ., ',. -., j :S. ',,7 _ w. $,...'._-'.n ',,A' _w* b*i,., ,..-.}',.,'s._ ,,, 4, w' !,. ,v.,... .a -s',- +. M,.. 5, , l ] \\.,.

- y '.f."

.s. v._.,, y*,,..' -,' * , y,: c ~ 5-f. '.$_s* .v l:' 7 + :.

• 4, l;.

_ +

• y, Qe'

' '"

• b
• 1

',f' I .g.<. - ..{,,,- .:.. '= s'a lr;. ,:.:,*W.".,., i e f.i.,,.. ~.'.".,:;. :, :...... s. *

• (/ ?.j' N'

(';+ n '._,e n ',._.,,. - ' - *.,f,,,.,'4 ..'l {.,

• s

s. -i. n:

g..: q. .,'L,, ., ' ;., ', f.. :. %, t.f.,,.,, -qg.., .-_}-Q*,'.'."*.,,s ,c**,, T.',;...m. ,t.(. . '...$.',,r,.' 1 ,y ' f'e '., _l' m - ' 7' ., w ; m,...

• e

.......s I._..':**",,M- ' ' * * ' +i, 3 '.'_'l .of.*' ,.e,,,.-.,. _ '.*~f'.'. .,,Q.'..., L..,,_ _s.,V L : 'e .a',z5a

1. 'd'*.<Y#,.'[.':

{,__._;N. - f. '- h,. *,,,.-_' ; - 'g w - <, fi.:..,,..; <:..,,.,' *. k,. ;. '. s .-e s' ,.*'\\ '? l-g . e 7, s,, -.,: s -#..7 .. ' i: *:,4' i'. 'y,.,- l -u r .,.,, ~ ' p,'* ' '.. / J. ' ..,-.-.* ~ * : ;o. *.. t ' -'J....'.*a.-Q.- p .u v g...* ,. ' k ' ', '. ' v. D. : :,c'-[.a .s. a, .r . - ; ' 9..,,%,'4 t. v '. :. e Y .i -,,,.- -,, -:..,,.#.. s.., y;, '., ;,"I hj / ~ ;. q.

q

,l';..' i. - ' ? d*a .p' ? :, .. sh '. ; t

• ,. j

,, h } /, M.', '.pj',~..,p 5' "y; M,:i[,..,. b,.. '.. >..',.g.t. v* 4 o - s- .... d 3 ',.,.q' ' y ' l',,'p,'~','- y ( ^. q, a.u '4.y' /.. l,.. ' f/f'.,. ' b ; ^,,_;,- t' s i ' W ?. :' W.., L J5 4, '.. f.,. .. // - ' ' (, ; ';<-'_>.'l.-f,l, l ,',a v ' A,it e ",.,., r 4' y-..] g,; :. 0 ' ' ' !$'.;;;;lp, ; _. s v"-p.+... M,,,%m-(5- 'tp% .s 't.'%. ' ;t, '- o- ., -..,.s .,,g,

• T ' ; s.

.s *. O;

-n,.."u, 7,,) $j;1 i'.? [t ' e >- .,.3 c' '%,E"

p w

' ' iC

y,G v,;,

';.. :. ? ?? "*'.."X, .' yh ;.g@+', . ;A, l.l,.;, 9 f..-t.,,_s.. ,';[ 4 i -: a;;' ' ' ' *. .I'h ' [',4.' r, w.;... '.'.b. , ;._,\\.. lg_'.'.-'o. ..R' '; ' ;, .'o ... 'ph,'^

• j ',

e..:, -

rs -6,',. - :y{J .4

a..';,'~.f.

,q" [. ,,. a' ... ; g . _,,,u g ,,5._ b .[", ,'*/,, ,'..,".','p...,;, '*;,.~.,,,'.'_*"f.';.,. -: :t *, s ,b ,'&, t, - *.i,[., 'l*_.b. ....y:-, 'l.;,, h,io,- '_- 's. _p. s'

, ';>f,.;; t.*

l..q u,2

.

...f

\\* k,.. l,,h., '., ',;',,...Y- .: ns.. n A.,f l o

• (:

. 1' y 7. ' w' ;*

.;v, f,' '. : j.. I y,. g.. p b' .: :; J..,.:,'..:,. :", '.s

• t
  • ._..l

l ' '.+/._f ,j,., '; ' t,g.. ;. y, 5

l.. ;,.m ggk e,

u - _

a.,.

e, h f 4 '. * *',.3 ;j -,,. .y %.yyyy(i. *, ,,,:2 72, ; %~ r -'.,n L,.'; V < }yNf M,,.,. _ ,l,,,.x .*? 3.;,y.3 q.;y. n. g :.g J,_ '\\ .e s. gr r.g :p ~...' T'.* ' *. ,1. .c { 't, .+.sy.h '{ h.. '-3[ :... - I

.. k Q*J F / r'.,.,,,,.,,...

• [ I.D ["b 2 J '.J, ;'

e ,s :. _... > '.. . ',,q.- ' */

j'.,;

e s s v,.w - f,.'

f. h ;' '.' j,,. '" '

J..j. ;. [d 3 I; ..i'".' h ',.,. ;.J .; :;.. S.,. 7., 8 yg,i j ... ' :... ' q ?. ' j'4 eneuf s I. [, 9,'y:{.z q,.7:f'l'.', 9 (t:;:'. o. = '[',, ' [, _.l ' f&f ,.k, sr., n.

• '2_.

(' ' '. .d ,E $ ':,,4, I' e--

i. '

,o. n.. ......., ' ',.-......I'; N : [ f .Co. . '..., [., (,, f, ' ' ),l Q ' bl. A' i : v. .f[ '.s' '/,.[ " f.,,,, '. ?, j 4. r, f N, V.'. c

• d

'e ..J -, 3.. c :y ' ' N ':f. .,,a.,; .E:,'.'; ll ;l :,'[a - ') 'b

• L,Ljf Q *.

t ".'l' y.,.. , ' _. ' e's ,i* ~ ;.' ;?;. v.,..,.. _ {, . N.. r i 'la,:.. _, ft- .. i..,.,.-'..,.,. ' '.. '. *_d ...h.*. ': ' ' '. .s, s .. -,,,,..., -e ~ .. ' of ,s ,,,.., ',,....,., j..g,'.,p,j,, u n. - % ,,:<,..'..9: s; ) .,~,;,. ,;y ~ :;. . =.,... '. *q,, ",; *..,,. ,, :rb- <, *.~ _,; .o. g ,v. d e. 3 s e ,,s. ,.,v b, _..ql,,,7 s s..-p .,, ',. *.' y .-.....,>e. ',y ..,,.f;, _ ' ; t., o ~ . ? s : h',, _ ;e: -s.., s, .4 'v . ?  ; s ,.._s a y. , i,p.*..- g'.'.... 1:., '.['A,'~-v..._'_' #". - f *,;_,; .Q.

• )

i'r

^,,r

's"9.- a %s., '/_.'*;..,:. -..,,..v....,...,, '),. ..? ', *\\'".*o' , :._ _ ; s ; .L' r >',[,_','_'E l'. -_",;;; * -,-?, 1^- * ',.. '. % ;l'* ,e-' "..,q 3' ..,.,.,.,'k- .-',,. ' ',*9 }, =.. ', : "*,. f. ' '. '.: .L.' -,.*^. .- _'_:.'.- ' ',,%,, 5, % _. c :.., ~ ;, .'.'d,.-;l,.-* ' 4;-',_,; * '.'.);' '-'..;, a~'. ,'^~, ~ a.' ~ '. 2,

• er ', *

~ ' ', _,r*:.s .,.~g',. '. ', s .'.',A:,_. 'f., -.. f' l', '.; ': ~.?' -< e ..*.,. ', (;'.v..,.. .,_4, , e,j J..:.', ' '

._,,. ; ",,, -^~ ',,,..-. '< ;,

, }, {.,f ',.,. '...,..,f.'.,..- r -.. .,o,,.', ',[..* q'_. 'ig, a ./,,., s,. _. ',,,".l..'*.'g r '. c.v a .t ,[... p ?-.',

r. a.. b. ;...

.'"...l* ~y .,.,.,.f,.,. + 3',._: b y, ,.'7, _....., ,4- ,s d..;,, $.. ~ '-.,l ' :'._ : k. 7, , ~-... ..b "* - ;s * ...l'

-'.4 % '. *

.b.., ..j.. *. s,. - ' ',,',

t.., ' -

.,y.. e. .i," ... **.. / ' 's..'- j* - ..s- ' +.. ... e, .. /. /, ;., 4 .,,..g /.,, r. ,,.'.'r',' ., ;,.,f. ..,.. ",.,', - ' j,"." - 8 e..

?,...

.se ', ,,8,.,,,...-.;':.'., 7, 7 s'.,_,,i 7, s- -o c. '.r>. [.g', ':.'.,., ' -,,,s.., y 4.,' ;,' y,.- [, *,, ', '.,,,. g ; .s, '..y ,,,.~.. ; y ' ~ ~ ' '. a;;;. ' ;..f -,... _ 5 s -,..,y,,, a', .i : .s s 4.d

• .., ' -> - >'....... '..:,,:.." .?.

5' ., f ,.',,f ,,e',_.', .'.r

s...

../ 5. . J',# ;,, t y., ', '.{.,. c, - .';...._,,'_N.' ~.' ' ' .,'s. _...,.., ~.., ..: 3,, 'o .,.,.t'.s' '-.,..;

~ w~

..,,,. '. -

;n _. o, -7 .t 4 ..',s-.... '... m..- u ..s-a, *.. ) - 1 : ',.*. ;;j"'., :,,'...:*..'...,,,' *;.. .y '" A.,,:..,'-.. - ; ,1 ;,; + ..1, l*..' i -f 's i i u.-; - ;,.. ~. ' t .v.',..- <... -.;..c. g. ../ *,.'P;'- .',,? .,[, . '.' ?: .., s: A,a L; ' l

_.,9*

'.'.'.','*:;.',.'... n '.? l '.%. ~',. l.,, ,~ ~ ' l' -* jS ',, ', ' 1'\\ ; * ' ~-*

• ,,',(. ~, ',

s 'W d-- I' ,.'* N, ' t t .D- + ,..l~_.- , 7 a,... .y.-

• 3,.*

- [ _. E' [ ',.' l l ',

_;,,, y _ _,,. _,,,.,_._...,, -.,...'.;.

S' ,, r,;. - ; $& -.,*o.,.,p p .m... w- .' :. ' *. '. '. ',,.I-j,7 - -,,- -,, - ~ _,.,,.,, ~,,,. 7, j,, <s, '. - 7 s,. ', .,.',:' ;_' \\' ^,l',.'.1.""-.~.,,,,:,..: y',.. l' ' r - -.y. 4",'- y, .f,-,_, ,'.,r;,r_-__'" ' s. _,,, -...,';.,,'.....::..'. : r...-:.. ~..

• j...,_.,.,

,,'v ^ ^. '. - l " ', ',. <, c..., ', *,' 7 d 2, -4 -*.a ,_4 ?. '.t l..,.... ~. s -* " .'.~,i ; - ".c,.j ... - ~.- s.,....:. r, _., y, s 3- , [.; '..,, -.: f ' ' n',;. ::, '.,, i '. ..x ,, l . a.y,.. ll [ a,.,..,.,,..... - i,j'.,,,, .L , v..' - e '...,.,, . -' ^ ' _.., -,...,. ;-., d .......'.;:,,.....,.......,.... ;. p.. ;, s,.., -..,,.. - s.'. ': T: : ,7 _.,.a.-.., ';; '..*.: . ',.s' l '..- a, l l : y .) 1~i,...':., : 7 +.

r

..:. :. c. t

. A g

,.*y..,.' .y 9, - /.s. .L.,, v _', f,'. E,,4Q s; .....v. e 4 s J w . =; s._' Q 4

Q.,

Ai .Q - o. '.i- .h -.j;., y( s

• .m a

.c .,:

• J.

6 'J j ' .[, : - I ~.. g .. 3 .g s ~. s y. t .y .s 2 c y .'5 /" ' , '.' f. ] 3 y a; \\1% ".- Y,

n/

%u ,M Y ' W. s.o c' ' *L, ., y)l a p.g* )m. : :, c.j!' c ' ) j'. L*:,'.'" e

, Y '

y g s R. J.' g p,,f s V* i..%NY[:' 5 < 1

• j.ll '~

f- - y <,> - f., r 6 r' y

*' K O e.

? f , _,( J'Y ; [f f, ', E'..[ [- - *.' .. ),b' e V -. 4 R. :.. f.. ' l.4 M, &.t. .. ',., '. D.)*' g, s q. .y 1 s y,.. [. y:Q,Q[.','. i " -,.. A ; y ;,, I. ki,,.d.'e I./ I I,.rky. [,.Q*y ..:a;;k .;h I'..Q' 5 { [.fl.T*.lk.[.[.I. .. ' ' * '.9.' l r.' ',?. j ls. 5.W):.&,WQ).' 4..f" ? '9A*. f'.,,' ' %k '. d.

.. f...n. efsp,?.. ;. $.j,fx; l

3[. 'lk.n C'. E, ;" %. ' *. \\,R.)'-: ,y <, ~ ' "I g %&l?Q&.; '. i ?g.. :.y. ? 9 - y : :s. - t .,1 +p 'W + i C. ^ $_, L. hfh}% Y. ?:n.. W s :; . s y;;;Y $. "Y n ' 4, v." a P k - n :f.% s,. kh i?, @.?'O.:ff..?'.{.,. ' ff ~ I,# M)Q[0Q l' ^ l II.(-$,(%.L: '

• Q? T'. ;(;[,,.^ ?..5'..kj,9 g8[ [ $y-

}[,- a n-. , gl, [. .Y,, ':::[l$ ;;k. [ M'k 3':, L-e k w t. :: - ?., (.- ff hi g ',,. S'),..

1. .E.[

v1 ,0 . t i. t,.....',,,a. ;m..;.l : Q (., < Q.l:( ^ :' f _;',-l W,_ .. 'f. N :.h, ;g s(&.. ;yif_.Q. !,4! f,;:'l,. 3,_. ':... -. ",.'.} [ ' a ...) ; f.':'Y:. ~.. ; 6.Q. : 3,[.',,_ ..,',.... ;..y...., ; E j ^ -. -6.:. ;.3..:-..; :-'. .m ,:Yy.)... 4..': ' ? _. _,.,,,.. ; V '. * ; s L. ..m..ij T '.,6 .a .q".,;.~.- \\., 'L- ~~o'. ,...,,.,.u,:.,a y'..... ',. '.,,, .... m 9 i;. c y.,.,. ., y. q. ..,m.,.:.y-...,,... 4.,..Q.,., ... r/" .,..a aaw ' c. g -Q g 4.., ,s, x,. u.a ,,,. 7 ..,.,n. .g.,.-_., ..(.. ,7 7,,y . '. [.' , f:h3?.% {, f... Q y (I" . ;e 'T' .. N.

• l l '_

l. y..'.'..".- ~,'l l.. ' ?. g,ySW y _.f:.l).7%.y.)..p,:;i./j.c,.'J: ',' j_ ,y

• h, ;

9;y a + l ;)' ? s: *

OrM

.n;.

.: :.' L : :

• 'C..

... ;.$.%g

t'. %

... ~ :.. ; .,. -,: &. G j;. .;g_.,. ^7 ^'. / ' .; ; ;. ; ',:. - 7.x,; :.; '.:.. ; p.. /: q:; ; a -. ~ '. %. * '. ('

.~.. _ m..;.

M :.' ','... Y, '.. '. _...,. - '.;-,...

'.,p.',S. :.. ' J - 4.., b, g..yf.~. f..' :;:

A~.

g t..- ,v : ~ : ..v.,.,. t ':%,; f.y%p.if.. ~... : :z t y -. ,;,,d,;.*;.; : ..., t ;.c..;.g, W ;,:, '.,.. -,.......'s. ~,. ..:./. - :, :,.:. :., s n 2 ~ 5.- ...,v . h- ,.s .:. 7 4 +y:n,. r

$,;.;. p,y

".. y._ ;'..

t.

f.n ' :. :: *.... !

e ip ; }y - '.... - '. , g;, :c. m"' .x.. - ;..

• . ~.':

.z....,;.. . g .....7.. 7e'j.

A'.-

,,,,.. % 3, _,,,. }.., r _/,. ;., _._.;. : '. -..- a c. s.,,., t ,y

. m. -

• _ ;Qy. ',.,:,_, l.

3.__ [_-

[y ;[.

...y _ :q ',f;* n.,'.'.,, y[_,,u [.,},. [ -.. ';.; :_ ',*' ' p.

e. ' ' - y Q,a ' _..'j ' 9; L ; ' '.; g: :L,: ;..,, ;..;.;;,',:_, ' ;. =.

y. ;-

m'.

.g;'

, ; f - { ll .m_.;;; ; x, .r,. m;.-. '. L. ' ::,. .: :y ' \\ '. '... f, V,, .,-2.:. .,.3:

.3 m....;...

N ;-.V. n '.',..;.. ;** [ :.. ~*.T : ;. ' R -/. /..:

• C.; ?. i'

1.,...

.'.. ;  %.)

...Y.~..:'.

... - f,;. i ; n. g- ' '. & T V L t _ ': "i .c.,..'. - ? . :; ; y.',+_ 3 '.. ' - e., j: \\. ' ;f : ) il. h.'.. G i [; .,[h[ i > + ' :: ;; _ R. ; : Y L;r. .,c ..' : ', ' -'...),.;l.. - l..; q,." : q. - e b. ; .;..._..v. b';:. '. ",.7,_.;.g; '.

.., f ; :

.., %. _. y... ),. y;:'.,. - ' ',j,. '..r;". g (.~. o.,... i ,.w s. 3

x.. ;*.:;

. _. 3 ..,.y ;'_ ',L : -..,.. s' '..,... ..e

.';'. 4., ', '

• '.. :. : G c.

_,k... -' y.. - :3,.' -". -' ' ',:... 'y },.;,

q'

?

',,e.t.';.- .. 6. )

;c,

,, : : '

,i :-. s a e r ,... v. ~ . j i $,.,....,..,. - <t ; '

.

'. 2;.y. '.. ;,'..

.L?!. j i .. 6.c- 'c. : r.. -c, .,j;.,:,.,- ...[.. ,.,..,q _.'., '. y ;... ' ;, .a :

,. -.

~ *

:.

.,:.... y . ~ - ; - ; _..,

f...-.e.--

,.,.i....;..

A.

_. -;,,..,...e .e. . ~ ~.., .v_ . ;;:.' - - ^ ;,

s. c. -,..; '.. ;.. i.

f,

• '. k [.

.- -, '; '...: :. [,,,'.a ['l.. ' '.. * %q : : % .I :' ' f.f..... I

:.O.. ;..

a.., _ ; s... ~.., j ^ . ],'_,',l,. ; _ - ([

i. ' -

.; ;... a .,y -. _ _ ~.. s,,. ~ y, : <. ' a, .,n._ ,".-_4,. ,, ;.:. y 1 22. '.s :.:.e--.'- q.... n. ,...;.y , 1. .,%- ~'.':.- r. a. c., _c. c; ;.

.s.....,.: - =..

... j ., 3..;c.,... ?.- ., p, ,. o'p q .'.. ; 4. - k'.* . r. ~... ;,., w

• ../:.

..,.. g.l :1,c*f y

t ..-- :. :._ ; *.. _ ;,.'. :..,.. a. ..i ; _. -...:... g. ',,*.,.. ~..,,.,,.r 's., _t'., o -' , '. q. }.'%:,.. 1 +. ... _ u_ h..- :... e.,. :c :. . ; f. ".g.. 6 3 4 7 _. ::.. : :.... ;,;........,_;-...__..' 4

- j. -.-

I. '3 .,}" [. k'i . j **},.bl,.. [.' j

l

'.,.Q l ::,. . '[ '... q. l I.'- [, . lv. k. [ ,l' ' ';~ ';;,'...',.,+9 E.. . k.?.' '- l; ?.{ ',. _'.I~.'? j. h. l.;.ll .l .l :. *.' ', ;....T'. , l' Y ';: .{~: ','* ;.: ( t-f +* J ' .' [ '?;,., 1 * '

3., * ' '., ',

.....:.,7,} '. ' Q,.. - {. ,.; y . l. '.; j ,,;,.

• s f.' ;{f.:_

l- . i '-l,Y,.*,,.. .,....,*r _e... 9-- .. s ;. -^... s ^ ..N ' ~ f. ' -'_' *. '. _. ' ' ' T ..I, A - '.__...,: '? \\ l.' :.,'- ?*-

h. !b * '.'.l ', ? *-. A ;l.._I._ _:: _ ' '

.,'l:'., ,.i '., ' '.. " "' .q.r.

,m'

...,}..,* '.. l; $ 7, , l4 '-

, ', N*'

.} 1.

f '. ' 'm ' Q... ' j ' ;,. '.{- . f ; ', _. i *_,.... (... L,z Q.:,':, L '. _;.,.l,, ?,* 0 *,.; _. :.e .,;..'>..._:,..'], ..? ^ -' I l '. '( _ ; ;.. ' c':f,j. ' ;l ;. ') : '. ' ^ ' f. ?._

. ?[. ;,

z,..,;..,-.., [_'.,.' [., :, -.. :,', %% ^ _. -.',., ' ' ' ~-...;'.,... n::,.T,.,- ' :;.7 :, .s ....t., ,e. ..i, .. ( ..., g e g,. F -; * .g- . '.-4" g., .,y, '.-.i<...,., ', ' ' ', -i ;. ...j", ,i -:.. _ U,. . ? h. ' *.. 4;,',^ \\, ' , '... l'.S ' "*[:.} '[ .,.M.'** ,,., ';[,. .I. f '., j., ..-l r ~' '. -' [. ' !.,,.. *- { ] ^.. '... '- a t -- + a ,i.. }.;,. - '. ' ',.,,. ',. r . * - -,.'] 'h*,,. _.5 s s - -....i ' ' ' . J: ....,,L .i ,.,,.,i -_-l,, ',..... y J, ._s al. '

• *f 5;* ; y'., ; ? ' - " - '-~,;'ic-.,. -.....

.. g..,.%', '. **:, o c ' -,:.. 'l s. e., c'. .r ~, '.- :, ~f '- * :: r '_)-_,

• ., ', _..l,

.g* ,,a' "'..,y. 'y,'..' ,*l ,, _ l '[ I. 3. ', j,,* ', -

• ..,;,;d_,.

l. -..c..,'-.- *.,' '. :. a..- '. '.. --,l.',',+ [_ ... '. ' '..,~O-e ': '. ' ' ^. * *.. ;; ; -^ : - _ -

s', ' ' -

D-

c....[i:b'. L -l.. } '.

r., -.

..m. y ,,'..j.. -- -- ', g l, j - '. ' ' .y ..,,.d ',' :.. -..

.\\

r s. ... r s _ y - -. +. _.......... - _. ' ' ',, - i.. 7 as,, T," 'p. e - g

• ,',,~"_.':;\\.',';,'....... -

'+ ? :, r 'r i :. '.'~.L..I', }', '.. ~.. *: :' , e,5,4 _ i.,., ;. ',: ^ ~.

• '.I,

? -[ ' '. - :,.- ' j. ' :' .',g _ [ ; <.' ;. ; '::7..,,;.t.,-. '.....',..,,e.._..-, - _ '. - e ,,: i. ,s,- 7. 7 ,,s .3 ' _.. i'e .'I- [..._ .. _... ;. -~ ^,,...,., _.. ,[,;,l.- ..~ - mg - ?, e '..

• l

_1,.. ~ ,_? _, '. ',.' ', ' ;; ~. ..g',;,. -_'.;l , ' ' '.,., ' -..; '.. :[' _ '.. ~,,.'.,V' _.9_._ .r. i +...,,. '..'.... / J '.,. : ,- =.,.. * ,'y..:. ',,,.. [.;; s. 's .y._,. - n., _._ _'.._;, ;._..;_ r.. _ e .,,s.,_ ,..,. d--}:. .*r -.. :...- % v ,f. .. -..- 1(..,. *..,. .m,... v -..'_r. >..'.,y ,_v -,,,,;,. *..- c

,,1

.,c '4 q.... . _. -... '-r. - ; r :.,-. -..: 2, .s ,s_ _...,..-...~, y : _. :.,,,, _,,, _.. _ _ _. .._o_ t. .-a., '_ ;. L.. ~ s.c -,_.v.,.. . g..,..,..'_'. t . :- ( -...... yc ,...e. i, ( f<,,.t,, s, y;.... . }.

j....,

L-7 t,,., ,,t .,b .? 3

explorationand ;3rOduCtiOn ~ ., ' t . y 5 l \\.l 'l [ = 8 l a . ~. E j ',? l 34 - ,. j. I I. 1 ~ l 5, 'C I \\ w, t ^ s J,f - f . h". ~ SULI OP PAAE '

g gg.

EP-O Reserve Basins $ Blocks

I. ' ; ' ' -. '; l.,.-,.,..

., r ;*.

7r -. '. ' *..... ' '-- ', -..}' ' '.

• .O. '_:*,, ' '. - ',

v.l. }, ~ s g ._; y 1.,, y... ll ,4. ;. :

7.., ;

.,f g., y,1;.,.:'..: -.- : '.. - .. ::c. '. ' - ' ..g.......,+..a..* ;'* ifl ..- -.,, ' " ;, _.; ; ' ^ ; r.. i,r Q' ;k's, ) ' :._.;.. '..,,;,'d-c"..'.e...,* -. .n .'s1 ..,.*.. e!.. - f_,..;'_.._.'..-l_._..'-[;,': Q ' '. '......l...;..:. : - _ )~.. _., ,e

h.. (_. ( "'.' Q.

.W _%. . f..; p y....,, q. .a. m(. +.. 3. -,......... .. 4 ...,.-.;..;,.:.~,._..,..:... ;,w. q;. ;.., .n .y.'. .g.:.,.'.....#.,...,'.,.. '..'.,r..;';....,....,.. . m;. .r .g c. ._.. ;..t. ....'). h I 'M v o -...;i t,q. _. "....s....... c;,- ',5, b '.,.'U,' .A i..,,. ,g

• j, }l. ' MAMIteQigeM'iderNM'.; '* ' ' at l, '

. I.. '.?5 T.J. .,' L. ~. ^. -l l # :.. ' a d. (OEnpQth.VQ$&. :.. - '..:. ;,. ' l '..! { [ ;. I I / E s,- . ;* a r '. :., ;. _. +_.... ;: g... -',,... _ *l \\. ,.- :_ ~s a c;. *. 7 *[',; t-'

.*.*-.. '[ ;-

f,,- l.l.;- _' _ _.,.'. _, = - .;. y .y,.,7._,~- - ; a:. _, ; _:.., hhL .... :4 ,.T, '.. l.

• z...'.

r _..,__;_. ~. :., ;. '. '_k.~.~, ^.l. ] :;. li..',:.' v,' : ;l ';.'. 1; '? ~.:.-l.L '.;l.l..l  ? L. , :f;,.;' '*,, ,.;E ,..e.. ..,t.... i _ :3* 4

• f : ' ',,

'., : :l:..*

y. ' _. ;. -_. '

• i '..

. i _, ',. .,,s'. ^ j' '. z.;. ; e. .... ) : g.!. i ,,,, ; :..ll ;. __. : : y...:. ;;. _ q

;,3...:q' ;: '? *.. ;,,

,u .e;.

^,i *.;

'..;...,y : :.. f_ s,: -. _ ' l.. ' - ;;_, '.,. kf.. ; u;.l.;:.'.

,. !......... k..f..

. " I ',' n ; ' - V-l..l-r I.^ ' :. _, l. *. ' '. l. "..Y.' Ij.*..$ '.b.,l,,'b-g. g. ' + ' ~ ' '. _ m.

9 [.[

{.;a..,,,

a. s; ',:.,: r',:.. '..y , _,. __,....,..,...,:,:.,_...;_4 ..: y \\. ; _ ;, (: r 7. ; _ ;p[.:;., _.. .,9 .. '. ;n ..'.n,

= z.

:~.

g L:.,.. ;. ; ;

3. u.., _.,,.

. +,_. ; ;... ;,...;.,J: n_... ??; _ ;...

,t y......,,.. -

. -; : 6.;-

., _, -, - -.9

.. _..,.p' ..e_ f ;.., .,y;y... e,. ,.:. y t. _e., y. ;; t.,, .. s_ j '.,g... ;,.._.,.,,._ y o _,_ _.:: ; (_ - (

..:] ;;._'.[ ..;. 3 } '[,. \\..: :. :,';"

g.

1.,i. ";'

b_- 3, j:G;j'...y j,.._ .N.... $.: l,;,;i h..,.., l' W'M f.y, _' ......l,1.,'; J., : :. i - '.l ' [

l. '.

~ .~..,:.;..' '\\ yy ;.. - s '. *.',-.: ^.'.' R... : , ki.: ':. ;;.'. 1:,..;; * "m..- ::.. ; l. : l.. - ; -l . :M. '- ;..y.1 ' '. a' J ' ~ -' - - .'E. [.'. ^ M.: ; *; }r Q* ',,' :. ' ;: ' M.. 2.., - 'J '. -.. - ' v. '. :G' . - -.:'. 3.., 4 :. '.;, J. .. -:'i.: ^<': '.m 4y;- , '.E, ,..s.,_. -,... e... i s. . + :, ; c.,y,..- C. ~ ~. = . : : t -- i e p..; - .... -.......(;..: :: :..; ...,,;,;. 9. :... ~ ;.. _._;.y . _,._.; _..' ; j< g _..' :: .g_., y,. ':....,,, f '. 7. ?;.. :..l..q..' h. d. u. ',,;;o; ( *_ '..:.',.;.? v ;. ?

p ;

l,.. . n. / \\: ._ :'; i:.: e .;;.,:s... : ; V j:... q..,. _ _ ",.. .o. .g 2.-

... -,.p..

'. b .... ;..k.. ;... __c ...:.-....,.. ; - \\."

? ;_ ;,

.,c . ~.. :7.....

a..,.....:.

v,Q..

~..

c. .,.... y., s..- "'.e..' .h.. . 3 _.,. ' j..:.~).. V" ,y.. '. p,. 0.y ~., '- -.j...

• v :'

b ^;., '...;.' '. .\\L. 'e. , y; s'* -, ' -' 5g ....:, -... :,. ',.' : ~. ' h '.. ' l ) r. c..... .~.y.

L..

'd. k.. - {,,. t t. ~- t {. Q. ; [ c: c, V- ..q' .* ',. * $_ -,......:',.". ' 'l'; '* >.;. -* l:,. ._n-}.

• {. ' :...
• , -* * *;..'.'.,'?'

. - _.,z ; ;. 's,. . y., ^ .I'- *l .'M, r ' :; ;., ; y n. 4 ' - ' ?.. '* * ',. ' 'r-y- _,j ( -. '.'.f ?. I.. '.,.'. : :-,y -'.;,-' - '. i.;,'. : :.T '- ~* - ..','u.n s ' s '-f 9,. ' .,<.e.. .? - ' -. v:: y . ; -.,... A.,o-... ' :,. a...,. q.. ; : ^,. '.. n.."...'.c, ,- ~r w: '. ~;<.. ..n ' ',....'.t..,;* - ; ; '.'.: c ....t . ::.. ;.. - 7. __.3.,...,;..,......,'.:,;._.:._:.: y, n. _.,

.+-* ;.:.

~ \\. ;..

. -

,.r..,; ;,.,. :...,. ; _. :., a ~o.,

_., s

-v. ..[: [. > p ~,::..; _ :, ,.;,7 3-

~ _, '. '..:. n ;"

_;,~', '. '. _ _. s :.i,. ',. ; v p ~.:7., ;.._. 5. :. :. /,Q-. ' - s.'.;: ; c '. f. ;y ;:....l[ :_ :lL, *, '. -.. " ' '- * *:. ,3.. . g ;} ' : 5 ",:. '.

• p.

7,. 9.'. ..' :. n, '. :..' s x, n.- ..*r .c..c._. ~. "t l.., u..e .,......a.._'.., '.. s.. - n' -'__',';.;'._'. '.;,~,*.-_ ',. ;^; Y e ~ e? l. .. ;. ;. ut " _..*..c ~4; .a ...s:'.i'.. lp ' J.;. ?._ % '. ; '.,'.a ",~ _ \\ ; _

3.'.%..

3. _.. ;.,,,

,.a.* ..,.&. ; ;;: 1 W.,.Q ;.Q' l;(.o ;. _, .t ' : i, .. '..;;.........e'. l. ?.. L : ..Y t ;: ' y'. '..; ::. '.'.+..': ( 1 m.. I. L'. s..: ' : p a... .. J, ; _.: y;..... ' 5. ^ '" : y , ',.... 9.. l :. ;.. ;.; : %j;,. [:. t. :i~- : (y.J' ;.

a '.-

... &. y. ., _ j: -. _y ~ > ' ~,,..-.- ..... '.;;. : a.,. ,V.N. ,g.....'... . :. 2 ...:,,. Ty,"':j,h e..[,',',.

v '.;4

.y,' s .- :, :~ O.6'4".<'.'_'..+.., .L -.. r .f W #. ,4.,, .r,. . ;. ].g/(, .[, ': hl y.. s l~;..l,...'.a.-

• g...y,

-.7 f*. "..(.- . ' y. .? g '.: 4..x ....a. ..i. '., ,u a

. r.

.. ].. h. "..... i...,.

• 0 :.

.;p ..,.,;f, ; ; s. &,.Ql ., ', '.h ..l N. '; ; ) ; ' +_ - 1 ...,.g:",.. y ' ' ~ _ g,, 9 q.c.j :, Q

a.. J'_ f. b :.Q %.

^ p q :r, n.'. _ y [ +;;,;,

., _, s; _.. y

..; n..,.,, ;.. 9

.s*

,*;.

_ ;.. ; 34 i-'

.' I i -f, ,( $. f.:3. 'p... %.,. ., ' ', i '. [,, * ( ',.. I' ! -

. 'h,Q.7

, '. -. ',' 5 '> ' '.'. ) k...I 'I :T D 7' 'l'.C 4;*...O

~

i . ;. c. ;,' ._ y.; c y y . :.p,, v.:..'

f..,..,, z.x

.. W ;.

.,...:s.~

3. :. :.:

'l _ f. f......... -'f, }:lr,.:[,. ",. ~ [ ;. f Y '..,'..Q::.. - .~: m.. :. . s o.. n f, juj., ....,. i ". ' '. <.g2. 'g. _.' ; ; s. .-9,_ . tn ...e ..,.c.'..- ..,._s.

n....,-..:,...,. ; 4.. ;. :.,. ;.

_.a.. .. -.p ; e:. y. ' f..t .. 3 'v, Qw.:...

. ?:

..y > g.3 : .,, ' : ;. -... ;,,'M. - ty;,.;;. r... h *;.w.... i;. -, ' '..-'.r'-.- 2..: g<', :;g,:, ..,s ,'; ; g:.- ._x p* :.;: i,. y' s? ,'u. . g. g

v.]

[:y;.

.,

.1 l l:..

^L . ;; s I' s

.$,4,'.

-,, ~, b.. 7.l.," : . 1.,,'.' ..,, q ;.., ' g(:,,. ( O;, / . s: ', I ... '.?l ., ~, ' ,v .,. t, .....:.r

.. ~.. '. '.......

.

., +..

,',. V.;.._x. cn. ...e ...o..g ; ;...L C:7.~

. v.

, ',.i 's,u': '._ l' :g,j ;., f

• y T ' r :'

je. :,. ;....."..,':.'..;.. q ',.[f.;' :\\ '..O, ,::: O ;i'"'[i'b '. s.'.,' .f . ? 4.. _ _"9: '....f!... .a.. .r.. k., ,f, e.v. ,;...',',,',.'.R._..... .a. t,::,.. . ;_ ;. x _. ;: ;. ' g. ;( .,'_.6_, j v .,,.,..,,c. .p. ;,.. :. 'e. ' - - r- . w'...

• : t..

t:.- m. :.. > ...,L. u ..s g.

c

- a r 6 z: 'o -J.,' ._. f,;7 ... : a::...-,^..:... * .^ ~J,<> '.,:~. T.I. r' :;'.,.'.. .' ', :,,,J: *. ... c r.t.. :. l .o. y',. s..

;, ; l'p',....,.

....,} -'. ",.~. :

_,, p . i.;... l* ,a f. v;,. ;,.,,g.,, .T ...fn o,." ,g . g; W: :k. e.,. $g:; ;., p

• t.

n -

s 9

.r

[.: ; : :....:

[., "c.,.. . :;,.,.. e ;.. : :.,. ;. - ~ :. ". *.. a,, ' :. ; 'y.q y..;;;q.._g..:s; ;,f._,:;,,

, y. ;

..v _._ 7,. 3.z, s. l' i e:: 2.,Q/.i,?.C.... _? ).i: ....c.., .: w'..)..;.. ' _ ' : :. ..,. '_[ ;:2 {, :

l.,.\\': ;l. : &...J. ; y >..g 7. g,3. f,.;.?[vQ.

..:2.['

g;:.f.' f._

}..

.~e,,,.-..

a _ i' }, ?, j... _,.. l;;[' f:. [:..,, 'I-n. v c.... \\.y .n. n: w;.:, ;:.... :

m... y.- ~: ;..a : -

.t..

,-.. j.. ;,.,. c. A. W: ; ; ~..J?s; .'.2p c. 3,. ;; ;.. .. ;e : .y

3

;;~ :

7: :. q. .. : Sj;.. _,.. . ' y;;g g ;.a.:;r,.3,:n;;y;;y.q, n. y w.

y...w ;,n.;

,. s. ;.;.. ;...::.

,.

.n, y ::,t,,*

n ..,.,c ..,..n,,.. e

<e

_. ;_ s ._.q ',...,..,u.o

,., < y Q. is.

y,...;.;j.,

.f

.bM 'j.P * '[':. ' y.j!..y,g'[.Q .v... ,...s .u.; ,.) _.g y r p e.....,, _.1.w.s...s .... s., ? y..., ;2.c \\ g;.; :} 'j...,-. - ' '{..* Q :.. l..: _,, ':[ ', y,,;.y [ .y.. 3,,_:l } - n :

R ',;* -' '.. [. *

f; '

:r.

. lj R.* c .g '. _.; ' 7., :..? ;.( h '; k, '.Q; k:#:;%,d. j;; : T,ly) i. ;.g 9.n, 3; + ,s. j,r, o ;.v s :.s.9.,,.3, '. j{',mg ; , "..; ; y.......,.[2.. y:. ....u .y .c . e. ...i ,...........,,c,.

=

. c :.,. ;,.,,. ; # -., y:.; av y a. .; j,, l';ta '. ". :.1.j!'..W.:; t :g,.;:.,,.s*? 4,&, ; j \\;. 0 j V ; ~ [: h',, ' ' ', ., t (,f,[.;'h. 4 ? 4.fw';(.': ;% g :n .r. -.: lg.,.. q'..'..t. <@ ';!.f ?l. ,k. y. ,.,-v f.'. 5 Jg:.:y.-

.

9g' ;;3 y;.; 3..u.., 4 :

..:. : k, p.

.M M

-+ .. ;.:, m . L,, +,.. i:. W r,%. %!;g.,.y&.Q .. 4.A; 5 W. " ;, 4 vy v.; p. f hy

,'.,bu T.

_.; r 3.,, '. :... ' 0 ;O!'\\,;', :. Q lcf. y ;;)f_;g.fif:;y;b';}Vf;Khj,)lf3: bl7:fi'Y l? 1 :^... I *./ ,g, .,'. (* '[ ' :

c, *

,l.4 y.,. .1 [.j;;;; ~ 4,g]'p{ g .',}].('y,% ;.

7.,.

y

;.g

.;.,(,. _,. ; p;.. y, ; 7_ ,g .'. h;f.

1. g.,,,.

xa - ^,,...m .x~, u ?,. v y......

j..:..',, },.,..~ N. :.y};,,,

,;,,o --? .L. ~?

• -l'.;_,R*_Mw,:.'9._

lI ' '. Q r._;,, \\ k i'., g,;.. ., g, ;. - _l .r,. lc n. l, ,y... e

r

. 'O

,.l,.s',,'.,

y,. ;...

. g;.. 3.,. -

m. _ '

1 '. '. ',,, '.

g ion. 2 }3 'I{( [;, ',,, :. 3'. p. ' ' .gf ;

• *.'ig

[ } . fj.'(, k '.1 ,O' -[ J

s

'... f QQ ^_ 1 _ e. 5' i'

.l l '.* =. ?.. '

:. h. ' ',. i: {; ' , :.b J.yic.

<. Q,. _ _ ::, '.I. ',,.',?~ il..w:g'. ' h ;*.. ': : , ;. y" 3,.4:"...a W '. _, ( b'. h fW 'O; - 7' ,,,._ ;...;G.:v. . L ' ~ y u _ ',j.f,, - ' *.. 4 - ^'t a. ..~. r. n. t, .. r.,:. '., _

• j,,

u e L f s,, k 9. v '..'J. g.. e'". K:p C'r y,. :. -

• ./,

; n.... . s'......,.'c' 4 Q.

.,..;'.' * ^*'.';..,... ' .t'.p '.. . L 'n 1

...,z

-. ~~:._.**...> p:e ', = :,, V e .),,. R _._..c.. ..; c u. 's. - *- a ...x .y.:7,...; - : >...

Nw-

7.

.. - if ss.., s

t. :.

• y",

.g ,n y(. .4 .,a . v 3.. 1 .....v.. 5.} . '-'y l-l -1, <v u

.<p4

.g. r.. <,..p. v i

,~.

s c,, s ..y t a%A ' t,gs w s > y.m;.i .r.- ir r '.,. ' ', 'f,, ( [4,.,_ ' ' b i '. J-: n,. f f '...y*. p e ,',._'3.,L - '. mg: ],. Q.,f. u - .:) s::r; .[,.,_ jf.. r g w;, e,p&(,,,, , h es '.q"l.,.,u..M;, y ( c pM.,,q /

n y;y-

.y y? y.*y 4 'Qgy,, j _ y;. y <y.. y

-.e,.

.v* s; :

..i.,..,.

g

n

.vs, iy ..v+ +ys s '?fh 'N M@$h k;k,,." 4Q,.< c%.4 4 [ n.g .[.!h. d

I.k,

'N. -,' ,[ *l 4 k J.M s,$..Mc.d[.L k.'.

• l.'.Ii@ ?:.:.. p[ P

': "" ' 'a i ' ,4 m,f )., y {,f,~ y I '. '. l .T. [ '- h f. '4,. *p.. ;.,.q*j:',. ',;, 7 <...;, g_ ;'.:{... : k. - -:,.. e.y; ' ' ~ c.:', ' ; .i. : ', ;,. : ~. t'y.. V;.v :;.;. : gn ;c"...,';. ~ c, ...;:.;: * * : v .. '.'., '3 ;.. m-n .; < %!y... * ? o c...'.. 4 . ~ -'". " Q p. :.'. 7' ). c.:. -~..~y..;'. . :.t...

• *;;. q....g' 3v'.

v. .ra s)..k.'*3 J' W. g;!.n -.' } 2 t.'

*. * * * '. '. W -;. ** ' '.';'.

+ as v ?;. '.. ', :. ::,L % ' '. '- ll 4.. ; _ c.. '.

u. f.q.,.,'..n.s~ _, *r-

.e

..; l p.

,..:!,l','n ?;.:;' 4 \\,:gW:..> ;ty lq;;a? Q f.~.g,'.5l*:

y, ;x. n c: t ^ w . _, :s n ;:, c: : t ..y:,2. l.f. '::p ;s ',~:,; W '}l; cl ;.".. ' lc.- ' '.,: '* M..? ' "' '.. V ' ". '.*t

• I:i* ?

J

'. - 4 y !-

V.' . '.. j '. -* ' :I. ". --.%'%'... c. n

f. V a ;,. :.:lt,',-

,' s w.,.e :,,, e .. - v . ' ;.'.y. ' ;. ; ; i. '.1.,.; ;;;..,, ' :Y.. ..':,;y' : '

• s:'. :

. ;.. -..w . t c s.- : . h: f.. ] ; r ;:> V.. c..* ': .. e.c:.. ':. Q; :: e;.; y,.: ? - :... ; ; '

• . 2,. J..

..."!'t..,

o. :....

_ ~,'.{ .,.6., <.. )y >,., ; a" :.. :.

n...'

, a.:: ,, < ; ;;.. ' s..

r ~; ;.

c . :' ~. y j.,.,.,'.. rE .,;: :., ',,. M, o ; :i,.....-.., :,:. g'

. C.. 5.. ; ~ ;.....

.q : .. ~ p..i;. 4.'.. ::.',:::.,.:. ; ; s .....~.."c <*s _... f.,- - ;.;, ' = .*,-~;..,,..,.. ' \\ ....s..,.,'.y,. ,, > "..,% q ,,,.',~,~,'?,' ,.g .r...j..J ;N ' '.J

• d'*.^?

.a .

• g >..s ir.

.'..,, j,.

g . *i s*.. -,. g.-

• w < * : p...,,

c. ,., ' : L. -l ; A l : {.:... '..;..l_.;;.E. .l.; '_'

• p e.;

's,'*'l. b 'l. ' -.': . ? :! .J.:' b :_,'f:{. '& ',. 2' ... p. %. : ~. :. :.. s _ - ' ". - .E O '.' '. -. ;,_.'.-)j.'..,;,~,-

.y.1.; _: *.

.i.?. ;E I .. f.,... ',,;%.':., l~ :;., ',, '.r. ^' ^ 3., ':. *; : .JI -...,} ' )._ :,;.\\ c' . jo:l .".Q '.' ; ;,; 9.p;- ' '..:.a.. '; 7

, [,,...

,S,.,,, h. .[ -.-*.. f.f k.. * '-e

• .;.,' i

'.3'.''[1,. ',. *'. '.j....,s.s,....,, "..,, ;...' :* ; 4. ;. h,.[ ..*'.3, /. '.,. ' i,,; ',0.* )a, *.,,, 'M,.? -','.ic::/ -$ < ;[, ' .  ? :, ',., : - c ,,....,.' ;..., Q,,. 4 4 y','.;nm, f.:. 4.,, e 1., 9 'h ',f-

r. :

[. ;. f.. g;;. :., fi ..'.c.. g .r i s. '.. ;.. : f -'.. i ;,',: ',.': l'7..'.i i _; _; ], 74. ;- ....:. j.f. p;a.jy '.l,. ... L. _,,. [.[.n. - .=...:. '. :'._,.; y ':: ; +.,... (jg,,.....,. 4a '9 ( ; ;. _ } %,';'.,..':l l ' '. ? ?.: c:, "., _ _ .. '. '. 3.qhQ.. g'l \\. '.* y. ,1,.* '. ' n F,.... ; .,.....y- ..q. L. ' -:l,.... f : ~, [ t;.* l_.j._ f,,[ ' i ',' }' l2 ':' ) a ~' ,',k'..... ',]. ' ~ f*

...,. c. 7,..l.,. _, l,

,. ;...,. : ~4~** ? ........3 .l -' '. ys ; y J ,a 7: %y;. . ;".., ? _e..,i,L,..f. :. * ;:.. s.. '_, p ' - [ _...'.~.v..v... .W'.-'.,,+';v..,9, ?. y l ' 'l V. l: - l ', 'A ', i ~ '.?. ll,_ ;_,. ';:. ,n- .. <.: ;.. -n ..;, n..:, ;.z...... i'. : ~.. 4.) - ~ ;.,. - r,..u... q..;. s..,.. :..;...- ; ... -,. p a.:.;.: : .,.e... - -,, - r ^ . N.l. ' ?..\\. n_,..:.....:.. s: l'.$ :fi. - { K:...,' * ; '. *];!.I ?',..R~, ;,,,? '., lz.,T ' _ :. ' ?.' ^.: c.,zl:._. { t. e-l '.,D L'; s. A.. ; ':lo i .%;.. ':g;~~ .v

s; r.

._ - 7. a.c.. :. ;. :.r':- ...,',...,..c:;.-* .,....,...a. L;.. ; - c_. ;.. ;. : .r., .r? 'N ', *.,,. a.. /,.. ..,,. '........,,,, ; s,..; g. ' ':., .. ' 1. ',':;;;,f' z. /, -,.; : %. f.+ ,",<,?. n' .i. ' ;. g.:;. f j.. p ', *,,. % g.c. ,4'e, .,'p.J'# .- Q,.. N; ..e., 3- [ ;'.. ,,.4 '.?,..,.g. '.',.... ...,,. C'1 ,.,. *c i; 6...,,.': . b.l- [l. ' L['R.;Q. ::,';9. } '::._'l ; 2.:.,. ; W, T ;.-i.?.'C : >.J. ; L. '. [:l..(..,YT. fg 'JJ.s::,3 ll.,.. l ['. f...,: f. ~. ;b '.. M.:. l::"...,.,, ~'s ' r e., _ ..N ..?,p % ?

a.. '

.g '.. ..':+.x.-v t*\\,_,T, '),.'. ', ..r...;... ~. ...q _...'*f;..'..,;;':.l'.s.. '. ; b '.. - .s.. l,?...', m. ' ' :<

e.... ' '3..'.

'.l.,..'.'.'Y 4:_1:: 'l.' .; '_,' ) . ' : 'a

.t

4.,. :, *, -.

+. <. -.'., -y [ ; '.. \\ '! _,.) ':/".f' ',',.,, :.~. 9. ,2 ; *'Y/**: '. L.,.l:( ' 7.-.';i:p.,.'.':..s.,l'...:) L. ' '); ::. U.: g. &,.,.} {' ;. :.f.* 9. -Q.' G W's L...: ';,...,.'.:,'.'._'."M - ' r - l {'... ':, ',';[;.: lu, ' '.: " i ' : '. ?;. _ ". ' ? :: ?.,

.: _.? G. l '

t. =_., .w<

'... : [,,. -.

,&s. s '. ;j s, .. :. 4 ? , ; ' '.. i. y. ;, :; ;. ? :q., ;*;. -- ) ;).} . : e. ;._ }. ",c.,.. *.;,. '.,;; ;.;.n.- n_ '_...[ :..' y .., - ' :;.,y; :.

• ...'y.,..-,i.; ".,,,., ~ : ~.. _

L.. c..,> .,. ;,.., n. ; _. _ -... L 4 + f r ~g ._..7...yg.g.,,".' -.,.,,.r ' s ': y,..~.-;.s-u. . y,, ... -.;. /;.,,. g, -. ,y... ..g,.. - y.. [.. 1;

o,_

... 3 :., '.),.'"} .. _. y] ',";f,_ r}., e

3. '.]

.ll aj ?- ; ;;; [ ;i -. ' - ;.,y..;,yl:: ) ' ' /, [' 3 [ .-[;; } ;, ;' :: ;}

• f [ __..y.; :.;p,,':

[,: - } _ ' ;}.. ; \\ (;', .\\ [. J, '. ':. :.. ~ '.'.."\\;....]._,_.)-.; l b.. . ' i,:* ..,[..

;

.:.. / *.:...;. -

v .a- . * .,.:.- '. ~,', :, _ 7 _ e.-

; _s. '. "- ;..

: ~.a ;,

.q . ; - ;g.: .a

w;. -

-. -,.s.. .,r

, ;. ;; n '. y .. -...,...; -..-....-:...:..

__'.y_...,6..l-y- L-'...

a. :,:. ' ' .

.s;'._

..J. '.': s?,., - ~ ...c.:.,- p.. ;... :...... ~..... y ;_ ;..; ;.,. y.:- .l_;- K.. _. y;.. _. ; ' ~-.;. _... ;.... m,. ~;- _.4,.::3 _ ;,... g. F, :8.5 ~. .:.c 3 g ;. p;,

.y /,

i_ ;.. > ::.. '~.'*I '... ;., /. ; ;;'. ",. ' :.- '...Q,'.;.,.* '- ~ 'l",**,..,k.-:. ' - -.. ;. ;. _. _ f. ' ;;.:~. ;,.;,z, : '. :. :., ..s- - :. f;. - _.'i.- **: %f..- *. .::..-_'..;..:. O....._'.*..,, -'.,*l'., r. :.. :: .a . s:.. ..h

~

1:. - .'.'?,- ... _ *'  :. ;.. '. :1,**] / V:' ,..'.*y

, * ' S

' '. 1p. * ',9,- .'... ~. ,.- -~

• i: '.;

s :- - ..': y,'.,',,;

• • ..e -, ':__ *:* '

.i.... .h'-- , ' _...,_, '. ',",,,pe ;.... - ~i.,.,'._., '... ? - ' l;- ..a. ._f.: g'.:

c.,..

G -Q,.. ; *,,. ~ _ -.,[ _ ._ ;; :; _' _ l }f. ; L \\ ,( ;. $,:.,

• },

i',;,*,,.,':.'., ' ,.c.'

_ - _ [-

..{;. ! J';. - ,e ' 4 - -

L -

s '*, e

• s-

'. [ 3,,. i' *,,... '*r

f. ; j ;. ;l ". ; 'i

- ' >.-.. '"_.i'.,,,;.__ _,...:

. $

: v;.

,.. ' '~Ll.'. :l,... ;..b... :N:.,..)..: l' ['. ;.* '_,,.. _,_ z '_ ". g - f,, :: f ' . ; ' _.., y % 'q'...:..;.. ~,.:.,.... _Q.; ' ' L' l'.'. y.. _ L_  ?.. %;. '.L. %..L..... l, _~,':.....4.;.>*.d- . i l.. M.c.. L :l: ; v,.. w,... ?;..

,..p'; * '..,.s. -

.c a-v.v - ; .~:.. ...... set..._,_; .:.. :. p..:..- : :. e.,,.y y. - s. ,,... ::..q.~.e_* ;. '. ~.- r _ :.....:::.. ,e _, :;,-' ':- ', *. - .v', v.;..t :... _::. ;;..'. .L ,~_..:....;.',.,:.,.s.- '.~.)..._Y_.., .,_9' 3:... :. :..? r

s L*....'.

.L

.= f..,.;,: ' '. " '. ;b - :..+.....,:- *; .i._.,.....;_... 1 .,!,+.* ,. ;l. ;;. c- -...l : ;.; _ - , A_ ... v.:,._. -,.,...,. _.

:.. W

,..;. :.,.L; f. e. ',...* : N; l _._._;_, ..; :f ll', ..,l_.. ',..,,., ; ;;.. l , s ~....,.........9.'.* .*- l % ". ".. ' h* .f,:.. _. ;:.'} ': ;:: ; ; 9. _.-,,,... :L '- -.,,: _.?.. &...... ..r . w'l' ';.. __ ;,. *. ;b..

• n:. :...' -..,,.

e.._',._..

.

.......,3 3: z_. .y.. -... ::. '. ;..i., :_.: ' g_: p'.....' ~ '. s..; ' .-...,'..*, ;s, f. 1. g. 6.,. , *.-!....#.-.~?.,.,.,. .qq ...c.. ,4.- i. <. o; :,L,,..;

- [ t-l yw..,. - - q:. : n,..,.

L..., ' ' * -. '.:.. e. g.;....

_'...:.(,_. ' _.: :. p.. DM ' j., ', - l-.. j ( -: - ' '. '. ",.'7 s.

;)

'-_ ' ) ?....'e;r... ;.; ;:..,; .,., f ",;,. r.,f ' ', q. '.', y '. '. ' ; .j '. s- .'(- J.(' l

,.. y.. I. \\;<.

~ - - ~ f *,, ';. : g' _. * .+ '.;:, s,. 4... :....,; i;. : --. i.. : l l7 ) " :.. ? L '.. ~.. '... ~, v ..u..- ' j.cz. ; a.:*:...,;. 'u c...~.'.o.':.~. :...:.r.-g. .'. ' 1?.,.:s;., ',... - ,,.t 1.1. . :..'..m.* ,.....,.,.a.,e:,...t,. es ). 4< q 3.Cf...,.. '. ' s...:..

m....,- '.

1 '.;_...'_.~4...s. ' ~. , ; e:f.. r ~. ',, ',: +..

..; ~~

Y

L., : '... '

y,;,.. _ y..,, _,;

p y,.

~ -' 'q ,_ L. s,,, L. ".[ ; ; m;:_ '. :; g,. 't ;,_ y - e' 'l :.' J,' ; :. v: [,....~....; - 'l.*&**& ^&\\ g..g. ;agaggh,'&;,f.y- ). l *;.. ll.? ? _ .__Y. 3

• ^

_[; *. ).

<k

. M.. i n - ~ ......y .79.'1 .- i

• n'.

v ,,?';f..'.. s l'.'.

?.,,f.,

l,.] 't ^[. p ;_y ::?-l>_y._l['js ~ ' 'i p.p}:. y}:;;;'v 3...,;?y. f Q

.;; 4 3.g g:;. y,4,ppy j...gy

_, g' __ ;.,..3

Q. ' ;....

l3, ;. j;.444g QQ;y -:;Cl ; ^minewM 4anernee'estMme 646*y.t ennhink .'[. ff V ';. f :l. .. e. Y ::;l,;_Y k T ". R' '. l. M. ?,: ' * ' e..: i (, i

. W.:

Q: ;.

.l. R, _y;- . j v..::_ ;. ;.* > _[_ _. ggg [' N} ;\\ ':

pg g

' i ?j :

E. ' ~; P.g.

4_. 1'... i. (.y Q,]. '. : _:.; ' ;g yQ' ggQgg _: L: ..g [N :,[; g; }. ' K : j:.. ; ;- . y.[ ; f iQ 'q. Q - Q 4 Q Q} ' ; g & ^ [" =,. [ ' W

v. [ * '.. ' ' ;L :. :

' %. ).[. L. j[;._ y. y ']_ Q.),.,.a ';' :._ g Jf * ; .y J :g R!..;}: 9.'.... - ; ) !._,. 9.j. h, - L *'.,.,,.*..; c ' u a 4:'. ;,,. .;. /....r.. - j 'l'..; ;. -C W'.- ]A y ,.':L '._ :. : .)'. .... 3.. ,n, ,..,. :. t.. :. .~..y. ' 3 .:...z-

*: - e % :< ::- - -.

fdf.. .1, ;..: R :. D;:

• m b..

e.., E'.

.u. ... - -. ~

• b _ l j.l. - };[]. jf'7 7 4:. i} [. j ' l ' k ;;.5 T*',,:.

,.. ;;.: J -;l..,i._ ;j f... * '.; * ;:{l'.,0;'.: ( ' [,'i',;i :- ll -

.. ".. w, .....,.... -. e....,; 9

4

f l

. 7.g {l'.,. '. ' '.l * *

• ,.'r,l.-

L'.' ?:,'..* l'. ; ), ':, f.. e ~ .~g.j..-.... .,y,..s.

g.. ;..

.lNN {';_.%i: ?.s '$ '... - b ' _ ;n.. :. n q.'e *...*.,

p..:... 4.'I.'Y., f.. y '; %,{;. :; ?..j.).. ;. :,$ ';:.f;..

n '. J '. E. = i. * ;. ? ; .~. ;;:; [ _. .e.,- (. w. _ : ~. :;g...,.

y.. ;

.p. rA a ...r.y_..,...c. .h. n... ,; _.' y. ;y v .......q,. 5.:;::v. ;: ..... :..,.... g:.. :,3 .c'r.,.._- c '.'h A y. . w. .. d '[. v;; ff. -G.._;; ;. ' ' ' j':\\,.f.f > l. l ;.':;i ' ' *,.....), Y. :_ f;.1_ ;. t :';[, 3 - ' * ? ', :.:.:. '_. ..O :):0. s :, %..,. T : ll. .'. _- h. ;.

: '.,(. l{.,1.'

Enron's advanced metering program relies on cus-tomized multiple communication technologies to provide electric and gas readings for customers. Enron's meters access a proven national network already supported by sophisticated two-way paging technologies and also benefit from the network's cost-sharing opportunities for time usage scheduling, product development and system management. Ily outsourcing their meter services to Enron, customers are gaining access to state-of-the-art technology which allows them to expand their service capabilities. Enron's investments in 1997 and 1998 are enabling it to take the early lead necessary to stake a long-term position in this huge new market. Completed contracts related to this business have associated future revenues in excess of $1 billion and, in 1998, f / substantial increases in contracts for energy com- / /E modity and services are expected. The value being l@ l created was indicated by Enron's sale in late 1997 [ 2/ ef a 7 percent equity interest in this new business. ff8 Two investors paid $130 million, establishing an l - 4 enterprise value of approximately $1.9 billion, - 29 equivalent to $5.50 per Enron share. ( i 2 \\~ Although many states are pursuing deregulation to { benefit end-use customers, Enron's success in this growing business is not dependent on the continued \\\\ pace of deregulation. Throughout the U.S., Enron now has the fmedom to offer customers innovative energy services that represent better value and high-er quality than traditional services of the past. With the strengths and systems previously developed in Enron's wholesale market and its investments and talent specific to this new market, Enron is well pre-pared to ewcute its game plan to become the retail provider of choice.

? sew Businesses advancements in photovoltaic technology and from the combm.ed industry expertise of the j.. t venture om partners. The partnership is ramping up a new facil-ity for the production of thin-film solar panels, has l access to the partners' existing project development expertise and is benefiting from both pre-existing Consistent with its extensive track record of success-electricity customer relationships and a growing fully developing new businesses, Enron is making interest in green projects. The solar partnership has selected investments in clean energy and communi-development activities underway in countries such cations technology. as Greece, India, Japan and the U.S. Cleon Energy Communications Technology Opportunities for clean energy are being driven by Over the next decade, the global telecommunications concerns about the environment and the increasing market will grow from $600 billion to $2 trillion. Data cost competitiveness of renewable energy compared traffic for internet usage and othe* sophisticated to other wholesale energy sources. Enron is benefit-applications is expected to grow from 30 percent of \\ ing from these trends by selectively participating total telecommunications traffic in 1997 to 75 percent with logical extensions of its technical and market in 2000. Ily taking advantage of changing regulatory, f. strengths to build a leadership position in' the devel-technology and market conditions, Enron is selec-l opment of wind and solar energy. tively pursuing opportunities to leverage its existing skills, experience and existing asset presence, includ-Enron is a successful developer of utility scale wind ing the fiber optics assets owned by Portland General 30 - projects, as well as an experienced manufacturer, and the fiber optic line being constructed in the j owner and operator of wind turbines. The company western U.S. Enron may also consider additional has installed more than 3,200 wind turbines and investments and alliances in this field that fit operates 2,700, comprising 424 megawatts of world-strategically with the telecommunication industry's wide capacity. Enron's wind turbines, both on and enormous growth potential. offshore, are among the world's most advanced, providing clean power generation at competitive costs. Enron's California-based wind turbine manu-facturing subsidiary designs and manufactures the largest wind turbines in the U.S. These turbines are being utilized in constructing the world's three largest winct contracts: 107-megawatt and 100-megawatt projects in Minnesota and a 113-megawatt project in Iowa. Through a joint-venture partnership, Enron ranks as the world's second-largest solar manufacturer. The partnership, which has product sales in more than 70 countries, is expanding its photovoltaic manufactur-ing capabihties to meet demand, with a particular focus on competitively priced remote and rooftop applications. Enron's solar business benefits from

e d s e Y ~'D 4 e / t a. ~~ Y t ,5 ' /., [g \\ p +m e + p 9,, Enron is providing power and other 8., % energy services to the University s. U / of California and California State University systems, which operate 31 Y college carPpuses across the state. g (Q S 3 e. A ,~ A i . n) ,7 W* t= 9 a ~4 3 + y

• 1

\\ 93, }_ s .g '.,!jl-:7;d ~ g: h _ 7h,' l n y.g, t j s-. 1}h j[ + E g ZOM gy hk 'g ~ > m -> f ~ ,c .n Aw . j M ~ z 'M ~ ,h e,%--* wmmg t .~ . ell >$ 'm..... ame# _, m hhSk;_yjb.5 <!k]l jn}l_.j;pj kg.[h_..ESl;,fll ff W,_ ' ' ' o kt A qN* b 5 4g g,7Q. f 4 e ,q. J.ygN;wn x a a. n qqy u i wa. t 4 'b k \\ i+h ? 5;w 86 h a r tg ..a. 4 [ 4

T..-..., ' ' _. : [. 4.g ', '. ' ::. :. ' l ;.i h,. i ;',..;...:, '.;. f i;....,g.' . W...~.t. s..pl ;' L.._. ?..;> e; '.;.i. :y :l . '. f, :..,. ;.. ;.-.. ;;,...e; -

....e

.. ;..? .2

• n*

.,.... 7,'l. _ -.je......._..._.,%.:: n. u ;,:,v ^ - ~ s a.

• i... ;

~:. _,,,..... : : q ::.

• 'L;. M.. y.,.. T... : j.. :..' C '.9. G.... ;. :~.,12.., ::: ".. ' *., : ;[ ;...;. '.. :'.....,.*;

'kY y..: w I' G.l... ,n [' '. _ l Y* L (( ,7 _' ' :'_,l l* ^l

• f f [. :fe,

[,. ;,, q - y

. ;-.._ ges. / '.~.L Y-

f.. :..':.

(. c ' I

' ~ !.

b. . '. ~L s .i[l_.j,[__*' ,u, [.J -,".:, _ ~ '. - '. 3. :. : _ _; .YI. ^ '. '. ?',. - :......... ...... ~.... i. :., '..: : - e. ;.'.

.l'.

9,e. *Q,. y'.. : '., ' - .,.. '7.:,..i -l %4 m ' [ ;:.'::. ~h ..,. *~ z. ..r.. ' l.; :. . o. E 'm ..:.1' e. _..<~....-,_...: 'l ,__ _,_ :;.. [. : ' ; _ _ m.* _ r u .g.. f '.an... y. y,, ..a n.-

• 7 a; ;....

s,a, g v. e s.. - p.Q, o i .._;g.:. t..., .,3 ....,, '_..(. ' ;. _,,.. Y,.' h ' '~ _ *

• E -

'l} ...-... s. ~....;..

._..,~...._..y_

.z. e .,v. * '. .l e * ?,.

~.v.~.',,.' V : '.. v.. (. ' ; ;._...;;..',_.,'.

<e '..- *., '.,_ ? _ ; : ;;. '% '.I. ' f _4 '. ;.. l%... -...p'.. ;,. l _ ',,. }' ?' ^ '.I p . ' l,, _ ', : }.... _ _ j',,'I'. .'.e ^..,; - i. *t.',,, r... ... : L '_.*: ' ['*.; ; t*, ) hk. h., ' ^ (..h... _, u.. g, [.. t' hf,I. '. [,'q d y - ' JS i,' h"[. v'f.. [, ".*. /', s;.;.l.h..;g.;ijl . /... ~ q ;,. j '. J,';, t.. j ;,, ',.. *j

• 't ;'

{,,' -s .;,...,. :... -. ;.i ,]'..: 3 ..; j r

.m,....gn s.;

h. g . r. :.s.s ,._ (. _f...,,fy> ...,'^:s.,.v friQry. e.. ..f.,_ e. -,-. 3 9,._., n y y, W ..1 .a v. 1,.: ',. ;; : e., ,-v.,' a w.. r ;,;,;.,. 7.s. ..'....~...,,;.s ,;.,;w e..;... . ':-h.' [. -[',i: ';',, # E._.. ' ' ' * :.- ' ',..,.. -7 M$. . '.I ' J^ '.',:.:;'_,.,..'.-l'..*.- /.

;. 2 ff r

f f t.. - - ~ ; s y., .,,~ ...n. ,,. ~.'.. .t - - ;.,' -'., _, _,,.. *. ; ';, ;.; ~.. / . -( .. - _,. t; ',. : l.. -.. .: e c..._ e ..t; ......... ^. l'* ' 'y. ~v. - j : -y. ..f-3. -. ? <. ; - _.

'. '.',R,

., j;,. :.,,.. g:.'. :... ;,3, s t. t ,. -... ~: - - 'I ' ,...pl...,,. '. , :~ 3 ; _. '; ;,i. [... ..;:}.' _, l' l.. h - u '...,, ' [ -,, .c -.A .J: e /_ ..;.3 ;, ' ..... ~... - - V

;y,. ut,_...

r* L'*' :, ; c'. _p. .. ' i [. ' ~.  ; '.' . '.. (;. L[ ;;;.' ) ;. ".. * ;., L ; _ ;. ' '..:'.'..~~...,.::...:.r ;, n 3;_ _

" q ; '.. -

7:.. . -.. ',.. p ' y. *,..,.. . y ;._ ~ [ ', V. _ ; l

:.;, M..;.j.[. .l

6. i :[ '. ;.

.

,.s.

... '.. ;... '...a u;p

y i. q : '. :s.,,_._t.,-

9.- h _r.. -c'....-....:.-,o. q... -'* o.....'_...'..?.

y. ; _._.: ~ _;~. ;: M. f %_,v.....'7...j,, $ 'y p {,..,y..c w o..:,..

L :.: .....? k

, ' c,, -

m

_.s.7,...c.. ,,.p ,.p..,,, 3. 7,., 3.,.7.,., g.., f. g.: (.. _. .j7 .-,3- ., ;..,,.,..,.....,,g : ~..,..,.."..,;..;gM i,g;.y.;.,,; '..,.6' ; ' ' O -' '.,', '. ',.'_ ..... -...,.. w v.,... - ...m. w, ,f.-. ,4,. 4- '.y _, y,;.. ,$,.y.3. v, .n- -.- :s ..y y h 7..

_.} l l.,' ll.[_f.:[ p.

g.g ; .l..):.f:j. :[.L ),j. J: [f.:.L_'~ j*" ; ', ;:

}

s_ N; }' ,7 ~. 7. ; ; ;.y :l:, y S..$,. o f ? O h&L 3. ~. ,g. 7 '*'.:->.,..'..:',b.: ..; L ;..

..

• L; ; '

': * [-.f ) .i..... '. V S..q.g. }., _.....;. ;.. l : ;..

c..: '.._..;s.

~, L.: _ : .J 4.j.'s_, ';,), ;:.l l l. 'l.. :. *.., i _ } Q,l '. ...x; .. ;,. ; - \\.. } f t.fl[',& [:,Q,-l .,.y- ,;;.. '_.. _. 3,,;;_ y: \\ J,l.,( .. '. [.:s g._ :. };; _ -l. ;. _.:.._. ;.. ' _." :;. qu' ; ;r.. _. -.. j... . s. ;.;_ ;, y-.;.: ;. :,.;,9.j.Q.g .l_ , :[: y. K r.:, ;, '.'.; ;^ nl..,n.-;. ....:. ; a : 3 ;, v 3,...: ..s' Wj L,-; * .[ .' jj ,.;-*'..'? . * =.

"l ~ ' -

's ;'. i. 'in '- tQ f : '? m

• ' l v. ',[ - _ [,.[ ".,.. q., ' j :; [.:. '

.,. \\,,. ', i.. } ' . 4 '. ;,;.W :.. ;.{ 4 -l -.- g; . lg e. ~ ;.. 3. g. .g. , ys lh. 7.f $^~ ~ i@ '% '..... in '_"'.','.;1 . J: J ~ ~. L* J'.' [.[ ' ). v [} .:$_lllc,[.},'.'l-l,[I. ; [ 'jlll}?ll lf.jl..l.,. j_ ;Q } "

g#'

[f (. { ,l'' .n. ; - > * . n,4 y '.[;;' "[: ' ~.a '. [f5...(f * ,, j l '..' [ (( j- :[;,. ~[.f. ; I;, - 1' [ -: ^ ~' .: i " ,Y~.;k;-'}' E ' i.', , [. ..:. s. p:: ; s : / 2 r.u.. 1 ?.p. . y..' :.. L, - ~; =

• :i ^ ~5 f; ' '. llf,..,.'.l, ',* =.f[.. ;_

'_ $,, { / y ;- .....' : ll -. [.. .,s ';.;l_.M ; . l 5l [ ',.,[ [.. g 'l'.,:lj.. m' , J.JR ,Q..:_'..._..;' ,3., ; y . _z.. : q '.,;....':. _., '; : \\._.,.. _ ..'_._;se .,,9, *; g. y

y.,,.

.g ',.s .f. $. n _ ; q.'.. , ~ p;~.

}; ;; p.., n $..F.

...... ^-..v ;

x . g. ..,. x,..,,. : y "y y: _ ~,i.. :. :. 1 r.

s. j:...

y y, ,.,......, -:.._;,,...; y;, ;,, :... ;_ ... b.. ;,:... :.j. 3:4. T e-

:::- [

.t,.-.p. 4. g ;; k. ,.} m?...,.... ... i: -

m

... ;. : L..;.. <,.:-

4.. J,. s

... _ a~

. y'f e., .. M. A ) 3...,;.<*..,_'., ......L'.'.":,.'. .v... ... y ".,.."..;.;....-y}:q ~") . ! [ Y,..;.[' y~_. * '.;,,;. .-f..* .. a.g T

n.. '

- 2,; ;< . t +:

,l:..

.c.. '?,- .,,' '7 - nt. Q.. g ': . ;. ', -,. 7;. ;..., " t.,. ,...L

+

* :

f. ' ' '.i _ g., ' :).y. ; l ,i. e,.s ' '; - ..;.',',..f. y' '.. . ' ' '.: ;'.. ~.: :.:. -

)

t p,. f'.. .';;_. tra. s.,_. ;y,,, '

• _*.

,.'1. _y. .. 'sf. ;J.o ' *.; 3.... r :.';.. :'.l :: ;;; '[Hei - c

.?. *:;;,. ; :..

..n. A l:.,:; :.. : , ^ ?;,~W {, .6g_ q 7 6 ;.s...? y.:yf _.: ,'y ..._,;u. 9. lr - ~ _}.., ..~. - j '. h I . ;g ' l :] / . ).f;', , '.[ l. (!:) ,. f~_ *. _. ^.'_ :l'k . *]; ; ]! f' _ l. $.y h'.'} '{?._ ~ ' . '.a :. +.. . ' F. -. .. :.:... - p :e - - - -[l:.., ? 'n. .:q

n.. ; y... : -

n ;(: fT ?:O:.'.Y s.* h.' :'d .,.h. f. , s'f j. l y.,.;,. '. ?.' ~. ' LU '~^ ' ).f;. ;f h ' ( f k '. ;..' l's w '.e.L.l,;4..:.. :m ' s.

y.. ; V W. ';; ::.:

...<.f :c. p, ?.m. ;.. .g c'%.y %_ ; " . '.- j._ 4. ',b _ ^ 9.. +.4c..,.,..,.: :.. ;..-

.. ' ;. ',$.{, *

f. ' X s *-

'.,..; ;:c r 'g;. _ ( _. :g.,.. f. * : 3,;, y ;,. ' ; '_..._ _.. ;\\.~.: N,:) -l' ::,l.,':l: . ' - l { lll .! QS Elt 'Y' N?:;l' ..,p, .'n,. I. ' l$ ' ; -. ? .. ? ,. '.; ;.? ;.., Jl~ *

G, g - *e #8 - Q,p,. '. . ',

'..s ' Qff_. _.

. c:

.,a. _. : ; ;,.. y ;_ q.. r.. _ j.... i ;- ! .;..,).,_..., -,, a. ' :. g .....,: ; ; ;ls .;..,..,- ;  ;; j:l.: ?9.

. wg fq..:

.g - ( qt,.s.,'; :f ;';',.', __... q 9. 7

m....h :,".. ' m...:.. _.,' '. :.*.

N ' __3

..;:, r..,;c-

, 't t 's. a, _

.;,*;_.'.s....... ! c ; :- .,.\\ _ :.,,1'l..\\.,..'.:.,'. K ;,; s. :4...,,..,. t ; ,_y G, *...; ' ;.,.. " ', '. _. 7 ': ' 3 .?,, , ?,. - .,,;. !,n .,y,y..,,y_..y.,:'.'.,"r ,.:,..s..-'. :..a: u r:t ;,;,, ' :- ' ; d'...- ,y .c, .,., : e. ;.... 5 r. %.4. .,. y,, [,', 2 i.,,%,._ - ) : .y, .. '. ; v. ' :.;- %_ ' '. ' l :;. - R

.'.'p. _ :. '.

l - ^

.. '.=.. gg ;

..;.

.;,... ;,....; :x ;; g; _ -.. '... ^ -.

. _ _;_. a 4:n:?. :;.p.; . ~;y; - :q u- . 5 G: n.... o. :v ..q; , _ 2. :.. y_ a ' : e ;. "..% *. ;., - ? '.. '. v;.'~ :.....;.... ',:. <, ^; : , '. ' _,..:.;. ; 6b. * *, '. :. :: '> a.. .:-.,y; ~ 3. _,,..P. f 9 : ?<,t,?"-

.r.

L. .x _ q :. ' 6:. ".7- ,....;; : ' e. y.... ... ! s.,- I J....I. h'. ;f, \\. [..

'. " l'h 5.....,

• '.. '.' s.. '% *. a ; ;,

[k J.. ".,d I. '. _k G,.b...,. -.. y,1 ',J,', ~? i g, ': f . ;., ; ;.,. (. , :....;

• 3

.*1, ..,...,. [, .,..,.,..i.,,,'..' a

' ,,.--R.*.

': ~ ' ;,.. :.. e. r 3 .% j.; ;.. l{ '. : ;N 1 s n,i a ;, ; v.' ' s. ; ;-.. : -', _,,.,.

,y'...'-

7 ?, . 7 Y, :' '.. '..l ' &, l...Y.. ;? -.$*. '.:'_, ' ' :' :,,1: p. '_'_ ,.'r'-' < - e !'f *: .u s *:. ,;,,,~- ". '., ' '.. '- * ' _ ' * .. '. *' ^^.:.' ' ' b.~- . '-l.; ', .1, .? % f ,V - 1 ;.; ?,. *.,: ~ ; ;...'- l:. : . y.:.

• 3,

'...f.%...._'..',':'- .. '.:..,._.,.' '"\\:;.; ; ~..%..?;.K.:; '. '.: ;: ~ ..h*

. c q

.. v: ;;-. : n _. ;. s.... u L ; ,y ';,,

.v 2...,_-

.i.,.',_p,,,, .n..: ., Y._ 3., _ s _ yQ = ',.,,,,,,.....:. =v c. - q -u-

, y., y._..;.. _. ; ;... ;

. L,..

_,. _ _,,..y ).,,..- :,...,.... - p[.,:..,,'.,.;. ',, ; e. 3.,; _ _ _, ':;... ' e.,... .c ; _. :...._.,_.. ; :p n .,...ic.... w y' 5 R; p j -[, ....-p,'.:. ..p..;. .p y, _ ;, .,.g; ,,yL. ;... - .,3.,._,,..._ . m: r -. ..,,,.:;'(y..,3.,...,,- .s ..';.,y - -,,._.,_: .. ;1

y..

..;_ _ 7 ;, 4 . v - ,..s .).,..,'.... ...,e- ..I .,, 4 ; ; a. ~. -.:g. ... -,., F.~ :.:.-.y ;,,:., f....<.,. .?..*..

• z., : ;..:: _. : p

.,. ; ;;: :..s, .r .... - - : y,;_ e .p. --3 ;.;. 6, u. -....,.., w....:.,.. .r ';. y. e.. .o_ .r y y :,., ,7 ..g:. ..o e..,.,. ; g _[.';*........ p ..,s '..b......;...p...: ' ; ; : 3:g.;,;. ;;[ y,. ' p.; >:,,3 ...,J, '. ' 4:1'y,,.. ,3. l. , y (sownymewisig.ageesmpinhiineh.qHnMk ?;p.;f %l.A'V.l,.i;4%l( a., G. a:

• '?

= ". / j ' : ; :a : _..,.. ',. .; n.$in6'M' N .,,..,: ; : ;y ~

.1.i p.,Pr.M:c ?

1 S. >: . mmmpw;,.., - . y g y., ((.

ym r

m. :

g ;7 7_. w,:m ; x.:; y.... _ c e uS '-.ac y j ;,n; g'? :;,7.9. A t? -_ e.y 7.;....y.q.gwgigggfq,,g_myseg,..:.39:q..- - a .,.,. f. - Wj.._;.. . = " ' '... _ q ;'*.. _,.; .. t.,,?; ,.,.3. .c ,,. _ v, ' 4 e.,q_ a ,,.. ;p- } ' f _,. *. ', :.,, ;, ..R,* e 3 *. .",9 :., ' - ;- ; }.; .I.f....... ,.u....,....,,. ?, -.j . J v....>..g,.. . eb .,,..y.; p );_ : ( -. -[*.-: .:c,,' Pl ,,y .,,s.:4

• ... [.'.

y...;:#...,.:. $_ *.. *., -../" r,,,..:q gf., p'.f:0,.y 's.,, ,..I' [, f' , '.... _.;.,. y; ;;.L };.'_ '. '_ li ' '...'

; '; j. [.;.."*,;. "' ^ l-

,1. 0 N' _.. ;....._ _p _ ; _ ' l.,. ;,:;.,. ' [: v,, f'. ' [ ' -- i;... ; :.- - ...s. ~* ,,,;;v : .v. ..'. 3 -..c. ...... L.:.. h. j:. * =.. D., 1 ...a; .,..a l _'.;.: r: -.;,. ......y / ...,..,.. y [.4......,~.;,.'.:w..

;.... p.-.

.....,.,1 w ^.... _. .,y - ; ;. _.,. :y ;._ -, r,_c.....,.... .. ;,.g,, a. ,..w

'. l,t, - &,,;~3 - -,, c.+ ',, i+ ~ ,'..QS. e, ^ c. 1 *',. */ J; , d, T. 9 p ', '. i,- e.' .,.e '., > ', - ',g l *

• C

,, - I~ i. ~, p. ~.,. . s ~, ' -., a, . t i .n . s u -f., e s s ,~ .e,- ( e n. e s; t i. 9, . b ' u c 9.~ , + +. n . r.. * %,y + ' i .,.,.=a, :,,- (.* Q... 't ,,:a,- u. ,i,,,,.,,.n .. e ,s,,.,. ',..,. 3 . ~., ,o si- /, ..,.,e / n, v y . 1 ..t ~<,k

• sg

,. - t,,. ,1 a ~.. ..s ,..s,,, 4, 3 ;., .. ~.. -

• +

l s eq,>,. ~,, ...4 A j,, g *, s. s,* s -,, a .~., ,3 n ~ [,.,. s . %: yo,n ;. ' , -,a <., < e,. v. Lph. t..... .3 s o u, ., s, v,,...,. g n 8, s,.... x - s \\ ,1 s 3 ,- e i, 4 s ,1 ,. ~ s,#s,,,...

.~o.q i

~., /.,- - ; 4 ~ r s 9 .,', ;, ['. m - p,..' ,,.[','., ,." - j .,. '., ].v'_ 8'. ' ' 1 \\

• ,a

,j.'. pf( ,' l. g . sl '~ s. n a +l. i.., . i. s ..,4 hf,,. !, . apf8' ?

s. s.., U. ' ' o '. ' % m,'y 'p=.l,*

., + 1. ~. ,r, .i*" $u. v,' q t ,i.. si r,- - ~ 3f,.. i' 3 ( ,i g :j"g b, n s 2, s ?, { f - s

• ~

d. l N '

Y f l 'l 3,b;, ' ji fi .s y' 1 . (. I.i* , @1 f, ,'4 'i V' ., 4, n, / j ',. , c gj .,,f ;yb,4,,j),4,, '...,,, y 8, i " ',3 g L(p'g ' 6,1 f r i ' >'.,~>y.> (+ p',, ,, 4 f i n 1 t - 4,, p u T ,.l - y .e s

f <,..,,,,

s., '

9 ]> ,, j, , r. v n t, ./ kq.,.'e'.!,. = c - \\; e y 's i a .-,jj ._4 s + ,I c, s.', u.,. <*,, L >..,.,, , /. < i, n, .s n. p,.,.e d-.. ~ - ?- ~.. .,, g . 7 6 ;.

• b

.u, ,' '}', l a u, s ,, ' ' ', g m ~, w :;, j - W,' "s -, <.. 1..' = s < m %. g%..,,. O o a. s, n. ~.. .,' ~ ',

s.,,

e > ?. . ~. . s" c i ,,A.,., .t - q ~ i s.- .. s., ~. ,.s ,e s. i.. i (. .,.,t. s, a., ,~ ..r ,\\, ,.,1 ,s k , e .... ~.. e,, 1 c. .,,..e % d e, w p..pawndense,,g - e ~.i 4 , ;.,% s f,,.

e g efw e stwipou wwdm.

c,,t - 7,,, ;, , i q i . yi ,,., g< o .... v.,=ve.wrouwpu, m,, w.

• 4a mehe.amew w by 4peswis,me,s,'>

. 6 ,J', .7, in =wompwp.mn g. 4 enw,4' - . wsMon. - ;~ c y,s. .; L,'. es u. s 4 e w.,; .',g t ~ i 6 st l y M 3 q ./ d j F, eT 4 ,T

• y,

1 g - g 3 g i - 4 . i n } Y - t, - .g s, >>r, .* ~.

purchasing practices. These customers want energy' Retail Enerev OJ vendars who can provide excellent service and assist them in lowering their overall energy bill. To these y g potential customers, Enron can provide very signifi-cant value through its knowledge of natural gas and electricity markets and national ecenomies of scale for energy commodity and service delivery. Through this new retail energy services business, Enron is poised to capitalize on fundamental changes in markets across the nation, Enron utilizes the occurring in the way end-use customers across North extensive sidlls of its 1,100-member retail workforce America purchase natural gas and electricity and to provide site-specific energy services that span the related services. Deregulation in many sta tes is allow-full spectrum of markets and industries. In 1997, ing companies like Enron, for the first time ever, to Enron acquired The Benticy Company, one of the offer commodities and services to end users. In areas oldest and most respected energy services, manage-l not directly undergoing deregulation, the surround. ment and engineering firms in the western U.S., to i ing debates have spurred an increased interest provide commer:ial, industrial and public sector among commercial and light industrial customers customers with energy efficiency and power quality in the value associated with energy purchase and services, as well as cost-reduction projects, metering, e ( service decisions. By transferring its wholesale exper-billing and financing. j tise of providing commodity and related services to customers and using its associated well-developed As an example of its early success, Enmn signed an 8 ~ support systems, Enron is at the fon front of these new agreement with Pacific Telesis Group, the parent 26 - markets and is making substantial investments which company of 10 subsidianes including PacBell, the [ are already resulting in significant new business. regional phone company serving San Francisco and 5 Southern California. The agreement calls for Enron to The leader in retail energy services supply electricity and provide demand-side energy Because of Enron's irwestments in the people, tools services for the telecommunication company's 8,000 and technologies that can create and deliver market-facilities in California. The agreement includes a responsive solutions, Enron is leading the industry four-year commodity purchase and designation for in competing across North America for retail natural Enron as the preferred provider for numerous energy gas and electricity customers. By leveraging its products and services. strong wholesale risk management, physical and financial positions and customer relationships, Enron also signed a long-term contract with the Enron is successfully adapting its first-mover advan-University of California and Califomia State University tage to compete for a substantial share of the $300 to supply electricity and energy services to the two billion retail natural gas and electricity market and systems' combined 31 college campuses. The cam-related $200 billion energy services and equipment puses are expected to benefit from cost-effective, market. Of this very large opportunity, Enron is efficient and reliable power and also from Enron's primarily targeting the estimated $80 billion expertise in account preparation, customer service, commodity and $40 billion services markets for com-billing and other value-added services that reduce mercial and light industrial customers. This segment energy consumption. Combined, the universities are is comprised of national and regional businesses that the largest customer to date to switch electricity have multiple locations, large combined energy providers in the deregulated marketplace. requirem.ts and often decentralized energy j /

transportationand d1Str13Ht10n l i 1 Natural Gas Pipelines e In Operation Under Construction = =.. b Generation, Transmission & Distribution Portland General Electric l ~ A Generating Plants Trading Hub f l lld l ID NYMEX l 5 l [ ? 5 - as 5 \\ \\ y \\

WhO1eSaIe energyoperationsand North America a a \\ g. 1 5 E 36 - w g Daily Gas Marketing Activity (MMcf/d) 500 - 1000+ 100 - 500 h 50 - 100 $ 0 - 50 h Electricinterchange Agreements Natural Gas Pipeline - Enron & Affiliated Under Construction - Leased Capacty Generation, Transmission & Distribution - Portland General Electnc A Generating Plants Storage Facilities E Owned E Leased l Trading Hubs E NYMEX

) iervices Europe M 4 - x tamn a j h 1 / i / f i uw m y 'TT h - 37 6 .m cwn ssN \\ 's T Daily Gas Marketing Activity (MMcf/d) Projects Under Development 500 - 1000 + h Power Plants h Electnc interchange Agreements Offices Projects in Operation k Power Plants $ Gas Processing Plants Projects Under Construction h Power Plants

'-x O esale 0 OElli)[jo l fs e % m"k 8 l D .g 110 38 N [ e I% in op,, k Power Pfg Y Pipeg'nes & Distnbution GANG & Other i 059Gs Under Co k Power g %g M nnes & o,* button i LPGxyg & Other Prajn k Power Pfants M 'nes & OjSg,,y I LPGxy0 & Other N Office,

erVices w _~ h l =. I E 5"(' l j ! g "" 5, d =/!i... ~ E / ,07.".,5"*c.,,.

== 6

ath

- 39 ~'t i et V ~ [_ \\ p-8shhelMIS tenue W#8W /

==:=====

from the map as U+wlopment efforts progress.

( energy services retaii I h b\\ 40 - . 'N " ' s. 'l I / 7 Customer Accounts l'p to 100 100- 500

500-1000 1000 +

• Channel Partners

+ EES Sales Office Locations

... ~. ;...; _. :..._.:. - r. ..;.;..w. .L. _, ' ' _ '., x l' :. '.~:; .i. ' ~ _' {. l _ ' ~ ~ ,, _ v - q; , $r , ^.'

i. * - +'.

~,.,.... :/,.. . '.,si w as e,me 3 + \\' aientnge,eno phtmiten,a. q fy :. M. Mendte a es.amasse.matar smar6etsies ' '.5 '..

c.

-.r ....,,,g gg%, y g. 3. >7. e-E ' t'. x. .V*;958#m8'apulaen... ,,.,. ; 4. F .. -._ Jj [ . '[ J'. e 3., 3 3 ; p ;. ; 9

m.c ;.y

+ ..:/.

.[

; '

J..: } [. ' f. ' }. ;.j ; < - J h/

{f.

l . g9. ..( J.jw g M,k ^ * ,,.~..; p.;.. .Q' f - 7.- .~y..

' K'. { -

):{,,. . j. ' f

7 7; ;

.y g..q :..1 f. '.. * - [ j ',. f ' , ~ '. lJ I' 3 , ;. j _~ L.h,.,[. p f.. {.. ,, ;; v,/ :n,. . Y: ~.. ...'}. ; ; :<.n [.y '_ [ ... ; ~. . 3 4 , ).. .' j;.., ; :),gff, :..... 3 3.- l; / c .w .w. ,) ~[. 5 ([ ;,. r. ,'[., .],. .,6 ..'.c.. ,u. - ,. y; .n ' ?;,.'_ ^ '. !.l ~ .l ..'t - f ..c y. vr qn ' '.: }. f;& ~;' T;.. ..y.qp . y g, ..l: , j ; ):. $) .'I 4 - ~ . '.,.,"...,,.,c' ,'l..' 1 ?? p ..v .s., ...,. ; ;..,. 3, .. 7 :... .,g- .7 r ....,.~.......:,.;-. , _. :..,.i 3.f . j. ,, +, ; i , [. ' ' ' ,. p .I 'ls (,.:. . n. -

f J~

_,...;6.;.,,,.. '.,(.

a

J q e 1.- ,.[', '),.* .,, -, l._ ..':~, ' '.,, '.I _ v c....

• + _

..l-r s ' '. L.

.. ; \\ _ J b;. a-

~ j ; ~ _

.

i..,;

-.J [ :: -. _[L. ?.. - [. (( [. '.;;.. il_. [ ,. _ i ( _ ._ }, ^. '[ :- ; 'i \\' - [ ,,..s..' .-_.}.. , 17 _ ' 't f,. ;.,.. ,'.. '.Pfr ~ 1 . ; " '. ",' ', y ., f ..c 1 f$w&&,,y m,u.4 ,as nm ~ + [I' [ l w s gug)y%g g%g

1. y, ~ VW L.::: - ::. J. ;; ;.

_ ;, 4 g..

.s...

w?.

~ p;. y a .awwn .e n S ',9;. )..,, _ -[..[ .h$. - - ...J. 'M }llllf.k l } k (([}

npnxn

o. 3.,,g,;n,.;y 3

wg g.c..,.yt /

3 & sqpose g y.. ( my [M.((f[IM&MM d h, 8g3. :.[.jg ,y

1,: r '. t.' ;%. *.,. x. ,rc .,,,i.~.,.'..'.';....':n. "-.. ' ..:'..,.. '. )...., r :. ?,.. '. : '." '. : L,. ;\\. '.;.. ', .*Tg,... .> *. ".d.* %.' **...u.',.- o 'v..1.,"4.;....:.,.,.~..,.:'.~ .' : /. '.. :, 2 4.,.. f. :'. ',.,:.,.,, <, y. + ;, q' u '. - *L,,. y,o. - ,,..,\\,'.,.,,.<.:..'..,,.,e;..;, .T.;;, *:..*-

y;.

1 p'*: I c.,',...,:.,,.t.. .,2.,.',,<.,.yc.r,;, , Q o .{ .u ), .s., -. ;. ,;, v t ...,., ;..%.q, p<,.g,c,3 ,....s. ..r .,._.r.r ,.s ..w ...s....' v ...c....*,.&. _ c ; :...,.d.;'.,.. .<e.g.,.

.. ~,,g ; s a 4,... q. -g \\.

.....

A ::. y.,9.% ';. t,.,, 4.,.. . ; 9 .s.y.. f,;y,.,..p. i.;p;r s. ',a;

. f ; j '..;q c f.', v y;,L*p.e.,.!

M...: . t g..,;. .,!q *.*.4; p ; -l.. ,......,,y ~;;s.

...,. m.,,, : yz.. t.

u,1.. w. .,. g- ....; *,.9, 3 _;- -.u., q[ ",;'(... : w.i.,.3 ,,.,i,,,.u , _ _ : :,,,, : g.y.. a; )s. .r: j,,, s. ,: 4

m.,

, :t . ',f fr,u. a.- s;_q%,,,t. r, ;.,.;_, 9 c,f'.*lf :,.,,. ').. \\.y-' . s,z; g 't. ;, < +' !.., ', '. u.,,.f' Y).,. 4.h)3.p q. y,:..,\\ ;3 a, a,b o*,&_ b '. y;. :. v n': .. ~h;.,,' :', ',. :, % L. e M !, y. i:, .:s

.n; s:< >;. :

q.c y; _a j,s:.b: W-

h.'

~,I'.i,' ' 'c ' '[

• )k[:>}*,

.(,h,[, h .r.h; ,C.'.',*. i.. '. h y{. '..., _,.;,. u, [ Q', ~;. ,[ 'l,# j.;,f['. 7. )..,.,' .,3.., _ _.y. '.;q; - . y.,,, ;;:.u y* . 4 V; '..

'..g :, - ;, _.;. s; :.,,:.a.,....

• _.... : g ;._r ~
• :.; *..V.. %., )..,, ';,;?, si,,..,

3. :

' '..,' ' p, :s n.?, f. y.. s,.. ~..*...

z.

• 4.;,.

,;. ). f,(: '; '.::l, :. '. a.,,,;s , 9... ?. 5;.m.}.,,~. .,( '.... g ?:,.: .,.......',*,:..',..:,..? ::., y.. l.., i z.. ' " ;;~..: s.p. :,. L.. :- . '. ;L,

'.,re... <

n. 4 p,j'.,.,.,.<,m,.,

n. \\ ' ~. ;,.,,

m..... n,,.

a 4,r. s . -. ;.s'-e1.: .e

,,a g

r. -..,, - ?.g. ,.:>.g,- .n. : . s u, ,,,$ 4..,, - i ;..,.s ::.,:...gl,-*-* o_ _,,.,.;.,.T.,. T ;s.,,,,),r. ,.i: t. .', l *..$j -.,, ;.',.9 ;, a .. g, y,Y.g,_,'...,'J., lsy. ..3 *,'J..;';, ,',.5,,. . n .,, '.0a' j ,',..y *l ,, ;; <..'.-l'.s..'*.ll ~-.- ;-,,-.;.f.,;. as e -?. ..,, *.t,",' .,'_.v,.l,'_,-l,*,..,.',,,,:l

',.t,

.. :.e'>=p._ 4' - ,'1_* re.., ',).,-p 5.. n,.,!,., ~,,',...,f- ,t J s .,t.t'.,. ; f., 9, ',.; :::, 'q, f

• +

L ,2 ,..'.,.s..,s,je ..r. 4;, ...h...t,< . ^ ....'J...,.,.;,.....,e.s.:n* ...., v ?:c,,.,.. .<.*?,*l ~r ..u, y : .. ~. +. - s, r, o. ,7 .J, :,, a.r.. - .+ n

y....s

'.*r,. ,g: : : y.h :...,,. :p;.,..:.;_. g.,,..... .,3 s % 4 1, s ;- ,r. .L.,...._....".n, i. V; c. .,.y, J.,. e,,,. ,. a . y,.<.,s.,, y y...e...- ... 4: > :,.....,:.,,

9..g

,.. :_-,...g. :. -c:.. ::: ...,.... p :. ;., ;;.,:y y... r.,:q ; e.,-.

e. :t v..i: w

'7 ;... s.r ! f... :.u ..Pl.,. ., g,.,: ,:,.. r. : ..,:".._. *; _s. x s, 0 a

• l'.l:

z., v., q'

• a.', ';;,'.g *:l'....

'c '*; ?. ' .?, : h,l:k.. ',-. ',j; '4 '. C,. ',' ~ ' ), p ;.: q,l','. lk...',..."' 4.,*.\\.:..,..,, S.... :' :Q '..?. l. ? *. #. v"..,' 1,.i..., ',_,;f. j., '_ A

• s T;.,' (.l y).. :
• r.,.n.....-

y a,..,-.. .,n ..*6 . L.y...d ;.;n - :.=... s... -a. ...,.-) n.r..;.. .;.'...,,,w.~,.s,;.... -* ~..,,....;..,...

_..p,,.,

,....1.,.....,.......,.'.......?.s.,...,. - .2 cy.,...... ".n.,....:. p,1,'.'....,'.,:,,,,.,--.,...,.,...., _.. v,..,,..:,'- + g. a

...

, f ;;.

r.,, _...,.s.

.e ..,,..,,,v.. ..s. .n, ..,.c,.,.. :..,.... -..,.. a.- f , ; ;,.1 7, s. ~,. ,.. g.< .n. s m.,Q.., c,. ev...r_ -i.a<v...,,.,,,,.;...:,:,. f,,.....,,. <.,. <...,,.rq ..r,'...,.. ...i. >;*, e s..,;.,.,....,:... %.,..o ... w,.,, :,,,

m. t >

e.s.

g. >o.s.,

..r, i-.,,. ;;,, f..,..- ~ * *.s....%,,.e...,.s.e.,..,,,.*..,?.. i,: .,),,;.......,....,:.4 q,, .,u..,. v..: ". A. / . -.. - -t; ',, ..s. ,. :.

• n a. p.-...:...

f. -

.,>.,, :.

• v..i,q y.;,.-... ;, -. " y" a -

,'1..-.,z;_*:.,.',.-..~.,,'.r. y.~.'.-..-}'.*s <:. s.- L...q 1.s.o.,,. e:.*. e s ,r..,. , e. ; .e ,s.. c.y.....,...... y "..'.c. .,1 .h....:.. v.u, ......,..,s.'"i.

,,.l.

, '4....,,.

.,L:..., ..,;a'4

• t. *. a,.,

..o. i l e.;., n,., f ,r ,. r ,,, ;......,.., :....., ; ;.. ' ^ ;:.' i,:,s.,,.t > :. ,:3.,,..:':*,*, - u ,'<. *. ",.... ' h... %,:,... '! :.s u,,... r . { q.,,:,.c,,z'

...,.,,,. ; s., :.,

.,..,o... '

:. -.*-,..,-,

9 _. s

?, p;. ..., >.. q., ; - t,,, ~, ,2 .': .:.-8. J ' :.'..', ; ;..,. ~. , : r...v: q =..,., .s... v-.l- , s...... !.,.y.~....,,n..,...i..9,,.,.e.. ,.e .s. s. .L v 's ..,-s. ,M ' '.,' '".1.. ^. y :. .C' , :t ' v

• . ! '. '. * ' :, ;'. ",.. ;l.' :

l t. '.' ;rs :. ?;; s, A 9:'.:, -:* ' '. :.;. u * ~.'. ':'. ; ~. ..i i '

f^ :.,.* i '.. '... n

- *,i. ",....>;,; ? ~ . '^ Ll' e. x. : ;:, :~:': ' a ... ' '. * ";.i \\; ;L...*:( :,,

,, b n,#

.. ' * -.i ;'.. !, *., ll : ll . ?, ,' ';;\\. '.',; ~ 1. ',.', ;*:', ' ':*. ' .E . \\;;s*L ',,-l ^ ' '.?/ : -,,,','O

• 5 '.

.-lL .6,.,.,.,..*..**.,] .-:s,.... ' >..:) '.: l,, :., ); l,,., .:',s,'.,.,..,;'. } .,I... .,, *-lv. ?,' ,_.,.,,,,,g-e, 's ..~..:n .r '$...,.,,..,....,,p,;,, ..f..,s,. ',,,',.e,,..,

'.e....,,.. j -.,;.'..., ' -.,

t,,..,i,.f....,p.

r p. .c...,.,..,y.+,. '.l',' N : " ) ,,,r;,,

• • ~

,- - 3.. t, i. ...s 'I l',:-*L*".._'*.,q. ',0! *,'.,;. l,'.Q ',.'R,,,,,. j,I ' c

N,,s.. ', ', '-,,. h e* r, *. $,';a.,  !".

..c =.; -, r. ','r;,'*,' 4. i. l,. ,',',:f. ' }.'[v.. * * ',, Nl :. . l,. l,. l.. g* .,'s,' l,f

• N, s

,.!,,,*,**<',,*'8'l.".\\,.,- .,)'s .'W -...:_ ',. ?,':, ', -l} i, ' ' ** { '..,i -,_.0, ;i .~ 9,'.; -.. ,q.

, ?..,

. W,.,.. l . y l l, *,. _*- ~. ,.*'.,,l(*y 'l s'\\';,; j, ~.,$, ' '. .e ,, ',.,;'f ",, ': .E *.. : ,. < *..,..',-l .a.f,.' ,,. s, ,(, ....,..1.,

, ' '. 4

.....t...:.. i.,.f

a.....,... ' '...,v.s.-

,. ~..,. < i *... '. - -,.i,.. <..',.,,c -. + c,.. , :. "l 'c, h.. y<,..",. .,.....,.3;;,.,..q..j<,'...-' ',,.l ~,, .,;,e,.,..,. t%,*# ,..o,,.%.., .a -,*;.5 .l...,- .e,..; j,, - a,..., s.',.,,,,,. '; 3..

, '...' '..,i:, r ':', - -.-

., ?l.

.v ,.~*.- o':.. :.6, .~t*, J- *, 'i. .,4 ..,". _.,, n.< W..

• ',*'..:.'.'..=...--', ',-

e , '..., < l, :. : : .,....'i.=,~,i..;,',.n,'-;.....,~,.. .l .I

• a.

...;sq-

• ',.. o,;

,,..,;, '. _,',.s': ... ;. k.'. ;.,,, ; "., t .g ' ' '.:.. ' ; e i :- ~ ..e .....,..s ,..,,;-p,... ' ',,. '. ~.... ..., e .,.'.., '..-,..s.'... '.... ~. ' ' - c... '*. '.. . :,g. ~,, .(~ a a=,- ..'i .o

• )... M

,,... -..s... a, r .~.'.f. ,.,...s.*s s..,.n.,'<..,,,,a,.., .+'. ,8...., ,,, [ ; y.. -,'r* i ..,,..s-4 .~I.,*.. , + *,.. ,,t.. *=. .,,e,' .,:.'e'*,,'- 'O 'A '. *.- ,1 ,,',,Y.,.'.,,'..l,*.",,,, ',,. . *,. <;.,'..,P,. '..*. ".. a ,b.' g,'..,,,.;.,.,.' .e.,.','.- ., ',, e,:,r. -.:.- ;.; :. g., a:,, '...,,;,,s 3 f,

• ..g

,. i,a ' p:. .s. - '. ',.,lm. M'- - :g. l , '. -),,,:.,,,,'. ;.l.*.-. - :

• ..,l'c.'

...g /... j,. N ', *,, L ;, 5

7.,..'f.'.'

. :.'.,j,"- *' , ;' i t j -. a - _.,. ' 3 ,=: l' , :, q ' c.. ,e..i.' - * ;.' ?. y -s. a'. ,,p:. 3, s,,;,, '..,,. ,,e

. n:*. ' ?.,,, ;r'J. n,, --

..,.,.s'. a.

• -. r

-.'. s Y a. ,, (:, 5 ..(': ~ ...0, .,3.<.'.,..,,.,.e.~.9, e,:,,..,....,,. '.., ..:p":,.'.'...,,.',,.,*>,:..',

• \\.:

...,'q ;..', ',,. .,\\ \\,...,, ',. '.., r, :*. ; .....:-v r - ..,1,.,.:,, y

,.- *,. ~,.,f,

....,. {...:.,: :...,,,. ; u. .. -.,.. s.....;...,/ ,es c..., -. ... r ,*e {. t... f l:. -. l

s*

l 6:. ~. s ......-,fe ). <. :n . - -.. Y.... - ',u." .y. sc e*+ ... * ?- .- - n n.= r. 1- -.- ,p }.. - ,,...,..,...s .,,3 ,,.., j. S..,,y , 1 ;..... j., z f,q,~ ..9s i 4 -3 p,., ...,...,. i. j;,..,.f,.,.....,s,,,, b i,,.....,. f ' , i.!, '. b f; ^j{, 1,- k; 5 ' :

' l..

.. l*

,.,',. ', $., s. ' '

g. "

.f- .~ ; ._Y3 'I. _,(n).A ),,,. l N, .y ..'.l.. (,*,  !. * - l 1 t , ',0* W.'. , } :. ', \\ '. g ; ' ')'( l ;.,j ;, '.7.} .. l. '., M -[

• 7.ll,

-,,,., f,, /- ',,. j $.,,, : q,,,,,, ,,ys... cp-i,,:,.., 1;.., ,,1.f.,. (, ;.... ),.,..,

• ...t.

f,".'.,,,d l -o, y,',. i.f ,r,. ,s 4 .e'., r,,,.7 ..p e ; ;.i,., t l ^ c' e i * ,.o,,- .q. ' * - l

• .. v.:'.?.~.4, b.. ). 4, ;.,.r..,i s.,;

,.n.... / J 's'. <,$,7v,l. . c. v:. ;* 't"... ' '..; w ' n

• ,. '....s,"'.*
• r ;. ',,

s. g.....p...,... :.;.:; n.,.,~,:t.~.

• r':,.

e... r..;,,.'sv a. ~;,, >j.4 ',,,. -,* ..-l :*.c. % ~,. s o r ':.,. y '. ; ~. <., -. a '. - .. s. ;;.... <:.9,, .a,; , y-e

y..

pd:,: .g,,=; +.7, i,.~ ;;. y ..-e .,.....,~ ,s... .9 ,,:,.,,,....,.~ s.;..,,.,,..r: ..'s," <; -.,,'..,?,. ?. n. g. a,,: ,,..;.~..;i.,,.,.,,:.,..,...,y ....<.~,s...._, ,,,-,; * ;+ .L..., .,,...,..,.-,s,... 4' ,s..;* y ...k..s ;.

• ..*:.,,..,i.,:.v

.e *.~:.~..- ,,.'t',# e I q, '."f p k,}. "

• I','. _

..v r ,,L,'....'., .y

v. I, ' ^.

, ;. 5., = *. .' ' 9.[,','O , r,, ;,,, 'I, #: t 1l h,. ; 't,f.,. ', * ;-. :,.. a g '-;,Ge,'

g. 'I. [,..,.' ' b,'["

,/,' k ' ',.Il' 5.,'.., ' t

• j.

-[,,':,l;, E. ',J,j..',,

.'ar

'y ,l. %l ',I',.I',"s.# ., i,: '.6, ',J j;..,. ( ). '[ '/', ; i[',

,',,.;; ) E I

,, ;.,,[ '

/ j 5

j ,' [.. M J ,., [ ? l", ", 4 -Y:fs 7, ' ' [ ,) 'J'".."h..l','.,. ',,,: , ',,4fl, !, - ' 5 ^ 'l ',, D.. '.f,l llr,' O'l.,#.[ k ", f. 't.'.'1",,'*\\.*a, .s

[,,.,

'....=,

'(,,.~;,,'d,.e.<. von. l *[ ' - g..,..,'f,,, ".f:,.., ;{r r4

s.'; -*_'l

'.., ' *,,d '.4: ..t..' . \\. ',I ' ^.,j,,.,+, '

. ',,. i. '; \\',,. L.. k'

1

, ". h.l ' '.

>\\

y',* ,.*?j...,,'. .,,~,o..s, , \\s n,..,.s.-{I.,'-.C., -). u. ,1, .. a... ', ..he v'. e.':

• .,...y

.. <,. m.. :r.. ' e_'n,

.1,

- + ':?. "l * :: 3 .. ~, ;.*- ',, y \\."*, ' .Q ...s.: n..). l* / y - 2 '* yl..i..q ',' ' '},.,., h.' ' * '\\ ~ ~l' ":,,.' ' ' ',, ^,- .*

• q.

, 5 ;.,',., ', p*, * :, ', . :i,,.', -sl.h#,'.,:,*' t,' ';'lk.; ".,; ; a:,.. ,s;- ' l -r' '*'J a ,,:. I*,,b',,#',"f ' ' v 'o'w' Q.,;,':.,f.'^:':,'.';'.,:.'.:.\\'- ?' y, :r :.,,' '_.... ^ * - ,'_'?',e * "; 'l + 3 f'.,!'.' (- '.: *... h ': ~ f * " < 3 ',,:.., c, '.+. -[', <:,.: b. :' ',~. :, ', "' y, s,i Q.l:,,h,, ';) lI 'l'^^^ h 1* .,a, : '.l'- } ;. ' -l') ll 6 q" y, t..,. ..... '..< s. :,'.:.. p., j c: u _, -l,Q.u,;. :....,;o...',,.,.h.,.., ' y :n y y '.,:.. a.:,~. ;.. :.

.,... :.,. '; M.,, p v

..p ...,'. ; a.., 4 ' '.,s...'.,.. 4 e. j... r>,.,.,e ? s. v . +..., y.. . ". '. ';r ~ 3 +eo;p ,.s...,,.. '.a

• +.

.e .,s s..,,.,. <.. -u*-n. ,;,*4.+.- . ~ '.....:....., %,. ;,,, ;s ; ' , i ;,,,.., - . 3. :s,,..g <.....;. -,..,.,. r,,.,, '..u....',.',.' ... ;,.,<.:(, ;..... f.,,.,_, :{ ; > ;.f,... 3 cf,,,, =,..,X s;., (.: +b 4 6

• ' y Q '.' ' f. >,,r. f,,;'...\\. '.;',. ;;, ' *"). f,..., n & < r, :;. ;,'*y:,;

_s, %s.. ; ./.s y. s *.,Q,..?,...., ';;.,: , 'y. ......,.s . :,y, a,:..., .V,.c:...z...,... c.; .... e, s ... c, a,..,,s., c ..g...... ~..A..., o3 s- .;:,4..,..,.,'.. t..- u, .-....... _...,..<,,,3,.~.v.u.,..,.,,.. c ,,_,bl .~:.: ". L. '..'- ;,. y* '.h. f..9,, .,i1 ',':'~... ' . J,\\.... i .y. 2.... ,.. '.,!;)i....,, A ?,f,..,'.. ^:.:.r. ;Q,!y .r. _ ;s., m.,u. y- .,..,.,....:. li, . : ;,. '.: ;;. '. (. '; ; Q;.],. a....sg',.,.... '.,., " +.. <,,p r..e.,.,. .p y s.n '..,.. s .o

..,^l.

j. '.

y-. .i,._, .c, .,. *..V, ,,:-;;.;.c ',3:.'..%4 ..g.;,'l <* '. ..m.'.....:

• '; ~ q s

s s. 'y<v.. '..",.s, .., '3., ' gsi,--..Q s i .y. ;.. _ y '_y, (,,,, } :, '; ;.;,;; ; *f..,, , a!.

.[..;..;,._ : ;;,;; ::'.

t , c.- y.saan;h. '..,.4. :,,G y

s

~..;..

• - 3

~

• e ",;,

e . %... m.- 'y ;. :t: ;a...... ',. '....:, s

....-p's.,

.:,.....,......~.,..,,",f,v.o,.z..... A'.,. .v' O t \\ ..,t*. .o.... a,...y,.,,- ,w'*:- ~:- n.., s.;.9,,,

yt..

..,.,.,.c..s,,. e,.,<r.,....,......,]..% .._e .s.. F * :'... > ;.,.. n. - - -- -... ~...> -,...,.,. ...,r..'.c.-..v.,..~.., C,. ,,r.,,,r.,- ..:.. ;', -.. ;. I ;.,..;,... ",.,....,. ; v' ',tr, .., p..,;,.+

,s

s. t

.,c

c. -* ;; v,,

f.

9. r. 3, 9,9... ;.,.:

n s. v i :,...

p...>...a^.... ;

...,,.. ~,......- .s.. >...,...NJ... .a .Y ,.,,,;..', :., c 4 e.,....:..

..". u

'."s,.,;.,,...'...v. ..,o.,.'. t a: g+..

i.,,., y<;

f., ....to. n e., p. ' i-...... a. ... b'.'d ,s. s. 4 %.~.......s.

d.*;

,L'. O l': ',7;p.., ;f.*,.)_ ;:' ', *.,h ' 7 . ':;l.'.' E } ^ 1.h ~.~"' ?. ..... n [ _: '.::, ';.:...

Y.g ',- >l.G -l.;.. ~ & 8., ?,).'T. ' N ;. l' .,','.';';.; > : ?.' ' D.p.... s.Q,d -, ; t,. l A;,..,,...Y. ]...,, 3 . U . l!; '.f. '. :.,<.

p. ': v ' _,::

,.r,. c

• h.:, "... '.

s,,4. 4... '.> n;:.- ..h..",l,_%, . a't!p " ;,, _.,s ..r .' '.;., ', -,.. t -?,4 c.*.'--- t ':..;;. x.: c; f.'.'.. ' ':.'. '. ; y...: '.,. - .,.1*.; ., 3. os , ;,, e 4,-.a.y:,.,- q,,.J. - z.z,.o

l r.

, ;[' q', ",;_

• .C

  . ; s 4

>'.p i..... '. rt;;..',.?*c, ' -, e,' pg l.:. ;. as se: ;;.... ' .<q, ;. ;.,.,_. -.;,.. ;,, ;.. -.,,., y. (<,'.

• 1

..- u.

n.... c..,: ;; - 'w

,.Y.

y; n v so y.... s,

• r.,~-,e,,,,. -,.,...y.,.,.:.,.:.;,,.:.n%.. :. e,9.,3,,,;,.c-.-

p'.o.- . o. .[ ;3, ' *, ;1. ' ' ',... e. *' ;;.. .r. 3 ,..:.f,.. ' g :*.;.*', '.f 43 - 'l ,J.

• .t'.,^

...:< v', ('. ;'.i'. '

:.iTy.

. ;"',,.:,.2. ;, :: ,~s F ..t ..b '..': '*re., ..,,..',:;h, .t. j,. -,;. r.,.,'. . ~, ' -g. .,.4.. ...m. 'u;:.

. r..\\.

• r
• y,.,..

,z.,,..,,n.n.,-...o;_.j..,.......,,;.... ,~. '.s.. ,- 4...:.,. y,, :. ,y-r a .'a..... ,4, y- . 1:, p' ,s,;.. - : ..?-

,,t.,.

,.a .,_,.;* l ,.#,g:',,, .',,.i.,....,/ ...)*J s: ,g,; > s .c. p.

• c:..ye....,.;.

.,,. re. - *:.'-. 'y,. , ;, y. - u n,;... .s t ...r ,._...c.., .v ,.9 . Y "ss. 4, \\..,.'. :.,.. %, i,,.3.'- - j;. '; _,/ : .'a ..,... s [, f,,. '..:. r- .:',..,.,l-j.. .,,l... y ?

Qi' ' * '.,

;,. ' ;, t *.).\\'

. f,Q..,. ; '.*w,y.... :$,;;...,,

• j.,, *.,, ; ".'..;.. :.,4,,,,:.".v...-.

, ;...... c; - C 4:.,.,.., y.i...,,..',.- -;'.,.'.,'..-,.,:sl.',",tsl \\ _ Q, s , n 5 %..c,, y,a. < ;. :..,.,;.. w. Y.,,s a. ,y..,.~.. .:.. an 6,. n,._, ;..,... z

.9...,.,

,..,,,,,....,.,; %,.9,. s,t. ,,,....,.:,-.,;,.,,.,;._,,,,_, _;f c::.. ...,;,., - -,~...,,,......:-.>. , T.. y 5...... ' f i_ '. e. :. '.,* ',.: ^,l Y * :l.: ; f _. s. ' '_; - fl [y, * ;;.,_7. G.*~ :\\ r. G; i. ?,\\. ',,: ;::} ' ' ' : '3:9.; 3 y. !;[*.R ).. J:j:.$}.,'x@f -* r_ \\ l3,.;Tl.y, e.(, [. q : '. '.'. 'g [r _.; ' ','". '_'.l., i., ' 1,.*

../., ?

W *,s %'.' :) ; j. ', %.lf '67 _. '.l;.."?.\\'..l l 'e S}'

'],}c.*

• D ' C ',., 'r*q '_'.';._ [ l h):,.'!v ll,. ?'

.l;h ;.,~. I.*! _ ;;:f..,n 7 :. M._~f >}~,s.... v.,, c. ,8 e. : 0 -: ' * - ~;. e s t .'f;. ..p. ;,' w,

f. ?,.l*&',' ','. V., I.,', y s

,;;?. '..',..'C_t:"ll j;. 1 o t e- - ' :.. t ,c w* n J, r:% p ;;;n,.. c r, p. " >':..b. :,..... .r...;.:g. s

r,.

y: .. ;. n g....,.,. ;, 'c K. c.g '.. -..,C.,,. y, A..;,, :c. A y';..,..q,. ' :.... '... 5. ,..s..., ,.' :,; s, l.... )! '.% ',.,~.';. ':.:5'.,:... 7.. .7 e s. ','..:..,.~..'p.:.:...,. ~ D. u :*w... I,'..".;'.., ;,,:n.X -

• 3. @..

,y2.,.,..,,..,t,.;,..')....,','G..,.*..'s,,,,.-di,. ~. r ? '...

• q,.n..;s::

' r! 1 2,;..,... g. ., '.. +..- ,.-s.,. -;.:(,.:7 s ; 2 --.,, --:.- *...,.,.,;~.. '.. ',.. .-.;:s" * : ..'..c. s _1 ..,....w r ....L...*..,.,.2e. Q... ,,s;. s .s v 4. w;....,i: c.

..a...,., a a.

. - A e,,. 2 o a. c,....,.,..., :. ;;..V m _;.9 y;;;, s. .x ?.n ..,s. . n.. :. . :q .,s.. y,,. . ~. -.

.. 2. :.., :.

y. ....,;. 7:.,f. ~ 3 :';;..* r i.3.....:..: ;,'.,..,.....,....;. ,i.. 8 l .:,..i m._;,.~, c .,c. v ..[ t .).. [...,. 1, ~; ' . ". '} ,,.) [,.=...'... . l, ,.y>.,,- _s.,' .......u ...?: ,_.q,,L, i'.... -. '.,...,_;'.1.. -l ..,....t. :. 4,, 7. ..l ..e,.,.,,c..'.,Q.,.,..y, 1 ,a.. ...,,_g .,3 ,1;. G?,l Q.' i o.];g.,.'..:.#...}') L. ;_. .c.' , i ..,g,. , _:z*, _: =.l

• fl,). {,.1 % '- l '.h

. s t 'd ' y :' i ll " J. .'.. "', { ?;. ;';. ' N.. i'.;.,'l 4 - ' .i '. 0; l.. ._ j ' ,y, ', '. :..'. l '. '.l; N, *:,'..,, "'. ". * '. ', ' q.,'. ..s c . Y* ' ; '..;s.; l'... Y ~. i,1.. '.; ' '.'. ;'.L'4 .l.:. '..:y. - ; e ::s ;,;.,.' ji Y., : ',. y' M .n; ' 7 k:, a. ... ; Q.,,',f,3,"..,.J. ;. ; '. : ',,,!n.."r.,.: a. '.:. \\,,.

• r,. r.

1'.... . ^ ,.ry' a.,,. i.'. . - u s:

s. Q o 'r,' ; ) *', ',i.'. '1':

...n-ru a, ^ ..l"~.1 ::b.." ;','4'* ,..,j.'- ',','_g'.".,,4.',.'.,,l q,;;f,...,'; ': :. _,., _,.. '.. +... '.,*-.:.+ . ' q -.s.' ?' m,.,c ;(. *. v ';;,,, :s_.g _b f;1. s 4 -. '... ' _ ~.,.';- h.:[.. 'u f '. '..s,....,*.- .8.,.'....-i..'..- y a,,,_,.s. -t'. , _; t. y +, ,fe . u ,,,.t we;. ,o c..... s.. ,n .n... {* >.e.. s -a te, ';,?.,.:..r., ..t.. ,.- V r s <3 -e a [- a.*...?.'..:;=.,.....,..' y"...,.~g.. ,,.~....i..'..;':.y ' - -- '".., '...*/-,<,.... p i ~1. .. e:.

• .. i'

.,,y;...m. : ;..., ;. ;,...p-4~. . s .,f,,,....:.;. r

...v..,..

.,...p.. :. t e,. n r. . p .w. ;..,.... - _y, . :.. :..,. ;o :., 3 1;;,:.: :: e

e Management's Discussion and B sic and dilutId strnings per shira of common stock Analysis of Financial Condition and ,,,s Results of Operations Reported basic earnings per share 50.32 $2.3i $2.07 Diluted earnings per share: The following review of the results of operations Results from core businesses $1.98 $1.82 $1.82 and financial condition of Enron Corp. and its subsidiaries Retail Energy Services: Results (0.24) and affiliates (Enron) should be read in conjunction with Gain n sale of 7% of EES shares 0.21 the Consolidated Financial Statements. items impacting comparability: Charge to reflect impact of RESULT 5 OF OPERATIONS amended J-Block gas contract (1.57) Charge to reflect depressed Consolidated Net income MTBE margins on committed Enron's net income for 1997 was $105 million com-production (0.25) (0.18) pared to $584 million in 19% and $520 million in 1995. Gains on sales of liquids and The results of operations discussion focuses on core busi-gathering assets 0.22 0.22 0.16 Gains n sales f Enron M & Gas nesses, the new retail energy services business (primarily serving commercial and light industrial end-use customers) Re er for a ified facilities and items impacting comparability of operations. Core disposition (0.20) businesses include Exploration and Production (Enron Oil Miscellaneous reserves and & Gas Company), Transportation and Distribution (Gas other items (0.01) (0.46) Pipeline Group and Portland General) and Wholesale Effect of anti-dilutionW (0.03) Energy Operations and Services (Enron Capital & Trade Reported diluted earnings Resources. Enron international and Enron Engineering & per share 50.32 $2.16 $1.94 l Construction). The results of Portland General have been Idl f C '997'o'f the diluted eamongs per share cakulatm was anti-ddu-A' C "*"5' n f preferred shares to common shares for included in Enron's Consolidated Financial Statements purposes w beginning July 1,1997. See Note 2 to the Consolidated true by 50 03 per share Howevec in order to present comparable [ Financial Statements. ftems impacting comparability are results per share amounts for each eamings component were calcu-y discussed in the respective segment resuits. Net income 'd "5'"9 295 *I'h " Sh*'es". h#^ 855"**5 '^' C """5I " # P I ferred shares to common shar p includes the following: g income Before interest, Minority interests and income I (in Millions) 1997 1996 1995 After-tax results from: 43 Core businesses 5585 $ 493 $ 48, The following table presents income before interest, l Retail Energy Services: minority interests and income taxes (IBIT) for each of g ResultsW (70) Enron's operating segments (see Note 17 to the p l Gain on sale of 7% of Consolidated Financial Statements): Enron Energy Services (EES) shares _6_1 j (9) (in Millions) 1997 1996 1995 1 576 493 489 Exploration and Production $183 $ 200 $ 241 Items impacting comparab;lity:M Transportation and Distribution: Charge to reflect impact of Gas Pipeline Group 466 524 359 amended J-Block gas contract (463) Portland General 114 Charge to reflect depressed MTBE Wholesale Energy Operations I margins on committed production (74) (49) and Services 654 466 401 Gains on sales of liquids and Retail Energy Services (107) I gathering assets 66 59 43 Corporate and Other (745) 48 164 Gains on sales of Enron Oil & Gas Reported income before interest, 90 161 minority interests and taxes $565 $1,238 $1,165 Company stock Reserve for qualified facilities disposition (54) Exploration and Production . Miscellaneous reserves and Enron's exploration and production operations are Re ne ncome $ 165 $5 conducted by Enron Oil & Gas Company (EOG). IBIT of ~ Exploration and Production totaled $183 million, $200 mil-(a) Tax effeaed at 35%, except where a specific tan rare app 6d lion and $241 million for 1997,19% and 1995, respectively.

W;llherd volum3 and prica stItistics (including intzrcom-Costs and Expenses pany amounts) are as follows: Operating expenses, depreciation, depletion and amortization and taxes other than income taxes increased 1997 1996 1995 in 1997 and 1996 due primarily to the increased produc-Natural gas volumes (MMcf/d)(a) tion activity. North AmericaM 758 706 636 Exploration expenses increased 15% in 1997 and 13% in 1996 as compared to the prior year, primarily as a result of increased exploratory drilling activities and lease Total 889 830 743 acquisitions in North America. Average natural gas prices ($/Mcf) North Americak) $ 2.20 $ 1.92 $ 1.34 Trinidad 1.05 1.00 0.97 Outlook ladia 2.79 EOG plans to continue its significant investments in Composite 2.07 1.78 1.29 development and certain exploration expenditures in its Crude oit/ condensate volumes major producing areas in North America. In addition, EOG (MBbl/d)(a) anticipates increased spending for the continued devel-pment of its significant international projects in India, T nd Venezuela, Trinidad and China. Enron has hedged its net India 2.3 2.8 2.5 exposure to EOG's natural gas prices for 1998 production Total 19.9 19.6 19.1 and will continue to assess opportunities for hedging Average crude oil / condensate prices future production. ($/ Bbl) North America 519.33 $21.08 $17.09 Trinidad 18.68 19.76 16.07 Transportation and Distribution India 20.05 20.17 16.81 Transportation and Distribution consists of Gas Composite 19.30 20.60 16.78 Pipeline Group and Portland General. Gas Pipeline Group includes Enron's interstate natural gas pipelines, primarily (a) Mdlon cubsc feet per day or thousand barrels per dq as applicable g (o) includes an annual average of 48 MMd/d n 1997,1996 and 1995 Northern Natural Gas Company (Northern), Transwestern 2 de/wered under the terrns of a volumerne producron payment agree-Pipeline Company (Transwestern) and Enron's 50% interest ] W ment effectwe October 7, f 992, as amended. in Florida Gas Transm..ission Company (Florida Gas). Portland

(

R) includes an average equwa*nt w// head value of J f.73 per McIn 1997, Jf.17 per Mcf n 1996 and $080 per Mcf n 1995 for the volumes General primarify reflects the results of Portland General 5 deraJed in Note (b) above, net of transportation costs. Electric Company (PGE) since the July 1,1997 merger (see Note 2 to the Consolidated Financial Statements). The following analyzes the significant changes in the 44 - various components of IBIT for Exploration and Production: Gas Pipeline Group. Significant components of IBIT F (in Millions) 1997 1996 1995 Net revenues 5783 $730 $648 (in Millions) 1997 19 % 1995 Corporate hedging activities (8) (4) 45 Net revenues $665 $719 $745 Operating expenses 150 133 126 Operating expenses 310 316 343 Exploration expenses 102 89 79 Depreciation and amortization 69 66 82 ) Depreciation, depletion Equity in earnings 40 35 46 and amortization 278 251 216 Other income, net 38 44 9 Taxes, other than income taxes 60 48 32 IBIT before items impacting Operating income 185 205 240 comparability 364 416 375 Other income, net (2) (5) 1 Gains on sales of liquids and Reported income before interest, gathering assets 102 90 67 minority interests and taxes $183 $200 $241 Miscellaneous reserves and other items 18 (83) Net Revenues Reported income before Exploration and Production's revenues, net of gas sold interest and taxes $466 $524 $359 in connection with natural gas marketing, increased $53 million (7%) in 1997 and $82 million (13%) in 1996. The Net Revenues 1997 and 1996 increases reflected both increased average Revenues, net of cost of sales, of Gas Pipeline Group wellhead natural gas prices and increased production dedined $54 million (8%) during 1997 and $26 million (3%) volumes. The 1996 volumes increased from 1995 primarily during 1996 as compared to the applicable preceding year. from the elimination of voluntary curtailments in the The decrease in net revenues in 1997 compared to 1996 was United States in 1996 due to significant increases in well-primarily due to the sale of natural gas liquids assets in early head natural gas prices. Other marketing activities, which 1997 and the turnback of capacity at Transwestern, result-indude hedging, trading and natural gas marketing trans-ing in reduced transportation revenues beginning in actions by EOG, reduced net revenues by $61 million in November 1996. The decrease in net revenues from 1995 to 1997, compared with increases of $4 million in 1996 and 1996 was primarily a result of the sale of gathering facilities $105 million in 1995. Net revenues also include gains on in 1995 and the first quarter of 1996, in addition, revenues sales of crude oil and gas reserves and related assets of $9 decreased at Northern in 1996 as a result of a planned million in 1997, $20 million in 1996 and $63 million in 1995. reduction of trans'rtion cost recoveries related to the termi-nation of its merchant function pursuant to the Federal Energy Regulatory Commission's (FERC) Order 636.

4 Oper1 ting Expensu Statistics for PGE for the period from July 1 through Operating expenses of Gas Pipeline Group declined December 31,1997 and 1996 (including amounts for 1996 $6 million (2%) during 1997, primarily due to a reduction for comparative purposes only) are as follows: of transition costs to be recovered in regulatory surcharges 27 1996 at Northern. Gas Pipeline Group's operating expenses E e ricit ales (Thousand MWh)W declined $27 million (8%) in 1996 compared with 1995 due primanly to the favorable resolution of environmental Commercial 3,618 3.450 contingencies previously accrued, combined with reduced Industrial 2,166 2.020 expenses related to the gathering facilities sold in 1995 Total Retail 9.163 8,891 and early 1996 and a decrease in amortization of deferred Wholesale 15.041 5,949 contract reformation costs by Northern. Total Electricity Sales 24,204 14,840 Depreciation and amortization declined $16 million (20%) in 1996 compared with 1995 due primarily to the Resource Mix sale of gathering facilities in 1995 and the first quarter Coal 10% 15 % of 1996. Combustion Turbine 5 11 Hydro 5 8 Total Generation 20 34 Equity in Earnings Firm Purchases 74 55 Equity in earnings of unconsolidated subsidiaries Secondary Purchases 6 11 increased $5 million (14%) during 1997 as compared to Total Resources 100 % 100 % 1996 after decreasing $11 million (24%) during 1996 as compared to 1995. The increase in 1997 was primarily due Average Variable Power Cost to increased equity earnings related to Enron's interest in (Mills /KWh)(b) Citrus Corp., which holds Enron's 50% interest in Florida Generation 8.7 7.7 Gas. The decrease in equity earnings in 1996 was primarily Firm Purchases 18.9 16.5 due to lower earnings from Enron's interest in Trailblazer Secondary Purchases 13.2 12.3 Pipeline Company due to the recognition in 1995 of Total Average Variable Power Cost 16.5 13.1 income from a settlement with a transportation customer. E Retail Customers (end of period, thousands) 685 668 i: Items impacting Comparability g% ,,g, During 1997, gains of $102 million were recognized @ Md/s ono cent)per kilowart-hour y related to the sales of liquids assets, including processing E plants and Enron's interest in the Enron Liquids Pipeline Outlook LP. Gains of $90 million related to the disposition of non-Transportation and Distribution should continue to l strategic natural gas gathering facilities were recognized provide stable earnings and cash flows during 1998, g in 1996, and gains of $67 million were recorded from the including steady growth over 1997 levels, g sale of gathering assets and a processing facility in 1995. Various expansion projects underway or proposed by in 1996, reported IBIT included $18 million as a result of Gas Pipeline Group should contribute future earnings favorable resolution of litigation. Regulatory and contin-when completed. Over the next three years, Northern is 9ency adjustments totaling $83 million were recorded planning expansions which would add 300-400 million in 1995. cubic feet of gas per day (MMcf/d) of incremental capacity. Transwestern plans to expand its pipeline capacity and g Portland Generaf. Results for Portland General have access new gas supplies by approximately 200-300 MMcf/d. I been included in Enron's Consolidated Financial Florida Gas also plans to expand its capacity by 150 MMcf/d i Statements beginning July 1,1997, Since that date, to serve its growing markets by the year 2000. Additionally, l Portland General realized IBIT of $114 million, as fol-Gas Pipeline Group will continue to monitor its overall lows: cost structure. l PGE anticipates continuing retail customer growth in l (in Millions) 1997 one of the fastest growing service territories in the U.S. In Revenues 5746 late 1997, PGE filed a Customer Choice Plan proposal with Purchased power and fue! 389 the Oregon Public Utility Commission (OPUC) which would Operating expenses 154 give all of its customers a choice of electricity providers as Depreciation and amortization 91 ear!y as December 1998. Under the proposed Customer 2_ Choice Plan, PGE will separate its generation business from Other income, net ..$114 its transmission and distribution businesses and PGE Reported income before interest and taxes will become a regulated transmission and distribution company focused on delivering, but not selling, electricity. The separation of the generation business is proposed to be accomplished by selling PGE's generating assets, either to an Enron affiliate or third parties. In preparation for electric deregulation, PGE has begun to leverage from the operational experiences of Enron's Gas Pipeline Group which has previously transitioned from providing merchant services to providing transportation services.

Enron is unible to prsdict what chinges mxy be Cash and Physicxt. Tha cash and physical operations required by the CPUC for approval or when the OPUC will include earnings from physical contracts of one year or approve a Customer Choice Plan. less involving marketing and transportation of natural gas, liquids, electricity and other commodities, earnings Wholesale Energy Operations and Services from the management of Enron's contract portfolio and Enron's Wholesale Energy Operations end Services earnir,gs related to the operating assets of this segment, businesses are conducted primarily by Enron Capital & including EPP operations. Also included are the effects of Trade Resources (ECT) and Enron international (El). These actual settlements of long-term physical and notional j businesses provide integrated energy related products and quantity-based contracts. services to wholesale customers worldwide, including the Wholesale markets and transports a substantial j development, construction and operation of power plants, quantity of energy commodities as reflected in the natural gas pipelitres and other energy-related assets, following table (including intercompany amounts): energy commodity sales and services, risk management 1H7 1996 1MS products and financial services. This segment also includes Physical Volumes (BBtue/d)(** results of Enron Engineering & Construction (EE&C), Enron Global Power and Pipehnes L.L.C, (EPP) and Enron ited States 7,654 6,998 6,405 Americas, Inc. Enron acquired the minonty interest in EPP Canada 2.263 1,406 803 in November 1997 (see Note 2 to the Consolidated Europe 660 289 Financial Statements). 10,577 8,693 7,208 Wholesale Energy Operations and Services Transport volumes 460 544 580 (Wholesale) can be categorized into four business fines: Total Gas Volumes 11,037 9,237 7,788 Asset Development and Construction, Cash and Physical, Oil 690 320 439 Risk Management and Finance and investing. The follow-Uquids _ 9_87 1,187 526_ ing table reflects IBIT for each business line: Tc:al Physical Volumes 12,714 10,744 8,753 Electricity Volumes Marketed (in Millions) 1997 1996 1995 (Thousand MWh) 192,323 tio,150 7,767 N Asset Development and Construction 5 77 $ 60 $ 37 Financial Settlements l Cash and Physical 310 324 206 _ Notignal)fBBtue/d) 49,069 35,259 32,938 ( 4 Risk Management 143 105 19 (a) Bdhon Bntah thermal units equivaknt per day l Finance and Investing 284 122 103 (b) Includes thord-party transactions by Enron Energy ServKes, b Reported income before interest, ~ ~ ~(160) (145) (138)~ The cash and physical business includes Enron's Unallocated expenses ~~ minority interests and taxes 5654 $466 $401 interest in the following operating assets: The followir g discussion analyzes the contributions Acquisition / to IBIT and the outlook for each of the business lines. . Size / Capacity operations Date Pipelines Asset Development and Construction. This line of Houston Pipe Line - U.S. 5,243 mi/2.5 Bcf/d 2Q 1985 business includes the development and construction of Transportadora de Gas del sur Argentina 4,104 mi/1.9 Bcf/d 40 1992 power plants, pipelines and other energy infrastructure, L uisiana Res urces - U.S. 540 mi/750 MMcf/d 2Q 1993 including the results of EE&C. " #9 ' At December 31,1997, the following projects were Transredes Bohv.a 3,093 mi/320 MMcf/d(*) 201997 / under construction: Estimated Commercial Power Plants Size / Capacity Operation Date Puerto Quetzel-Pipehne Guatemala 110 MW 1Q 1993 l Bolivia / Brazil (Phase 1) 1,180 miles 1Q 1999 Teesside - U K. 1,875 MW 1Q1993 Batangas - Philippines 110 M AI 30 1993 Power Plants Bitterfeld - Germany 125 MW 4Q 1993 Cuiaba - Brazil (Phase 1) 150 MWta) 34 1998 subic Bay Philippines 116 MW 1Q1994 Dabhol-India (Phase 1) 826 MW 4Q 1998 Puerto Plate - Prti - Guam 80 MW 1Q1999 Dominican Republic 185 MW 3Q 1994, Sutton Bridge - U.K. 790 MW 10 1999 1Q 1996 Trakya - Turkey 478 MW 10 1999 Hainan island China 154 MW 3Q 1996 EcoElectrica Puerto Rico 507 MW 4Q 1999 Nowa Sarzyna Poland 116 MW 40 1999 Local Distribution Companies i Sarlux - Italy $51 MW 10 2000 CEG - Brazil N/A 3Q 1997 I (a) Megawatts. Rio9as Brazil N/A 3Q 1997 GasPart_ _ Brazil N/A 4Q 1997 Earnings from the anet development and construc-(a) Gpaaty atso includes 35 MS/d of havids tion business increased 28% in 1997 from 1996, primarily as a result of fees earned on projects in the U.K. and The earnings from cash and physical operations Puerto Rico in 1997. The earnings from this business decreased 4% in 1997 as compared to 1996 primarily due increased 62% in 1996 compared with 1995 primarily due to lower domestic gas and power margins in 1997 to ircreased earnings on capital employed related to compared with 1996. Although volumes were higher in development projects. 1997, greater seasonal volatility of domestic natural gas

prices provided highir margins in 1996. Dom stic liquids Outlook marketing activity was also lower in 1997 compared with Enron anticipates continued growth in Wholesale 1996. These decreases were partially offset by inaeased during 1998. Asset development and construction earnings activity in the European markets related to natural gas and are expected to increase as a result of Enron's extensive power contracts. Inueased earnings from the operation of portfolio of projects in various stages of development, in international power plants and pipelines and domestic the cash and physical business, volumes are expected to natural gas assets also contributed to the results. continue to increase. In addition, the existence of a The earnings f rom this business increased 57% in 1996 substantial portfolio of contracts as well as the ability to i as compared to 1995 primarily due to earnings from higher benefit from the relationships between the financial and natural gas volumes and margins and increased earnings physical markets and the natural gas and electricity l trom the management of Wholesale's commodi*y portfolio. markets provide substantial opportunities for earnings. l Earnings from the marketing and processing of natural Earnings from risk monagement are expected to increase as gas liquids also increased in 1996. These increases were Enron continues to pursue opportunities in the European partially offset by a decrease in earnings from natural gas marketplace and continues to increase integration of l assets. Electricity volumes substantially increased as Enron financial products and its energy commodity portfolio l continued to expand its role as an electricity marketer. worldwide. In the finance and investing business, Enron Risk Management. Wholesale's risk management will continue to expand its products and services in its role operations consist of market origination activity on new as a full. service provider of various types of capital. Further long-term contracts (transactions greater than one year) expansion into new products and international markets is and restructuring of existing long-term contracts, including expected to increase results in all of these businesses. development activity related to such c.ontracts. Earnings from Wholesale are dependent on the Earnings from risk management increased 36% in 1997 completion of transactions, some of which are individually as compared to 1996 primarily due to strong origination significant, which are impacted by market conditions, and related activities with utilities and independent power the regulatory environment and customer relations. producers (IPPs) in the European market. This increase Wholesale's transactions have historically been based on was partially offset by lower origination from long-term a diverse product portfolio, providing a solid base of contracts in North America for both natural gas and power. earnings. The outlook for potential future transactions is { Earnings from this business decreased 46% in 1996 as currently very favorable. Enron's strengths, including its j; compared to 1995 primarily due to lower origination ability to identify and respond to customer needs, access j from long-term contracts with domestic utilities and IPPs-to extensive physical assets and its integrated approach to j l Earnings from the restructuring of existing long-term con-international business, are expected to result in continued g~ tracts were also lower in 1996 as compared to 1995. These earnings growth. In addition, earnings are expected from decreases were partially offset by increased origination Wholesale's commodity portfolio and investments, which _ 47 with IPPs in the European market. are sabject to market fluctuations; risk related to these Finance and investing. The finance and investing activities is managed using hedge transactions. See 5 operations provide a variety of capital products to its " Financial Risk Management" for a discussion of market [ worldwide customers, including volumetric production risk related to Wholesale, payments, loans and equity investments. These products are offered directly or through joint ventures-Retail Energy Services Financings arranged and production payments were Enron Energy Services (EES) was formed in late 1996 $561 million, $755 million and $382 million in 1997,1996 to provide direct energy sales and services to end use and 1995, respectively. customers in the U.S. natural gas and electricity markets, Additionally, the finance and investing business particularly in the commer ial and light industnal sectors. includes the management of Wholesale's capital invest-EES has participated successfully in selected natural gas ments, both operating and financial, is well as certain of and electric retail marketing pilots and continues to make Enron's equity investments. Accordingly, the results of this significant progress in expanding its customer base and business include earnings from changes in the composition contracting activities. EES reported losses before :nterest, ano market value of these investments. Market value minority interests and taxes of $107 million in 1997 relat-changes result from both un jerlying operating strengths ed to significant investments in building its sales force, and favorable conditions in the equity markets. Expc'sures developing products and services, establishing a support related to these investments are rnanaged through certain system to service its contracts and supporting EES's regula-hedging transactions as well as through the overall diver-tory efforts. sity of the investments-in late 1997, Enron sold approximately 7% of its Earnings from the finance and investing operations ownership of EE5 for $130 million to defray startup increased 133% in 1997 compared with 1996 due primarily costs and establish a valuation for this new business, to a significant increase in the market value of its invest. The transaction resulted in a gain of $61 million, which ments, including the positive impact of a change in the has been reflected in Corporate and Other. This sale of structure of a joint venture investment, es well as increased EES ownership was based on a total enterprise value of carnings from origination. $1.9 billion. Earnings from the finance and investing operations increased 18% in 1996 compared to 1995 primarily due to Outlook increases in the market value of its investments. During 1998, EES will continue its focus on commercial Unallocated Expenses. Net unallocated expenses such as rent, systems expenses and other support group and light industrial customers in the energy market, while costs increased in both 1997 and 1996 due to continued developing new energy products and expanding its cus-tomer base. EES also plans to continue its efforts to expansion into new markets and system upgrades.

Improve the regulttory environment for retril gis and Dividends on Comptny-Obligttsd Przferred Securitirs electricity, both on state and federal levels, strengthen its of Subsidiaries marketing and sales organization and continue to enhance Dividends on companymbligated preferred securities its transaction support capabilities. EES expects that 1998 of subsidiaries increased from $32 million in 1995 to $34 losses will approximate those incurred in 1997, million in 1996 and $69 million in 1997, primarily due to the issuance of $215 million and $372 million of addition-Corporate and Other al preferred securities by Enron subsidiaries duririg 1996 Corporate and Other includes results of Enron and 1997, respectively. Company-obligated preferred Renewable Energy Corp., cOTT Energy Corp. (EOTT) and securities of subsidiaries also increased by $29 million at the operations of Enron's methanol and MTBE plants. July 1,1997 for securities of PGE. See Notes 2 and 9 to the Significant components of IBIT are as follows: Consolidated Financial Statements. (in Millions) 1997 1996 1995 Minority Interests IBIT before items impacting comparability $ (3i) $ (22) $ (35) M nority interests increased $31 million to $75 million Gain on sale of 7% of EES shares 61 in 1996 compared to 1995, primarily due to the reduction of Enron's interest in EOG following the sales in 1996 and December 1995 of an aggregate 43 million shares of EOu Charge to ref ect mp f amended J-Block gas contract (675) c mmon stock held by Enron. Charge to reflect depressed MTBE margins on committed production (100) (75) Income Tax Expense Gains on sales of Enron Oil & Gas income tax expense decreased for 1997 as compared Company stock - 178 367 to 1996 primarily as a result of pretax losses due to the non-Reserve for quali0ed facilities recurring charges for the restructuring of Enron's J-Block disposition - (83) contract and for depressed MTBE margins on committed Charge primarily related to conversion production. In addition, the 1997 tax provision was reduced f r differences between the book and tax basis of certain j M e neou s rv s and other items _ (25) 9 asset and stock sales, income tax expense decreased in 1996 g Reported income tafore compared with 1995 as a result of benefits from the reduc-interest and taxes 5(745) $ 48 5164 M tion of the deferred tax liability due to the reevaluation of federal and state deferred tax requirements. During 1997, Enron recorded a non-recurring charge of $675 million, primarily reflecting the impact of Enron's FINANCIAL CONDITION amended J-Block gas contract in the U.K. (see Note 14 to 48 the Consolidated Financial Statements), and a $100 mil-lion charge primarily to reflect depressed MTBE margins Cash Flows on committed production. In 1996 and 1995, respectively, (in Millions) 1997 1996 1995 9ains of $178 milaon and $367 million were recognized, Cash provided by (used in): primarily related to the sale of 12 million and 31 million operating activities 5 501 $ 1,040 $(15) outstanding shares of EOG stock held by Enron.The 1996 Investing activities (2,436) (1,230) 13 results included an $83 million reserve related to the Financing activities 1,849 331 (15) required disposition of certain assets in connection with the merger with Portland General. The 1995 results Net cash provided by operating activities decreased included a $75 million charge to reflect depressed MTBE $539 million in 1997 primarily as a result of a cash payment margins on committed production and $74 million of of $440 million made in connection with the resolution charges primarily related to the conversion of a compen-of the J-Block gas contract. Cash provided by operating sation plan to more closely align employees' interests to activities increased in 1996 primarily as a result of reduced Enron common stock. working capital requirements reflecting increased trade Enron continues to assess and modify its computer payables combined with an increase in the sale of trade systems to ensure they will operate properly in the year receivables under Enron's receivables sales program at 2000. Enron management anticipates that these Year year-end 1996 as compared to 1995. 2000 costs, which will be incurred over the next two Net cash used in investing activities in 1997 prirrarily years, will not have a material impact on Enron's financial reflects increased capital expenditures, which total position or results of operations. $1,413 million. See " Capital Expenditures and Equity Investments" below. Equity investments of $944 million Interest and Related Charges, net in 1997 primarily include investments in international power and pipehne projects. Partially offsetting these 1 Interest and related charges, net, is reported net of uses of cash were proceeds of $473 million from the sales ] interest capitalized of $18 million, $12 million and $10 of assets, primarily from the sales of liquids assets. Net l million for 1997,1996 and 1995, respectively. The net cash used in investing activities in 1996 reflects equity expense increased $127 million in 1997 after decreasing investments of $761 million and capital expenditures of $10 million in 1996. The 1997 increase was primarily due $878 million. Equity investments in 1996 primarily include to higher debt levels, including debt of $1.1 billion from investments in international power and pipeline projects, PGE following the merger on July 1,1997 (see Note 2 to the EOTT and Joint Energy Development investments, L.P. Consolidated Financial Statements). The 1996 decrease (JEDI).These uses of cash were offset by proceeds of $477 was primarily due to lower ave age interest rates com-milli n from sales of assets, including 12 million shares of bined with lowcr average debt balances,

EOG common stock held by Enron and non-strategic Equity investments by the operating segments are as gathering and processing assets. follows: Cash provided by financing activities in 1997 was 1998 7 l generated from net issuances of $1,674 million of short-On Millions) Estimate 1997 1996 1995 l and long-term debt, $372 million of preferred securities Exploration and Production l by subsidiary companies and $555 million of subsidiary Transportation and Distribution 10 3 equity (see Note 7 to the Consolidated Financial M lesale Energy operadons and es e 824 69 143 Statements). These inflows were partia:ly offset by pay-

• " 9 ments of $354 million for cash dividends and $422 million and o er 350 11 108 2

j for the purchase of treasury stock. Primary cash inflows Total l from financing activities during 1996 included $282 mil- - $800 $944 $761 $170 lion from the net issuance of short, and long-term debt. Equity investments increased $183 million in 1997 $215 million from the issuance of oreferred securities by compared with 1996 primarily due to investments by subsidiary companies and $102 million from the issuance Wholesale in Brazilian gas distribution companies. of Enron common stock. Cash outflows included cash The level of spending for capital expenditures and dividend payments of $281 million. equity investments will vary depending upon conditions in the energy markets, related economic conditions and Working Capital identified opportunities. Management expects that the At December 31,1997, Enron had working capital of capital spending program will be funded by a combination $257 million. If a working capital deficit should occur, of internally generated funds, proceeds from dispositions Enron has credit facilities in place to fund working capital of selected assets and short and long-tenn borrowings. requirements. At December 31, 1997, those uedit lines provided for up to $3.7 billion of committed and uncom-FINANCIAL RISK MANAGEMENT mitted credit, of which $35 million was outstanding at December 31,1997. Certain of the credit agreements Wholesnle offers price risk management services contain prefunding covenants. However, such covenants primarily related to commodities associated with the are not expected to materially restrict Enron's access to energy sector (natural gas, crude oil, natural gas liquids and f funds under these agreements, in addition, Enron sells electricity). These services are provided through a variety of commercial paper and has agreements to sell trade financial instruments including forward contracts, which 5 accounts receivable, thus providing financing to meet may involve physical delivery of an energy commodity, h seasonal working capital needs. Management believes swap agreements, which may require payments to (or y that the sources of funding described above are sufficient ~ receipt of payments from) counterparties based on the to meet short-and long-term liquidity needs not met by differential between a fixed and variable price for the - 49 cash flows from operations. commodity, options and other contractual arrangements. interest rate risks and foreign currency risks associated with [ Capital Expenditures and Equity investments the fair vane of its energy commodities portfolio are f Capital expenditures by operating segment are managed in this segment using a variety of financial as follows: instruments, including financial futures, swaps and options. Enron's other businesses also enter into forwards, 1998 swaps and other contracts primarily for the purpose of On Mgen4 _ Estimat.e 1997_ 1996 _1991 hedging the impact of market fluctuations on assets, Exploration and Productions $ 660 5 626 $540 $464 liabilities, production or other contractual commitments. Transportation and Distribution 480 337 175 127 Changes in the market value of these hedge transactions 98 " #

• 9" nd Services 220 339 150 152 Retail Energy Services 70 36 hedged item.

Corporate and Other 70 75 13 34 Management of the market risks associated with its $1,413 $878 $777 portfolio of transactions is critical to the success of Enron. -Total $ t,500 - - ~ ~ - ~ Therefore, comprehensive risk management processes, W teludes ewkyarm expemes of $75 m#mn (estemarel J75 m#on, J68 policies and procedures have been established to monitor m#on and $55 m#cn kr 1998.1997.1996 and 1995. W4 and control these market risks. Enron manages market risk on a portfolio basis, Capital expenditures increased $535 m.llion during i subject to parameters established by its Board of 1997 as compared to 1996. Increased expenditures in Directors. Market risks are monitored by an independent Exploration and Production reflect increased develop-risk control group operating separately from the units ment expenditures in the United States and increased that create or actively manage these risk exposures to property acquisitions in Canada. Transportation and ensure compliance with Enron's stated risk management Distribution expenditures increased due to expansion policies. Enron's fixed price commodity contract portfolio projects by the interstate natural gas pipelines. Included is ty ically balanced to within an annual average of 1% in 1997 in Wholesale were send-or-pay payments totahng of the total notional physical and financial tran< action $167 million related to a transportation agreement m the volumes marketed. United Kingdom. Enron measures the market risk in its portfolios on a daily basis utilizing value at risk and other methodologies. The quantification of market risk using value at risk pro-vides a consistent measure of risk across diverse energy markets and products. The use of these methodologies

) rIquirts a number of ksy Assumptions including the li1bilitirs. Tha vs!ue at risk for commodity, inttrest rate and l selection of a confidence level for expected losses, the foreign currency exposures described above is calculated holding period for liquidation and the treatment of risks using a

• Monte Carlo" simulation of delta / gamma outside the value at risk methodologies, including liquidity positions which captures a significant portion of the risk and event risk. Value at risk represents an estimate of exposure related to option positions. The value at risk for reasonably possible net losses in earnings that would equity exposure discussed above is based on LP. Morgan's be recognized on its portfolios assuming hypothetical RiskMetrics* approach utilizing historical estimates of movements in future market rates; it is not necessarily volatility and correlation. Both value at risk methods utilize indicative of actual results which may occur.

a one-day holding peried and a 95% confidence level. In addition to using value at risk measures, Enron Cross commodity correlations are used as appropriate. performs regular scenario analyses to estimate the The following table illustrates the value at ri;k for economic impact of a sudden market movement on the each component of market risk at December 31,1997: value of its portfolios (stress testing). The results of the l stress testing, along with the professional judgments of (in Milyons) Wholesale Non-trading Market Risk experienced business and risk mariagers, are used to Commodity price 525 59(') supplement the value at risk methodology and capture interest rate additional market-related risks, including liquidity, event, F reign cunency concentration and correlation reliance risk. exchange rate 1 1 Y ~ Market Risk The use of financial instruments by Enron's businesses (a) includes only the nsk related to the hnancial instruments that may expose Enron to market and credit risks resulting sene as hedges and does not include the related undertying

1. 1. d"'*"~

from adverse changes in commodity and equity prices, interest rates and foreign exchange rates. For Enron's price risk management portfolio, the major market risks CAPITALIZATION are discussed below: l Commodity Price Risk. Commodity price risk is a a consequence of providing price risk management services Total capitalization at December 31,1997 was $14.0 billion. Debt as a percentage of total capitalization l to customers as well as owning and operating production increased to 44.6% at December 31,1997, as compared to facilities. As discussed above, Enron actively manages this g 39.8% at December 31,1996. The increase primarily reflects g risk on a portfolio basis to ensure compliance with Enron's increased debt, partially offset by the issuance during 1997 stated risk management policies. Forwards, futures, swaps 50 - and options are utilized to alter Enron's consolidated of approximately 50.5 million and 11.5 million shares of common stock in connection with the acquisitions of exposure to price fluctuations related to production from Portland General Corporation and the minority interest in l Its production facilities. g Interest Rate Risk. Interest rate risk is also a conse. EPP, respectively (see Note 2 to the Consolidated Financial quence of providing price risk management services to Statements). Assuming the conversion in late 1998 of 10.5 customers and having variable rate debt obligations, as million Exchangeable Notes into EOG shares held by Enron, changing interest rates impact the discounted value of the pro-forma debt to caphalization percentage would be future cash flows. Enron utilizes swaps, forwards, futures approximately 43.5% at December 31,1997. and options to minimize its interest rate risk. Foreign Currency Exchange Rate Risk. Foreign INFORMATION REGARDING currency exchange rate risk is the result of Enron's inter. national operations and price risk management services FORWARD LOOKING STATEMENTS provided to its worldwide customer base. The primary purpose of Enron's foreign currency hedging activities is This Annual Report includes forward looking state-to pro'ect against the volatility associated with foreign ments within the meaning of Section 27A of the Securities currency purchase and sale transactions. Enron primarily Act of 1933 and Section 21E of the Securities Exchange utilizes forward exchange contracts, futures and Act of 1934. Although Enron believes that its expectations I purchased options to reduce Enron's risk profile-are based on reasonable assumptions, it can give no assur. Equity Risk. Equity risk arises from the finance and ance that its goals will be achieved. Important f6ctors that investing operations of Wholesale, which provides capital could cause actual results to differ materially from those to customers through equity participation in various in the forward looking statements herein include political investment activities. Enron manages this risk on an over-developments in foreign countries, the ability to pene-all basis, including the use of futures, forwards, swaps and trate new retail natural gas and electricity markets in the options, to ensure compliance with Enron's stated risk United States and Europe, the timing and extent of management policies. changes in commodity prices for crude oil, natural gas, l electricity and interest rates, the extent of EOG's success in Accounting Policies acquiring oil and gas properties and in discovering, devel-Accounting policies for price risk management and oping and producing reserves, the timing and success of hedging activities are described in Note 1 to the Enron's efforts to develop international power, pipeline Consolidated Financial Statements. and other infrastructure projects and conditions of the capital markets and equity markets during the periods Value at Risk covered by the forward looking statements. Enron hn performed an entity-wide value at risk analysis of virtually all of Enron's financial assets and

i Management's Responsibility for Report of Independent Public Financial Reporting Accountants The following financial statements of Enron Corp. To the Shareholders and Board of Directors of Enron and subsidiaries (collectively, Enron) were prepared by Corp.: management, which is responsible for their integrity and objectivity. The statements have been prepared in confor-W have examined management's assertion that the mity with generally accepted accounting principles and synem of internal control of Enron Corp. and its sub-necessarily include some amounts that are based on the sidiaries for the years ended December 31,1997,1996 and best estimates and judgments of management. 1995 was adequate to provide reasonable assurance as to The system of internal controls of Enron is designed the reliability of financial statements and the protection to provide reasonable assurance as to the reliability of of assets against unauthorized acquisition, use or disposi-financial statements and the protection of assets from tion, included in the accompanying report on unauthorized acquisition, use or disposition. This system is Management's Responsibility for Financial Reporting. augmented by written policies and guidelines and the Our examinations were made in accordance with careful selection and training of qualified personnel. It standards established by the American institute of should be recognized, however, that there are inherent Certified Public Accountants and, accordingly, included limitations in the effectiveness of any system of internal obtaining an understanding of the system of internal control. Accordingly, even an effective internal control control, testing and evaluating the design and operating system can provide only reasonable assurance with effectiveness of the system of internal control and such respect to the preparation of reliable financial statements other procedures as we considered necessary in the and safeguarding of assets. Further, because of changes in circumstances. We believe that our examinations provide conditions, internal control system effectiveness may vary a reasonable basis for our opinion. over time. Because of inherent limitations in any system of f Enron assessed its internal control system for the internal control, errors or irregularities may occur and not / years ended December 31,1997,1996 and 1995, relative be detected. Also, projections of any evaluation of the to current standards of control criteria. Based upon this system of internal control to future periods are subject to l assessment, management believes that its system of inter-the risk that the system of internal control may become 3 nal controls was adequate during the periods to provide inadequate because of changes in conditions, or that the reasonable assurance as to the reliability of financial degree of compliance with the policies or procedures may statements and the protection of assets against unautho-deteriorate. [ rized acquisition, use or disposition. In our opin on, management's as:,ertion that the sys-Arthur Andersen LLP was engaged to audit the finan-tem of internal control of Enrore.orp. and its subsidiaries - 51 cial statements of Enron and issue reports thereon. Their for the years ended DecemM 31,1997,1996 and 1995, audits included developing an overall understanding of was adequate to provide reasuable assurance as to the l Enron's accounting systems, procedures and internal con-reliability of financial statements and the protection of i5 trols and conducting tests and other auditing procedures assets against unauthorized acquisition, use or disposition sufficient to support their opinion on the financial state-it fairly stated, in all material respects, based upon current ments. Arthur Andersen LLP was also engaged to examine standards of control criteria. and report on management's assertion about the effectiveness of Enron's system of internal controls. The Reports of independent Public Accountants appear in this l Annual Report. l The adequacy of Enron's financial controls and the accounting principles employed in financial reporting are Arthur Andersen LLP under the general oversight of the Audit Committee of Enron Corp.'s Board of Directors. No member of this com-Houston, Texas mittee is an officer or employee of Enron. The independent February 23,1998 public accountants have direct access to the Audit Committee, and they meet with the committee from time to time, with and without financial management present, to discuss accounting, auditing and financial reporting matters.

~ Report of Independent Public Accountants To the Shareholders and Board of Directors of Enron Corp.: We have audited the accompanying consolidated balance sheet of Enron Corp. (an Oregon corporation) and subsidiaries as of December 31,1997 and 1996, and the related consolidated statements of income, cash flows and changes in shareholders' equity for each of the three years in the period ended December 31,1997. These financial statements are the responsibility of Enron Corp.'s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with,gener-ally accepted auditing standards. Those standar fs require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examin.ng, on a test basis, evidence supporting the amounts and disclo-sures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluat ng the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial f position of Enron Corp. and subsidiaries as of December 5 31,1997 and 1996, and the results of their operations, [ cash flows and changes in shareholders' equity for each of the three ye.rs in the period ended December 31,1997, in 52

• conformity with generally accepted accounting principles.

Arthur Andersen LLP Houston, Texas February 23,1998 i

Enron Corp, and Subsidiaries Consolidated Income Statement Year Ended December 31, (in Millions, except Per Share Amounts) 1997 1996 1995 Revenues Natural gas and other products $13.211 $11,157 $7,529 Electricity. 5,101 980 179 i, Transportation 652 707 692 l Other 1,309 445 789 Total Revenues 20,273 13,289 9,189 Costs and Expenses Cost of gas, electridty and other products 17,311 10,478 6.733 Operating expenses 1,406 1,421 1,218 Oil and gas exploration expenses 102 89 79 Depreciation, depletion and amortization 600 474 432 Taxes, other than income taxes 164 137 109 l Contract restructuring charge 675 Total Costs and Expenses 20,258 12,599 8,571 _ ' Operating income 15 690 618 Other income and Deductions Equity in earnings of unconsolidated subsidiaries 216 215 86 Gains on sales of assets and investments 186 274 467 Other income, net 148 59 (6) Income Before interest, Minority interests and income Taxes $65 1,238 1,165 [ Interest and Related Charges, net 401 274 284 Dividends on Company Obligated Preferred [ - Securities of Subsidiaries 69 34 32 it Minorrty interests 80 75 44 3 Income Tax Expense (Benefit) - (90) 271 285 { Not income 105 584 520 j Preferred Stock Dividends 17 16 16 Earnings on Common Stock 5 88 $ 568 $ 504 _g Earnings Per Share of Common Stock Basic $ 0.32 $ 2.31 $ 2.07 g Diluted $ 0.32 $ 2.16 $ 1.94 g Average Number of Common Shares Used in Computation 8asic 272 246 244 Diluted 277 270 268 The accompanying notes are an integralpart of these consolidated financial statements. l l, l'

Enron Corp. and Subsidiaries Consolidated Balance Sheet I December 31, (in Millions, except Per Share Amounts and Shares) 1997 1996 ASSETS Current Assets Cash and cash equivalents 5 170 $ 256 Trade receivables (net of allowance for doubtful accounts of $11 and $6, respectively)

• 697 1,841 Other receivables 4P4 414 Assets from prke risk rnanagement activities 1.577 841 Other 771 627 Total Current Assets 4,669 3,979 investments and Other Assets

. Investments in and advances to unconsolidated subsidiaries 2,656 1,701 Assets from price risk management activities 1,352 1,632 Goodwill 1,910 87 Other 7665 1,626 Total Investments and Other Assets 9,583 5,046 Property, Mant and Equipment, at cost Exploration and Production, successful eiforts accounting 4,251 3,753 Transportation and Distribution 5,279 3,494 f Wholesale Energy Operations and Services 3,879 3,967 .8 Retail Energy Services - 44 Y. Corporate and Other 249 134 13,742 11,348 Less accumulated depreciation, g depletion and amortization 4,572 4,236 Property, Plant and Equipment, net 7 130 7,112 g. Total Assets $23,422 $16.137 7he accompanying notes are an integralpart of these consolidated financialstatements.

December 31, 1997 1996 LIA8ILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts pay &ble 5 2,119 $ 2,035 LiabWties from price risk management activities 1,476 1,029 Other 817 644 Total Current Liabilities 4,412 3,708 Long-Term Debt 6,254 3.349 Deferred Credits and Other Liabilities Deferred income taxes 2,039 2,290 Liabilities from price risk management activities 1,190 980 Other 1,769 740 Total Deferred Credits and Other Liabilities 4,998 4.010 Commitments and Contingencies (Notes 3,13,14 and 15) Minority Interests 1,147 755 Company %ted Preferred Securities of Subsidiaries 993 592 Shareholders' Equity Second preferred stock, cumulative, no par value and $1 par value, respectively, 1,370,000 shares and 5,000,000 shares l . authorized, 1,337,645 shares and 1,370,714 shares of Cumulative Second Preferred Convertible Stock issued, respectively 134 137 j Common stock, no par value and $0.10 par W f i value, respectively, 600,000,000 shares authorized,318,297,276 shares and - 255,945,304 shares issued, respectively 4,224 26 1,870 Additional paid-in capital - 55 Retained earnings 1,852 2,007 j l-Cumulative foreign currency translation I E adjustment (148) (127) b Common stock held in treasury,7,050,965 shares and 821,155 shares, respectively (269) (30) l ' Other (including Flexible Equity Trust) (175) (160) Total Shareholders' Equity 5.618 3,723 Total Liabilities and Shareholders' Equity 523,422 $16,137 i 4 l \\ I I i l )

Enron Corp, and Subsidiaries Consolidated Statement of Cash Flows Year Ended December 31, (in Millions) 1997 1996 1995 Cash Flows From Operating Activities Reconciliation of net income to net cash provided by (used in) operating activities Net incorne $ 105 $ 584 $ 520 Depreciation, depletion and amortization 600 474 432 Oil and gas exploration expenses 102 89 79 Deferred income taxes (174) 207 216 Gains on sales of assets and investments (195) (274) (530) Changes in components of working capital (65) 142 (834) Net assets from price risk management activities 201 15 (98) Amortization of production payment transaction (43) (43) (43) Other, net (30) (154) 243 Not Cash Provided by (Used in) Operating Activities 501 1,040 (15) Cash Flows From investing Activities Proceeds from sales of investments and other assets 473 477 996 Capital expenditures (1,413) (878) (777) Equity investments (944) (761) (170) Business acquisitions, net of cash acquired (see Note 2) (82) Other, net - (470) (68) (36) Net Cash Provided by (Used in) ci investing Activities (2,436) (1,230) 13 Cash Flows From Financing Activities -g Net increase (decrease) in g short-term borrowings 464 217 (250) Issuance of long-term debt 1,817 359 967 ~ Repayment of long-term debt (607) (294) (448) g._ Issuance of company-obligated preferred securities of subsidiaries 372 215 Issuance of common stock 102 20 Issuance of subsidiary equity 555 Dividends paid (354) (281) (254) Net (acquisition) disposition of treasury stock (422) 5 (64) Other, net 24 8 14 Net Cash Provided by (Used in) tinancing Activities 1,849 331 (15) i increase (Decease) in Cash and Cash Equivalents (86) 141 (17)_ Cash and Cash Equivalents, Beginning of Year 256 115 132 Cash and Cash Equivalents, End of Year 5 170 $ 256 $ 115 Changes in Components of Working Capital Receivables 5 26 $ (678) $ (639) Payables (41) 870 126 Other (50) (50) (321) Total 5 (65) $ 142 $ (834) 7he accompanying notes are an inregral part of these consolidated fonancual statements. m_ _-.-__m-.

Enron Corp. and Subsidiaries Consolidated Statement of Changes in Shareholders' Equity (in Millions, except Per 1997 1996 1995 Share Amounts; Shares in Thousands) Shares Amount Shares Amount Shares Amount Cumulative Second Preferred Convertible Stock Balance, beginning of year 1,371 $ 137 1,375 $ 138 1,405 $ N1 Exchange of common stock for convertible preferred stock (33) (3) (4) (1) (30) (3) Balance, end of year 1,338 $ 134 1,371 $ 137 1,US $ 138 Common Stock Balance, beginning of year 255,945 $ 26 253,860 $ 25 253,070 $ 25 Exchange of common stock for convertible preferred stock 382 19 219 Issuances related to benefrt and dividend reinvestment plans (3) 197 Sales of common stock 2,066 1 374 { issuances of common stock in business acquisitions (see Note 2) 61,970 2,281 Issuance of no par stock in reincorporation merger (see Note 2) 1,881 ) Other 39 l l Balance, end of year 318,297 54,224 255,945 1 26 253,860 $ 25 Additional Paid-in Capital Balance, beginning of year $1,870 $1,791 $1,788 Exchange of common stock ) for convertible preferred stock 1 (1) (3) g Issuances related to benefit 2 and dividend reinvestment plans (9) (16) (5) y Sales of common stock 18 109 15 issuance of no par stock in reincorporation merger (see Note 2) (1,881) y Other 1 (13) (4) ~ Balance, end of year 5 $1,870 $1,791 - 57 Retained Earnings j Balance, beginning of year $2,007 $1,651 $1,351 g l Net income 105 584 520 . y Cash dividends Common stock ($0.9125, $0.8625 and $0.8125 pe. share in 1997, 1996 and 1995, respectively) (243) (212) (204) Preferred stock ($12.4584, $11.7750, l and $11.0922 per share in 1997, 1996 and 1995, respectively) (17) (16) (16) Balance, end of year $1,852 $2,007 $1,651 Cumulative Foreign Currency Translation Adjustment Balance, beginning of year $ (127) $ (153) $ (159) Translation adjustments (21) 26 6 Balance, end of year $ (148) $ (127) $ (153) Treasury Stnck Balance, beginning of year (821) $ (30) (2,618) $ (93) (1,395) $ (41) i l Shares acquired (9,790) (374) (2,226) (85) (3,496) (116) Exchange of common stock for convertible preferred stock 70 3 46 2 183 5 issuances related to benefit and dividend reinvestment plans 2,838 106 2,249 81 2,090 61 Sales of treasury stock 1,728 65 Issuances of treasury stock in business acquisitions (see Note 2) 652 26 _ Balance, end of year (7,051) 5 (269) (821) $ (30) (2,618) $ (93), Other Balance, beginning of year 5 (160) $ (194) $ (225) issuances related to benefit and dividend reinvestment plans (15) 34 30 ~ l 175) ~ ~ 7 560) His B ance, end of year Total Shareholders' Equity $5.618 $3,723 $3,165 The actampanynng notes are an integralpart of these consolidatni finardel statements

Enron Corp. and Subsidiaries assum;d issuince of common shares for all potentially dilu-tive securities. Common shares held by the Enron Corp. Notes to the Conso,idated i pi,,,3i, gq,,,y 7,,,,,,, no, inciug,g in,3, comp,1,1;,n,, Financial Statements eamings per share untii such shares are reieased to fund employee benefits. See Note 10 for additional information and a reconciliation of the basic and diluted earnings per 1

SUMMARY

OF SIGNIFICANT share computations. ACCOUNTING POLICIES Accounting for Price Risk Management Consolidation Policy and Use of Estimates Enron engages in price risk management activities The accour. ting and financial reporting policies of for both trading and non-trading purposes. Financial Enron Corp. and its subsidiaries conform to generally instruments utilized in connection with trad?ng activities accepted accounting principles and prevailing industry are accounted for using the mark-to-market method. practices. The consolidated financial staterr ents include Under the mark-to-market method of accounting, the accounts of all majority-owned subsidiaries of Enron forwards, swaps, options and other financial instruments Corp. after the elimination of significant intercompany with third parties are reflected at market value, net of accounts and transactions. future servicing costs, with resulting unrealized gains and The preparation of financial statements in conformi-losses recorded as " Assets and Wabilities From Price Risk ty with generally accepted accounting principles requires Management Activities" in the Consolidated Balance management to make estimates and assumptioris that Sheet. Terms regarding cash settlements of these affect the reported amounts of assets and liabilities and contracts vary with respect to the actual timing of cash disclosure of contingent assets and liabilities at the date receipts and payments. The amounts shown in the of the financial statements and the reported amounts of Consolidated Balance Sheet related tc, price risk revenues and expenses during the reporting period, management activities also include assets or liabilities Actual results could differ from those estimates. which arise as a result of the actual timing of settlements

• Enron" is used from time to time herein as a related to these contracts. Current period changes in the l

cellective reference to Enron Corp. and its subsidiaries assets and liabilities from price risk management activities g and affiliates. The businesses of Enron are conducted by (resulting primarily from newly originated transactions, M Enron Corp.'s subsidiaries and affiliates whose operations restructuring and the impact of price movements) are l are managed by their respective officers. recognized as net gains or losses in "Other Revenues." The y market prices used to value these transactions reflect Cash Equivalents management's best estimate considering various factors 58 - Enron records as cash equivalents all highly liquid including closing exchange and over-the-counter quota-short-term investments with original maturities of three tions, time value and volatility factors underlying the com-5 months or less. mitments. The values are adjusted to reflect the potential impact of liquidating Enron's position in an orderly manner Depreciation, Depletion and Amortization over a reasonable period of time under present market The provision for depreciation and amortization with c nditions. Prepaid transportation costs are included in

• 0ther Assets" in the Consolidated Balance Sheet.

respect to operations other than oil and gas producing activities is computed using the straight-line or regulatorily Financial instruments are also utilized for non-trading mandated method, based on estimated economic lives. purposes to hedge the impact of market fluctuations Composite depreciation rates are applied to functional on assets, liabilities, production and other contractual groups of property having similar economic characteristics. c mmitments. Hedge accounting is utilized in non-trading The cost of utility property units retired, other than land, activities when there is a high degree of correlation is charged to accumulated depreciation. between price movements in the derivative and the item Provisions for depreciation, depletion and amortiza-designated as being hedged. In instances where the antic-tion of proved oil and gas properties are calculated using ipated correlation of price movements does not occur, the units-of-production method. hedge accounting is terminated and future changes in the value of the financial instruments are recognized as income Taxes gains or losses. If the hedged item is sold, the value of the financial instrument is recognized in income. Gains and Enron accounts for income taxes using an asset ar'd losses on financial instruments used for hedging purposes liability approach under which deferred tax assets and are recognized in the Consolidated income Statement in liabilities are recognized based on anticipatect future tax the same manner as the hedged i+em and are recognized consequen:es attributable to differences between financial in the Consolidated Balance Sheet as "Other Assets" or j statement carrying amounts of assets and liabilities and "Other Liabilities." their respective tax bases (see Note 4). The cash flow impact of financial instruments is l Earnings Per Share Consolidated Statement of Cash Flows. See Note 3 for fur-In accordance with Statement of Financial Accountin9 ther discussion of Enron's price risk management activities. Standards (SFAS) No.12B " Earnings per Share," basic earn-ings per share is computed based upon the weighted-Accounting for Oil and Gas Producing Activities average number of common shares outstanding during the Enron accounts for oil and gas exploration and pro-periods. Diluted earnings per share is computed based upon duction activities under the successful efforts method of j the weighted-average number of common shares plus the accounting. All development wells and related production

l equipment and lease acquisition costs are capitalized a stock-for-stock transaction. Enron issued approximately l when incurred Unproved properties are assessed regularly 11.5 million common shares, valued at $36 09 per share, l and any impairrnent in value is recognized as appropriate. to shareholders of EPP in a ratio of 0.9189 share of Enron l Lease rentals and exploration costs, other than the costs common stock for each EPP share held. Additionally, dur-( of driihng exploratory wells, are expensed as incurred. ing 1997, Enron acquired renewable energy, telecommu-Unsuccessful exploratory wells are expensed when deter-nications and energy management businesses for cash, mined to be non-productive. Enron and subsidiary stock and notes. t l 1ains and losses associated with the sale of natural Enron has accounted for these acquisitions using the j gas and crude oil reserves in place with related assets are purchase method of accounting as of the effective date of l classified as "Other Revenues" in the Consolidated each transaction. Accordingly, the purchase price of each tricome Statement. transaction has been allocated to the assets and liabihties acquired based upon the estimated fair value of those Accounting for Development Activity assets and liabilities as of the acquisition date. The excess Enron capitalizes project development costs which of the aggregate purchase price over estimated fair value l may be recovered through development cos; reimburse-of the net assets acquired, approximately $1.8 billion, has ments from joint venture partners or other third parties, been reflected as goodwill in the Consolidated Financial written off against development fees received or includ. Statements and is being amortized on a straight line basis ad as part of an investment in those ventures in which over 30 to 40 years. Assets acquired, liabihties assumed i Enron continues to participate. Accumulated project and consideration paid as a result of businesses acquired t development costs are otherwise expensed in the period were as follows: that management determines it is probable that the costs will not be recovered, U". W!! "9 _. __ _ _ _ __ _ _ __ _.. _ _ __... I Development revenue results from development Fair value of assets acquired, other than cash $ 3,829 0 fees, recognized when realizable under the development i agreement; long-term construction contracts, recognized o m n5 c o E ron an ubsidiary issued using the percentage-of completion method; and the ~~82' f Net cash paid j operation and ownership of various projects. Proceeds -- f 9 from the sale of all or part of Enron's investment in devel-The allocation of purchase price related to the f3 opment projects are recognized as revenues at the time determination of reserves for certain contractual and of sale to the extent that such sales proceeds exceed the legal contingencies for the PGC merger is preliminary j proportionate carrying amount of the investment. pending completion of Enron's final studies and evalua- [ tions. Enron does not anticipate that the final evaluation Investments in Unconsolidated Subsidiaries of these issues will materially affect the allocation of the - 59 investments in unconsolidated subsidiaries are purchase price. accounted for by the equity method, except for certain The following summary presents unaudited pro ( equity investments resulting from Enron's merchant forma consolidated results of operations as if the business 5 banking activities which are included at market value in acquisitions had occurred at the beginning of each period

• Other investments" in the Consolidated Balance Sheet.

presented. The pro forma results are for illustrative pur-j The valuation methodologies utilize market values of poses only and are not necessarily indicative of the oper-publicly-traded securities, independent appraisals and ating results that would have occurred had the business cash flow analyses. acquisitions been consummated at that date, nar are they .\\ necessarily indicative of future operating results. Reclassifications Certain reclassifications have been made to the con. On Milhons, except Per Share Amounts) 1997 1996 solidated financial statements for prior years to conform Revenues $20.950 $14,401 with the current presentation. Income before interest, mino.-ity interests and income taxes 716 1,511 Net income 181 691 2 BUSINESS ACQUISITIONS Earnings per share Basic 5 0.53 $ 2.20 Effective July 1,1997, Enron merged with Portland Diluted 0.52 2.08 General Corporation (PGC) in a stock for. stock transaction. PGC, through its wholly-owned subsidiary Portland General 3 PRICE RISK MANAGEMENT AND Electric Company (PGE), serves retail electric customers in FINANCIAL INSTRUMENTS northwest Oregon as well as wholesale electricity customers throughout the western United States. Enrsn g l issued approximately 50.5 million common shares, valued Enron, through its Wholesale Energy Operations and I at $36.88 per share, to shareholders of PGC in a ratio of Services segment (Wholesale), offers price risk management 0.9825 share of Enron common stock for each share of services to the energy sector through a variety of financial PGC common stock and assumed PGC's outstanding debt and other instruments including forward contracts involv-of approximately $1.1 billion. It, ;onnection with the ing physical delivery of an energy commodity, swap agree-merger, Enron reincorporated in Oregon and reissued its ments, which require payments to (or receipt of payments capital stock without par value. from) c unterparties based on the differential between a On November 18,1997, Enron acquired the minority fixed and variable price for the commodity, options and interest in Enron Global Power & Pipelines LL.C. (EPP) in ._________a

i l l l other contractual arrangements. Interest rate risks and the terms of their contractual obligations. Enron rnain-foreign currency risks associated with the fair value of the tains credit policies with regard to its counterparties that energy commodities portfolio are managed using a variety management believes significantly minimize overall cred-of financial instruments, including financial futures. it risk. These policies include an evaluation of potential Notional Amounts and Terms. The notional amounts counterparties' financial condition (including credit rat-and terms of these financial instruments at December 31, ing), collateral requirements under certain circumstances 1997 are shown below (volumes in trillions of British ther-and the use of standardized agreements which allow for ( mal units equivalent (TBtue), dollars in millions): the netting of positive and negative exposures associated with a single counterparts. The counterparties associated fixed Price Fixed Price Maximum with assets from price risk management activities as of Payor Receiver Terms in years December 31,1997 and 1996 are summarized as follows: Energy commodities Natural gas 4.515 3,927 26 1997 1996 Crude oil and liquids 3,405 3,169 9 investment Investment Electricity 1,456 2,637 22 (in Mi!! ions) Grade (8) Total Gradeta) Total Financial products independent power Interest rate (8) 54.094 $7,174 25 producers 5 353 $ 529 $ 358 5 461 Foreign currency 3,006 1,950 18 Oil and gas producers 351 529 422 791 Equity investments 972 487 4 Energy marketers /,03 585 466 598 Gas and electric utilities 747 815 495 524 (a) The enterest rate fixed pnce recewer sncludes the net notional Financial institutions 483 486 191 191 dollar value of the interest rate sensitwe component of the combined Industrials 76 128 35 48 commodity porttoho. The remaoning interest rate imed pace recewer and the entire interest rate faed pnce payor represent the notronal Other 137 139 108 109 contract amount of a portfolso of vanous financialinstruments used Total '2,550 3,211 $2.075 2.722 to hedge the net present value of the commodity portfobo. For a Credit and other reserves (282) (249) gwen unit of pnce protection, different finanaalinstruments require Assets from price risk dofferent notionalamounts management activitiesM $2,929 $2,473 l Wholesale includes sales and purchase commitments M ' investment Grade" is pnmanly determined using pubhcly available associated with contracts based on market prices totaling creast ratings along with consideranon of collateral, which encompass 3,725 TBtue, with terms extending up to 18 years. Standby letrers of credit twent company guarantees arkt property onterests, including ori and gas reserves. Included on " Investment Notional amounts reflect the volume of transactions Grade are cotorciparties wrth a msnemum Standard & poor 3 or g~ but do not represent the amounts exchanged by the Moody's rating of 688. or saa3, respectwety parties to the financial instruments. Accordingly, notional (b) One and two customers' exposures at December 31,1991and t996, respectively compnse greater than 5% of Assets from Prrce Risk 60 -~ amounts do not accurately measure Enron's exposure to Management Activstres All are uncluded above as investment Grade market or credit risks. The maximum terms in years detailed j above are not indicative of likely future cash flows as these This concentration of counterparties may impact fa positions may be offset in the markets at any time in Enron's overall exposure to credit risk, either positively or response to the company's risk management needs, negatively, in that the counterparties may be similarly The volumetric weighted average maturity of affected by changes in economic, regulatory or other con-Enron's fixed price portfolio as of December 31,1997 was ditions. Based on Enron's policies, its exposures and its approximately 2.7 years. credit and other reserves, Enron does not anticipate a fair Valve. The fair value of the financial instru-materially adverse effect on financial position or results of ments related to price risk management activities as of operations as a result of counterparts nonperformance. December 31,1997, which include energy commodities and the related foreign currency and interest rate instru-Non-Trading Activities ments, and the average fair value of those instruments Enron's other businesses also enter into swaps and held during the year are set forth below: other contracts priman.ly for the purpose of hedging the impact of market fluctuations on assets, liabilities, pro-Average Fair Value duction or other contractual commitments. Fair Value for the Year Ended ,3 og jyfy3jg7 jyf33fg7c.) interest Rate Swaps. At December 31,1997, Enron (in Millions) Assets Liabilities Assets Liabilities had entered into interect rate swap agreements with a Natural gas $2.173 $1,655 $2,196 $1,538 notional principal amount of $2.8 billion to manage inter. Crude oil and liquids 337 395 323 431 est rata exposure. Swap agreements relating to notional Electricity 641 560 578 423 amounts of $1.0 billion and $1.8 billion are scheduled to Equity 60 56 62 72 terminate in 1998 and thereafter, respectively. Total $3,211 $2,666 $3,159 $2.464 Energy Commodity Price Swaps. At December 31, 1997, Enron was a party to energy commodity price swaps (a) Computed usmg the ending balance at each month end covering 141 TBtu,4 TBtu and 42 TBtu of natural gas for the years 1998,1999 and the period 2000 through 2005, respec-The net gain arising from price risk management tively, and 2 million and 1 million barrels of crude oil for the activities for 1997 was $360 million. years 1998 and 1999, respectively. Credit Risk. In conjunction with the valuation of its Credit Risk. While notional amounts are used to fmancial instruments, Enron provides reserves for risks express the volume of various financial instruments, the associated with such activity, including credit risk. Credit amounts potentially subject to credit risk, in the event of risk relates to the risk of loss that Enron would incur as a nonperformance by the third parties, are substantially result of nonperformance by counterparties pursuant to smaller. Counterparties to forwards, futures and other

contracts are equivilint to investment grade firuncial 4 INCOME TAXES institutions. Accordingly, Enron does not anticipate any material impact to its financial position or results of opera-The components of income before income taxes are tions as a result of nonperformance by the third parties on as follows: financial instruments related to non-trading activities. Enron has concentrations of customers in the electric (In Millions) 1997 1996 1995 and gas utility and oil and gas exploration and production United States $96 1551 $622 industries. These concentrations of customers may impact Foreign (81) 304 183 Enron's overall exposure to credit risk, either positively or $15 $855 $805 negatively, in that the customers may be similarly affected by changes in economic or other conditions. riowever, Enron's management believes that its portfolio of receiv. Total income tax expense (benefit) is summarized ables is well diversified and that such diversification mini-as follows: mizes any potential credit risk, Receivables are generally not collateralized. (In Millions) 1937 1996 1995 Payable currently - Federal $ 29 $ 16 5 29 Financial Instruments State 9 11 26 The carrying amounts and estimated fair values of Foreign 46 37 14 Enron's financial instruments, excluding trading activities 84 64 69 which are marked to market, at December 31,1997 and Payment deferred - 1996 were as follows: Federal (39) 174 158 State (42) (1) 30 1997 1996 Foreign (93) 34 28 Carrying Estimated Carrying Estimated (174) 207 216 (In Millions) Amount Fair Value Amount Fair Value Total income tax expense (benefit) $ (90) $271 $285 Long-term debt (Note 6) $6,254 $6,501 $3,349 $3,508 The differences between taxes computed at the U.S. i; Company-obligated federal statutory tax rate and Enron's effective income tax preferred securities rate are as follows: ) of subsidiaries y (Note 9) 993 1,024 592 607 (In Millions, 5 Interest rate swaps 13 (11) except Percentages) 1997 1996 1995 Energy commodity Statutory federal income (31) (64) tax provision 55 35.0 % 35.0 % 35.0 % - 61 price swaps Net state income taxes (21) (140.0) 0.8 4.5 Enron uses the following methods and assumptions Tight gas sands tax credit (12) (80.0) (1.8) (2.8) [ in estimating fair values: (a) long-term debt - the carry-Equity earnings (38) (253.3) (3.3) (3.8) 5 l ing amount of variable-rate debt approximates fair value, Minority interest 28 186.7 3.1 1.9 the fair value of marketable debt is based on quoted Asset and stock market prices, and the fair value of other debt is based on sale differences (79) (526.7) 1.8 2.1 cash value in life insurance (7) (46.7) (3.2) the discounted prcsent value of cash flows using Enron's Go dwill amortization 9 60.0 current borrowing rates; (b) Company-obligated pre-Other 25 166.7 (0.7) (1.4) l ferred securities of subsidiaries - the f air value is based $@o) (H8.3m 31n 35% 1 on quoted market prices; and (c) interest rate swaps and energy commodity price swaps - estimated fair values The principal components of Enron's net deferred have been determined using available market data and c me tax Hamy are as foh valuation methodologies. Judgment is necessarily required in interpreting market data and the use of December 31 different market assumptions or estimation methodologies (in Millions) 6 97 1996 may affect the estimated fair value amounts. Deferred incorre tax assets-The fair market value of cash and cash equivalents, Alternative minimum tax trade and other receivables, accounts payable, equity credit carryforward $ 247 $ 235 investments accounted for at fair value and equity swaps Net operating loss carryforward 361 78 are not materially different from their carrying amounts. Other _ 218 65 Guarantees of liabilities of unconsolidated entities and 826 378 residual value guarantees have no carrying value and fair Deferred income tax liabilities - values which are not readily determinable (see Note 15). Depredation, depletion and amortization 2,036 1,622 Price risk management activities 457 536 588 638_ Other _3,081 2J96 Net deferred income tax liabilities (8) $2,255 $2,418 (a) Includes $216 mdhan and $128 milhon In other current labohnes for 1997 and 1996, respectwely

Enron his an alternztiva minimum tax (AMT) credit in addition to borrowing from banks on a short-term carryforward of approximately $247 million which can be basis, Enron and certain of its subsidiaries sell commercial used to offset regular income taxes payable in future years, paper to provide financing fo various corporate purposes. l The AMT credit has an indefinite carryforward period. As of December 31,1997 and 1996, short-term borrowings Enron has a consolidated net operating loss carryfor-of $825 million and $298 million, respectively, have been ward for federal tax purposes of approximately $745 reclassified as long-term debt based upon the availability million which will begin to expire in 2011. Enron has a net of committed credit facilities with expiration dates operating loss carryforward applicable to non-U.S. sub-exceeding one year and management's intent to maintain sidiaries of approximately $300 million that can be carried such amounts in excess of one year subject to overall forward indefinitely. The benefits of these net operating reductions in debt levels. Similarly, at December 31,1997 losses have been recognized as a deferred tax asset. and 1996, $462 million and $175 million, resp?ctively, of U.S. and foreign income taxes have been provicbd lonC-term debt due within one year remained classified as for earnings of foreign subsidiary companies that are long-term. Weighted average interest rates on short-term expected to be remitted to the U.S. Foreign subsidiaries' debt outstanding at December 31,1997 and 1996 were cumulative undistributed earnings of approximately $300 6.0% and 7.0%, respectively. million are considered to be indefinitely reinvested out-Detailed information on long-term debt is as follows: side the U.S. and, accordingly, no U.S. Income taxes have been provided thereon. In the event of a distribution of December 31, those earnings in the form of dividends Enron nay be (in Millions) 1997 1996 subject to both foreign withholding taxes and U.S. Snron Corp. Debentures Income taxes net of allowable foreign tax credits. 6.75% to 8.25% due 2005 to 2012 5 350 $ 350 Notes p.yable 5 SUPPLEMENTAL CASH FLOW INFORMATION 6.25% - exchangeable notes due 1998 228 228 6.45% to 10.00% due 1998 to 2023 2,492 1,542 \\ Cash paid for income taxes and interest expense, Floating rate notes due 1999 to 2037 35n including fees incurred on sales of accounts receivable, is Other 67 4 { as foilows: Northern Natural Gas Company g Notes payable

(

(In Millions) 1997 1996 1995 6.875% to 8.00% due 1999 to 2005 350 350 l Income taxes (net of refunds) f68 $ 89 $li Transwestern Pipelire Company interest (net of amounts capitalized) 420 290 296 Notes payable a 7.55% to 9.20% due 1998 to 2004 150 150 During 1997, Enron issued common stock in connec-Portland General Electric Company t.'on with business acquisitions. See Note 2. First mortgage bonos in March 1995, a subsidiary of Enron Oil & Gas 5.65% to 9.46% due 1998 to 2023 564 y Pollution control bonds l Company (EOG) issued redeemable preferred stock with a variable rate due 2010 to 2031 192 liquidation / redemption value of $19 million in exchange Other 172 for certain oil f nd gas properties. These preferred shares Enron Oil & Gas Company were exchanged in 1995 for 633,333 shsres of Enron's Notes payable common stock. Floating rate notes due 1998 to 2001 120 190 5.44% to 9.10% due 1998 to 2007 390 210 6 CREDIT FACILITIES AND DEBT Enron Europe um;ted Other 37 41 Enron has credit facilities with domestic and foreign Amount reclassified from short-term debt 825 298 banks which provide for an aggregate of $1.5 oillion in Unamortized debt discount and premium _56,254_$3,349 (33) (14) long-term committed credit and $1.4 billion in short-term Total long-term debt committed credit. Expiration dates of the committed facil-ities range from May 1998 to June 2002. Interest rates on The indenture securing PGE's First Mortgage Bonds borrowings are based upon the London interbank constitutes a direct first mortgage lien on substantially Offered Rate, certificate of deposit rates or other short-all electric utility property and franchises, other than term interest rates. Certain credit facilities contain expressly excepted property. covenants which must be met to borrow funds. Such debt The Enron 6.25% Exchangeable Notes are mandato-covenants are not anticipated to materially restrict tily exchangeable in December 1998 into shares of EOG Enron's ability to borrow funds under such facilities. common stock at a specified exchange rate or, at Enron's Compensating balances are not required, but Erron is option, for cash with an equal value. Enron currently required 9 pay a commitment or tacility fee. During intends to satisfy the exchange obligation with shares of 1997, $25 mil! ion was outstanding under these facilities. EOG common stock. Enron has also entered ;nto grcements which pro-The aggregate annual maturities of long-term debt vida for uncommitted lines of credit totaling $817 million outstanding at December 31,1997 were $462 million, at December 31,1997. The uncommitted lines have no stat- $508 million, $161 million, $664 millio 1 and $180 million ed expiration dates. Neither compensating balances nor for 1998 through 2002, respectively. commitment fees are required as borrowings under the uncommitted credit lines are available subject to agree-ment by the participating banks. At December 31,1997, $10 mill;on was outtanding under the uncommitted lines.

7 MINORITY INTEIEST Enron's equity in earnings (losses) of unconsolidated subsidiaries is as follows: Enron's minority interest primarily includes EOG and EPP prior to Enron's acquisition of the EPP mino6ity inter-(in Millions) 1997 19 % 1995 est in November 1997 (see Note 2). Citrus Corp. 5 27 $ 22 $ 27 Also in 1997, Enron and a third party investor Compania Estadual de Gas do contributed approximately $579 million and $500 million, P,io de Janeiro, S.A. 1 I respectively, for interests in an Enron-controlled joint EOTT Energy Partners, L.P. (2) 9 (23) Jo n En g oprnent venture. The joint venture purchased 250,000 shares of p 68 71 4 l juruor convertible preferred stock from Enron and made Teesside Power Limited 20 29 18 demand loans to Enron. Each share of junior convertible Transportadora de Gas del Sur 5 A. 45 29 22 preferred stock has a cumulative, market-based dividend, Transredes Transporte is convertible at the option of the holder (currently the de Hidrocarburos 5.A. 5 l Enrorrcontrolled joint venture) initially into 100 shares Other 52 55 38~ l of Enron stock, subject to certain adjustments, and has a 72iG $215 5 86 l liquidation value of $4,000 per share, subject to certain adjustments. The joint venture is a separate legal entity Summarized combined financial information of i from Enron and has separate assets and liabilities. Enron's unconsolidated subsidiaries is presented below: l Absent certain defaults or other specified events, Enron has the option to acquire the investor's interest in the December 31, ' joint venture. If Enron does not acquire the investor's (In Milliorv.) 1997 1996 interest before December 2002, or earlier upon certain Balance sheet ~ specified events, the joint venture will liquidate its assets Current assets $2,481 $2,587 and dissolve. The joint venture is included in Enron's Property, plant and equipment, net 8,851 8,064 Other noncurrent assets 1,356 902 consolidated financial statements and the third-party Current liabilities 1,855 2,381 investor's investment in the joint venture is included in ng-tenn 5, 3 5, 0 minority interest. Other noncurrent liabilities 1,295 1,139 2 Owners' equity 4,304 2,803 lll r t 8 UNCONSOUDATED SUBSIDIARIES W . h h Enron's investment in and advances to unconsolidated (in Millions) 1997 19 % 1995 subsidiaries, which are accounted for on the equity income statement method, are as follows: Operating revenues $11,183 $11,676 $8,258 - 63 l Operating expenses 10,246 10,567 7,335 Ownership December 31, Net income 336 464 226 ( (in Millions) Interest 1997 19 %~ Distributions paid to Enron ~ 68 84 68 dtrus Corp 38) 50 % $ 432 $ 405 ~~ Compania Estadual de Gas do Rio de Janeiro, S.A.(b) 25% 194 EOTT Energy Partners, L P. (EOTT)M 49 % 143 130 1 Joint Energy Development l l Investments L.P. (JEDI)(bW) 50 % 392 320 Teesside Power Limited (b) 50%M 151 106 i Transportadora de Gas del Sur S.A.(b) 35% M2 188 i Transredes Transporte de Hidrocarburos SMb) 25% 137 Other 735 552 52,656 $1,701 1 (a) facluded m the Transportation and Ostnbution segment. Ib) included in the Wholesale Energy Operatons and kswces segment. (c) Included in the Corporate and Other segment. . (d)JEDIaccounts forits investments at fair value (e) Net of trunanty inteests the ownership a 31% l, I l 4 l l I 1 1 i

9 PREFERRED STOCK-10 COMMON STOCK Preferred Stock _ Earnings Per Share ) Following Enron's reincorporation in Oregon on July 1, The computation of basic and diluted earnings per 1997, Enron has authorized 16,500,000 shares of preferred share is as follows: stock, no par value. At December 31,1997, Enron had out-standing 1,337,645 shares of Cumulative Second Preferred (in Millions, Year Ended December 31, Convertible Stock (the Convertible Preferred Stock), no Except Per Share Amounts) 1997 1996 1995 Numerator; par value. The Convertible Preferred Stock pays dividends Net income 5105 $ 584 $ 520 at an amount equal to the higher of $10.50 per share or Preferred stock dividends (17) (16) (16) the equivalent dividend that would be paid if shares of Nun 1 erat r f r basic earnings per the Convertible Preferred Stock were converted to com- '"'*****"I mon stock. Each share of the Convertible Preferred Stock common shareholders 88 568 504 is convertible at any time at the option of the holder Effect of dilutive securities: thereof into 13.652 shares of Enron's common stock, subject Preferred stock dividends (a) 16 16 to certain adjustments. The Convertible Preferred Stock is Numerator for diluted earnings currently subject to redemption at Enron's option at a per share - income available to price of $100 per share plus accrued dividends. During common shareholders after 1997,1996 and 1995, 33,069 shares, 4,780 shares and assumed conversions 5 88 $ 584 $ 520 29,489 shares, respectively, of the Convertible Preferred Denominator: Stock were converted into common stock. Denommator for basic earnings per share weighted-average shares 272 246 244 Effect of dilutive securities: Company-Obligated Preferred Securities of Subsidiaries Preferred stockf*) 19 19 Summarized information for Enron's Compane Stock options 5 5 5 Obligated Preferred Securities of Subsidiaries is as follows: Dilutive potential common shares 5 24 24 Denominator for diluted earnings per l Liquidation share - adjusted weighted-aveoge (in Millions, except Per _ December 31, Value shares and assumed conversions 277 270 268 Share A_ mounts and Shares) 1997 1996 Per Share Basic earnings per t. hare 50.32 $2.31 $2.07 Enron Capital LLC Diluted earnings per share 50.32 $2.16 $1.94 g 8% Cumulative Guaranteed ~ g~ Monthly income Preferred (a) For 1997, the divedends and conversoon of preferred stod have been Shares (MIP5} excluded from the computation because et is antadilutive ~ (8,550,000 shares)(a) 5214 $214 $ 25 Forward Contracts and Options f Enron Capital Trust 1 At December 31,1997, Enron had forward contracts 8.3% Trust Originated to purchase 6.7 million shares of Enron Corp. common Preferred Securities stock at an average price of $42.00 per share. Enron may (8.000,000 preferred securities)(*) 200 200 25 settle the forward contracts in cash or an equivalent value f Enron common stock until April 2001. Shares potentially Enron Capital Trust il deliverable to the counterparts under the contracts are 8.125% Trust Originated assumed to be outstanding in calculating diluted earnings Preferred Securities (6,000,000 preferred securities)(a) 150 25 Per share, in 1997, Enron granted options to EOG to purchase Enron Capital Trust ti; 3.2 million shares of Enron common stock (exercise price of Adjustable-Rate Capital $39.1875) in connection with certain agreements between Trust Securities Enron and EOG. The options vested 25% immediately with (200,000 preferred securities)M 200 1,000 15% vesting in 1998 and the remainder vesting equally in 1999 through 2004. Enron Equity Corp. 8.57% Preferred Stock (880 shares)(a) 88 88 100,000 7.39% Preferred Stock (150 shares)(axo 15 15 100.000 Enron Capital Resources, LP. 5% Cumulative Preferred Securities, Series A (3,000,000 preferred securities)(a) 75 75 25 CMher 51 l $993 $592 (a) Redeemable under certain circumstances after speafned dates (b) Mature on 2046. k) Mandarortly redeemable on 2006-

r-- - - - - - - - - --- - - - - - - - - - - - - - - ' - - - - - - - - - - - - - - - ~ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Stock Optian Plins The fair value of each option grant is estimated on Enron 4.pplies Accounting Principles Board (APB) the date of grant using the Black-Scholes option-pricing Opinion 25 and related interpretations in accounting for model with weighted ~ average assumptions for grants in its stock option plans. In accordance with APB Opinion 25, 1997,1996 and 1995, respectively: (i) dividend yield of no compensation expense has been recognized for the 2.5%, 2.3% and 2.4%; (ii) expected volatility of 17.4%, fixed stock option plans. Compensation expense charged 23.8% and 24.3%;(iii) risk-free interest rates of 5.9%,5.9% against income for the restricted stock plan for 1997,1996 and 6.4%; and (iv) expected lives of 3.7 years,4.0 years and 1995 was $14 million, $4 million and $2 million, and 3.7 years. respectively. Had compensation cost for Enron's stock Enron has four fixed option plans (the Plans) under option compensation plans been determined based on which options for shares of Enron's common stock have the fair value at the grant dates for awards under those been or may be granted to officers, emplores and non- { plans consistent with 5FAS No.123 " Accounting for employee members of the Board of Directors. Options Stock-Based Compensation," Enron's net income and 9 ranted may be either incentive stock options or non-earnings per share would have been $66 million ($0.18 quahfied stock options and are granted at not less than per share basic, $0.18 per share diluted) in 1997, $562 mil. the fair market value of the stock at the t...le of grant. lion ($2.22 per share basic, $2.07 per share diluted) in The Plans provide for options to be granted with a stock 1995, and $514 million ($2.05 per share basic, $1.92 per appreciation rights feature; however, Enron does not share diluted) in 1995. presently intend to issue options with this feature. Under Because the 5FAS No.123 method of accounting has the Plans, Enron may grant options with a maximum term l not been applied to options granted prior to January 1, of 10 years. Options vest under varying schedules. 1995, the resulting pro forma compensation cost may not Summarized information for Enron's Plans is as be representative of the pro forma amounts to be folI0W5: l expected in future years. I ___ _.199 1996 1995 [ Average Average Average g l Exercise Exercise Exercise E (Shares in Thousands) Shares Price Shares Price Shares Price Outstanding, beginning of year 25,476 532.69 22,493 $29.02 24,246 $27.38 h GrantedW 17,658 38.63 7,370 39.71 2,971 34.27 ? l Exercised (2,165) 41.06 (3,615) 24.41 (3,137) 20.91 [ l Forfeited (1,514) 35.25 (749) 31.66 (1,586) 29.89 Expired _ 26) 34.59 (23) 30 65 (1) 23.42 - 65 ( Outstanding, end of year 39,429 $35.77 25,476 $32.69 __22,493 $29.02 Exercisable, end of year 21,252 533.55 12,883 $30.65 9,599 $26.11 ? Available for grant, end of year (b) 13,0a7 6,505 7,831 [ ,_eighted average fair value of options _ granted $7.10 $9.44 $7.86 W i l (a) Includes 1,768.074 shoes issued in connection with business acqursstrans drscussed on Note 2. (b) includes up to 12,246,040 sharet 5.232,218 shares and 5,209,620 shares as of December 31,1997,19% and 1995, respectwely which rnay be issued enther as resrnctedstod orpursuar:t to stock options. The following table summarizes information about stock options outstanding at December 31,1997 (shares in thousands); Options Outstanding Options Exercisable Weighted Average Weighted Weighted Number Remaining Average Number Average Range of Outstanding Contractual Exercise Exercisable Exercise Exercise Prices at 12/31/97 Life Price at 12/31/97 Price $ 9.13 to $ 29.75 5,421 5 years $24.17 5,044 523.86 30.13 to 34.75 10,143 6 years 31.56 5.798 31.67 i 35.38 to 39.88 11.397 8 years 37.59 5,239 37.86 40.00 to 45.00 12,468 7 years 42.55 5,171 42.79 $ 9.13 to $45.00 39,429 7 years $35.77 21,252 533.55 i d

Restricted Stock Plan The measurement date of the Enron Plan and the Under Enron's Restricted Stock Plan, participants may ESOP is September 30, and the measurement date of the Portland General Plan is December 31. The funded status be grantad stock without cost to the participant. The as of the valuation date of the Enron Plan, the Portland shares issued under this plan vest to the participants at General Plan and the ESOP reconciles with the amount various times ranging from immediate vesting to vesting detailed below which is included in "Other Assets" on the at the end of a five-year period. The following summa. Consolidated Balance Sheet. rizes shares of restricted stock under this plan: (Shares in Thousands) 1997 1996 1995 (In_ M@io_n_s)__ _ _ _ _ _ 1997 _ 1996 _ l Outstanding, beginning of year 825 159 194 Actuarial present value of accumulated Granted 2,088 1,772 45 benefit obligation Issued (321) (1,062) (70) Vested 5(552) $(301) Forfeited or expired (55) (44) (10) Nonvested (20) (4) Additional amounts related Outstanding, end of year 2.537 825 159~ to projected wage increases (45)_ _ 5) ( Available orirard,'end of'yelr ~ 12.246' 5,232 5.210 f Weighted average fair value of Projected benefit obligation _(617) (310) _ Plan assets at fair value<a) _ 727 _ 315 _ restricted stock granted $38.26 $37.04 $31.36 Plan assets in excess of pr jected benefit obligation 110 5 Flexible Equity Trust (the Trust) Unrecognized net loss 34 46 In December 1993 Enron established the Trust to Unrecognized prior service cost 35 36 fund a portion of its obligations arising from its various Unrecognized net asset at transition (24) (30) employee compensation and benefit plans. Enron issued Contributions 1 7.5 million shares of common stock to the Trust in Prepaid pension cost at Decemb_er 31 5 155 _$ _58_ exchange for cash and an interest bearing promissory \\ note. The note held by Enron is reflected as a reduction of Discount rate 7.25 % 7.5 % shareholders' equity. During 1997,1996 and 1995, respec. Long-term rate of return on assets (b) 10.5 % \\ tively, 258,658 shares, 2,233,867 shares and 1,049,403 Rate of increase in_ wages (c) 4.0% shares were released to fund employee benefits. (a) Includes plan assers of the ESOP of $ 135 molhon and $ 137 mdiron for

l the years I997 and 1996. respectweiy 11 RETIREMENT BENEFITS PLAN AND ESOP (b)long.rerm rate of rerum on assets is assumed to be 10 5% for the f

Enron Plan and 9 0% for the Port:and Ceneral Plan (c) Rate of oncrease on wages is assumed to be 4 0% for the Enron Plan y Enron maintains a retirement plan (the Enron Plan) and o 0% to 9 5% for the Portland General Plan which is a noncontributory defined benefit plan covering 00 ~ substantially all employees in the United States and cer-Assets of the Enron Plan and the Portland General tain employees in foreign countries. The benefit accrual is Plan are comprised primarily of equity securities, fixed g g in the form of a cash balance of 5% of annual base pay income securities and temporary cash investments. It is beginning January 1,1996. Prior to 1996, the benefit for-Enron's policy to fund all pension costs accrued to the mula was based on final average pay and years of service. extent required by federal tax regulations, Portland General has a noncontributory defined l benefit pension plan (the Portland General Plan) covering 12 BENEFITS OTriER THAN PENSIONS substantially all of its employees. Benefits under the Plan are based on years of service, final average pay and cov-Enron provides certain medical, life insurance and ered comper.sation. dental benefits to eligible employees and their eligible Enron also maintains a noncontributory employee dependents. Benefits are provided under the provisions of stock ownership plan (ESOP) which covers all eligible contributory defined dollar benefit plans. Enron is cur-employees. Allocations to individual employees' retirement rently funding that portion of its obligations under its accounts within the ESOP offset a portion of benefits postretirement benefit plans which are expected to be earned uncar the Enron Plan. All shares included in the recoverable through rates by its regulated pipelines and ESOP have been allocated to the employee accounts. At electric utility operations. Decembe r 31,1997 and 1996,13,508,794 shares and Enron accrues these postretirement benefit costs 15,976,195 shares, respectively, of Enron common stock over the service lives of the employees expected to be were held by the ESOP, a portion of which may be used to eligible to receive such benefits. Enron is arrortizing the offset benefits under the Enron Plan. transition obligation which existed at January 1,1993 The components of pension expense are as follows: over a period of approximately 19 years. (in Millions) 1997 1996 1995 Service cost - Denefits earned during the year 5 22 $14 $1 Interest cost on projected benefit obligation 32 23 21 Actual return on plan assets (84) (34) (32) Amortization and deferrals 42 9 9 Pension expense _(income) 512] $ 12 [ $ (1)

Th2 following itble sets forth the plan's funded the economic effects of regulation and, accordingly, status reconciled with the amounts reported in the Enron has recorded regulatory assets and liabili ies relat-t Consolidated Balance Sheet, ed to such operations. The regulated pipelines operations' net regulatory (In Millions) 1997 1996 assets at December 31,1997 and 1996, respectively, were Actuarial present value of accumulated $283 million and $312 million, which included transition postretirement beneht obligatic.n (APBO) costs incurred related to FERC Order 636 of $41 million Retirees $(121) $(126) and $86 million. The regulatory assets related to the FERC Fully eligible active plan participants (5) (2) Order 636 transition costs are scheduled to be primarily otal A O ~( 8 - recovered from customers by the end of 1998, while the ma n ng aysets are expected to be recovered over vary-Plan assets at fair value 54 15 ing time penods. APBO in excess of plan assets (94) (129) Unrecognized transttion obligation 62 66 The electric utility operations' net regulatory assets Unrecognized prior service costs 22 20 at December 31, ta97, were $561 million. Based on rates 6 33 in place at December 31,1997, Enron estimates that it will Unrecognized net loss '5~(4)~~$ (10)~ collect the majority of these regulatory assets within the Accrued postretirement benefit obligation-- next 10 years and substantially all of these regulatory Discount rate 7.25 % 7.5% assets within the next 20 years. Long-term rate of return on assets, before taxes (a) 7.5% Pipeline Operations Health care cost trend rate (b) 11.0 % Enron's regulated pipelines have all successfully com-40 tong-term rare or return on assers before rames as assumed to be pleted their transitions under FERC Order 636. Any future i 5% for the fnron assets and 9 5% for the Portland Generalassers transition costs not recoverable through the pipelines' (b) Heatrh care cost trend rate is assumed to be 8 0% for Entorn and 75% for Forrland General These rares are assumed to decrease to FERC tariffs are not expected to be substantial. S 0% by 2003 Electric Utility Operations The components of net periodic postretirement On September 2,1997 and December 1,1997, pur-f benefP expense are as follows: suant to the OPUC's condition to its approval of the Enron/PGC merger, PGE submitted to the OPUC a /$ (in Millions) 1997 1996 1995 Customer Choice Plan and rate case to open its service ter- [ $ ritory to competition. This plan will separate PGE's poten-f Service costs 52 $1 51 Interest costs to 10 9 tially competitive businesses, primarily the generation of electricity, from its regulated businesses and allow cus- - 67 os r re en nef ense $i ]Q tomers to choose their energy provider. The separation of the generation business is proposed to be accomplished [ A 1% increase in the health care cost trend rate hse g generadng am, eh M an Enmn ah 6 would have the effect of increasing tne APBO and the net late or third parties. Enron is unable to predict what periodic expense by approximately $9 million and $1 mil-changes may be required by the OPUC for approval or lion, respectively. when the OPUC will approve a Customer Choice Plan. Additionally, Enron maintains various incentive PGE is a 67.5% owner of the Trojan Nuclear Plant based compensation plans for which participants may (Trojan). In March 1995, the OPUC issued an order autho-receive a combination of cash, restricted stock or stock rizing PGE to recover all of the est, mated costs of decom-i options based upon the achievement of certain perfor-missi ning Trojan and 87% of its remaming investment in mance goals. the plant. At December 31,1997, PGE's regulatory asset "'**7 58 " 13 RATES AND REGULATORY ISSUES $488 million. Amounts are to be collected over Trojan's original license period ending in 2011. As discussed in Rates and regulatory issues related to certain of Note 14, the OPUC's order and the agency's authority to Enron's natural gas pipelines and its electric utility opera-grant recovery of the Trojan investment under Oregon tions are subject to final determination by various regula-law are being r.hallenged in state courts, tory agencies. The domestic interstate pipeline operations Enron believes, based upon its experience to date are regulated by the Federal Energy Regulatory and after considering appropriate reserves that have been 1 Commission (FERC) and the electric utility operations are established, that the ultimate resolution of pending regu-regulated by the FERC and the Oregon Public Utilities latory matters will not have a material impact on Enron's Commission (OPUC). As a result, these operations are sub-financial position or results of operations. ject to the provisions of SFAS No. 71, " Accounting for the Effects of Certain Types of Regulation," which recognizes i ) 1 I l l

i 13 LITIGATION AND CTHER CONTINGENCIES On June 3,1997, the London Commercial Court ruled in favor of the " CAT 5" parties in their dispute over the Enron is a party to various claims and litigation, the availability of the CATS (Central Area Transmission significant items of which are discussed below. Although System) transportation facilities. The CATS parties sued no assurances can be given, Enron believes, based on its Teesside Gas Transportation Limited (TGTL), an Enron sub-experience to date and after considering appropriate sidiary, and Enron (on the basis of its guarantee of TGTL's reserves that have been established, that the ultimate res-obligations under the transportation agreement between olution of such items, individually or in the aggregate, TGTL and the CATS parties) for allegedly failing to make will not have a materially adverse impact on Enron's quarterly " send-or-pay" payments under the transporta-financial position or its results of operations. tion agreement. TGTL had refused to make these pay-l ments based upon its position that the transportation facilities were not available as required by the contract. Litigation The effect of the Court's decision is that TGTL has released In 1995, several parties (the Plaintiffs) filed suit in Harris County District Court in Houston, Texas, against withheld

• send-or-pay" payments to the CATS parties in the amount of approximately 81 million Pounds Sterling, Intratex Gas Company (intratex), Houston Pipe Line P us interest and costs. The judgment has no effect on the l

Company and Panhandle Gas Company (coHectively, the Enron Defendants), each of which is a wholly-owned sub. above referenced settlement of the J-Block gas sales sidiary of Enron.The Plaintiffs were either sellers or roy. agreements. Enron is appealing the decision of the London Commercial Court in the CATS litigation. Enron alty owners under numerous gas purchase contracts with believes that the ultimate resolution of this matter will intratex, many of which have terminated. Early in 1995, the case was severed by the Court into two matters to be not have a materially adverse effect on its financial posi-tion or results of operations. tried (or otherwise resolved) separately. In the first mat. On November 21,1996, an explosion occurred in or ter, the Plaintiffs alleged that the Enron Defendants com-mitted fraud and negligent misrepresentation in connec. around the Humberto Vidal Building in San Juan, Puerto tion with the " Panhandle program," a special marketing Rico. The explosion resulted in fatalities, bodily injuries program established in the early 1980s. This case was tried and damage to the building and surrounding property. in October 1P96 and resulted in a verdict for the Enron San Juan Gas Company, Inc. (San Juan), an Enron sub-g sidiary, operates a natural gas distribution system in the Defendants. In the second matter, the Plaintiffs allege = 3 that the Enron Defendants violated state regulatory vicinity. Although San Juan did not provide gas service to l requirements and certain gas purchase contracts by fail, the building, the investigation report of the National ing to take the Plaintiffs' gas ratably with other produc. Transportation Safety Board (NTSB) has tentatively con-g~ ers' gas at certain times between 1978 and 1988. The ciuded that the incident was caused by gas leaking from 68 - court has certified a class action with respect to ratability San Juan's distribution system. San Juan and Enron claims. The Court of Appeals has affirmed the trial court's strongly disagree with the NTSB findings principally [ order granting class certification. An appeal to the Texas because the NTSB investigation (i) found no path of i5 Supreme Court will be pursued. The Enton Defendants migration of gas from San Juan's system to the building, deny the Plaintiffs' claims and have asserted various affir. and (ii) discovered no scientific evidence that propane gas mative defenses, including the statute of limitations. The was the explosive fuel. Enron and San Juan have been named as defendants in a number of lawsuits filed in U.S. Enron Defendants believe that they have strong legal and District Coart for the district of Puerto Rico and factual defenses, and intend to vigorously contest the Commonwealth courts of Puerto Rico. These suits, which claims. Although no assurances can be given, Enron believes that the ultimate resolution of these matters will seek damages for wrongful death, personal injury, busi-not have a materially adverse effect on its financial posi. ness interruption and property damage, allege that negli-tion or results of operations. gence of Enron and San Juan caused the explosion. Enron On June 2,1997, Enron announced the resolution of and San Juan are vigorously contesting the claims. all contractual issues involving the J-Block contract in the Although no assurances can be given, Enron believes that the ultimate resolution of these matters will not have a U.K. North Sea with the J-Block producers, Phillips Petroleum Company United Kingdom Limited, BG materially adverse eff ect on its financial position or results Exploration & Production Limited and Agip (U.K.) of operations. Limited.The J Block contracts are long-term gas contracts that an Enron subsidiary entered into in March 1993 with Trojan Nuclear Plant the J-Block producers. As consideration for amending the in early 1993, PGE ceased commercial operation of contract Enron made a cash payment of approximately Trojan. Since plant closure, PGE has committed itself to a $440 million to the producers. Enron recorded a second safe and economical transition toward a decommissioned quarter non-recurring contract restructuring charge of plant. PGE has received approval of its decommissioning $675 million ($463 million after tax), primarily reflecting plan submitted to the Nuclear Regulatory Commission the impact of the amended contract. Such resolution and Oregon Energy Facilities Siting Council. PGE's concluded all J-Block litigation between Enron end the remaining cost to decommission and close Trojan of $313 J-Block producers. million has been reflected in "Other Liabilities" in the Consolidated Balance Sheet. I 1 Q l

Tr jtn inv stmInt Ricovsry 15 COMMITMENTS in April 1996 a circuit court judge in Marion County, Oregon, found that the OPUC could not authorize PGE to Firm Transportation Obligations collect a return on its undepreciated investment in Trojan, Enron has firm transportation agreements with vari-contradicting a November 1994 ruling from the same court. ous joint venture pipelines. Under these agreements, Enron The ruling was the result of an appeal of PGE's 1995 gen-must make specified minimum payments each month. At eral rate order which granted PGE recovery of, and a return December 31,1997, the estimated aggregate amounts of on,87% of its remaining investment in Trojan. such required future payments were $100 million, $114 mil-1 The 1994 ruling was appealed to the Oregon Court lion, $118 million, $122 million and $133 million for 1998 of Appeals and stayed pending the appeal of the through 2002, respectively, and $942 million for fater years. Commission's March 1995 order. Both PGE and the OPUC The costs recognized under firm tr3nsportation } have separately appealed the April 1996 ruling, which agreements, including commodity charges on actual appeals were combined with the appeal of the November quantities shipped, totaled $27 miliior, $25 million and 1994 ruling at the Oregon Court of Appeals. $18 million in 1997,1996 and 1995, respectively. Enron Enron believes that the authorized recovery of and has assigned firm transpo-tation contracts with two of its return on the Trojan investment and decommissioning joint ventures to third parties r.nd guaranteed minimum costs will be upheld and that these legal challenges will not payments under the contraas averaging approximately have a materially adverse impact on its financial position or $36 million annually through 2001 and $3 million in 2002. results of operations. Other Commitments Environmental Matters Enron leases property, operating facilities and equip-Enron is subject to extensive federal, state and local ment under various operating leases, certain of which environmental laws and regulations. These laws and regu-contain renewal and purchase options and residual value lations require expenditures in connection with the con-guarantees. Future commitments related to these items at struction of new facilities, the operation of existing facilities December 31,1997 were $142 million, $117 million, $114 and for remediation at various operating sites. The imple-million, $63 million and $46 million for 1998 through mentation of the Clean Air Act Amer dments is expected to 2002, respectively, and $228 million for later years. [ result in increased operating expenses. These increased Guarantees under the leases total $1,029 million at 3 operating expenses are not expected to have a material December 31,1997. 5 impact on Enron's financial position or results of operations. Total rent expense incurred during 1997,1996 and l The Environmental Protection Agency (EPA) has 1995 was $156 million, $149 million and $147 million, g informed Enron that it is a potentisily responsible party at respectively. the Decorah Former Manufactured Gas Plant Site (the Enron guarantees certain tong-term contracts for the - 69 Decorah Site) in Decorah, Iowa, pursuant to the provisions sale of electrical power and steam from a cogeneration of the Comprehensive Environmental Response, facility owned by one of Enron's equity investees. Under [ Compensation and Liability Act (CERCLA, also commonly terms of the contracts, which initially extend through I l known as Superfund). The manufactured gas plant in June 1999, Enron could be liable for penalties should, I Decorah ceased operations in 1951, A predecessor compa-under certain conditions, the contracts be terminated ny of Enron purchased the Decorah Site in 1963. Enron's early. Enron also guarantees the performance of certain predecessor did not operate the gas plant and sold the of its unconsolidated subsidiaries in connection with Decorah Site in 1965. The EPA alleges that hazardous sub-letters of credit issued on behalf of those unconsolidated stances were released to the environment during the period subsidiaries. At December 31,1997, a total of $278 million ) in which Enron's predecessor owned the site, and that of such guarantees were outstanding, including $92 mil-1 Enron's predecessor assumed the liabilities of the company lion on behalf of EOTT. In addition, Enron is a guarantor that operated the plant. Enron contests these allegations. on certain liabilities of unconsolidated subsidiaries and The EPA is interested in determining whether materials other companies totaling approximately $873 million, from the plant have adversely affected subsurface soils at including $402 million related to EOTT trade obligations. the Decorah Site. Enron has entered into a consent order The EOTT letters of credit and guarantees of trade obliga-with the EPA by which it has agreed, although admitting tions are fully secured by the assets of EOTT. Enron has also no liability, to replace affected topsoil and remove guaranteed $486 million in lease obligations for which it impacted subsurface soils in certain areas of the tract has been indemnified by an

• Investment Grade" company.

j where the plant was formerly located. To date, the EPA Management does not consider it likely that Enron would j has identified no other potentially responsible parties be required to perform or otherwise incur any losses asso-j with resoect to this site. Enron believes that expenses ciated with the above guarantees. In addition, certain j l incurred in connection with this matter will not have a commitments have been made related to 1998 planned j l materially adverse effect on its financial position or results capital expenditures and equity investments. l of operations. l l l l l 1

16 QUARTERLY FINANCIAL DATA (UnDudited) Sumrnarized quarterly financial data is as follows: First Serond Third Fourth Total (in Millions, Except IW Share Amounts) Quarter Quarter Quarter Quarter Year 1997-Revenues $5,344 $3.251 $5,806 $5,872 $20,273 income (loss) before interest, minority interests and income taxes 429 (548) 311 373 565 Net income (loss) 222 (420) 134 169 105 Earnings (loss) per share: Basic $ 0.88 $ (1.71) $ 0.44 $ 0.55 $ 0.32(*) Diluted 0.81 (1.71) 0.42 0.53 0.32(*) 1996 Revenues $3,054 $2,961 $3,225 $4,049 $13,289 income before interest, minority interests and income taxes 415 265 262 2% 1,238 Net income 213 117 123 131 584 Earnings per share: Basic $ 0.86 $ 0.46 $ 0.48 $ 0.52 $ 2.31(*) 0.80 0.43 0.45 0.48 2.16(*) _ Diluted (a) The sum cr eamings per share for the four quartes may not equal eamings per share for the totalyear due to changes in the average number of common shares outstanding. Addetoonallp: certain items in the diluted earrungs per share romputatron were antrJilutive in the second quarter and totalyear 1997. 17 GEOGRAPHIC AND BUSINESS Geographic Segments T SEGMENT INFORMATION Year Ended December 31, g Enron's operations are classified into the following (in Millions) 1997 1996 1995 ' business segments: operating revenues from 70 - Exploration and Production - Natural gas and crude unaffiliated customers United States $17,328 $11,262 $ 7,855 oil exploration and production primarily in the United States Canada, Trinidad and India. Foreign 2.945 2,027 1,33_4_ $20,273 $13,289 $ 9.189 E Transportation and Distribution - Interstate trans-Intersegment sales rnission of natural gas. Management and operation of pipelines. Electric utility operations. n 97, Wholesale Energy Operations and Services-Energy g,,, $ ynn g 3g3 commodity sales and services, risk management products operating income (loss) and financial services to ' wholesale customers. United 5tates 5 173 $ 490 $ 487 Development, acquisition and operation of power plants, Foreign (158) 200~$ 6Tli 131 natural gas pipelines and other energy related assets. 15 $ 650 Retail Energy Services-Sale of natural gas and elec-Income (loss) before interest, tricity directly to end use customers, particularly in the minority interests and commercial ano light industrial sectors. income taxes Corporate and Other-includes operation of renew. United States $ 601 $ 938 $ 969 able energy businesses and clean fuels plants, as well as Foreign (36) 300 196 $ 565 $ 1,238 $ 1,165 Enron's investment in crude oil transportation activities. identifiable assets Enron's business segment information has been reclassified from prior years to reflect the realignment of p,"r 3 86 7 Enion's operations. Financial information by geographic $20.766 $14,436 $12.022 and business segment follows for each of the three years in the period ended December 31,1997. i -_a_______

Business Segments Wholesale Exploration Transportation Energy Retail Corporate &nd and Operations Energy and (In_ Millions) Production Distribution and Services Services Other(0 Total 1997 Unaffiliated revenuesW $ 789 $ 1,402 $ 17,344 $ 683 $ 55 $ 20,273 Intersegment revenuesM 108 14 678 2 (802) Total revenues 897 1,416 18,022 685 (747) 20,273 l Depreciation, depletion and amortization 278 160 133 7 22 600 Operating income (loss) 185 398 376 (105) (839) 15 Equity in earnings of unconsolidated subsidiaries 40 172 (1) 5 216 j Other income, net (2) 142 106 (1) 89 334 l Income (loss) before interest, minority interests and income taxes 183 580 654 (107) (745) 565 [ Capital expenditures 626 337 339 36 75 1,413 j Identifiable assets 2,668 7.115 9,531 322 1,130 20,766 Investments in and advances to - unconsolidated subsidiaries. $21 _ 1,932 _ 203 2_,656_ Total assets $ 2.668 $ 7,636 $ 11,463 $322 $ 1,333 $ 23,422 19 % ( Unaffiliated revenuesta) $ 647 $ 702 $ 11,413 $ 513 $ 14 $ 13,289 l . Intersegment revenuesM 177 23 491 15 (706) Total revenues 824 725 11,904 5i8 (f92) 13,289 Depreciation, depletion and amortization 251 66 138 19 474 Operating income (loss) 205 337 287 (139) 690 Equity in earnings of l f unconsolidated subsidiaries 35 168 12 215 175 333 g Other income, net (5) 152 11 income before interest, minority interests 1 and income taxes 200 524 466 48 1,238 l* 13 878 Capital expenditures 540 175 150 k ~T371 2,363 8,879 823 14,436 Identifiable assets 2 investments in and advances to l unconsolidated subsidiaries 516 1,005 180 1,701 ~M Total assets $ 2,371 $ 2,879 $ 9,884 $ 1,003 $ 16,137 1995 l Unaffiliated revenuesW $ 481 $.758 $ 7,531 $400 $ 19 $ 9,189 5 Intersegment revenuesM 278 55 166 (499) Total revenues. 759 813 7,697 400 (480) 9,189_ Depreciation, depletion and amortization 216 82 132 2 432 Operating income (loss) 240 279 291 (192) 618 Equity in earnings of unconsolidated subsidiaries 46 64 (24) 86 Other income, net 1 34 46 380 461 Income before interest, minority interests and income taxes 241 359 401 164 1,165, 34 777 Capital expenditures _ 464 1_27 152 909 12.022 l . Identifiable assets 2,067 2,305 6,741 Investments in and advances to 97 1,217 unconsolidated subsidiaries 495 625 $ 1,006 $ 13,239 . Total assets 1 2,067 $ 2,800 $ 7,366 (a) Unaffiheted revenues hclude sales to unconsohdated subsidianes. ? M kutersegment saks are made at pnces comparable to those recewed tm*n unaffiliated customers and in some Instances are affected by regulatory considerations. (c) bcludes consohdatong eliminations. 1

18 COL AND GAS PRODUCING ACTIVITIES (Unaudited except for Results of Operations for Oil and Gas Producing Activities) The following information regarding Enron's oil and gas producing activities should be read in conjunction with Note 1.This information includes amounts attributable to a minority interest of 45%,47%,39% and 20% at December 31,1997,1996,1995 and 1994, respectively. Capitalized Costs Relating to Oil and Gas Producing Activities (~ December 31, l (In Millions) 1997 1996 Proved properties 5 4,070 $ 3,593 Unproved properties 221 160 Total 4,291 3,753 Accumulated depreciation, depletion and amortization (1,904) (1,653) ' 2,106' ~~ ~,387 $2 Net capitalized costs I ) Costs incurred in Oil and Gas Property Acquisition, Exploration and Development Activities (8) _1,n Millions) United States Foreign Total ( 1997 Acquisition of properties Unproved 5 69 $ 8 $ 77 Proved 43 38 81 ~ Total 112 46 158 l E Exploration 74 27 101 { Development 333 109 442 y Total $519 $182 $701 g 19 % g Acquisition of properties ~ Unproved $ 39 $ 6 $ 45 Proved 69 69 72 Total 108 6 114 Exploration 61 27 88 g Development 283 123 406 z ~ _ Total $452 $156 $608 1995 Acquisition of properties l Unproved $ 16 $ 6 $ 22 1 Proved 123 5 128 i Total 139 11 150 / Exploration 48 25 73 Development 217 79 296 Total $404 $115 $519 (a) Costs have been categonzed on the basis of financh! Accounting Standards Board dehnstoons which include costs of oil and gas producing actwi-tres whether capetehred or charged to expense as incurred.

Results cf Operations (Ir Oil gnd Gis Producing ActivitiJs(*) The following tables set forth results of operations for oil and gas producing activities for the three years in the period ended December 31,1997: (in Millions) United States Foreign. Total 1997 Operating revenues Associated companies $207 5 15 5222 Trade 449 160 609 Gains on sales of reserves and related assets 4 .5 _ 9_ Total 660 _ 180 840_ Exploration expenses, including dry hole costs 51 24 75 J Production costs 106 43 149 I impairment of unproved oil and gas properties 24 3 27 Depreciation, depletion and amortization 23, 39 278 income before income taxes 240. 71 311 income tax expense 6 40 109 ,_Results of operations $17 5 31 $202 1996 Operating revenues Associated companies $253 $ 14 $267 l Trade 282 153 435 Gains on sales of reserves and related assets 19 1 20 Total 554 168 722 Exploration expenses, including dry hole costs 45 23 68 Production costs 77 42 119 Impairment of unproved oil and gas properties 19 2 21 g Depreciation, depletion and amortization 209 42 251 2 Income before income taxes 2M 59 263-Income tax expense 54 39 93 0 Results of operations $150 $ 20 $170 h T995 g~ j Operating revenues l Associated companies ' $224 $ 7 $231 73 Trade 122 124 246 Gains on sales of reserves and related assets 63 63_ g Total 409 131 540 g Exploration expenses, including dry hole costs 35 20 55 i l, Production costs 64 32 96 Impairment of unproved oil and gas properties 22 2 24 Depreciation, depletion and amortization 181 35 216 income before income taxes 107 42 149 income tax expense 1 29 30 Results of operations $106 $ 13 $119 ta) Excludes net revenues assoaated wsth other marketing actrvities. Interest charges, general corporate expenses and certain gathenng and handhng fees whKh art not part of reQUWed disclosures abOut oil and gas prodVOng BCtIVitW5.

Oil and Gas Reserve Information staff, in addition, the deep Paleozoic reserves were cov ered by the opinion of DeGolyer and MacNaughton at The following summarizes the pebcies used by Enron December 31, 1995. All reports by DeGolyer and l in preparing the accompanying oil and gas supplemental MacNaughton were developed utilizing geological and reserve disclosures, Standardized Measure of Discounted engineering data provided by Enron. The standardized measure of discounted future net Future Net Cash Flows Relating to Proved Oil and Gas Reserves and reconciCation of such standardized measure cash flows does not purport, nor should it be interpreted, from period *o period. to present the fair market value of Enron's crude oil and Estimates of proved and proved developed reserves natural gas reserves. An estimate of fair value would also I at December 31,1997,1996 and 1995 were based on take into account, among other things, the recovery of studies peric,rmed by Enron's engineering staff for reserves not presently classified as proved reserves, antic-reserves in the United States, Canada, Trinidad and India. ipatert future changes in prices and costs and a discount Opinions by DeGolyer and MacNaughton, independent factor more representative of the time value of money and the risks inherent in reservc estimates. petroleum consultants, for the years ended December 31,1997,1996 and 1995, covering producing areas, in Enron's presentation of estimated proved oil and gas the United States and Canada, containing 54%,64% and reserves excludes, for each of the years presented, those 60%, respectively, of proved rese ves, excluding deep quantities attrib itable to future deliveries required Paleozoic reserves, of Enron on a net-equivalent-cubic. under a volumetric production paymer% in order to cal-culate such amounts, Enron has assumed that deliveries feet-of-gas basis, indicate that the estimates of proved reserves prepared by Enron's engineering staff for the under the volumetric production payment are made as properties reviewed by DeGolyer and MacNaughton, scheduled at expected British thermal unit factors, and when compared in total on a net-equivalent-cubic-feet. that delivery commitments are satisfied through delivery of gas basis, do not differ by more than 5% from those of actual volumes as opposed to cash settlements, prepared by DeGolyer and MacNaughton's engineering 2 Standardized Measure of Discounted Future Net Cash " lows Relating to Proved Oil and Gas Reserves 5 S (in Millions) United States Foreign Total 1997 ~ Future cash inflowsW 5 5,187 52,994 5 8,181 74 - Future production costs (1,138) (836) (1,974) Future development costs (313) (124) (437) g Future net cash flows before income taxes 3,736 2,034 5,770 E Future income taxes (888) (810) (1,698) Future net cash flows 2,848 1,224 4,072 Discount to present value at 10% annual rate (1,298) (473) (1,771) Standardized measure of discounted future net cash flows relating to proved oil and gas reservesW 51,550(b) 5 751 5 2,301(b> 1996 Future cash inflowsW $ 9.391 $2,288 $11,679 Future production costs (1,640) (856) (2,496) Future development costs (306) (10) (316) Future net cash flows before income taxes 7,445 1,422 8,867 Future income taxes (2,260) (572) (2,832) Future net cash flows 5,185 850 6,035 Discount to present value at 10% annual rate -(2,693) ~~ (2,966)~ ' ~ ~ Standardized measure of discounted future net cash flows relatir g ~ (273) to proved oil and gas reservesW $ 2,492(b) $ 577 $ 3,069(b> 1995 Future cash inflowsW $ 3,996 $1,294 5 5,290 Future production costs (747) (558) (1,305) Future development costs (298) (24) (322) Future net cash flovu before ncome taxes 2,951 712 3,663 Future income taxes (696) (233) (929) Future net cash flows 2,255 479 2,734 Discount to present value at 10% annual rate (1,015) (134) (1,149) $ standardized measure of discounted future net cash flows relating to proved oil and gas reservesW $ 1,240(b) $ 345 $ 1,585 b> t m) Based on pur-end market pnces determined at the poont of dehvery from rhe producing unit (b) bcludes $ 18 mdhar, $75 mdkon and $36 mahon at December 31,1997,1996 and 1995. respectwly assavated wrth a volumetnc produaron pay-ment sold eHective Octoberl.1992, as amended, to be delivered over a 78 month penod begrnnung Oc*3ber 1, i192

• Changes in Standardized Measure of Discounted Future Net Cash Flovvs (In Millions)

United States Foreign Total December 31,1994 $ 963 $281 $ 1,244 Sales and transfers of oil and gas produced, net of production costs (268) (99) (367) Net changes in prices and production costs 12 (35) (23) Extensions, discoveries, additions and improved recovery, net of related costs 376(8) 138 514(8) Development costs incurred 29 5 34 l Revisions of estimated development costs 1 33 34 Revisions of previous quantity estimates 6 5 11 Accretion of discount 97 38 135 Net change in income taxes (133) (25) (158) Purchases of reserves in place 194 194 Sales of reserves in place (54) (1) (55) Changes in timing and other _ 17 ._5 22 December 31,1995 .$1,240(*) _ ..$ 345 .$1,585(*) Sales and transfers of oil and gas produced, net of production costs (437) (126) (563) Net changes in prices and production costs 1,817 172 1,989 Extensions, discovenes, additions and improved recovery, net of related costs 381 275 856 Development costs incurred 58 4 62 Revisions of estimated development costs (14) 12 (2) Revisions of previous quantity estimates 7 79 86 Accretion of discount 137 47 184 Net change in income taxes (656) (191) (847) j Purchases of reserves in place 162 162 / Sales of reserves in place (103) (3) ',106) Changes in timing and other (300) (37) ~ ' $3,069(*) (337) k December 31,1996 ~ $2,492(af ~ ~ ~ - '577 g Sales and transfers of oil and gas produced, net of production costs (519) (132) (651) { Net changes in prices and production costs (1,664) (50) (1,714) y Extensions, discoveries, additions and improved recovery, { net of related costs 374 300 674 l - Development costs incurred 52 2 54 I-75 Revisions of estimated development costs 4 (28) (24) Revisions of previous quantity estimates (17) 26 9 Accretion of discount 328 89 417 g Net change in income taxes 606 (67) 539 5 Purchases of reserves in place 44 53 97 Sales of reserves in place (29) (29) Changes in timing and other (121) (19) (140) December 31,1997 ~ 51.550'*F '5751 52,30dai (a) Includes awroxtrnate& $86 m:11mrt $344 rndkon and $17 rrution related to the reserves m the B9 nney deep Palextuc formatens at December 31, 1997,19% and 1995, respwtively

yye-Reserve Quantity informatiott Enron's estimates of proved developed and net proved reserves <>f uude oil, condensate, natural gas liquids and natural gas and of changes in net proved reserves were as follows: United States Foreign Total Net proved developed reserves Natural gas (8cf) December 31,1994 1,128.2(*) 494.5 1,622.7(*) . December 31,1995 1,218.1(*N 544.0 1,762.1(axb) December 31,1996 1,325.7(*W 814_3 2,140.0(*Xb) December 31,1997 1,349.0'8N 986.3 2,335.38N Liquids (MBbi)k) December 31,1994 16,770(*) 19,087 35,857(*) December 31,1995 19,977(*) 23,654 43,631(*) December 31,1996 24,868(a) 26,411 51,279(*) December 31,1_997 _. _ _._2 7_,70_7(a)._ - ._39..,1_08 _. _66,815(*) _. Net proved reserves at December 31,1994 1,307.4(*) 532.1 1,839.5(*) Revisions of previous estimates 10.1 (19.9) (9.8) Purchases in place 174.8 174.8 Extensions, discoveries and other additions 1,391.6(b) 190.6 1,582.2(b) l Sales in place (38.1) (1.7) (39.8) { (66.7) (258.4) l Production (191.7) ~634I4 3,288.5( )(b) I ~,654.1(a)(b) 2 Net proved reserves at December 31,1995 i Revisions of previous estimates 3.6 76.7 80.3 Purchases in place 100.6 0.9 101.5 Extensions, discoveries and other additions 256.8 264.5 521.3 [ Sales in place (58.4) (4.3) (62.7) U Production (210.2) (81.5) (291.7) N Net proved reserves at December 31,1996 ~ ~,746.56N 890.7 3,637.2(*W 2 h-Resisions of previous estimates (50.8) 23.2 (27.6) g Purchases in place 60.0 67.6 127.6 Extensions, discoveries and other additions 275.9 299.0 5 /4.9 76 - Sales in place (17.7) (0.4) (18.1) P oduction (229.1) (84.6) (313.7) y Net proved reserves at December 31,1997 2,784.8 1,195.5 3,980.3 Liquids (MBbi)k) L Net proved reserves at Decernber 31,1994 17,787 19,251 37,038 f Revisions of previous estimates (413) 4,919 4,506 j Purchases in place 4.264 4,264 Extensions, discoveries and other additions 8,703 4,625 13,328 Sales in place (1,241) (9) (1,250) Production (3,701) (3,789) (7,490) / Net proved reserves at December 31,1995 ~25,399' ~ ~ ~ ~24,997 ~ ~ ~ ~ 50,396 Revisions of previous estimates 339 2,026 2,365 Purchases in place 312 2 314 Extensions, discoveries and other additions 7,103 3,779 10,882 Sales in place (447) (121) (568) Production (3,830) (4,272) (8.102) Net g, roved resuves at December 31,1996 28,876 26,411 55,287 Revisions of previous estimates 3,515 213 3,728 Purchases in place 127 1,123 1,250 Extensions, discoveries and other additions 6,037 21,713 27,750 Sales in place (1,683) (1,683) Production (5,223) (3,458) (8,681) M P'O.ved_ reserves at December 31,1997, 31,,6[ ] ~46,002 [ 77,651 (a) Eachodes apprtwmately 21 Bc138 Bcf 54 Bd and 7i Bcf at December 31,1997,1996 1995 and 1994 respectwely, assoaared w:th a volumetnc production payment sold effeawe Oaober 1,1992, as amended to be debered twr a 78 rrmath penod beginntng October 1,1992. j (b) Includes 1,180 Oct remred to net proved deep Paleroic natural nas reserv?s (c) Includes crude onl, condensate and natural gas houds l l

Board )f Directors 'j P'*f"k@ 9 i y } ijg k. s j [ ;,j: f h '5 .'g jj T.' ; g -j$ 'i ,? 3-s 1 f a W .j A 3 , f:. f ..a , y .y .i; eA 4 <y s' 4q. V 4 m 4 jy-k \\ 4 / ~ / l /; \\ 'E. T ^ ) ,8 f E _ 77 -.mdaA Front row (left to right, touching bar): John A. Urquhart, Wendy L. Gramm, Kenneth L Lay Jeffrey K. Skilkng, Herbert 5. Winokur, Jr., and ? Ronnie C. Chan. Back row (left to right). ken L. Harreon, John H. DurKan, Bruce G. Wilhson, Charts E. Walker, John Wakeham, Jerome J. Meyer, j Norman P. Blake, Jr., Robert K. Jeedicke, Charles A. LeMaestre, Joe H. Foy and Robert A. Belfer. Robert A. Belfer "' Wendy L Gramm "" Jerome J. Meye "" Bruce G. Willison "" \\ New York, New York Washington, D.C. Wilsonville, Ore..,o trwindale, California \\ Former President and Former Chairman, U.S. Chairman and CEO, President and COO, Home ( Chairman, Belco Petroleum Commodi*y Futures Trading Tektronix, Inc. Savings of America \\ Corporation Commissa,n Jeffrey K. Skilling "' Herbert S. Winokur, Jr. ""' Norman P. Blake, Jr. "* Ken L Harrison Houston, Texas Greenwich, Connecticut Baltimore, Maryland Portland, Oregon President and COO, President, Winokur & Chairman, President and Vice Chairman, Enron Corp., Enron Corp. Asscciates, Inc., and Former CEO, United States Fidelity and Chairman and CEO, '"I' and Guaranty Company Portland Gene al Electric John A' Urquhart "' Central Corporation Fairfield, Connecticut Ronnie C. Chan "" Vice Chairman, Enron Corp., Hong Kong Robert K. Jaedicke "* President, John A. Urquhart

• Executive Committee Chairman, Hang Lung Stanford, California A sociates, and Former
• Audit Committee Development Company Former Dean, Craduate Senior Vice President of
• Finance Committee Limited School of Business, Stanford Ir dustrial and Power
• Compensation Committee John H. Duncan "*
• niesity Systems, ennal Electric
• Nominating Corr.:nittee Company Houston, Texas Kenneth L Lay ",
• Denotes Committee Former Chairman of the Houston, Texas John Wakeham as Chairman Executive Coramittee of Chairman and CEO, London, England Gulf & Western industries, Enron Corp.

Former U.K. Secretary of State for Energy and Leader Charles A. LeMaistre ",,, f the House of Lords Joe H. Foy "' Houston, Texas Houston, Texas President Emeritus, Charis E Walker "" Retired Senior Partner, University of Texas. Potomac, Maryland Bracewell & Patterson, and M.D. Anderson Chairman, Walker & and Former President Cancer Center Wallier, LLC, and former and COO, Houston Natural Deputy Secretary of the Gas Corporation U.S. Treasury

Enron Management Conmittee J. Clifford Baxter Rodney L. Gray Gene E. Humphrey Kenneth D. Rice Senior Vice President, Executive Vice President. Vice Chairman, ECT North Chairman and CEO, ECT Corporate Development, Enron international Amenca North America Enron Corp. Kevin P. Hannon Steven J. Kean Edmund P. Segner, til* Richard A. Causey President and COO, ECT Senior Vice President, Vice Chairman and Chief of Senior Vice President, Chief North America Governntent Affairs, Enron Staff, Enron Oil & Gas Accounting, Information Corp. Company Ken L. Harrison and Administrative Officer, V ce Chairman, Enron Corp., Mark E. Koenig Jeffrey K. Skilling and Chairman and CEO, Senior Vice President, President and COO, Enron James V. Derrick, Jr. Portland General Electric Investor Relations, Enron Corp. Senior Vice President and Corp. Jose h M. Hirko Jose h W. Sutton General Counsel, Enron Senior Vice President, Kenneth L. Lay President and COO, Enron Corp. Enron Corp., and Chairman and CEO, Enron International Andrew S. Fastow President and CEO, Corp. Elizabeth A. Tilney Senior Vice President, Enron Communications Rebecca P. Mark Senior Vice President, Finance, Enron Corp. Forrest E. Hoglund* Chairman and CEO, Enron Advertising, Peggy Y. Fowler Chairman and CEO, Enron international Communications and President and COO, Oil & Gas Company Organization Development, p Portland General Electric Enron Corp. Stanley C. Horton Chairman and CEO, Enron Mark A. Frevert Chairman and CEO, Enron Energy Services John A. Urquhart President and CEO, ECT Gas Pipeline Group Vice Chairman, Enron Corp. Mark G. Papa

• Europe and Enron Europe g

President and COO, Enron Thomas E. White Ltd. g Oil & Gas Company Chairman and CEO, Enron Ventures Corp /Enron Renewable Energy Corp. l U

• Ad hoc 78 -

Ei Principal Corporate Officers Kenneth L Lay Steven J. Kean Melissa A. Becker Robert J. Hermann Chairman and CEO Senior Vice President, Vice President, Vice President and General G mmnent Maks Mrategic inWaWes Tax Counsel Jeffrey K. Skilling President and COO Mark E. Koenig Robert H. Butts E. Joseph Hillings Sen r Vice President, Vice President and Vice President, Federal Ken L. Harrison investor Relations Controller Government Affairs Terence H. Thorn Rebecca C. Carter Peggy B. Menchaca 9"

• Senior Vice President and Vice President and Chief Vice President and Vice Cha.irman Chief Environmental Officer Contr?l Officer Secretary J. Clifford Baxter Elizabeth A.Tilney Dennis W. Daniels Cindy K. Olson Senior Vice President, Senior Vice President, Vice President Vice President, Corporate Corporate Development j

Advertising, Organization Development, Affairs l Richard A. Causey Communications and Training, Recruitment and Lou. E. Potempa is Senior Vice President, Chief Organization Development Labor Relations J e H. Allen Janice M. Dupuy rporate De elopment d i t is Vice President, State Vice President, Work Force Paula H. Rieker James V. Dernck, Jr. Government Affairs Diversity p Senior Vice President and L. Diane Bazelides William D. Gathmann Investor Relations Vice President, Public Vice President, Finance and Rex R. Rogers Andraw S. Fastow Relations Treasurer Vice President Senior Vice President, Philip J. Bazelides Alberto Gude, Jr. and Associate Vice President, Vice President, Information General Counsel Finance Joseph M. Hirko Compensation, Benefits and Systems Mary S. Wyatt Senior Vice President Human Resource 5 Vice President, information Services Administration

• Principal Operating Officers EXPLORATION AND Rockford G. Meyer ENRON EUROPE John B. Echols PRODUCTION President, Florida Gas Senior Vice President and Mark A. Frevert Transmission Company CFO President and CEO, ECT ENRON OIL & GAS E. G. Parks Europe and Enron Europe C. Michael Harris COMPANY Senior Vice President, Ltd.

Senior Vice President, Finance Business Services - Danny J. McCarty Forrest E. Hoglund Managing Director and Chairman and CEO PORTLAND GENERAL COO Lee A. Jestings Mark G. Papa ELECTRIC Senior Vice President, President and COO Business Services - Energy Ken L Harrison NNM WOW Edmund P. Sagner, lil Daniel P. Leff Chairman and CEO Rebecca P. Mark Senior Vice President, Vice Chairn.n and Chief of Staff Peggy Y. Fowler Chairman and CEO Business Services - President and COO Devel pment Dennis M. Ulak Joseph W. Sutton Chairman and CEO, Alvin L Alexanderson President and COO Mark S. Muller EOG international Senior Vice President, Rodney L Gray General Counsel and A " ey B. Sherrick Executive Vice President, Presdent and COO, Secretary F nancial Management Martin Sunde EOG international Fred D. Miller Kurt S. Huneke Lewis P. Chandler, Jr. Senior Vice President, Public Managing Director, ~ Senior Vice President, Law Policy and Administrative Asset Management Victoria T. Sharp / Services Vice Pres dent and General Barry Hunsaker, Jr. Tod A. Lindholm l' p Counsel Senior Vice President and Senior Vice President and /2 General Counsel Senior Vice President, Chief Accounting and iI ! Power Supply Systems Officer Loren M. Leiker Steven N. Elliott 5enior Vice President, Jere C. Overdyke, Jr. NEW BUSINESSES 5 Exploration Managing Director, Vice President and CFO Capital and Trade Services ENRON RENEWABLE 79 Senior Vice President and David W. Shields ENERGY CORP. l General Manager, Midland Senior Vice President and jg Thomas E. White a Chief of Staff l William R. Thomas WHOLE5 ALE ENERGY Chairman and CEO ! d I Senior Vice President OPERATIONS AND Robert H. Walls, Jr. and General Manager. SERVICES Senior Vice President and Richard G. Barsky Corpus Christi General Counsel Vice Chairman, Solar Kenneth C. Karas Walter C. Wilson ENRON CAPITAL & Vice Chairman, Wind Senior Vice President TRADE RESOURCES - ENRON VENTURES CORP. and CFO s NORTH AMERICA Thomas E. White ENRON Kenneth D. Rice Chairman and CEO Chairman and CEO COMMUNICATIONS Philip J. Hawk TRANSPORTATION AND Kevin P. Hannon President and CEO, EOTT Ken L Harrison DISTRIBUTION President and COO Chairman Lawrence L Izzo Gene E. Humphrey President, Enron J05ePh M. Hirko ENRON GAS PIPELINE Vice Chairman Engineering & Construction President and CEO John C. Gorman Stanley C. Horton Chairmari, President and James S. Prentice Chairman and CEO CEO, ECT-Canada Presidenc, Clean Fuels William R. Cordes Amanda K. Martin President, Northern Natural President, Energy and RETAIL ENERGY SERVICES Gas Company and Finance Services Transwestern Pipeline Mike S. McCor.nell company ENRON ENERGY SERVICES President, Houston Pipe Larry L DeRoin Line Company and Lou L Pai Presider.t, Northern Plains Louisiana Resources Chairman and CEO Natural Gas Company Company James P. Badum Senior Vice President, Consumer Services

Marketing Contacts Corporate Headquarters Northern Natural Gas Houston Pipe Line Retail Energy Services Houston, Texas Omaha, Nebraska Louisiana Resources (800) 880-INFO (713) 853-6161 (402) 398-7110 Company (800) 880-4636 New Businesses Exploration and Transwestern Pipeline ~ 9 Production Houston, Texas Amoco/Enron Solar l Enron Oil & Gas Company (713) 853-1796 Enron Europe Houston, Texas London, U.K. (713) 853-7661 Houston, Texas Podand General Electnc 44-171-316-5300 (713) 853-5167 Portland, Oregon Enron Wind Corp. Transportation and (503) 464-8000 Enron international Tehachapi, Calif ornia Distribution Wholesale Energy 00 Florida Gas Transmission Operations and Services Enron Communications Houston, Texas Enron Capital & Trade Enron Engineering & Portland, Oregon (713) 853-3162 Resources-Ncrth America Construction (503) 464-3500 Houston, Texas Houston, Texas Northern Border Pipeline Omaha, Nebraska (713) 853-7500 (713) 6464000 (402) 398-7888 Shareholder Information W TRANSFER AGENT, REGISTRAR, DIVIDEND PAYING, AND Annual Meeting of Shareholders REINVESTMENT PLAN AGENT (DIRECTSERVICE The Annual Meeting of Shareholders will be held in j PROGRAM) Houston, Texas, in the LaSalle Ballroom of the Doubletree Hotel at Allen Center,400 Dallas Street, on Tuesday, May 5, f First Chicago Trust Company of New York 1998, at 10:00 a.m. Information with respect to this meeting P. O. Box 2500 is contained in the Proxy Statement sent with this Annual 5 Jersey City. NJ 07303-2500 80 - Report to holders of record of the Corporation's Common (800) 519 3111 Stock and the Cumulative Second Preferred Convertible (201) 324-1225 Stock on March 9,1998. The 1997 Annual Report is not to be 2 TDD: (201) 222 4955 5 ) For direct deposit of d7idends only, call: (800) 870-2340 considered a part of the proxy soliciting material. I internet address: http1/www.FCTC.com Dividend Reinvestment e-mail address: fctc@em.fcnbd.com g g 1997 Annual Report Stock the opportunity to reinvest part or all of their dividends This Annual Report and the statements contained herein are in the purchase of additional shares of Common Stock by submitted for the general information of the shareholders participating in the Direct 5ERVICE Program for Shareholders f of the Corporation and are not intended for use in connec. of Enron Corp. This program gives almost everyone the tion with or to induce the sale or purchase of securities. opportunity to purchase additional shares of Common Stock without paying a brokerage commission. Anyone wishing to Additional Information participate in the program m n, upon timely application, The Corporation's Annual Report to shareholders and Form reinvest some, all, or none of the cash dividends paid on 10-K report to the Securities and Exchange Commission are their Common Stock, or make optional cash payments of as available upon request by calling: little as $25, after an initial investment of $250 for new (800) 886-1373 shareholders, with a limit of $120,000 per calendar year. For quarterly earnings and financial information, call: Direct requests for further information to: (800) 808-0363 DirectSERVICE Program for Shareholders of Enron Corp. For information regarding specific shareholder questions, c/o First Chicago Trust Company wnte or call the Transfer Agent. P. O. Box 2598 Financial analysts and investors who need additional infor-Jersey City, NJ 07303-2598 mation should contact: Shareholders may call: Enron Corp. (800) 5.9-3111 Investor Relations Dept. Nonshareholder requests for program materials: P. O. Box 1188, Suite 4926B (800) 662-7662 Houston, TX 77251-1188 Internet address: http /www.FCTC.com 1 (713) 853-3956 e-mail address: fctc@em.fcnbd.com Enron's Internet address: http-1/www enron.com TDO: (201) 222 4955

^ * ~,Q',-

• . _. -. *_, _., * '^N,.'.

,' l_ ~ ' ' '*,..-l'.' ) ' .','J G )qz g ::,P: A- .... ( ; 3 ; 3.. ' G Q ~. y . '.. ;., _ l. J J,.

t....y ;. x c.:.b; )y.. h..

w.

.j vn :~

w.y,(:..

., '.. q. '. ;. J

• I

?. i ~ .y;.G:,g:.y.ppjyyp 3 ;.3... ::.. i 4:. _z :.

., x ". -

i

.. ~

c.. .o..:. a.. p. , r. p y s, s - - f. 4. ; en

..x,3,i R.S.

. ', % a :.L_.... '. hl

h^N -

c..y, c,(, a 3 ".n s

)* f._/- , \\ l$f' ' 'R . f i... hp 'y;;:...lb. 2l. -'?- '!'A:l ' Y,'" .f l, 'O' +...,l;, ..* ' + '

g

.t-STOn'jh- ..~ ~ 'L:. }.... . h VI-Q;yp/g.g.;:p;Q.. f _ ?s.c'[.:.a p Q&Npj.y Qy $_Q$y+y c:3 f.' . f? Q j i, .3 l , ? 7 '. :... g L.W. 3 9.,,. 1 r " .d g$p$ @,.' m.:g;:

f. ;e;4j: 4. ~ y $n:.; 3 g/ p.{ _ y 3 g :r:.FM.?gYq q :~ C c;73:s

-.g

.y.

.c ; = ' ' (.; 9 A,.

i. ;, - yp

.g: e b,..'. g q ~.,. f.. p~, ; y. g% s . s.a w-m 3...

,, v. _ y% vision is,to.beconne the wod(s leedas etu rf

. =,, pq , p y_ :.," O-V;r i Egyp i $f, ^ 2-hf.hhh h,x,.hhh h! b,[- w-n, g, i. ^ : ' j<. 'hd ; [ $[.- 'aaa'**=8 7 t '..e., ;....::.~., :.,7 ' 's' sT '... '. ' . n.', '.f a;,, .e' ' ' ' 'l

u...g <!..'

' i ' ~..;....* - .. J...; f. f c; h,'.....',..

• <c

?- ' ^ ' - '-~~t*- ~. ' ~- - e- '.' ' - l :c - l.[;. .[ ,h . l;.' 'f..$ [a E + .,.. nv. ~ .,( ,e ...i ' * + _ c. ' ',.. 7

a..u w.

+. ~ ~ . /. e c ~... : .,. a f,. .; x.

(. ;

-( : -.,.,.- Q '}. b. .; f ., r~+ kh.N T Y ~ ~. ~l.f l: ;l.f).:,f..lf.):h.,. ;l;f.;,.k n l&.,4.;.f l E: $ 0 l .,...a,. 2 3 l. O ..\\.. . ;+. ; ~? a.

,,.,..,,.4,.,)..

.y ...: -,......}, } :. '.f. ; y ' * *, b.,.. l:- v. } l n-[:.y,.. M.. i ~ y '. ; ;.... . _ }..[. }.. ;;.g a . y; .y A g. g~~ ; m*_ V %g. 7 m*nWhw%nM %. ^ 'L: y se . gm +.. ; ;. cg;.. 3 .I.m:. n.. . '. ~ ,, e.- + - /.. ,,.;(,, ,,y;y 4. ,.,,..,a, . R. p. j... q,, y j .4

• E N,

^ L; (. }; c A. ...m. gm.,. x .. c ~. n ~ ?* y,.,' ^ .l I l. l:l W. ." ~...l *

^

m.n / kwe m u;..ww w w'laL y h gg g 4 g p g;y-f Q p ; y

j 7 g

m e x ; w ; Q ] q p q; & w,,s. 4 % g ; 7 5.- Hg;[:33A u 3Q &w w ;q 7.... -.. jwss % w. ww : w ; m,,., ~. y ...~s , ;;z }, 2 ?'. -u.' \\ :.,.....,. ...... :.. c.... .'-;' _, %; _ ';. - '..\\'- l*'" i v 'l^ .,f....?.. }. ; } U ' :I[j ' \\;. '. : ' '. ' ? ^ ,. j.., ;. .. ' 7. y.,, y n p; ..-, ;3 l.Y W $YN Wl' lY.yy % % dgt@ %gy 3 y.; g w :p p m }O*WWW l&

QlQ Jfj[

'..%;j ?"':W^ y ~% R...yQ.;; y/[(

- 4;y:

......}.', - ^ l'. ( y.

..y

. l Y ' f..l;. f.. ll [_.'.; }f; u:. ., + s.. .-a n ~ u. .0 ' - - I ' * ;,.:, d, M WM gNp(hgh ($tgriMigM. (= ;., e );,'..l,-...

f. '.'I; +

g 'i.'m

i. 1,

~ w -.'.t. .,.,c U... '.Wt p gp

-s

^ ) ~v ,, ?

s..

>---q. . : h. n, ;. _...

f ', M N F) M b h S N.t[us[.. @$pt d.d e,ftd N ~.-

'\\ i if.. w . n.1 s. : :.. -, v. .w .v_. ..[ I.l.; . - +.,..-.,

i..' y

7 7..;. -.. '.

y -';, 1 a ' ;. _ p. ) ~.. '. '. ' _f. j,.,g 1 .,1 . ;...( Q. _. }'.! '. c ., :.,... -.:. ?,s .7 .' ^ l[.; c. -.' med .;.,y ~ *.j - }- ./j., i.,' ?'..~._: '..~l' i g. w. _M; '.',. '

y...

,.,.;.).'._ ,.e y;, , y,, ; a ,. w .,.. c 7. 1, t. ^ *,. W. .3 ...y. .a'. 9 ; :* ' y.

• b u-,y,

,_--};;.- g " L,.. , '..;. y * ,y,. 'Y_ -(- +-;.

.s s

3 e* g ',. l. ._,~d'$' y 'r l ;..,., f* '*['. .,s ,s,.- -. -. '4 e., -,.,. +,... -. ', ~.. ..,'._q... . '),- ..n.. -,,3-j ...l.[ ..?,,~ _.{ '-_.. ' '. '. _-. + . '..;.-. a

p

• [*8

.,..,I,%

• (

.,.4 e .s.' '. _ } : ; 4:, / _,.. .,:l..' '?< '3 v

i. ;g < q:b 3a, g/._ 5 Y y ,,el,._ t ,;;f y u 4 b,{lj "? .e, ? I ,1 y '1 I l M Natural gas. Electricity. Endless possibilities." 1400 Struth St. Houstan. Texas 77002-7361 http://unew.enron.com}}