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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark one)
[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (Fee required)
For the fiscal year ended December 31, 1995
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or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (No fee required)
For the transition period from ______________ to ______________
Commission file number 1-8246
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SOUTHWESTERN ENERGY COMPANY
(Exact name of registrant as specified in charter)
ARKANSAS 71-0205415
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1083 Sain Street, Fayetteville, Arkansas 72703
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (501) 521-1141
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
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Common Stock - Par Value $.10 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K._____
The aggregate market value of the voting stock held by non-affiliates of
the Registrant was $287,525,532 based on the New York Stock Exchange - Composite
Transactions closing price on March 25, 1996 of $11.75.
The number of shares outstanding as of March 25, 1996, of the
Registrant's Common Stock, par value $.10, was 24,701,349.
DOCUMENTS INCORPORATED BY REFERENCE
Documents incorporated by reference and the Part of the Form 10-K into
which the document is incorporated: (1) Annual Report to holders of the
Registrant's Common Stock for fiscal year ended December 31, 1995 - PARTS I, II,
and IV; and (2) definitive Proxy Statement to holders of the Registrant's Common
Stock in connection with the solicitation of proxies to be used in voting at the
Annual Meeting of Shareholders on May 13, 1996 - PART III.
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SOUTHWESTERN ENERGY COMPANY
FORM 10-K
ANNUAL REPORT
For the Year Ended December 31, 1995
TABLE OF CONTENTS
PART I
Page
Item 1. Business.............................................................................. 1
Natural gas and oil exploration and production........................................ 1
Natural gas gathering, transmission and distribution.................................. 4
Real estate development............................................................... 9
Employees............................................................................. 9
Industry segment and statistical information.......................................... 9
Item 2. Properties............................................................................ 9
Item 3. Legal Proceedings..................................................................... 10
Item 4. Submission of Matters to a Vote of Security Holders................................... 11
Executive Officers of the Registrant.................................................. 11
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters................. 12
Item 6. Selected Financial Data............................................................... 12
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 12
Item 8. Financial Statements and Supplementary Data........................................... 12
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 12
PART III
Item 10. Directors and Executive Officers of the Registrant.................................... 12
Item 11. Executive Compensation................................................................ 13
Item 12. Security Ownership of Certain Beneficial Owners and Management........................ 13
Item 13. Certain Relationships and Related Transactions........................................ 13
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K....................... 13
PART I
Item 1. BUSINESS
Southwestern Energy Company (the Company) is a diversified natural gas
company. Through its wholly-owned subsidiaries, the Company is engaged in gas
and oil exploration and production, natural gas gathering and transmission as
well as natural gas distribution. The principal sites for the Company's
exploration and production program are the Arkoma Basin of Arkansas, the Gulf
Coast (both onshore and shallow waters offshore) and the Anadarko Basin of
Oklahoma. The Company's natural gas gathering transmission and distribution
properties are located in Arkansas and Missouri. The Company was incorporated
under the laws of the state of Arkansas and is an exempt holding company under
the Public Utility Holding Company Act of 1935.
The Company was organized in 1929 as a local distribution company in
northwest Arkansas. In 1943, the Company commenced a program of exploration for
and development of natural gas reserves in Arkansas for supply to its utility
customers. In 1971, the Company initiated an exploration and development program
outside Arkansas, unrelated to the utility requirements. Since that time, the
Company's exploration and development activities outside Arkansas have expanded.
The exploration, development, and production activities are a separate, primary
business of the Company.
Exploration and production activities consist of ownership of mineral
interests in productive and undeveloped leases located entirely within the
United States. The Company engages in gas and oil exploration and production
through its subsidiaries, SEECO, Inc. (SEECO) and Southwestern Energy Production
Company (SEPCO). SEECO operates exclusively in the state of Arkansas and holds a
large base of both developed and undeveloped gas reserves and conducts an
ongoing drilling program in the historically productive Arkansas section of the
Arkoma Basin. SEPCO conducts an exploration program in areas outside Arkansas,
including the Gulf Coast areas of Louisiana and Texas, the Anadarko Basin of
Oklahoma, and the Delaware Basin of New Mexico. SEPCO also holds a block of
leasehold acreage located on the Fort Chaffee military reservation in western
Arkansas and in other parts of Arkansas away from the operating areas of the
Company's other subsidiaries.
The Company's subsidiary Arkansas Western Gas Company (Arkansas Western)
operates integrated natural gas distribution systems in Arkansas and Missouri
serving approximately 168,000 customers. Arkansas Western is the largest single
purchaser of SEECO's gas production. Southwestern Energy Pipeline Company (SWPL)
owns a 47.93% general partnership interest in the NOARK Pipeline System, Limited
Partnership (NOARK), a 258 mile long intrastate natural gas transmission system
that extends across northern Arkansas. SWPL also serves as operator of the
pipeline.
This document may contain "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. See "Management's Discussion and Analysis of Financial
Condition and Results of Operation" in Part II, Item 7 of this Report for a
discussion of important factors that could affect the validity of any such
forward-looking statements. A discussion of the primary businesses conducted by
the Company through its wholly-owned subsidiaries follows.
NATURAL GAS AND OIL EXPLORATION AND PRODUCTION
Substantially all of the Company's exploration and production activities
and reserves are concentrated in Arkansas, the Gulf Coast areas of Louisiana and
Texas, Oklahoma, and New Mexico. At December 31, 1995, the Company had proved
natural gas reserves of 294.9 billion cubic feet (Bcf) and proved oil reserves
of 2,152 thousand barrels (MBbls). Revenues of the exploration and production
subsidiaries are
1
predominately generated from production of natural gas. The Company's gas
production was 34.5 Bcf in 1995, down 8% from 37.7 Bcf in 1994. Sales of gas
production accounted for 93% of total operating revenues for this segment in
1995, 96% in 1994, and 98% in 1993. SEECO's largest customer for sales of its
gas production was the Company's utility subsidiary. However, sales to
unaffiliated purchasers, as a percentage of total sales made by both SEECO and
SEPCO, have generally increased during the last three years as compared to
periods prior to 1993. This increased percentage is due primarily to higher
production from Arkansas properties, from producing property acquisitions, and
from properties developed in the Gulf Coast areas. Sales to unaffiliated
purchasers accounted for 60% of total gas volumes sold by the exploration and
production segment in 1995, 63% in 1994, and 64% in 1993.
Gas volumes sold by SEECO to Arkansas Western for its northwest Arkansas
division (AWG) were 8.5 Bcf in 1995, 8.8 Bcf in 1994, and 7.1 Bcf in 1993.
Through these sales, SEECO furnished 65% of the northwest Arkansas system's
requirements in 1995, 64% in 1994, and 57% in 1993. The increase in 1994
compared to 1993 was due largely to increased storage injections and higher
volumes resulting from a settlement reached to resolve certain gas cost issues
before the Arkansas Public Service Commission (APSC). The settlement, which
involved the price of gas sold under a long-term contract between SEECO and AWG,
is hereafter referred to as the "Gas Cost Settlement", and is discussed more
fully below. SEECO also delivered approximately 1.4 Bcf in 1995, 1.5 Bcf in
1994, and 2.2 Bcf in 1993 directly to certain large business customers of AWG
through a transportation service of the utility subsidiary that became effective
in October, 1991. Most of the sales to AWG are pursuant to a twenty-year
contract between SEECO and AWG entered into in July, 1978, under which the price
had been frozen since 1984. This contract was amended in 1994 as a result of the
Gas Cost Settlement that became effective July 1, 1994, and calls for sales
under the contract to take place at a price which is equal to a spot market
index plus a premium. The Gas Cost Settlement has resulted in a lower contract
price based on market conditions since the settlement. That effect has been
offset in part by provisions of the Gas Cost Settlement which allow additional
volumes to be sold under the amended contract. The amended contract provides for
volumes equal to the historical level of sales under the contract to be sold at
the spot market index plus a premium of $.95 per Mcf, while incremental sales
volumes receive a premium of $.50 per Mcf. In 1995, 7.7 Bcf (net to the
Company's interest) was sold under the contract, compared to 8.1 Bcf in 1994 and
6.0 Bcf in 1993. Other significant terms of the Gas Cost Settlement preclude the
parties thereto from asking for refunds, transfer certain of AWG's natural gas
storage facilities to SEECO, and prohibited AWG from filing an application for a
rate increase before January, 1996. In addition to this contract, SEECO also
sells gas to AWG under newer long-term contracts with flexible pricing
provisions and under short-term spot market arrangements. SEECO's sales to AWG
have accounted for approximately 31% of total exploration and production
revenues each of the last three years.
SEECO's sales to Associated Natural Gas Company (Associated), a division of
Arkansas Western which operates natural gas distribution systems in northeast
Arkansas and parts of Missouri, were 5.4 Bcf in 1995, 5.1 Bcf in 1994, and 5.7
Bcf in 1993. These deliveries accounted for approximately 59% of Associated's
total requirements in 1995, 58% in 1994, and 67% in 1993. These sales
represented 16% of total exploration and production revenues in 1995, 14% in
1994, and 15% in 1993. Deliveries to Associated increased in 1995 due to colder
weather in the heating season and decreased in 1994 due to warmer weather.
Effective October, 1990, SEECO entered into a ten-year contract with Associated
to supply its base load system requirements at a price to be redetermined
annually. Deliveries under this contract were made at a price of $1.90 per
thousand cubic feet (Mcf) from inception of the contract through the first nine
months of 1993, increased to $2.385 per Mcf for the contract period ended
September 30, 1994, decreased to $2.20 per Mcf for the contract period ended
September 30, 1995, and are currently being made at a price of $1.785 per Mcf.
2
In 1990, SEECO completed the initial mapping and engineering phases of a
multi-year geological field study of the Arkoma Basin of Arkansas. The product
developed was an extensive database and geologic interpretations of the
distribution of gas-bearing sands in the region and resulted in the
identification of 69.7 Bcf of proved undeveloped reserves that were added to the
Company's base of proved reserves. At December 31, 1995, after transfers and
revisions, the remaining proved undeveloped reserves identified by the study
were 40.1 Bcf. The data base developed is periodically updated by drilling
activity and provides guidance in the Company's development drilling program.
The development drilling program added 17.1 Bcf in 1995, 22.2 Bcf in 1994, and
27.0 Bcf in 1993 of new natural gas reserve additions and resulted in the
transfer of .7 Bcf in 1995, 3.0 Bcf in 1994, and 2.6 Bcf in 1993 from the proved
undeveloped category to the proved developed category. SEECO participated in a
total of 80 development wells during 1995 with a completion rate of 68%. SEECO's
sales to unaffiliated purchasers were 10.3 Bcf in 1995, 10.7 Bcf in 1994, and
10.0 Bcf in 1993. At present, SEECO's contracts for sales of gas to unaffiliated
customers consist of short-term sales made to customers of AWG's transportation
program and spot sales into markets away from AWG's distribution system. These
sales are subject to seasonal price swings. In the past, the Company's ability
to enter into sales arrangements with unaffiliated customers has generally been
constrained by a lack of pipeline transportation to markets away from the Arkoma
Basin. Initiatives of the FERC to restructure the natural gas interstate
pipeline service rules through its Order No. 636 series have improved and should
continue to improve the Company's ability to market its existing and potential
reserves. Also contributing to the increase in the ability of SEECO to market
its gas to unaffiliated customers was the completion of NOARK in September,
1992, as explained more fully below under "Natural gas gathering, transmission
and distribution." SEECO's sales to unaffiliated purchasers have accounted for
approximately 22% of total exploration and production revenues for the last
three years.
At December 31, 1995, the gas and oil reserves of SEPCO were located
primarily in Oklahoma and the Gulf Coast areas of Louisiana and Texas. SEPCO
also owns gas reserves in Arkansas, primarily related to its properties on the
Fort Chaffee military reservation. SEPCO holds about 27% of the Company's
natural gas reserves and all of its oil reserves. SEPCO's gas sales were 10.3
Bcf in 1995, down from 13.1 Bcf in 1994 and 12.9 Bcf in 1993. The decrease in
1995 was primarily due to declining production in the Company's offshore Gulf of
Mexico properties. SEPCO's production is sold under contracts which reflect
current short-term prices and which are subject to seasonal price swings.
Oil production was 229 MBbls in 1995, compared to 200 MBbls in 1994 and 97
MBbls in 1993. The increase in oil production in 1995 and 1994 primarily
resulted from acquisitions of producing properties during those years. The
Company's exploration program has been directed almost exclusively toward
natural gas in recent years. The Company plans to continue to concentrate on
developing gas reserves, but will also selectively seek opportunities to
participate in projects oriented toward oil production. Over the long-term,
however, oil sales are not expected to account for a significant part of the
Company's future revenues. SEPCO's gas and oil sales accounted for 31% of total
exploration and production operating revenues in 1995 and 33% in both 1994 and
1993.
In 1989, SEPCO purchased at oral auction 11,000 undrilled acres containing
17 separate drilling units on the Fort Chaffee military reservation of western
Arkansas. The total cost of this acreage was approximately $11.0 million. To
date, the Company has drilled or participated in nine wells at Fort Chaffee that
have discovered an estimated 47.1 Bcf of new gas reserves, net to the Company's
interest. Sales of gas production from Fort Chaffee totaled 3.0 Bcf in 1995, 4.3
Bcf in 1994, and 5.1 Bcf in 1993. The decrease is a result of the natural
decline in the productive capability of these properties. Conflicts with
military training activities have limited SEPCO's drilling operations at Fort
Chaffee. The Company has attempted to work with the military to improve work
schedules and operating restrictions, but those efforts have been to little
avail. Fort Chaffee has been closed as an active military base, but is presently
planned to be a
3
training facility for the National Guard and other governmental agencies. The
Company is not able to predict whether this change in activities conducted at
Fort Chaffee will result in less restrictive operating conditions. As a result,
Fort Chaffee will play a lesser role in the Company's plans.
Outside Arkansas, the Company added 18.0 Bcf of new reserves in 1995 and
8.7 Bcf in 1994 from drilling. Of that total, 11.3 Bcf in 1995 and 8.5 Bcf in
1994 were from discoveries in the coastal areas of Texas and Louisiana. The Gulf
Coast region continues to be the primary focus of most of the Company's
exploration activity. The Company currently is participating in several 3-D
seismic programs in south Louisiana and spent approximately $5.0 million in 1995
on the largest of these programs, a 130 square mile 3-D seismic data acquisition
joint venture in the east Atchafalaya Basin of south Louisiana, primarily in St.
Martin Parish. The Company has a 50% working interest in the venture. About
100,000 acres is under option, convertible to leasehold acreage as the seismic
data is interpreted. While the options carry rights to all depths, the Company's
interest is primarily in those objectives deeper than the historically
productive zones. The Company expects this venture to generate a significant
number of well-defined exploration prospects. Drilling will not commence any
earlier than the fourth quarter of 1996. The Company is also participating in a
development drilling program in the Delaware Basin of New Mexico, keyed off
three 1995 discovery wells. The Company will participate with up to a 50%
working interest in 10 or more development wells during 1996 and more in 1997.
The Company also has two more exploratory wells to drill in the area.
During 1995 and 1994, the Company increased its emphasis on acquisitions of
producing properties and expects that effort to continue as a supplement to its
exploration and development drilling programs. The Company acquired
approximately 4.5 Bcf of gas and 851 MBbls of oil during 1995, and 20.6 Bcf of
gas and 1,038 MBbls of oil during 1994. The 1995 acquisitions were primarily in
the Gulf Coast areas of Louisiana and Texas and the 1994 acquisitions were
primarily in the Anadarko Basin of Oklahoma.
In the natural gas and oil exploration segment, competition is encountered
primarily in obtaining leaseholds for future exploration. Competition in the
state of Arkansas has increased in recent years, due largely to the development
of improved access to interstate pipelines. Due to the Company's significant
leasehold acreage position in Arkansas and its long-time presence and reputation
in this area, the Company believes it will continue to be successful in
acquiring new leases in Arkansas. While improved intrastate and interstate
pipeline transportation in Arkansas should increase the Company's access to
markets for its gas production, these markets will generally be served by a
number of other suppliers. Thus, the Company will encounter competition which
may affect both the price it receives and contract terms it must offer. Outside
Arkansas, the Company is less well-established and faces competition from a
larger number of other producers. The Company has in recent years been
successful in building its inventory of undeveloped leases and obtaining
participating interests in drilling prospects outside Arkansas.
The Company expects its 1996 capital expenditures for gas and oil
exploration and development to total $71.0 million, down from $82.2 million
incurred in 1995. Expenditures in 1996 for this segment are expected to be $24.5
million for development drilling, including $14.5 million for the Company's
Arkansas program, $20.0 million for producing property acquisitions, and a total
of $12.4 million for exploratory drilling and seismic. Most of the Company's
risk-oriented spending will be directed toward its 3-D seismic joint ventures.
The Company will review this budget periodically during the year for possible
adjustment depending upon cash flow projections related to fluctuating prices
for natural gas and oil.
NATURAL GAS GATHERING, TRANSMISSION AND DISTRIBUTION
The Company's natural gas distribution operations are concentrated
primarily in north Arkansas and southeast Missouri. The Company serves
approximately 168,000 retail customers and obtains a substantial portion of the
gas they consume through its Arkoma Basin gathering facilities. The Company is
also a
4
participant in a partnership that owns the NOARK Pipeline System. The complexity
of AWG's distribution operations, particularly its gathering system in the
Arkoma Basin gas fields, increased significantly with the start up of NOARK. AWG
provides field management services to NOARK under a contract with the
partnership and AWG's gathering system delivers to NOARK a substantial part of
the gas NOARK transports. The Company completed a pipeline in 1993 that connects
NOARK to Associated's distribution system, tying together the Company's two
primary gas distribution systems.
Arkansas Western consists of two operating divisions. The AWG division
gathers natural gas in the Arkansas River Valley of western Arkansas and
transports the gas through its own transmission and distribution systems,
ultimately delivering it at retail to approximately 101,000 customers in
northwest Arkansas. The Associated division currently receives its gas from
transportation pipelines and delivers the gas through its own transmission and
distribution systems, ultimately delivering it at retail to approximately 67,000
customers primarily in northeast Arkansas and southeast Missouri. Associated,
formerly a wholly owned subsidiary of Arkansas Power and Light Company, was
acquired and merged into Arkansas Western effective June 1, 1988. The Arkansas
Public Service Commission (APSC) and the Missouri Public Service Commission
(Missouri Commission) regulate the Company's utility rates and operations. In
Arkansas, the Company operates through municipal franchises which are perpetual
by state law. These franchises, however, are not exclusive within a geographic
area. In Missouri, the Company operates through municipal franchises with
various terms of existence.
AWG and Associated deliver natural gas to residential, commercial, and
industrial customers. The industrial customers are generally smaller concerns
using gas for plant heating or product processing. AWG has no restriction on
adding new residential or commercial customers and will supply new industrial
customers which are compatible with the scale of its facilities. AWG has never
denied service to new customers within its service area or experienced
curtailments because of supply constraints. Associated has not denied service to
new customers within its service area or experienced curtailments because of
supply constraints since the acquisition date. Curtailment of large industrial
customers of AWG and Associated occurs only infrequently when extremely cold
weather requires that systems be dedicated exclusively to human needs customers.
AWG and Associated have experienced a general trend in recent years toward
lower rates of usage among their customers, largely as a result of conservation
efforts which the Company encourages. Competition is increasingly being
experienced from alternative fuels, primarily electricity, fuel oil, and
propane. A significant amount of fuel switching has not been experienced,
though, as natural gas is generally the least expensive, most readily available
fuel in the service territories of AWG and Associated.
The competition from alternative fuels and, in a limited number of cases,
alternative sources of natural gas has intensified in recent years as a result
of the significant declines in prices of petroleum products and the
deliverability surplus of natural gas experienced in the past. Industrial
customers are most likely to consider utilization of these alternatives, as they
are less readily available to commercial and residential customers. In an effort
to provide some pricing alternatives to its large industrial customers with
relatively stable loads, AWG offers an optional tariff to its larger business
customers and to any other large business customer which shows that it has an
alternate source of fuel at a lower price or that one of its direct competitors
in another area has access to cheaper sources of energy. This optional tariff
enables those customers willing to accept the risk of price and supply
volatility to direct AWG to obtain a certain percentage of their gas
requirements in the spot market. Participating customers continue to pay the
nongas cost of service included in AWG's present tariff for large business
customers and agree to reimburse AWG for any take-or-pay liability caused by
spot market purchases on the customer's behalf. In an effort to more fully meet
the service needs of larger business customers, both AWG and Associated
instituted a
5
transportation service in October, 1991, that allows such customers in Arkansas
to obtain their own gas supplies directly from other suppliers. Associated has
offered transportation service to its larger customers in Missouri for several
years and AWG's spot market purchasing program has provided customers in
northwest Arkansas with many of the benefits of transportation service. Under
the programs, transportation service is available in Arkansas to any large
business customer which consumes a minimum of 150,000 Mcf per year and no less
than 3,000 Mcf per month. Transportation service is available in Missouri to any
customer whose average monthly usage exceeds 2,000 Mcf. The minimums can be met
by aggregating facilities under common ownership. A total of eleven customers
are currently using the Arkansas transportation service, including three of
AWG's four largest customers in northwest Arkansas and Associated's two largest
customers in northeast Arkansas. Associated's 13 largest Missouri customers are
currently using transportation service.
AWG purchases its system gas supply directly at the wellhead under
long-term contracts. Purchases are made from approximately 290 working interest
owners in 484 producing wells. As previously indicated, SEECO furnished
approximately 65% of AWG's system requirements in 1995, 64% in 1994, and 57% in
1993. A significant portion of AWG's unaffiliated supply comes from market
responsive, long-term contracts which take advantage of the lower prices that
have generally been available from gas suppliers.
At December 31, 1995, AWG had a gas supply available to its northwest
Arkansas system of approximately 213 Bcf of proved developed reserves, equal to
15 times current annual usage. Of this total, approximately 109 Bcf were net
reserves available from SEECO. Under the terms of the Gas Cost Settlement,
SEECO's reserves are no longer dedicated to AWG. However, a portion of these
reserves are utilized to meet the annual sales volume commitment of 9.0 Bcf
(gross) under the amended long-term contract with AWG. For purposes of
determining AWG's available gas supply, deliveries to AWG's spot market
purchasing program or transportation customers and the reserves related to those
deliveries are not considered.
Associated purchases gas for its system supply from unaffiliated suppliers
accessed by interstate pipelines and from SEECO. Purchases from SEECO are under
a ten-year contract with annual price redeterminations. Purchases from
unaffiliated suppliers are under firm contracts with terms between one and three
years. The rates charged by these suppliers include demand components to ensure
availability of gas supply, administrative fees, and a commodity component which
is based on spot market gas prices. Associated's gas purchases are transported
through eight pipelines. The pipeline transportation rates include demand
charges to reserve pipeline capacity and commodity charges based on volumes
transported. Associated has also contracted with five of the interstate
pipelines for storage capacity to meet its peak seasonal demands. These
contracts involve demand charges based on the maximum deliverability, capacity
charges based on the maximum storage quantity, and charges for the quantities
injected and withdrawn. In 1993, Associated renegotiated its purchase contracts
with interstate pipelines in accordance with the pipeline restructuring as
mandated by the Federal Energy Regulatory Commission's (FERC) Order No. 636.
Prior to Order 636, Associated purchased its system supply from six interstate
pipelines, SEECO, and various spot market suppliers.
Over the past several years changes at the federal level have brought
significant changes to the regulatory structure governing interstate sales and
transportation of natural gas. The FERC's Order No. 636 series changed a major
portion of the gas acquisition merchant function provided to gas distributors by
interstate pipelines. AWG already obtains its supply at the wellhead directly
from producers and has not been directly impacted by Order No. 636. Associated
has acquired the bulk of its gas supply at the wellhead since its acquisition by
Arkansas Western, but continued until Order No. 636 to purchase a portion of
both its peak and base requirements from interstate suppliers. The changes
mandated by Order No. 636 have placed the
6
responsibility for arranging firm supplies of natural gas directly on local
distribution companies and have, as a result, lessened the ability of Associated
to purchase gas on the short-term spot market
As a result of pipeline deregulation, Associated has paid, net of refunds
received, approximately $2.6 million in contract reformation costs and
take-or-pay costs, and $2.5 million in transition costs which its interstate
pipeline suppliers incurred and were allowed to recover. The Company anticipates
full recovery of the $2.5 million in transition costs incurred. To date, the
Company has recovered approximately $1.5 million of the contract reformation
costs and take-or-pay costs from its utility sales customers in the state of
Missouri. Of the unrecovered $1.1 million related to contract reformation costs
and take-or-pay costs, $.5 million is applicable to Associated's transportation
customers in the state of Missouri and $.6 million is applicable to all
customers in the state of Arkansas. As discussed below, the Missouri Commission
has disallowed recovery of the $.5 million from Associated's Missouri
transportation customers.
AWG also purchases gas from unaffiliated producers under take-or-pay
contracts. Currently, the Company believes that it does not have a significant
exposure to liabilities resulting from these contracts, although the Company's
exposure to take-or-pay liabilities to its gas suppliers has increased in recent
years as a result of a decline in its gas purchase requirements. This decline
occurred because some of its large business customers converted to the
transportation service offered by AWG and began to obtain their own gas supplies
directly from other sources. The Company expects to be able to continue to
satisfactorily manage its exposure to take-or-pay liabilities.
As discussed earlier, Associated purchases a portion of its gas supply at
the wellhead from one of the Company's gas producing subsidiaries under a
long-term firm contract entered into in October, 1990. On July 14, 1995,
Associated received an order from the Missouri Commission disallowing the
recovery of approximately $2.0 million of gas costs. The order was the result of
gas cost audits covering the five-year period ending August 31, 1993. Of the
total disallowed, $1.5 million represented a portion of the difference between
the price paid by Associated under its long-term firm contract with SEECO and a
spot market index price for gas delivered into an interstate pipeline operating
in the Arkoma Basin. The balance of $.5 million disallowed represented
take-or-pay charges passed through to Associated by its interstate suppliers and
allocable to transportation customers of Associated, as discussed above. The
APSC had previously reviewed the costs charged to Arkansas ratepayers under this
contract and found them to be proper and allowable for recovery. Associated has
appealed the Missouri Commission's decision to the Circuit Court of Cole County,
Missouri and that court has stayed the Missouri Commission's order and has
directed Associated to pay the money to be refunded under the Missouri
Commission's order into the registry of the court while the appeal is pending.
The Staff of the Missouri Commission has also recommended the disallowance of an
additional $.7 million of gas costs as a result of an audit for the year ended
August, 1994. The Missouri Commission has not yet issued an order in connection
with that recommendation. The Company will continue to defend its pricing
policies and seek recovery of these costs from Associated's customers. The
Company does not expect the ultimate outcome of these matters to have a material
impact on the results of operations or the financial position of the Company.
The gas heating load is one of the most significant uses of natural gas and
is sensitive to outside temperatures. Sales, therefore, vary throughout the
year. Profits, however, have become less sensitive to fluctuations in
temperature in recent years as the structure of the Company's utility rates has
become somewhat flatter; i.e., most recovery of return on rate base is built
into a customer charge and the first step of its rates.
Gas distribution revenues in future years will be impacted by both customer
growth and rate increases allowed by regulatory commissions. In recent years,
AWG has experienced customer growth of approximately 3.5% to 4.0% annually,
while Associated has experienced customer growth of approximately
7
1% annually. Based on current economic conditions in the Company's service
territories, the Company expects this trend in customer growth to continue. AWG
and Associated pass along to customers through an automatic cost of gas
adjustment clause any increase or decrease experienced in purchased gas costs.
As previously mentioned, the APSC and the Missouri Commission regulate the
Company's utility rates and operations. AWG filed an application with the APSC
on January 30, 1996, for a rate increase of $7.2 million annually. The APSC has
ten months in which to reach a decision on the amount of the rate increase to be
approved. As a result, any increase granted will likely not become effective
until late 1996. The Company anticipates filing a rate increase request for
Associated's operations in late 1996. Rate increase requests which may be filed
in the future will depend on customer growth, increases in operating expenses,
and additional investments in property, plant and equipment. AWG's rates for gas
delivered to its retail customers are not regulated by the FERC, but its
transmission and gathering pipeline systems are subject to the FERC's
regulations concerning open access transportation since AWG accepted a blanket
transportation certificate in connection with its merger with Associated.
NOARK is an intrastate pipeline constructed by a limited partnership in
which SWPL holds a 47.93% general partnership interest and is the pipeline's
operator. NOARK's main line was completed and placed in service in September,
1992. A lateral line of NOARK that allows the Company's gas distribution segment
to augment its supply to an existing market as well as supply gas to new markets
was completed and placed in service in November, 1992. The 258 mile long
pipeline originates near the Fort Chaffee military reservation in western
Arkansas and terminates in northeast Arkansas. NOARK interconnects with three
major interstate pipelines and provides additional access to markets for gas
production of both the Company and other producers. Construction of an
eight-mile interstate pipeline connecting NOARK to the distribution system of
Associated was completed during 1993. NOARK is a public utility regulated by the
APSC. The APSC established NOARK's maximum transportation rate based on its
original construction cost estimate of approximately $73.0 million. Due to
construction problems and the addition of a compressor station, the ultimate
costs of the pipeline exceeded the original estimate by approximately $30
million. NOARK has a capacity of approximately 141 MMcfd. In 1995, NOARK had an
average daily throughput of 86 MMcfd, compared to 82 MMcfd in 1994, and 79 MMcfd
in 1993. Arkansas Western has contracted for 41 MMcfd of firm capacity on NOARK
under a transportation contract with an original term of ten years. The
remaining term of that contract is seven years and the contract is renewable
year to year until terminated by 180 days notice. NOARK also had a five-year
transportation contract with an independent marketer to transport 50 MMcfd
through NOARK on a firm basis. The Company's exploration and production segment
was supplying 25 MMcfd of the volumes transported by the marketer under that
agreement. In late 1993, the gas marketing company filed suit against NOARK, the
Company, and certain of its affiliates, and, effective January 1, 1994, ceased
transporting gas under its agreement with NOARK. In late 1995, the suit was
settled prior to trial. In exchange for a $6.0 million payment to NOARK, the
marketer was released from its obligations under its firm transportation
agreement and its contract with the Company's affiliates. The Company is
currently making its own sales arrangements and transporting production through
NOARK which was previously purchased by the marketer.
NOARK has been operating below capacity and generating losses since it was
placed in service. The Company expects further losses from its equity investment
in NOARK until the pipeline is able to increase its level of throughput and
until improvement occurs in the competitive conditions which determine the
transportation rates NOARK can charge. NOARK provides additional pipeline
capacity to a portion of the Arkoma Basin in Arkansas which was not previously
adequately served by pipelines offering firm transportation. NOARK competes
primarily with two interstate pipelines in its gathering area. One of those
elected to become an open access transporter subsequent to NOARK's start of
construction. The increased availability of interruptible transportation service
has intensified the competitive environment within which
8
NOARK operates. The Company and the other partners of NOARK are currently
investigating several options which would improve NOARK's future financial
prospects.
The Company is subject to laws and regulations relating to the protection
of the environment. The Company's policy is to accrue environmental and cleanup
related costs of a noncapital nature when it is both probable that a liability
has been incurred and when the amount can be reasonably estimated. The Company
has no material amounts accrued at December 31, 1995. Additionally, management
believes any future remediation or other compliance related costs will not have
any material effect upon capital expenditures, earnings, or the competitive
position of the Company's subsidiaries.
REAL ESTATE DEVELOPMENT
A. W. Realty Company (AWR) owns an interest in approximately 170 acres of
real estate, most of which is undeveloped. AWR's real estate development
activities are concentrated on a 130-acre tract of land located near the
Company's headquarters in a growing part of Fayetteville, Arkansas. The Company
has owned an interest in this land for many years. The property is zoned for
commercial, office, and multi-family residential development. AWR continues to
review with a joint venture partner various options for developing this property
which would minimize the Company's initial capital expenditures but still enable
it to retain an interest in any appreciation in value. This activity, however,
does not represent a significant portion of the Company's business.
EMPLOYEES
At December 31, 1995, the Company had 667 employees, 88 of whom are
represented under a collective bargaining agreement.
INDUSTRY SEGMENT AND STATISTICAL INFORMATION
The following portions of the 1995 Annual Report to Shareholders (filed as
Exhibit 13 to this filing) are hereby incorporated by reference for the purpose
of providing additional information about its business. Refer to page 27 (Note 9
to the financial statements) for information about industry segments and pages
30 and 31 ("Financial and Operating Statistics") for additional statistical
information, including the average sales price per unit of gas produced and of
oil produced and the average production cost per unit.
Item 2. PROPERTIES
The portions of the Registrant's 1995 Annual Report to Shareholders (filed
as Exhibit 13 to this filing) listed below are hereby incorporated by reference
for the purpose of describing its properties.
Refer to the Appendix (filed as part of Exhibit 13 to this filing) for
information concerning areas of operation of the Company's gas distribution
systems. For information concerning the Company's exploration and production
areas of operation, also refer to the Appendix. See the table entitled
"Operating Properties" at the Appendix for information concerning miles of pipe
of the Company's gas distribution systems and for information regarding
leasehold acreage and producing wells by geographic region of the Company's
exploration and production segment. Also, see pages 24 through 26 (Notes 5 and 6
to the financial statements) for additional information about the Company's gas
and oil operations. For information concerning capital expenditures, refer to
page 14 ("Capital Expenditures" section of "Management's Discussion and Analysis
of Financial Condition and Results of Operations"). Also refer to page 31
("Financial and Operating Statistics") for information concerning gas and oil
wells drilled and gas and oil produced.
9
The following information is provided to supplement that presented in the
1995 Annual Report to Shareholders:
NET WELLS DRILLED DURING THE YEAR
Exploratory
Productive
Year Wells Dry Holes Total
---- ---------- --------- -----
1995 . . . . . . . . . 6.3 7.1 13.4
1994 . . . . . . . . . 4.7 1.8 6.5
1993 . . . . . . . . . 2.8 4.0 6.8
Development
Productive
Year Wells Dry Holes Total
---- ---------- --------- -----
1995 . . . . . . . . . 37.5 19.4 56.9
1994 . . . . . . . . . 45.5 14.7 60.2
1993 . . . . . . . . . 37.9 10.5 48.4
WELLS IN PROGRESS AS OF DECEMBER 31, 1995
Type of Well Gross Net
------------ ----- ----
Exploratory........................ 8.0 5.1
Development........................ 9.0 7.3
----- ----
Total.............................. 17.0 12.4
===== ====
Due to the insignificance of the Company's oil reserves and producing oil
wells to its total reserves and producing wells, separate disclosure of gas and
oil producing wells has not been made.
No individually significant discovery or other major favorable or adverse
event has occurred since December 31, 1995.
During 1995, SEECO and SEPCO were required to file Form 23, "Annual Survey
of Domestic Oil and Gas Reserves" with the Department of Energy. The basis for
reporting reserves on Form 23 is not comparable to the reserve data included in
Note 6 to the financial statements in the 1995 Annual Report to Shareholders.
The primary differences are that Form 23 reports gross reserves, including the
royalty owners' share and includes reserves for only those properties where
either SEECO or SEPCO is the operator.
Item 3. LEGAL PROCEEDINGS
The Company has been advised of a potential claim against it involving the
disputed ownership of overriding royalty interests in a number of oil and gas
properties and related matters. The Company has begun discussions with the
claimant and has engaged special counsel to assist it in a preliminary
investigation of the claim's merits. The Company is unable to predict at this
time whether litigation will be commenced in respect of this claim or how the
claim will ultimately be resolved. While the amount of the potential claim is
significant in the aggregate, management believes, based on its preliminary
investigation, that the Company's ultimate liability, if any, will not be
material to its consolidated financial position or results of operations.
10
The Company and its subsidiaries are involved in various other legal
proceedings arising in the ordinary course of business. While the outcome of
lawsuits or other proceedings cannot be predicted with certainty, management
expects these matters will not have a material adverse effect on the
consolidated financial position or results of operations of the Company.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fourth quarter of the fiscal year
ended December 31, 1995, to a vote of security holders, through the solicitation
of proxies or otherwise.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following is information with regard to executive officers of the
Company:
Name Officer Position Age
---- ---------------- ---
Charles E. Scharlau..... Chairman of the Board (since 1979), Southwestern 68
Energy Company and Subsidiaries,
and Chief Executive Officer (since
1968), Southwestern Energy Company.
Dan B. Grubb............ President and Chief Operating Officer (since 1992), 60
Director (1988-1992), Southwestern Energy Company.
Chairman and Chief Executive Officer of Grubb
Industries, Inc., and Investor and Business Consultant
(since 1988). Previously, President and Chief Operating
Officer, Midcon Corporation (since 1987).
Stanley D. Green........ Executive Vice President - Finance and Corporate 42
Development (since 1992), and Chief Financial Officer
(since 1987), Vice President - Treasurer and Secretary
(since 1987), Controller (since 1981), Southwestern
Energy Company and Subsidiaries.
B. Brick Robinson....... Executive Vice President and Chief Operating Officer 65
(since 1988), Southwestern Energy Production Company
and SEECO, Inc. (subsidiaries of Southwestern Energy
Company). Previously, various positions with
Occidental Petroleum Corporation and its subsidiaries,
including Vice President, Far East and Domestic
Frontier Exploration, Occidental International (since
1985).
Gregory D. Kerley....... Vice President - Treasurer and Secretary (since 1992), 40
and Chief Accounting Officer (since 1990), Controller
(since 1990), Southwestern Energy Company and
Subsidiaries. Previously, Treasurer and Controller,
Agate Petroleum, Inc. (since 1984).
All officers are elected at the Annual Meeting of the Board of Directors
for one-year terms or until their successors are duly elected. There are no
arrangements between any officer and any other person pursuant to which he was
selected as an officer. There is no family relationship between any of the named
executive officers or between any of them and the Company's directors.
Information concerning compliance with Section 16(a) of the Securities Exchange
Act of 1934, as amended, is presented in the definitive Proxy
11
Statement dated March 27, 1996, under the section entitled "Security Ownership
of Directors, Nominees, and Executive Officers" and is incorporated herein by
reference.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Shareholder Information on page 32 and "Common Stock Statistics" included
in the Company's Financial and Operating Statistics on page 30 of the 1995
Annual Report to Shareholders (filed as Exhibit 13 to this filing) are hereby
incorporated by reference for information concerning the market for and prices
of the Company's Common Stock, the number of shareholders, and cash dividends
paid.
The terms of the Company's long-term debt instruments and agreements impose
restrictions on the payment of cash dividends. At December 31, 1995, $103.0
million of retained earnings was available for payment as cash dividends. These
covenants generally limit the payment of dividends in a fiscal year to the total
of net income plus $20.0 million less dividends paid and purchases, redemptions
or retirements of capital stock during the period since January 1, 1990.
The Company paid dividends at an annual rate of $.24 per share in 1995 and
1994. While the Board of Directors intends to continue the practice of paying
dividends quarterly, amounts and dates of such dividends as may be declared will
necessarily be dependent upon the Company's future earnings and capital
requirements.
Item 6. SELECTED FINANCIAL DATA, AND
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, AND
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following portions of the 1995 Annual Report to Shareholders (filed as
Exhibit 13 to this filing) are hereby incorporated by reference.
Refer to page 30 ("Financial and Operating Statistics") for selected
financial data of the Company.
Refer to the text on pages 10 through 15 for "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
Refer to pages 17 through 29 for financial statements and supplementary
data.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no changes in or disagreements with accountants on
accounting and financial disclosure.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The definitive Proxy Statement to holders of the Company's Common Stock in
connection with the solicitation of proxies to be used in voting at the Annual
Meeting of Shareholders on May 13, 1996 (the 1996 Proxy Statement), is hereby
incorporated by reference for the purpose of providing information about the
identification of directors. Refer to the sections "Election of Directors" and
"Security Ownership of Directors, Nominees, and Executive Officers" for
information concerning the directors.
Information concerning executive officers is presented in Part I, Item 4 of
this Form 10-K.
12
Item 11. EXECUTIVE COMPENSATION
The 1996 Proxy Statement is hereby incorporated by reference for the
purpose of providing information about executive compensation. Refer to the
section "Executive Compensation."
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The 1996 Proxy Statement is hereby incorporated by reference for the
purpose of providing information about security ownership of certain beneficial
owners and management. Refer to the section "Security Ownership of Directors,
Nominees, and Executive Officers" for information about security ownership of
certain beneficial owners and management.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The 1996 Proxy Statement is hereby incorporated by reference for the
purpose of providing information about related transactions. Refer to the
section "Security Ownership of Directors, Nominees, and Executive Officers" for
information about transactions with members of the Company's Board of Directors.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) The following consolidated financial statements of the Company and
its subsidiaries, included on pages 17 through 29 of its 1995 Annual Report to
Shareholders (filed as Exhibit 13 to this filing) and the report of independent
auditors on page 16 of such report are hereby incorporated by reference:
Report of Independent Auditors.
Consolidated Balance Sheets as of December 31, 1995 and 1994.
Consolidated Statements of Income for the years ended December 31,
1995, 1994, and 1993.
Consolidated Statements of Cash Flows for the years ended December
31, 1995, 1994, and 1993.
Consolidated Statements of Retained Earnings for the years ended
December 31, 1995, 1994, and 1993.
Notes to Consolidated Financial Statements, December 31, 1995, 1994,
and 1993.
(2) The consolidated financial statement schedules have been omitted
because they are not required under the related instructions, or are
inapplicable and therefore have been omitted.
(3) The exhibits listed on the accompanying Exhibit Index (pages 15 - 17)
are filed as part of, or incorporated by reference into, this Report.
(b) Reports on Form 8-K:
A Current Report on Form 8-K was filed on December 21, 1995,
referencing the opinions of Cleary, Gottlieb, Steen and Hamilton and
Jeffrey L. Dangeau, as to the validity of the Company's 6.70% Senior
Notes due 2005, issued on December 5, 1995.
13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused the report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SOUTHWESTERN ENERGY COMPANY
---------------------------
(Registrant)
Dated: March 25, 1996 BY: /s/ STANLEY D. GREEN
----------------------------
Stanley D. Green,
Executive Vice President - Finance
and Corporate Development, and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on March 25, 1996.
/s/ CHARLES E. SCHARLAU Director, Chairman, and
- --------------------------- Chief Executive Officer
Charles E. Scharlau
/s/ STANLEY D. GREEN Executive Vice President -
- --------------------------- Finance and Corporate Development,
Stanley D. Green and Chief Financial Officer
/s/ GREGORY D. KERLEY Vice President - Treasurer
- --------------------------- and Secretary, and
Gregory D. Kerley Chief Accounting Officer
/s/ JOHN PAUL HAMMERSCHMIDT Director
- ---------------------------
John Paul Hammerschmidt
/s/ ROBERT L. HOWARD Director
- ---------------------------
Robert L. Howard
/s/ KENNETH R. MOURTON Director
- ---------------------------
Kenneth R. Mourton
/s/ CHARLES E. SANDERS Director
- ---------------------------
Charles E. Sanders
Supplemental Information to be Furnished With Reports Filed Pursuant to
Section 15(d) of the Act by Registrants Which Have Not Registered Securities
Pursuant to Section 12 of the Act.
Not Applicable
14
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
3. Articles of Incorporation and Bylaws of the Company (amended and
restated Articles of Incorporation incorporated by reference to Exhibit
3 to Annual Report on Form 10-K for the year ended December 31, 1993);
Bylaws of the Company (amended Bylaws of the Company incorporated by
reference to Exhibit 3 to Annual Report on Form 10-K for the year ended
December 31, 1994).
4.1 Shareholder Rights Agreement, dated May 5, 1989 (incorporated by
reference to Exhibit 1 filed with the Company's Form 8-K on May 10,
1989).
4.2 Prospectus, Registration Statement, and Indenture on 6.70% Senior Notes
due December 1, 2005 and issued December 5, 1995 (incorporated by
reference to the Company's Forms S-3 and S-3/A filed on November 1,
1995, and November 17, 1995, respectively, and also to the Company's
filings of a Prospectus and Prospectus Supplement on November 22, 1995,
and December 4, 1995, respectively).
MATERIAL CONTRACTS:
10.1 Gas Purchase Contract between SEECO, Inc., and Arkansas Western Gas
Company, dated July 24, 1978, as amended May 21, 1979, and Amended and
Restated as of July 1, 1994 (incorporated by reference to Exhibit 10.1
to Annual Report on Form 10-K for the year ended December 31, 1994).
10.2 Agreement between Southwestern Energy Company, Arkansas Western Gas
Company, Arkansas Power & Light Company and Associated Natural Gas
Company, dated September 1, 1987, as amended February 22, 1988, and May
16, 1988 (original agreement and first amendment to the Agreement
incorporated by reference to Exhibit 10 to Annual Report on Form 10-K
for the year ended December 31, 1987; second amendment to the Agreement
thereto incorporated by reference to Exhibit 10 to Annual Report on Form
10-K for the year ended December 31, 1988).
10.3 Gas Purchase Contract between SEECO, Inc. and Associated Natural Gas
Company, dated October 1, 1990 (incorporated by reference to Exhibit 10
to Annual Report on Form 10-K for the year ended December 31, 1990).
10.4 Compensation Plans:
(a) Summary of Southwestern Energy Company Annual and Long-Term
Incentive Compensation Plan, effective January 1, 1985, as
amended July 10, 1989 (replaced by Southwestern Energy Company
Incentive Compensation Plan, effective January 1, 1993) (original
plan incorporated by reference to Exhibit 10 to Annual Report on
Form 10-K for the year ended December 31, 1984; first amendment
thereto incorporated by reference to Exhibit 10 to Annual Report
on Form 10-K for the year ended December 31, 1989).
(b) Summary of Southwestern Energy Company Incentive Compensation
Plan, effective January 1, 1993 (incorporated by reference to
Exhibit 10.4(b) to Annual Report on Form 10-K for the year ended
December 31, 1993).
15
Exhibit
No. Description
- ------- -----------
(c) Nonqualified Stock Option Plan, effective February 22, 1985, as
amended July 10, 1989 (replaced by Southwestern Energy Company
1993 Stock Incentive Plan, dated April 7, 1993) (original plan
incorporated by reference to Exhibit 10 to Annual Report on Form
10-K for the year ended December 31, 1985; amended plan
incorporated by reference to Exhibit 10 to Annual Report on Form
10-K for the year ended December 31, 1989).
(d) Southwestern Energy Company 1993 Stock Incentive Plan, dated
April 7, 1993 (incorporated by reference to the appendix filed
with the Company's definitive Proxy Statement to holders of the
Registrant's Common Stock in connection with the solicitation of
proxies to be used in voting at the Annual Meeting of
Shareholders on May 26, 1993).
(e) Southwestern Energy Company 1993 Stock Incentive Plan for Outside
Directors, dated April 7, 1993 (incorporated by reference to the
appendix filed with the Company's definitive Proxy Statement to
holders of the Registrant's Common Stock in connection with the
solicitation of proxies to be used in voting at the Annual
Meeting of Shareholders on May 26, 1993).
10.5 Southwestern Energy Company Supplemental Retirement Plan, adopted May
31, 1989, and Amended and Restated as of December 15, 1993, and as
further amended February 1, 1996 (amended and restated plan incorporated
by reference to Exhibit 10.5 to Annual Report on Form 10-K for the year
ended December 31, 1993; amendment dated February 1, 1996, filed
herewith).
10.6 Southwestern Energy Company Supplemental Retirement Plan Trust, dated
December 30, 1993 (incorporated by reference to Exhibit 10.6 to Annual
Report on Form 10-K for the year ended December 31, 1993).
10.7 Southwestern Energy Company Nonqualified Retirement Plan, effective
October 4, 1995 (filed herewith).
10.8 Split-Dollar Life Insurance agreement for Stanley D. Green, effective
February 1, 1996 (filed herewith).
10.9 Executive Severance Agreement for Charles E. Scharlau, effective August
4, 1989 (incorporated by reference to Exhibit 10 to Annual Report on
Form 10-K for the year ended December 31, 1989).
10.10 Executive Severance Agreement for Stanley D. Green, effective August 4,
1989 (incorporated by reference to Exhibit 10 to Annual Report on Form
10-K for the year ended December 31, 1989).
10.11 Executive Severance Agreement for B. Brick Robinson, effective August 4,
1989 (incorporated by reference to Exhibit 10 to Annual Report on Form
10-K for the year ended December 31, 1989).
10.12 Executive Severance Agreement for Dan B. Grubb, effective July 8, 1992
(incorporated by reference to Exhibit 10.13 to Annual Report on Form
10-K for the year ended December 31, 1992).
10.13 Executive Severance Agreement for Gregory D. Kerley, effective December
14, 1994 (incorporated by reference to Exhibit 10.11 to Annual Report on
Form 10-K for the year ended December 31, 1994).
16
Exhibit
No. Description
- ------- -----------
10.14 Employment Agreement for Charles E. Scharlau, dated December 18, 1990,
effective January 1, 1991, as amended December 7, 1994 (original
agreement incorporated by reference to Exhibit 10 to Annual Report on
Form 10-K for the year ended December 31, 1990; amended agreement
incorporated by reference to Exhibit 10.12 to Annual Report on Form 10-K
for the year ended December 31, 1994).
10.15 Employment Agreement for Dan B. Grubb, effective July 8, 1992
(incorporated by reference to Exhibit 10.16 to Annual Report on Form
10-K for the year ended December 31, 1992).
10.16 Form of Indemnity Agreement, between the Company and each officer and
director of the Company (Incorporated by reference to Exhibit 10.20 to
Annual Report on Form 10-K for the year ended December 31, 1991).
10.17 Agreement for Sale of Partnership Interest between Southwestern Energy
Pipeline Company and GRUBB NOARK Pipeline, Inc., dated July 24, 1992
(incorporated by reference to Exhibit 10.25 to Annual Report on Form
10-K for the year ended December 31, 1992).
13. 1995 Annual Report to Shareholders, except for those portions not
expressly incorporated by reference into this Report. Those portions not
expressly incorporated by reference are not deemed to be filed with the
Securities and Exchange Commission as part of this Report (filed
herewith).
22. Subsidiaries of the Registrant (incorporated by reference to Exhibit 22
to Annual Report on Form 10-K for the year ended December 31, 1992).
17