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ENRON ANNOUNCES J-BLOCK SETTLEMENT
FOR IMMEDIATE RELEASE: Monday, June 2, 1997
HOUSTON -- Enron Corp. announced today the settlement of all contractual issues involving the J-Block contract in the U.K. North Sea with the J-Block producers, Phillips Petroleum Company United Kingdom Limited, BG Exploration and Production Limited and Agip (U.K.) Limited. As a consideration for the settlement, Enron made a cash payment of $440 million to the producers.
Enron will record a second quarter non-recurring charge to income of $450 million after tax ($675 million pretax) or approximately $1.80 per share primarily reflecting the full accounting for the effects of the amended contract under current market conditions. As a result, Enron expects to report a primary loss per share in the range of approximately $1.40 to $1.45 for the second quarter.
"Enron is pleased to remove this item of uncertainty for our company and our shareholders," said Kenneth L. Lay, chairman and CEO of Enron. "Renegotiation and settlement of the contractual issues now allow the gas to be taken at consistent volumes, assuring us a very significant, long-term supply at favorable fixed prices consistent with long-term contracts in the North Sea marketplace.
"Full contractual volumes of 260 million cubic feet of gas per day are to be effective July 1 under the settlement, with lesser initial volumes ramping up to the full contractual volume during June.
"The settlement of these J-Block contractual matters combined with the Portland General merger now affords the company the opportunity to focus on growth opportunities and shareholder value initiatives for the future.
"Enron currently has more growth opportunities in its portfolio than at any time in the history of the company. These include international development projects, risk management and finance activities, wholesale power, retail electricity and natural gas marketing, international E&P; and renewable energy as well as continued growth and strength from traditional pipeline and E&P; activities domestically. The opening of the California retail electricity market effective January 1, 1998, with all categories of customers permitted to select a supplier starting October 1997, offers Enron a unique opportunity to build a sizable new business."
Enron Corp., one of the world's largest integrated natural gas and electricity companies with approximately $15 billion in assets, operates one of the largest natural gas transmission systems in the world; is the largest purchaser and marketer of natural gas and the largest non-regulated marketer of electricity in North America; is a leading participant in liberalized energy markets in the United Kingdom and the Nordic Countries; markets natural gas liquids worldwide; manages the largest portfolio of fixed-price natural gas risk management contracts in the world; is among the leading entities arranging new capital to the energy industry; owns a majority interest in Enron Oil & Gas Company, one of the largest independent (non-integrated) exploration and production companies in the United States; owns a majority interest in Enron Global Power & Pipelines L.L.C., which is owner and manager of operating power plants and natural gas pipelines around the world; is one of the largest independent developers and producers of electricity in the world; and is a major supplier of solar and wind renewable energy worldwide. Enron is traded under the ticker symbol, "ENE."
This press release includes forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although Enron believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those in the forward looking statements herein include political developments in foreign countries, the pace of deregulation of retail natural gas and electricity markets in the United States, the timing and extent of changes in commodity prices for oil, gas, electricity and interest rates, the extent of success in acquiring oil and gas properties and in discovering, developing and producing reserves, the timing and success of Enron's efforts to develop international power, pipeline and other infrastructure projects and conditions of the capital markets and equity markets during the periods covered by the forward looking statements.
For additional information please contact:
Diane Bazelides
(713) 853-6285
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