RE: Houston visit ,
 ---------------------- Forwarded by Vince J Kaminski/HOU/ECT on 04/25/2000 
10:24 AM ---------------------------


"Faiz, Soussan" <faizs@texaco.com> on 04/25/2000 09:29:34 AM
To: "'Vince.J.Kaminski@enron.com'" <Vince.J.Kaminski@enron.com>
cc:  
Subject: RE: Houston visit


Dear Vince,

Firstly, I really appreciate your time and our meeting last week.  Learning
about Enron's use of leading-edge practices was quite enlightening and I
truly benefited from our visit.

Secondly, I've summarized my key "take-aways" as stated below.  Before
conveying it to my management, however, I really appreciate it if you can
pls review my conclusions and ensure that they are not miss-stated.

Again, thanks so much for your time and wisdom.  I was also honored that you
gave me a copy of the "Managing Energy Price Risk" book and shall reference
it with interest.  THANK YOU.

I really look forward to seeing you again next time I'm in Houston.

Best regards,
Soussan
(914) 253-4187

PS.  The latest Fortune article on ENE is a great read and substantiates the
company's innovative and creative approach to business.
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As you may know, I was invited to visit with Enron (ENE) last week.  I met
with Vince Kaminski, the VP and head of research in the risk management
group of ENE.  Vince who used to be with Salomon Brothers and AT&T is the
"brain" of ENE w.r.t. their analytical tools for pricing of commodities,
hedging, optimization of financial and physical transactions, as well as the
value-at-risk systems.  In addition, Vince has received the 1999 James H.
McGraw Award for Energy Risk Management (Energy Risk Manager of the Year)
and is well published.  He is the key contributor to a best-selling
publication by Risk Books entitled: Managing Energy Price Risk.

Our meeting was mainly focused on gaining additional insights re
leading-edge practices within ENE.  My key findings are summarized below:

1. ENE does not use corporate price premises.  They use market price info
only and adhere to mark-to-market accounting.
2. ENE uses the "Heath, Jarrow, and Morton" methods for modeling price
dynamics (I've asked BIC for a copy of the associated paper).  They have
their own "home-grown" software, however, they periodically review selected
external developments for internal inclusion and advancement.
3. Vince's group comprises of Mathematicians, Physicists, and Operations
Researchers who are responsible for the development and advancement of ENE's
risk management tools.  These models are religiously used by the traders,
risk managers, and BUs across ENE.
4. Investment proposals are screened, risked, and "ROVed" by a separate
corporate group (similar to our Special Studies and with business and real
options skills) who work in conjunction with the BUs.  All evaluations and
transactions are marked-to-market.
5. ENE does not use efficient-frontier portfolio concepts.  They "VC fund"
any opportunity that has a credible value proposition and can stand on its
own.  They believe that with the current plentiful liquidity in the market,
project-financing in not an issue for a "good" opportunity.  However, they
closely monitor the development of each opportunity, within their deep
portfolio, at the corporate level and know how to "fail fast".
6. The employee reward system is based on P&Ls as well as the creation of
new business.
7. Most employees have stock options.

I really enjoyed my visit and hope to meet with Vince again the next time
I'm in Houston.
vkaminski@aol.com