Confidential
Transaction Support HubTransaction Support Hub
Prepared for EDSPrepared for EDS
March 07, 2001March 07, 2001
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EnronOnline is EnronOnline is the the world’sworld’s largest e-commerce largest e-commerce websitewebsite..
• Total Life to Date Transactions > 655,000Total Life to Date Transactions > 655,000
• Average Daily Transactions > 3,700Average Daily Transactions > 3,700
• Life to Date Notional Value of Transactions > $400 billionLife to Date Notional Value of Transactions > $400 billion
• Daily Notional Value Approximately $2.6 billionDaily Notional Value Approximately $2.6 billion
• Average number of Logged in Users 3,500Average number of Logged in Users 3,500
EnronOnlineEnronOnline
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5,001
60,044
115,000
149,964
222,676
0
25,000
50,000
75,000
100,000
125,000
150,000
175,000
200,000
225,000
4Q99 1Q00 2Q00 3Q00 4Q00
QuarterlyQuarterly
Transactions via EnronOnlineTransactions via EnronOnline
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Daily Customers(Average) 3,000
2,427
1,227
22444
Daily Products Offered
(Average)
Q499 Q100 Q200 Q300 Q400
1,157
909
623
323
53
Q499 Q100 Q200Q300 Q400
EnronOnline’s Growth EnronOnline’s Growth
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Markets Available on EnronOnlineMarkets Available on EnronOnline
Commodity Types Commodity Types
• Argentine Natural GasArgentine Natural Gas• Asian Crude & ProductsAsian Crude & Products• Asian MetalsAsian Metals• Australian & Japanese Australian & Japanese
WeatherWeather• Australian PowerAustralian Power• Austrian PowerAustrian Power• BandwidthBandwidth• Belgian Natural GasBelgian Natural Gas• Canadian Natural GasCanadian Natural Gas• Canadian PowerCanadian Power• Credit DerivativesCredit Derivatives• Dutch PowerDutch Power• Dutch AluminumDutch Aluminum• EmissionsEmissions
• Sea FreightSea Freight• Spanish PowerSpanish Power• Swiss PowerSwiss Power• UK MetalsUK Metals• UK Natural GasUK Natural Gas• UK PowerUK Power• US Gas Pipeline CapacityUS Gas Pipeline Capacity• US LumberUS Lumber• US MetalsUS Metals• US Natural GasUS Natural Gas• US PowerUS Power• US SteelUS Steel• US WeatherUS Weather
• European CoalEuropean Coal• European WeatherEuropean Weather• German PowerGerman Power• International CoalInternational Coal• Japanese AluminumJapanese Aluminum• LME Metals ContractsLME Metals Contracts• LPGLPG• Nordic PowerNordic Power• Oil & Refined Oil & Refined
ProductsProducts• PetrochemicalsPetrochemicals• Plastics Plastics • Pulp & PaperPulp & Paper
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Transaction Support HubTransaction Support Hub
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Transaction Support HubTransaction Support Hub
Hub’s Mission:Hub’s Mission:
To facilitate the “Straight Through Processing” To facilitate the “Straight Through Processing” (STP) of energy and other commodity transactions, (STP) of energy and other commodity transactions, beginning with EnronOnline generated beginning with EnronOnline generated transactions.transactions.
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Value PropositionValue Proposition
• Reduce errors Reduce errors • Elimination of key-strokes Elimination of key-strokes reduces the riskreduces the risk of of
expensive data input errors. expensive data input errors. • Catching Catching just one error pays for the entire projectjust one error pays for the entire project• Companies devote substantial contingencies in their Companies devote substantial contingencies in their
budgets to account for errorsbudgets to account for errors
• Efficiency (Time Saving)Efficiency (Time Saving)• Customers have large staffs (mid-office, back-office, Customers have large staffs (mid-office, back-office,
settlements) devoted to the input and checking of trade settlements) devoted to the input and checking of trade data.data.
• Real time trade data enables better controlsReal time trade data enables better controls• Price riskPrice risk• Credit riskCredit risk• Enables Enables real timereal time position management position management
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Proposed SolutionProposed Solution
Transaction Support Hub, along with Transaction Transaction Support Hub, along with Transaction Data Feeds will allow clients to: Data Feeds will allow clients to:
• Upload transaction data information directly into Upload transaction data information directly into existing back-office systemsexisting back-office systems
• Eliminate redundant data entry and data entry Eliminate redundant data entry and data entry errors.errors.
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Target MarketTarget Market
EnronOnline has active traders in its Customer EnronOnline has active traders in its Customer base in need of these type of services.base in need of these type of services.
Customer ProfileCustomer
Base*Average
Transactions/ monthLarge 30 1,295
Medium 33 300Small 60 100
* This is not the total number of EnronOnline’s registered customers. * This is not the total number of EnronOnline’s registered customers. It only represents approximate number of target customersIt only represents approximate number of target customers
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Upside for EDS/ Why Partner?Upside for EDS/ Why Partner?
“We believe that this deal enables the Hub operator to gain substantial first mover advantage in the race to digitize energy commerce
and provide processing services to the industry.”
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What will Partners bring ?What will Partners bring ?
Partners will bring:Partners will bring:
• Experience and InfrastructureExperience and Infrastructure
• Neutrality to customers interestsNeutrality to customers interests
• Strong relationships with the target customer Strong relationships with the target customer groupgroup• Sales process will be faster and more credible Sales process will be faster and more credible • In many cases, you are already familiar with In many cases, you are already familiar with
customer’s systemscustomer’s systems
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EnronOnline's AdvantagesEnronOnline's Advantages
EnronOnline is uniquely positioned, by a wide EnronOnline is uniquely positioned, by a wide margin, to offer this service:margin, to offer this service:
• EnronOnline captures 40% of the daily transactions in EnronOnline captures 40% of the daily transactions in the Wholesale Energy Market.the Wholesale Energy Market.
• EnronOnline generates between $2-4B transaction EnronOnline generates between $2-4B transaction value EACH dayvalue EACH day
• EnronOnline customers include all the major industry EnronOnline customers include all the major industry players of a large customer baseplayers of a large customer base
• EnronOnline offers a large diversity of commodities.EnronOnline offers a large diversity of commodities.
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Why Partner with EnronOnline?Why Partner with EnronOnline?
• Substantial first mover advantageSubstantial first mover advantage
• Exclusive right to distribute EnronOnline transaction Exclusive right to distribute EnronOnline transaction datadata
• EnronOnline’s transactions and brand are the EnronOnline’s transactions and brand are the cornerstones for success in this space. Creates a cornerstones for success in this space. Creates a compelling proposition for other exchanges to compelling proposition for other exchanges to participate.participate.
• Next generation business opportunities greatly Next generation business opportunities greatly increasedincreased
• Ongoing revenue channel via TDFOngoing revenue channel via TDF
• Significant integration revenuesSignificant integration revenues
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Business PropositionBusiness Proposition
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Assets of LLC:Assets of LLC:
• Five year exclusive license to EnronOnline Five year exclusive license to EnronOnline transaction datatransaction data
• API and connectivity to EnronOnlineAPI and connectivity to EnronOnline
• Options on next generation servicesOptions on next generation services
• Five year support and maintenance contract Five year support and maintenance contract with EnronOnlinewith EnronOnline
• Utilization of the EnronOnline brandUtilization of the EnronOnline brand
Enron owns 100% of LLCEnron owns 100% of LLC
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Divesture Rationale:Divesture Rationale:
• Third-party neutralityThird-party neutrality
• Encourage other Encourage other platforms to participateplatforms to participate
Expectations:Expectations:
• Significant valueSignificant value
• Enron retains portion of Enron retains portion of revenues in addition to revenues in addition to equityequity
New Investor/Operator
Enron
Expected Equity Structure
EDS Buys Controlling Interest of LLCEDS Buys Controlling Interest of LLC
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You
Considerations while valuing LLCConsiderations while valuing LLC
Revenue sources to Hub Co:Revenue sources to Hub Co:
• Revenues from customers for Revenues from customers for services services
• Revenues from PlatformsRevenues from Platforms
• Revenues from System Revenues from System IntegratorsIntegrators
• Next Generation Services Next Generation Services MUST MUST be considered (ie. Processing)be considered (ie. Processing)
Revenue source to You:Revenue source to You:
• Revenues from System Revenues from System Integration work (significant)Integration work (significant)
LLC$$$
$$$
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TimelineTimeline
STAGESSTAGES
1. Concept Introduction1. Concept Introduction
2. Solicit License Fee Structure and 2. Solicit License Fee Structure and BidsBids
3. Selection of System Integrators3. Selection of System Integrators
4. Product Testing 4. Product Testing
5. Implementation5. Implementation
6. Commercial “Roll-Out”6. Commercial “Roll-Out”
DATES*DATES*
February 5th to 23rdFebruary 5th to 23rd
February 26th toFebruary 26th toMarch 16thMarch 16th
March 23rdMarch 23rd
April 2nd to 6thApril 2nd to 6th
April 9th to 30thApril 9th to 30th
May 1stMay 1st
*Dates are subject to change*Dates are subject to change