ENRON'S ACTIVITIES
LexInter | September 13, 2018 | 0 Comments

ENRON’S ACTIVITIES

ENRON   THE    ENRON BANKRUPTCY PROCEDURE THE QUESTIONS IN THE ENRON FILE  ONLINE INFORMATION ON THE ENRON FILE AND ENRON CORPORATE GOVERNANCE AND REGULATION ENRON ENRON  LITIGATION AND ENRON STOCK MARKET LAW AND DERIVATIVE PRODUCTS
ENRON

The Enron model: a model based on financial engineering

The company had been seen as a model of evolution from the industrial economy to the new economy.

In 1990 Kenneth Lay hired Jeffrey Skilling, a partner at McKinsey & C °, to make Enron Finance Corp a laboratory for the development of financial products and services.

A Risk Assessment & Control group reports to Skilling

 

Guy Hamel, Revolutionary

Interview, Amazon.fr

Georges Vialle, MARKETPLACES: “The future B2B models will be inspired by the financial markets” 12/17/2001

The Financial Expertise of Enron

From an industrial activity of electricity production to an energy trading activityA minor electricity production company in Texas, it divested itself of its industrial assets in the United States to become a world leader in energy trading. However, this did not exclude an energy infrastructure development activity within the framework of the liberalization of energy markets, the most controversial project being in India, the Dabhol project, launched in 1996. Enron had also initiated a project in Bolivia in 1999, the Cuiaba Integrated Energy Project, which has been widely criticized from an ecological point of view.

Enron started trading in electricity in June 1994 and will become the largest player in this market in the United States.

ENRON signed long-term energy supply contracts by committing to prices and / or efficiency improvements

 

Live Enron

Development and operation of energy infrastructure

Dabhol Power Plant Project Financing

Enron Press Release, May 6, 1999

 

Derivatives and the sale of servicesIn 1997 Enron launched a weather derivatives business under the leadership of Lynda Clemmons. In two years, contracts will total $ 1 billion.

In addition, Enron becomes a major player in credit risk.

Enron claimed to have developed risk control instruments on the markets not only of energy, but also of various raw materials having a sensitivity either to the cost of energy, or to significant factors of the cost of energy.

Enron sold products and services resulting from techniques it claimed to master, becoming such an important player that it seemed to support Enron’s claims.

Unlike other operators Enron was present in the operations on one side of the transaction instead of finding counterparties.

 

ENRON AND DERIVATIVE PRODUCTS

Enron and climatic derivatives

Enron Weather

Credit risk management

Enron wholesale services

caps & floors

swaps

trade on line

“The power of Enron”

 

A global online market activityIn November 1999 Enron launched Enron on line , the first global commodity trading site on the net. Enron was thus a leader in the development of electronic marketplaces which had their heyday.

Two years after its launch, the company carried out 6,000 transactions per day for an average amount of $ 2.5 billion.

This platform had made Enron an iconic internet company. Enron has both contributed to the development of the internet bubble and benefited from the phenomenon. Enron is touted as the largest company on the Net.

Enron and Internet Marketplace

EnronOnline   

Enron and e -procurement

 

A very diversified activity of trading and servicesEnron’s trading activities range from gas and electricity, coal, wood and paper, to metals trading.

2,100 financial products were offered in four continents and in 15 currencies

Enron posts an increase in its turnover from $ 40.1 Billion in 1999 to $ 100.8 in 2000 on a surge in its turnover through purchase and sale contracts for electricity and natural gas

Enron International  

Trading of Products and Services

Enron and services

Enron Energy Services  

 

 

A model that is presented as exemplaryThe Enron model is hailed as proof of innovation and results almost until its fall.

Enron thus aroused a sometimes dithyrambic admiration where the financial alchemy coupled with a fascination for internet techniques led to an almost unconditional admiration for a model which would normally have seemed too good to be true according to the old adage ” if it is too beautiful to be true, it just ain’t true ”

In September 1999 Andrew Fastow was awarded the “CFO Magazine” awards. He prides himself on the fact that the turnover has been multiplied by ten without dilution of capital or increase in indebtedness by financing hailed by investment banks as remarkably innovative.

Enron’s stock price weakened in 1997 and rebounded in 1998

On August 20, 2000, in the midst of internet euphoria, Enron shares reached $ 90

Enron had a negligible tax result despite the exceptional declared profitability. Enron had 800 subsidiaries in offshore locations (Caïman, 140 companies in Holland, Netherlands Antilles)

On March 5, 2001, despite pressure from Enron, a Fortune magazine reporter published an article “Is Enron Overvalued”. The article goes largely unnoticed

ON ACCOUNTING ASPECTS

House of the Year, Energy Derivatives Award Winner, Energy Power Risk Management, 2001

e-plus New Factory

e +. Doesn’t trading activities also offer interesting prospects?

Georges vialle. To compensate for the reduction in margins on B2B marketplaces, some operators will engage in speculation, buying and selling large volumes of goods in their markets. Enron pioneered this model of “e-speculation” in the energy markets. Its electronic trading platform allows it to make profits on the purchase and sale, for its own account, of various energy products (natural gas, electricity, pulp, etc.) and pollution control credits. Following the example of investment banks, this company has also embarked on the creation and sale of derivative products, such as options, financial futures and swaps, which allow other market participants to hedge the risks associated with price fluctuations. Experienced e-speculators, wishing to capitalize on an abundance of market information, will prefer sectors that facilitate the exchange of relatively standardized products among many buyers: they might even lower their commissions below. zero, that is, paying to receive a flow of transactions in order to gain valuable market information. Their preference will also go to markets with very fluctuating prices, in order to be able to play on spreads. We can therefore expect to see them emerge in the chemicals, paper and metallurgy sectors. wishing to capitalize from an abundant mass of information on the market, will prefer sectors that facilitate the exchange of relatively standardized products between many buyers: they could even lower their commissions below zero, that is to say – say pay to receive a flow of transactions in order to derive valuable market information. Their preference will also go to markets with very fluctuating prices, in order to be able to play on spreads. We can therefore expect to see them emerge in the chemicals, paper and metallurgy sectors. wishing to capitalize from an abundant mass of information on the market, will prefer sectors that facilitate the exchange of relatively standardized products between many buyers: they could even lower their commissions below zero, that is to say – say pay to receive a flow of transactions in order to derive valuable market information. Their preference will also go to markets with very fluctuating prices, in order to be able to play on spreads. We can therefore expect to see them emerge in the chemicals, paper and metallurgy sectors. they could even lower their commissions below zero, that is, pay to receive a flow of transactions in order to gain valuable market information. Their preference will also go to markets with very fluctuating prices, in order to be able to play on spreads. We can therefore expect to see them emerge in the chemicals, paper and metallurgy sectors. they could even lower their commissions below zero, that is, pay to receive a flow of transactions in order to gain valuable market information. Their preference will also go to markets with very fluctuating prices, in order to be able to play on spreads. We can therefore expect to see them emerge in the chemicals, paper and metallurgy sectors.

 

An activity dependent on deregulationIn March 2000 Enron was ranked sixth in the world for companies in the energy sector.

In December 2000, Congress approved the Commodity Future Modernization Act which confirms the exemption of energy derivatives from regulation, escaping the control of the Commodity Futures Trading Commission?

Enron’s credibility was of course linked to the convergence between its strategy and American policy, whose global weight in these sectors is preponderant. Enron was one of the influential members of the US Coalition of Service Industries, in particular the WTO.

In January 2001 the crisis in California led to an increase in energy prices

In June 2001 federal regulators imposed price controls on electricity markets

 

 Enron and deregulation

ENRON AND REGULATION

Agenda for reform: A fresh look at rules for energy and finance FT.com

Claude Rochet, Strategy, How to manage electricity

US to probe Enron’s ties to Energy prices, Washington Post Jan 29 2002

 

The fall

October 16, 2001 ENRON announces that it is deducting $ 1B from its 3rd quarter results

December 2, 2001 Chapter 11 filing

 

THE ENRON BANKRUPTCY PROCEDURE

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