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EXH 061-00637

Truman Discussion

Goldman, Sachs & Co.
17-Oct-2001

GOVERNMENT
EXHIBIT
  3991
  Crim. No. H-04-25 (S-2)


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hsan

I. Overview of Truman's Integrated Model



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  Overview of Truman's Integrated Model 3

EXH061-00638


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Waac seD Approach to Truman's Integrated Model

 Deconsolidate historical numbers, 2001E and 2002P into major business units

 Observe cost and growth trends to drive key income statement and cash flow lines

 To the extent possible, develop revenue/gross profit drivers for business units

 Incorporate Truman's strategic development objectives into projections for each segment

 Analyze segment and consolidated financial statements over the review period

 Provide flexibility to analyze various "what if"and sensitivity scenarios

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  Overview of Truman's Integrated Model 4

EXH061-00639


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EGAS C- ^t 10 0.2% 0.011/0 711 562 566 102 125 3 125
Wind Mai Ad 8.0°h 9.9% 151 163 205 53 59 1 78

  EES

350 1 861

  EBS nm nm (126) 0 295 (543) (277) (3) 100
A rOt~TW~ Corporate / other 15.6% nm 56 64 99 (563) (644) (845)

  k tp;Q Consolidated
It 5-wo , .

IS 64 o edn' p c UM. I~-r, If

  CS 1'c r -Ad- bi

14.4% 21.9% 6,966 8,813 13,192 3,012 3,420 6,195

113 ! AND	i	,vA ~.	PFr~ c ~l ~r
co~~rl vv ~	F ~ f'0 C (	III !h.	

  Overview of Truman's Integrated Model 5

SactisaO Basis For Projections
By Business Segment

		02 - 05 Growth		Gross Margin	($m)		IBIT ($m)	
	Segment	Gross Margin	IBIT	2001	2002	2005	2001	2002	2005
	ETS	2.0%	4.1%	$661	$674	$715	$361	$380 97.	$428
	PGE	4.3%	4.0%	619	636	722	189	222 S	249
	Wholesale - Consolidated	13.9%	17.5%	3,967	5,360	7,921	3,242	3,206 79	5,199
a
O
1~d~"	Wholesale - NA O s + Pte.	13.6%	15.0%	3,369	3,765	5,525	3,570	2,768	4,211
VK
af
~									
	Wholesale - Europe Fhb	2.5%	0.2%	924	679	732	309	200	201
Wholesale - Industrial Markets	47.7%	35.0%	71	107	343	43	125	308
~									
i 9Ap, Sam; Ca -4	Wholesale - Global Markets	15.0%	15.0%	475	719	1,094	237	300	457 .
1 G(d!„h~~ Mu }i~ tU	Wholesale - Other ,	36.4%	nm	(872)	89	227	(916)	(187)	23
	~i								

F fr )S 04

a; i on u 25.4% 35.0% 928 1,354 2,670 173

EXH 061-00640


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Sacnsa" Summary Model Output
  IBIT by Segment and Overall EPS Projections C< 6
26

  $7,000
6,000
5,000
4,000
3,000
F--
m
  2,000
1,000
0

  (1,000)

$6,195

$6
5
4

  m
3 (1)
  yr

2

0

  2002 2003 2004 2005
Wind -EBS -EGAS - EES -Wholesale ...r PGE ~ ETS -Corporate/Other --i --EPS

  Overview of Truman's Integrated Model 6


EXH 061-00641



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g°' °
  aS Summary Model Output
Wholesale IBIT by Business Unit


  ~/~O1elnle ~\~ NA d~~ves 5~w 'r I~-`~o ~'A~*~ ~3'7
  r~
$6,000-1

5,000

4,000

  3,000

I-
m 2,000

1,000

0

(1,000)

Cr~
SM~`


J I

  Overview of Truman's Integrated Model 7

EXH 061-00642


  Americas ® Global Markets  Europe ® Industrial Others


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gold man
  Needed Input/Direction

  General Wholesale j~~~~, a,
'
   Recurring/non-recurring revenue breakout by segment 1 i`~
&C) \M
   EnronOnline impact on wholesale (volumes and margin)

   Methodology for building in Price Risk Management trades, assets/liabilities
  cc?
Corporate/Other/General q` ( A

   Capital expenditures allocation and resulting impact

   Asset sales - Wholesale, EGAS or other (amount, timing, basis)
 On balance sheet / off-balance sheet debt detail

 Corporate overhead (including technology) and O&M targets

 Taxes (current/deferred, utilization of credits/NOLs)

Overview of Truman's Integrated Model 8

EXH 061-00643


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II. Summary Valuation of ETS

  Summary Valuation of ETS 9

EXH 061-00644


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~aens8° Project Truman
  ETS Total Company Valuation
  li j~r~s cMS.T ~, S - S.S ~; I I I t
($ in millions)

  Multiples Implied Enterprise Value
  Value Public Market Private Market Public Market Private Market

IA

	IBITDAI	$429.8	9.5 11.5 8.0 11.0 $5,047 $6,110 $4,250 $5,844
	IBIT2	360.7	10.0 12.0 - - 4,622 5,546 - -
			
P\c5~' r^ /~	Net Incomes	193.0	16.0 22.0 - - 3,622 4,780 - -
5~~y-	Book Value4	2,210.6	- - 2.0 3.5 - - 4,420 7,736
			
			
	Summary		
	Low		$3,622.3
			187.9
5
	Mean		,
	Median		4,913.8
	High		7,735.6

it /yl f k•\ h j , r) l (I;

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EBITDA plus equity earnings from EOTT, Northern Border and Florida Gas Transmission-
z EBIT plus equity earnings from EOTT, Northern Border and Florida Gas Transmission.
s Enterprise value assumes third party debt of $534.2 million.
Enron basis in ETS, which includes equity in unconsolidated subsidiaries.

Summary Valuation of ETS 10

EXH 061-00645


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9oWse°	Project Truman				
	ETS Sum-of-the-Parts				
	($ in millions)				
					
	
Northern Natural
Transwestern	Low
$2,162
1,168	/ Mean
$3,097
1 91	Median
$3,222
1 533	High
$ 3,841
3,010
	Total of Pipeline Assets	$3,330	I $ 4,788	($4,755)	$6,851
	Unconsolidated Subs				
	• EOTT	$ 128	$ 139	$ 139	$ 149
	2 Northern Border	207	! 223	223	238
	Total MLP Ownership
® Citrus (50% ownership)	$335
$ 823	$. 361
~ $ 1,093	$36
$ 1,037 ~	$ 388
$ 1,580
	Total of Unconsolidated Subs	$ 1,158	$ 1,454	$ 1,399	$ 1,968
	OR Equity Earnings in Unconsolidated Subs	$910	$ 1,073	$ 1,073 1	$ 1,235

  Implied Value of ETS $4,240 $ 6,052 $ 5,990 $ 8,819
07

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  Summary Valuation of ETS 11

EXH 061-00646


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~ e~" 1 "4-Ik~N~SS
~aachsan Project Truman a S loJ
  r
ETS Analysis at Various Prices
  ($ in millions) I

							
Enterprise Value	4,000	4,500	5,000	5,500	6,000	6,500	7,000
				i			
Enterprise Value / IBITDA'							
2000E $434.3	9.2 x	10.4x	11.55	X,-
12.7x IL	tr
13	
15.0 x	
16.1x
2001E 429.8	9.3	10.5	11.6	12.8	14.0.	15.1	16.3
Enterprise Value I IBIT'								
2000E $366.2	10.9x		12.3x	13.7 x	15.0x	16.4 x	17.7 x	19.1x
2001E 360.7	11.1	12.5	13.9	15.2 ~'	16.6	18.0	19
4
							.
								
Current Enron Debt: 6~3~ID1	$ 12,812	$ 12,812	$ 12,812	$ 12,812		$ 12,812	$ 12,812	$ 12,812
Paydown of Debt From Sale Proceeds	4,000		4,500	5,000	5,500		6,000	6,500	7,000
Pro Forma Enron Debt	8,812	8,312	7,812	7,312	6,812	6,312	5,812
Reduction	(31.2)%	(35.1)%	(39.0)%	(42.9)%	(46.8)%	(50.7)%	(54.6)%
					%			
Pre-Tax Interest Expense Savings'	$ 280		$ 315	$ 350.•	$ 385 /	$ 420	$ 455	$ 490
				`-				
		i					




  o~ 5•~ock~)nt.e

'Based on Management estimates dated 30-Jun-2001.
'As of 30-Jun-2001.
' Assumes pre-tax interest rate of 7.0°6
  Summary Valuation of ETS 12


EXH 061-00647


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EXH 061-00648


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fiaciisa° Project Truman
  ETS Sum-of-the-Parts Valuation
($ in millions)

		Metrics			Implied Enterprise Values	
	Value	Public Market	Private Market	Public Market	Private Market
Northern Natural							
LTM EBITDA	$308.2	9.5 x\ 11.5 x	8.0 x 11.0 x	$2,928	$3,544	$2,466	$ 3,390
LTM EBIT	320.1	10.0 12.0	- -	3,201	3,841	-	-
Book Value	5 p~ P,~,r J) 1,081.0 C
,\	- -	2.0 3.0	-	-	2,162	3,243
	, n						
Transwestern	\						
LTM EBITDA	$ 146.0	9.5 x 11.5 x	8.0 x 11.0 x	$ 1,387	$ 1,679	$ 1,168	$ 1,606
LTM EBIT	121.6	10.0 12.0	- -	1,216	1,459	-	-
Book Value	1,003.3	- -	2.0 3.0	-	-	2,007	3,010

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	Citrus (Enron 50% share only)				
	LTM EBITDA	$ 107.5	9.5 x 11.5 x	8.0 x 11.0 x $ 1,021	$ 1,236 $860 $ 1,183
	LTM EBIT	82.3	10.0 12.0	- - 823	988 - -
	Book Value	526.8	- -	2.0 3.0 -	- 1,054 1,580
	EOTT'	Do, to?a' t 57a-Qn -		
	Common Units (shares)	6.6 m	$ 17.51 $ 20.42	- - $115	$ 134 - -
	ShareofGPDist
°	$1.1	- -	12.0x 14.0x 13	15 - -
	Total			$ 128	$ 149 - -
	Northern Border				
	Common Units (shares)	3.2 m	35.4 41.3	- - $ 113	$ 132 -
7	Share of GP Dist .loo	$6.4		14.5 16.5 93	106
	Total			$ 207	
- -
$238
	Equity Earnings In Unconsolidated Subs
2001E Equity Earnings	
$65.0	-
14.0 x 19.0 x	
- - $910	
$ 1,235 - -
			(At		
			Mv~~~`ej~.i7E)		
					
Uw\ (	Assumes conversion of sub-units and APIs at ratio of 0.45:1 (as submitted in recent filings).		
				Summary	Valuation of ETS 14

EXH 061-00649


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Ill. Impact of a Hypothetical Sale of ETS and PGE

Impact of a Hypothetical Sale of.ETS and PGE 15

EXH061-00650


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~eSe° Impact of a Hypothetical Sale of ETS and PGE
  A Preliminary Look at the Numbers

($m Except per Share Data)	2002	Disposals	Proforma	2003	Disposals	Proforma
Gross Margin	8,813	(1,309)	7,504	9,999	(1,345)	8,654
IBITDA	4,165	(685)	3,480	4,915	(709)	4,205
IBIT	3,420	(602)	2,819	4,119	(623)	3,495
Interest Expense	685	(502)	183	739	(500)	238
Net Income	1,77		1,670	2,471		2-345
EPS	(12.06		j'1.973	($ 2.82		$2.68

Cash Flows from Operations 2,230 (627) 1,603 4,124 (651) 3,472

Net Debt 9,618 (7,173) 2,445 9,015 (7,149) 1,866

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FF01 Net Debt	0.2 x	0.7 x	0.5x	1.9x
Debt/ IBITDA	2.3x	0.7x	1.8x	0.4x
IBITDA / Interest	6.1 x	19.1 x	6.7 x	17.7 x

Note: Assumes (1) sale of ETS for $5bn; (2) Sale of PGE occurs at announced transaction volume; (3) pro forma net Income Is before Impact from a gain/loss on sale of assets; and (4) any taxable gain
deferred or offset.

Impact of a Hypothetical Sale of ETS and PGE 16

EXH 061-00651


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9aGman Impact of a Hypothetical Sale of ETS and PGE
A Qualitative Perspective

  Positive Factors Issues to Consider
 Business Profile  Business Profile
  - Shed low growth segments - Pro forma asset base
  - De-lever the balance sheet - Ability to fund high growth trading activities

 Market Implications 
- Market expecting asset rationalization
  - Debt repayment will enhance the equity story
- Focus on high growth new market development
  

 Credit Implications 
- S&P (1/2000): Anything open to be sold, including regulated
pipes
  - Truman has outgrown reliance on those stable cash flows 
 Agencies are expecting additional asset sales
  - Dramatically improves credit ratios
  - Seen to be addressing agency concerns

Market Implications
- Do you benefit from some continuing ownership in the pipes
business
- Is business mix considered "riskier"
How quickly does the market give you credit for new growth
opportunities

Credit Implications
- Will need to strengthen ratios to compensate for loss of cash
flow
With announced write-downs S&P and Moody's focused on
business
- Management of the balance sheet going forward
- Implications for further write-downs on the portfolio and
balance sheet

  Impact of a Hypothetical Sale of ETS and PGE 17

EXH 061-00652


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		Sac~nsa0		Impact of a Hypothetical	Sale of	ETS	and PGE
				Beginning to Value the "New" Truman			
							
y		($ in millions, per share data)			
					
					
c
4					
l^.					
					
		PIE Multiple 12.0 x	14.0 x	16.0 x	18.0 x 20.0 x 22.0 x 24.0 x
					
m					
r)
y					
~,		Current 2002E IBES Median Estimate $2.15 $30.10	$30.10	$34.40	$38.70 $43.00 $47.30 $51.60
		Implied 2003E IBES Median Estimate $2.52 $30.19	-.$ 35.22	$40.2
5	
1 $45.28 $50.31 $ 55.34 $60.37



Pro Forma 2002E EPS - Post Disposal $ 1.90	$22.80	$26.60	$30.40	`-) $ 34.20	$ 38.00	$41.8o	$45.60
$1.95	$23.40	$27.30	$31.20	$35.10.	$39.00	$42.90	$46.80
$2.05	$24.60	$28.70	$ 32.80	$36.90	$41.00	$45.10	$49.20
$2.15	$25.80	$30.10	$34.40	$38.70	$43.00	$47.30	$51.60

Pro Forma 2003E EPS - Post Disposal $2.40	$28.80	$33.60	$38.40	$43.20	$48.00	$ 52.80	$57.60
$2.50	$30.00	$35.00	$40.00	$45.00	$50.00	$55.00	$60.00
o $2.60	$31.20	$36.40	$41.60	$ 46.80	$ 52.00	$57.20	$62.40
							

$2.70
N	
$ 32.40	
$ 37.80	
$413.20	
$48.60	
$54.00	
$59.40	
$64.80
J $2.80	$33.60	$39.20	$44.80	$50.40	$56.00	$61.60	$67.20

  Impact of a Hypothetical Sale of ETS and PGE 18
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achs

IV. Process Considerations for an ETS Transaction

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EXH 061-00654


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Process Considerations

General

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a Preference for cash over stock as consideration

 Appetite for smaller, strategically less important assets?
- As part of larger sale package
  - Independently

 Alternatives to sale for "orphan" assets

e Separation Issues

Process

Sale of all assets to single
buyer

 Pre-emption rights / ROFRs over assets
 Timing and process duration

• Ability of larger bidders to acquire without significant anti-trust
issues

 Bidder appetites for physical assets (irrespective of apparent
strategic fit)

  Benefits
 Clean, simple, rapid process
 Allows less attractive/saleable assets to be
wrapped into larger sale

Sale of all assets to joint  Retains benefits of single sale
bidders/consortia  Reduces financing and regulatory issues for
  bidders
 Increased buyer population

Break-up sale  Allows maximum value to be achieved for each
asset
   Wider buyer population, with fewer financing
constraints

Issues

 Fewer potential bidders able to finance bid for
whole
 Potentially lower / little value for smaller,
"unwanted" assets
 Potential FTC issues
 Pre-emption rights on key Florida Gas pipeline?

 Long, complex process with increased
uncertainty
 Lack of "natural" consortia?
 May not result in maximum value

 Additional complexity and duration of process
 Separation issues?
 Potential to be left with orphan assets

  Process Considerations for an ETS Transaction 20

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  Preliminary Buyer List


  L
  Williams
El Paso
Duke

Single Transaction

  Dynegy
AEP
Exelon
Southern
Entergy

C Kinder Morgan
Tractebel

Market Cap/	2002E
Enterprise Value	PIE Multiple
$14,545/	11.1x
$24,727	
$27,128/	14.4x
$44,494	
$30,890/	14.lx
$46,883	
$14,969/	17.6x
$19,380	
$14,378/	11.5x
$30,337	
$14,454/	8.8x
$28,789	
$17,580/	15.Ox
$30,589	
$8,388/	10.8x
$17,253	
$6,036/	20.9x
$10,555	
Subsidiary of Suez	NA

Multiple Transactions

	Market Cap/	2002E
	Enterprise Value	PIE Multiple
TransCanada/TC	$6,350/	14.3x
Pipelines	$14,447	
Enterprise Products	$2,6541	20.1x
Partners	$3,397	
Enbridge/EEP	$4,695/	16.2x
	$9,808	
Plains All American	$1,051/	15.8x
	$1,519	
TEPPCO	$1,285/	16.9x
	$2,105	
Buckeye Partners	$971 /	14.4x
	$1,237	
BG	$13,382/	17.8x
	$14,219	
Kaneb Pipeline	$871/	14.Ox
	$1,127	
FPL	$9,5081	10.8x
	$15,698	
Private Equity	NA	NA

Process Considerations for an ETS Transaction 21

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  Process Considerations for an ETS Transaction 22

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EXH 061-0065


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Samsa0 Alternative Structuring Options
  Sell Northern Natural to Northern Border Partners L.P.

Description

to

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Benefits

Issues to Consider

 Enron contributes Northern Natural to  Retain some upside (and market  Structuring transaction with a related
Northern Border in return for cash or insight?) by keeping GP interest party - conflicts committee
  MLP units  Realize cash immediately  May not maximize value
 Northern Border funds acquisition N Reduces size of remaining asset,  Ability of Northern Border to acquire
through borrowings and issue of MLP potentially simplifying sale process for substantially all cash
units/I-Share offering and enDgodlg value of GP interest

  Very Preliminary Analysis of Financial Capacity of Northern Border Partners

		Acquisition Value ($m)	
			Multiple of Cash Flow	
		8.0x	9.0x 10.0x 11.0x	12.Ox
Cash Flow	200	1,600	1,800 2,000: 2,200	2,400
Acquired	.250	2,000	2,250 2,500 2,750	3,000
($m)	300	2,400	2,700 3,000 3,300	3,600
	350	2,800	3,150 3,500 3,850	4,200
		Accretion to LP Distribution/Unit	
			Multiple of Cash Flow	
		8.0x	9.Ox . 10.Ox 11.Ox	12.0x
Cash Flow	200	32%	26% 21% 16%	11%
Acquired	250	37%	30% 24% 18%	12%
($m)	300	46%	37% 29%. 21%	14%
	350	56%	45% 35% 25%	16%

Assumptions (10x CF Multiple, $200m CF)

Current Unit Price	$38.40
Current LP Distribution per Unit	$3.05
Current GP Distribution per Unit	$0.19
Interest Rate	7%
DCF / Distribution coverage ratio	1.22 x
Current LP Splits	75%
Percentage Equity Financed	25%

Proforma (assuming 70% GP Interest retained)

Current ENE GP income ($m)	6.4
Proforma ENE GP income ($m)	22.1
2001 ENE Common income received ($m)	9.8
Proforma 2001 ENE Common income ($m)	11.8
Proforma total increase in annual income ($m)	17.8

  Process Considerations for an ETS Transaction 23

EXH061-00658


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Confidential Treatment Requested by Goldman, Sachs & Co. GS 0833

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  aachs a° Next Steps

 Model
  - Refine valuation model
  - Layer growth drivers into projections

   Process
  - Establish scenarios for evaluation
- Consider additional alternatives

 Impact
  - Get credit / equity judgments
  - Evaluate implications for stock price and credit ratings

  Next Steps 25

EXH 061-00660


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Appendix A: Pipeline Valuation

  Pipeline Valuation 26

EXH 061-00661


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9eensen	Project Truman										
	Comparison of Selected Companies										
	($ in millions, except per share amounts)									
	Closing % of 52	Enter	prise Value		Catendarized	5-Year	2002			
	Price Week Equity Enterprise	Multip	les of LTM		PIE Multiples `	EPS	PEI5-Year	LTM Marg	ins'	Dividend
	Company 16-Oct-2001 High Market Cap' Value'	Sales EBITDA EBIT	2001	2002	CAGR'	EPS CAGR	EBITDA	EBIT	Yield
	Enron $ 33.84 40.0% $25.375 $ 41,754	0.3 x	12.2 x	16.8 x	18.8 x	15.7 x	17.0%	0.9 x	2.8%	2.1 %	1.5 %
	Enbrldge $28.49 98.9% $4,529 $9,642	4.0 x	129 x	20.9 x	18.2 x	16.2 x	11.0%	1.5 x	31.2%	19.3%	3.1 %
	TransAlla 13.96 85.7 2,362 4,318	3.9	7.6	12.0	16.1	13.6	---	---	51.1	32.3	4.6
	Duke 39.61 83.4 30,890 46,883	0.7	8.2	11.0	15.8	14.1	12.0	1.2	9.0	6.8	2.8
	Dynegy 44.92 77.5 14,969 19,380	0.4	15.6	22.4	21.7	17.6	20.0	0.9	2.9	2.0	0.7
	El Paso 52.52 70.5 27,128 44,494	1.3	19.0	26.3	15.9	14.4	15.0	1.0	6.9	5.0	1.6
	Kinder Morgan 51.86 86.8 6,036 10,555	4.7	21.0	26.8	27.3	20.9	20.0	1.0	22.6.	17.7	0.4
	Williams 29.99 65.3 14,545 24,727	2.3	6.7	8.6	12.8	11.1	15.0	0.7	34.2	26.8	2.0
	Mean 73.2% $ 15,430 $ 25,092	2.2 x	14.8 x	20.9 1t~	19.1 x	16.0 x	18.3%	1.0 x	16.8 %	12.1 %	1.3%
	Median 74.0 14,757 22,053	1.8	14.2
(	21.6)	18.6	16.0	16.0	0.9	14.8	11.4	1.5

' Source: Latest publicly available financial statements. Equity Market Cap based on diluted shares outstanding.
z Source: IBES median estimates.
  Pipeline Valuation 27


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~aedhsa0 Common Stock Comparison
Midstream MLPs

($ in millions, except per share amount)

  Closing % of 52 Enterprise Value Multiples of Calendarized
  5 Year
  Price Week Equity Market Enterprise EBIT EBITDA PIE Multiples' EPS 2002 PIE I LTM Margins
Company 16-Oct-2001 High Cap' Value' LTM LTM 2001E 2002E 2001 2002 CAGR' Growth EBITDA EDIT

Enron	$33.84	40.0%	$25,375	$11,754	16.8 x	12.2 x	9.9 x	8.5 x	18.8 x	15.7 x	17.0%	0.9 x	2.8%	2.1%
Midstream MLPs
Buckeye Partners	
$36.08	
95.2%	
$971	
$1,237	
13.0 x	
16.9 x	
12.1 x	
11.7 x	
14.9 x	
14.4 x	
5.0%	
2.9 x	
51.8%	
43.1%
Enterprise Products Partners'	$51.51	100.0%	$2,654	$3,397	11.9 x	10.2 x	12.7 x	10.1 x	22.8 x	20.1 x	10.0%	2.0 x	9.5%	8.2%
EOTT Energy Partners	$21.55	92.1%	$592	$786	21.8 x	11.2 x	10.8 x	10.3 x	23.7 x	19.8 x	5.0%	3.9 x	0.6%	0.3%
Kaneb Pipeline Partners	$42.94	100.0%	$871	$1,127	15.9 x	12.4 x	12.0 x	11.4 x	14.3 x	14.0 x	5.0%	2.8 x	49.8%	36.9%
Kinder Morgan Energy Partners	$37.90	100.0%	$2,459	$4,805	10.2 x	8.2 x	5.1 x	4.6 x	24.5 x	22.7 x	14.0%	1.6 x	25.1%	20.2%
Northern Border Partners	$40.61	99.2%	$1,690	$3,294	16.0 x	12.1 x	10.6 x	9.6 x	16.2 x	13.8 x	7.5%	1.8 x	70.0%	53.0%

Plains All American Pipeline	$27.40 92.9%	$1,051	$1,519	26.0 x	19.2 x	13.3 x	11.5 x	18.3 x	15.8 x	7.5%	2.1 x	1.3%	0.9%
Teppco Partners	$33.05 98.8%	$1,285	$2,105	14.4 x	11.3 x	11.0 x	10.5 x	16.5 x	16.9 x	8.5%	2.6 x	5.4%	4.2%
Mean	97.3%	$1,447	$2.259	16.2x	11.9x	11.0*	10.ox	18.9x	17.2x	7.6%	2.5x	26.7%	21.1%
Median	99.0%	1,168	1,812	15.1	11.3	11.5	10.4	17.4	16.4	7.0%	2.4	17.3%	14.2%
+n - High	100.0%	$2,654	$4,605	26.0 x	19,2x	13.3 x	11.7x	24.5 x	22.7 x	14.0%	3.9 x	70.0%	53.0%
N Low	92.1%	592	766	10.2	B_2	5.1	4.6	14.3	13.8	5.0%	1.8	0.6%	0.3%

0
Do
14

r Source: Latest publicly available financial statements. Equity Market Cap based on diluted shares outstanding.
Z Source: IAES median estimates.
3 Not pro forma for acquisitions of various pipeline assets in 1Q2001 due to insufficient information.
  Pipeline Valuation 28

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~ac~san Comparison of Selected Midstream Transactions

  ($ in millions, except per share amounts)

  Market Premium (%) Price to Earnings (x) Lev Mult. of EBITDA (x)
  Date Value ($) Previous 30-Day Current Next Current Next Market I
Announced Effective Acquiror 1 Target Equity Levered Day Average LTM Year Year LTM Year Year Book (X)

		5/912001	Pending	EnCap Investments I Plains Resources	149	149	NA	NA	NA	NA	NA	NA	NA	NA	NA
	YO	3112/2001	5/7/2001	Northern Border I El Paso Corp.	100	100	NA	NA	NA	NA	NA	NA	8.3	NA	NA
		`	1013112000	12113/2000	Cinergy, Vectren/NiSource (Miller)	68	68	NA	NA	NA	NA	NA	NA	NA	NA	NA
			1/18/2000	1/29/2001	El Paso / Coastal	9,739	15,208	26.8	34.0	21.1	20.3	16.6	11.3	10.1	8.4	2.5
		2/28/2000	11/112000	NiSource / Columbia	6,069	8,194	22.3	28.4	22.4	20.6	17.4	10.3	9.7	8.3	2.9
		7/8/1999	10/7/1999	KN Energy / Kinder Morgan Inc.	521	664	na	na	14.9	NA	NA	10.2	NA	NA	NA
		3/15/1999	10/25/1999	El Paso / Sonat	3,934	5,911	31.8	40.7	NM	26.3	21.3	9.5	8.9	8.1	3.0
		2/22/1999	1/28/2000	Dominion !CNG	6,353	8,268	26.3	33.3	26.7	19.3	16.7	10.0	8.7	7.8	2.6
		1/26/1998	7/211998	TransCanada / Nova	4,969	8,561	6.3	13.2	15.5	10.0	6.6	6.1	NA	NA	1.2
		12/18/1997	1130/1998	KN Energy / Mldcon (Oxy)	3,490	3,990	NA	NA	NA	NA	NA	9.7	NA	NA	5.0
		10/22/1997	11/26/1997	Koch / USX- Delphi	198	762	21.2	27.5	33.1	59.5	27.8	14.9	14.1	11.9	1.0
		912311997	1/12/1998	RD-Shell 1 Tejas Gas	1,450	2,375	23.0	NA	37.2	33.0	22.4	12.3	15.0	NA	3.1
		11/25/1996	6/18/1997	Duke Energy /PanEnergy	7,553	9,989	18.3	25.6	21.7	21.3	19.2	9.9	9.1	8.4	3.1

	Asset
1/29/2001	
1/29/2001	
Enterprise Products / El Paso Energy	
NA	
112.0	
NA	
NA	
NA	
NA	
NA	
NA	
21.9	
13.4	
NA
n+	12115/1999	1/20/2000	Kinder Morgan E I Kinder Morgan Inc.	743	779	NA	NA	NA	NA	NA	8.4	8.0	8.1	1.1
U	12/20/1999	12120/1999	Kinder Morgan Energy I Trailblazer	38	66	NA	NA	NA	NA	NA	7.5	6.2	6.4	1.4
	5/411999	7/1/1999	TransMontaigne / Amerada Hess	NA	66	NA	NA	NA	NA	NA	NA	NA	NA	NA
	11/2/1998	3/29/1999	CMS Energy / Duke Energy (Panhandle)	1,900	2,200	NA	NA	16.6	NA	NA	9.3	NA	NA	1.3
	312/1998	811411998	El Paso ! Leviathan (Deep Tech)	NA	450	NA	NA	NA	NA	NA	8.3	NA	NA	NA
	6/19/1996	12/12/1996	El Paso / Tenneco	879	3,879	NA	NA	NA	NA	NA	9.0	13.6	12.4	0.7
0
G,)
CO	1/30/1996
Mean
Median	10/8/1996	PanEnergy I Mobil	307	307	NA
22.0%
22.7%	NA
28.9%
28.4%	NA
23.3 x
21.7	NA
26.3 x
20.9	NA
18.5 x
18.3	NA
9.8 x
9.7'	NA
11.1 x
9.4	NA
9.3 x
8.3	NA
2.2 x
2.5

Source: J. S. Herald, Company announcements.
  Pipeline Valuation 29

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~aehsa° Comparison of Selected Midstream Transactions

($ in millions, except per share amounts)

						Market Premium (%)	Price to Earnings (x)	Lev Mult. of EBITDA (x)	
	Date			Value (S)	Previous	30-Day		Current	Next		Current	Next	Market I
	Announced	Effective	Acquiror I Target	Equity	Levered	Day	Average	LTM	Year	Year	LTM	Year	Year	Book (x)
	Gas Gathering & Processing											
	Corporate
3/16/2001	
Pending	
Enbridge I Midcoast Energy Resources	
351	
598	
7.1	
NA	
10.1	
14.4	
12.3	
9.5	
NA	
NA	
NA
	1/24/2001	3130/2001	Northern Border /Bear Paw Energy	270	370	NA	NA	NA	NA	NA	9.3	NA	NA	NA
n
,	3/10/1999	6/1/1999	Leviathan I El Paso	21	108	NA	NA	NA	NA	NA	8.1	NA	NA	NA
QJ	311211997	4/15/1997	PacifiCorp I TPC Corp	288	437	20.5	26.0	49.7	22.7	16.2	NM	NA	NA	2.8
	113111997	1/1/1997	PGRE / Valero Energy	723	1,500	NA	NA	NA	NA	NA	10.6	NA	NA	NA
	51911996	6/611996	Teas Gas / Transok (Unit of CRS West)	690	882	NA	NA	27.2	NA	NA	10.5	10.7	NA	2.1
	4/15/1996	8/5/1997	Texas Utilities / ENSERCH	550	1,700	41.1	NA	20.4	NA	NA	NA	9.2	NA	NA
	Asset													
	1/31/2000	1212212000	El Paso Energy / PGRE	279	840	NA	NA	NA	NA	NA	8.4	6.0	4.9	NA
	4/20/1999	9120/1999	Enterprise Products / RD-Shell (Tejas NGL)	NA	422	NA	NA	NA	NA	. NA	8.2	NA	NA	NA
	11711999	6/111999	El Paso Energy I Leviathan (Viosca Knoll)	85	117	NA	NA	NA	NA	NA	6.5	NA	NA	NA
~	Mean					22.9%	26.0%	26.8 x	18.6 x	14.2x	8.9x	8.6 x	4.9x	2.5x

C
CQ r
t 7	Median
Refined Product Pipelines
Corporate
11/24/1997 3/30/1998	


illiams Cos. /MAPCO	


,552	


,368	20.5%


34.3	26.0%


38.8	23.8


22.2	18.6


. 24.3	14.2


18.8	8.9


8.8	9.2


11.0	4.9


9.3	2.5


3.9
	Asset													
	8/28/1995	12130/1995	TransMonlalgne /Mobil	NA	NA	NA	NA	NA	NA	NA	NA	NA	NA	NA


  0
W

Liquids Pipelines
Corporate
10/20/1997 3/6/1998 Kinder Morgan I Santa Fe Pacific 971 1,288 23.4 28.0 NM NA NA 12.4 NA NA 3.7

Asset									
11/3011998 11/30/1998 Kinder Morgan / GATX	NA 1,150 NA	NA	NA	NA	NA	7.5	NA	NA	NA
6117/1998 8/15/1998 Kinder Morgan /RD-Shell	NA 110 NA	NA	NA	NA	NA	6.4	NA	NA	NA
Mean	28.8%	33.4%	22.2x	24.3x	10.8x	8.8x	11.Ox	9.3x	3.8x
Median	28.8%	33.4%	22.2	24.3	18.8	8.2	11.0	9.3	3.8
									
For All Transactions									
Minimum	0.2%	0.3%	10.1x	10.0x	6.6x	6.1x	6.0x	4.9x	0.7x
Mean	17.8%	21.2%	24.1	23.7	17.4	9.4	10.4	8.4	2.4
Median	21.2%	26.8%	22.3	20.9	17.4	9.3	9.3	8.3	2.5
Maximum	41.1%	40.7%	49.7	59.5	27.8	14.9	21.9	13.4	5.0

' Source: J. S. Herold, Company announcements..
  Pipeline Valuation 30

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Sacdhsan
  Recent Acquisitions of GP Interests

	

Acquisition
Date	
GP
Aggregate
Consid.	At Time of Acquisition
Multiple of
GP Cash GP Cash
Flow Flow	

IDR Tier at
Acquisition	
LP
Distribution
per Unit	

Current GP
Cash Flow	Current
LP
Marginal LP Distribution
I GP Split per Unit
Buckeye / Management I	March '96	$ 63.0	$ 4.2	15.0 x	75%/25%	$ 1.50	$ 17.9	55%/45%	$ 2.40
Enron Liquids / Kinder Morgan	Feb. '97	9.5	0.7	13.6 x	98%/2%	1.26	250.0	50%/50%	4.20
Santa Fe ! Kinder Morgan	Oct. '97	84.4	4.0	21.1 x	70%/30%	3.00	N.M.	N.M.	N.M.
Leviathan / El Paso .	March '98	267.5	15.9	16.8 x	50%/50%	2.00	24.8	50%/50%	2.10

Ferrell Companies / Ferrell ESOT July'98 23.1 1.3 18.1 x 98%12% 2.00 1.3 98%12% 2.00
PLX I Investor Group 2 May '01 75.0 1.3 60.0 x 85% 115% 1.90 1.3 85%/15% 1.90
Mean 24.1 x
Median 17.5 x

Other GP Transactions
Petrolane / CSFB
Suburban / Hanson
Plum Creek (MLP to REIT)
Borden Chemicals I KKR
Polaris (MLP to C-Corp)
SunSource / Lehman

' BPL management buyout from America Financial. Management vehicle actually command $1 million of equity to the purchase price. The $63 million balance was financed through an ESOP loan, the
cost of which was borne by the BPL LPs and offset by immediate cost reduction-
2 Acquired a 52% interest in PLX.
  Pipeline Valuation 31

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an
baths

Appendix B: Buyer Detail



0
co


  Buyer Detail 32

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a					
_rt
y					
					
~aedt>ISa~	Sale to Single	Buyer			
					
					
					
c		
Potential Buyers Analysis		
		Financial Capacity	Strategic	Regulatory	Acquisition
		Cash Stock	Fit	Issues	Focus
	Williams	~ •	.	.	
	El Paso				
					
	Duke				
	Dynegy				
	AEP				
	Exelon				
	Southern				
	Entergy	• •	V	V	
	Kinder Morgan.				
	Tractebel	• O	Cf	O	V
O
07					
N	
Key: O =Low	
(J = Moderate • = High			
					Buyer Detail 33
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~achsan
  Sale to-Single Buyer

Primary Interest

G)

0
W

Market Cap I	LTM	2002					
Enterprise	EBITDA	PIE	Northern	Trans-		Northern	
Company Value	Multiple	Multiple	Natural	Western	Florida	Border	EOTT
Williams $14,545/	6.7x	11.1x	.	•	V		O
$24,727							
El Paso $27,128/	19.Ox	14.4x	V		•		O
$44,494							
Duke $30,8901	8.2x	14.1x				V	O
$46,883							
Dynegy $14,9691	15.6x	17.6x					O
$19,380							
AEP $14,378/	7.6x	11.5x	(		()	C	0
$30,337							

Exelon $14,454/ 8.Ox	8.8x V			V	0
$28,789					
Southern $17,580/ 8.2x	15.Ox 4		E	a	O
$30,589					
Entergy $8,388/ 6.9x	10.8x			4	O
$17,253					
Kinder Morgan $6,036/ 21.Ox	20.9x •	•	4	E	O
$10,555					
Tractebel Subsidiary of NA	NA (4	(4	(4	O	O
Suez					

  Buyer Detail 34

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n
0						
c						
-a						
Samsan	Sale in Parts /	To Consortia				
						
						
						
C)		Financial Capacity	Strategic	Regulato	ry Acquisition
		Cash	Stock	Fit	Issues	Focus
	TransCanada/TC Pipelines					
	Enterprise Products Partners					
h	
Enbridge/EEP					
	Plains All American			C,	O	V
	TEPPCO	•	•	C,	O	C7
	Buckeye Partners		C)	C	O	
	BG	•	C1	C)	O	O
	Kaneb Pipeline	C)	C'	V	O	C'
U)	FPL	C)	.	C)	C	V
	Private Equity	•	O	•	O	V
0
w						
						
						Buyer Detail 35


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n
O
y

		Gold''"
Sacks	
Sale in Part I To Consortia			
						
C						
C				
CD
C				
				
V				
o	Market Cap / LTM		Primary Interest	
	Enterprise EBITDA 2002 PIE	Northern	Trans- Northern	
	Company Value Multiple Multiple	Natural	Western Florida Border	EOTT
y	TransCanada Pipelines $6,3501 7.9x 14.3x			O

y	$14,447			
~n	Enterprise Products $2,654/ 10.2x 20.lx
P
t		(\ • V	O
o	ar
ners $3,397			
				

Enbridge	$4,6951	10.6x	16.2x	('		C		C,
	$9,808							
Plains All American	$1,051/	19.2x	15.8x	C,				U
Pipeline	$1,519							
TEPPCO Partners	$1,285/	11.3x	16.9x		(\
~I	C)	C\
V	O
	$2,10
5							
Buckeye Partners	$971/	10.9x	14.4x		(\
~I	()	(I\
~/	O
	$1,23
7							
BG	$13,382/	9.4x	17.8x		V		V	O
Gl	.$14,219							
								
Kaneb Pipeline	$871/	12.4x	14.Ox	

O	

O	
O	
C)	
O
Partners	$1,127							
FPL	$9,508/	6.6x	10.8x	

O	

O		
O	
O
	$15,698							
0 Private Equity	NA	NA	NA	O	O	O	V	C)
.A								
								

  Buyer Detail 36


EXH 061-00671


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!~1
a)
a
a)
L

2
y

C
CO
Ey
to
ow
c~

Confidential Treatment Requested by Goldman, Sachs & Co. GS 0846

m

CU
a)
0
L
a)

m

N
O
O
O
;D-
(D
I
x
w


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9°acnsa0 Kinder Morgan
  Very Preliminary Analysis of Financial Capacity

Acquisition Value ($m)		Assumptions	
	Multiple of Cash Flow		Current Unit Price	$34.69
8.0x	9.Ox 10.Ox 11.Ox	12.Ox	Current LP Distribution per Unit	$2.31
Cash Flow 400 3,200	3,600 4,000 4,400	4,800	Current GP Distribution per Unit	$1.48
Acquired 450 3,600	4,050 4,500 4,950	5,400	Interest Rate	7%
($m) 500 4,000	4,500 5,000 5,500	6,000	DCF / Distribution coverage ratio	1.00 x
550 4,400	4,950 5,500 6,050	6,600	Current LP Splits	50%

			Accretion to LP Distribution/Unit	
				Multiple of Cash Flow	
					Percentage Equity Financed 25%
			8.Ox	9.Ox 10.Ox 11.Ox	12.Ox
	Cash Flow	400	17%	13% 9% 5%	2%
	Acquired	450	18%	14% 10% 6%	2%
	($m)	500	22%	17% 12% 7%	2%
		550	27%	20% 14% 8%	3%
					
					
			Accretion to LP Distribution/Unit	
				Multiple of Cash Flow	
					Percentage Equity Financed 0%
			8.Ox	9.Ox 10.Ox 11.Ox	12.Ox
CO	Cash Flow	400	23%	19% 16% 12%	8%
.4	Acquired	450	26%	22% 18% 14%	9%
	($m)	500	32%	27% 22% 17%	12%
		550	40%	34% 28% 21%	15%

  Buyer Detail 38

EXH 061-00673