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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
For the fiscal year ended December 31, 1996
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or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
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 its 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, P.O.Box 1408, Fayetteville, Arkansas 72702-1408
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(Address of principal executive offices, including 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
Title of each class on 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. X
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The aggregate market value of the voting stock held by non-affiliates of
the Registrant was $342,761,748 based on the New York Stock Exchange - Composite
Transactions closing price on March 25, 1997 of $14.
The number of shares outstanding as of March 25, 1997, of the
Registrant's Common Stock, par value $.10, was 24,722,332.
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 the year ended December 31, 1996 - 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 22, 1997 - PART III.
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SOUTHWESTERN ENERGY COMPANY
FORM 10-K
ANNUAL REPORT
For the Year Ended December 31, 1996
TABLE OF CONTENTS
PART I
Page
Item 1. Business............................................................................. 1
Natural gas and oil exploration and production....................................... 1
Natural gas distribution, transmission, and marketing ............................... 5
Real estate development.............................................................. 9
Employees............................................................................ 9
Industry segment and statistical information......................................... 9
Item 2. Properties........................................................................... 9
Item 3. Legal Proceedings.................................................................... 11
Item 4. Submission of Matters to a Vote of Security Holders.................................. 11
Executive Officers of the Registrant................................................. 12
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters................ 13
Item 6. Selected Financial Data.............................................................. 13
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 13
Item 8. Financial Statements and Supplementary Data.......................................... 13
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 13
PART III
Item 10. Directors and Executive Officers of the Registrant................................... 13
Item 11. Executive Compensation............................................................... 14
Item 12. Security Ownership of Certain Beneficial Owners and Management....................... 14
Item 13. Certain Relationships and Related Transactions....................................... 14
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K..................... 14
PART I
Item 1. Business
Southwestern Energy Company (the Company or Southwestern) is a diversified
energy company primarily focused on natural gas. The Company is engaged in oil
and gas exploration and production, natural gas gathering, transmission and
marketing, and natural gas distribution. The Company's exploration and
production activities are concentrated in Arkansas, Oklahoma, Texas, New Mexico,
south Louisiana, and the Gulf Coast. The gas distribution segment operates in
northern Arkansas and parts of Missouri. Marketing and transportation activities
are concentrated in the Company's core areas of operations. 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), Southwestern Energy Production
Company (SEPCO), and Diamond "M" Production Company (Diamond M). 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, the Midland Basin of Texas
and the Delaware Basin of New Mexico. Diamond M operates properties in the
Midland Basin of Texas.
The Company's subsidiary Arkansas Western Gas Company (Arkansas Western)
operates integrated natural gas distribution systems in Arkansas and Missouri
serving approximately 173,000 customers. Arkansas Western is the largest single
purchaser of SEECO's gas production. Southwestern Energy Services Company
(Energy Services) is an emerging full-service energy marketing company,
initially focused on optimizing the value created by the Company's business
activities. 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, Oklahoma, west Texas, New Mexico and
the Gulf Coast areas of Louisiana and Texas. At December 31, 1996, the Company
had proved natural gas reserves of 297.5 billion cubic feet (Bcf) and
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proved oil reserves of 8,238 thousand barrels (MBbls). Revenues of the
exploration and production subsidiaries are predominately generated from
production of natural gas. The Company's gas production was 34.8 Bcf in 1996, up
from 34.5 Bcf in 1995. Sales of gas production accounted for 90% of total
operating revenues for this segment in 1996, 93% in 1995, and 96% in 1994. The
Company also produced 391,000 barrels of oil in 1996, up from 229,000 barrels in
1995. Combined production of oil and gas was 37.1 Bcf equivalent (Bcfe) in 1996,
up from 35.9 Bcfe in 1995.
SEECO's largest customer for sales of its gas production is the Company's
utility subsidiary, Arkansas Western. Sales to Arkansas Western accounted for
approximately 46% of total exploration and production revenues in 1996, 47% in
1995, and 46% in 1994.
Gas volumes sold by SEECO to Arkansas Western for its northwest Arkansas
division (AWG) were 10.1 Bcf in 1996, 8.5 Bcf in 1995, and 8.8 Bcf in 1994.
Through these sales, SEECO furnished 62% of the northwest Arkansas system's
requirements in 1996, 65% in 1995, and 64% in 1994. SEECO also delivered
approximately 1.1 Bcf in 1996, 1.4 Bcf in 1995, and 1.5 Bcf in 1994 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 was frozen between 1984 and 1994. This
contract was amended in 1994 as a result of a settlement reached to resolve
certain gas cost issues before the Arkansas Public Service Commission (APSC)
hereafter referred to as the "Gas Cost Settlement". The Gas Cost Settlement
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
amended contract provides that volumes equal to the historical level of sales
under the contract will be sold at the spot market index plus a premium of $.95
per thousand cubic feet (Mcf), while incremental sales volumes receive a premium
of $.50 per Mcf. In 1996, 8.6 Bcf (net to the Company's interest) was sold under
the contract, compared to 7.7 Bcf in 1995 and 8.1 Bcf in 1994. The sales price
under this contract averaged $3.03 per Mcf in 1996, $2.40 per Mcf in 1995, and
$2.98 per Mcf in 1994. 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 Associated Natural Gas Company (Associated), a division of
Arkansas Western which operates natural gas distribution systems in northeast
Arkansas and parts of Missouri, were 6.2 Bcf in 1996, 5.4 Bcf in 1995, and 5.1
Bcf in 1994. These deliveries accounted for approximately 62% of Associated's
total requirements in 1996, 59% in 1995, and 58% in 1994. 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 $2.385 per Mcf for the contract period ended
September 30, 1994, at $2.20 per Mcf for the contract period ended September 30,
1995, at $1.785 per Mcf for the contract period ended September 30, 1996, and
are currently being made at a price of $2.225 per Mcf.
Sales to unaffiliated purchasers accounted for 53% of total gas volumes
sold by the exploration and production segment in 1996, 60% in 1995, and 63% in
1994. The Company expects future increases in its gas production to come
primarily from production outside Arkansas sold to unaffiliated purchasers.
SEECO's sales to unaffiliated purchasers were 6.7 Bcf in 1996, 10.3 Bcf in 1995,
and 10.7 Bcf in 1994. 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. 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 distribution, transmission, and marketing." SEECO's sales to
unaffiliated customers is also affected by the demand of the utility for
production on its gathering system. SEECO's sales
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to unaffiliated purchasers accounted for approximately 14% of total exploration
and production revenues in 1996, 21% in 1995, and 22% in 1994.
At December 31, 1996, the gas and oil reserves of SEPCO and Diamond M were
located primarily in Oklahoma, west Texas, and the Gulf Coast areas of Louisiana
and Texas. These subsidiaries hold about 27% of the Company's natural gas
reserves and all of its oil reserves. SEPCO's and Diamond M's combined gas sales
were 11.7 Bcf in 1996, up from 10.3 Bcf in 1995 and down from 13.1 Bcf in 1994.
The increase in 1996 was primarily due to acquisitions of producing properties
in recent years. SEPCO's and Diamond M's gas production is sold under contracts
with unaffiliated purchasers which reflect current short-term prices and which
are subject to seasonal price swings. Oil production was 391 MBbls in 1996,
compared to 229 MBbls in 1995 and 200 MBbls in 1994. The increase in oil
production in 1996 and 1995 primarily resulted from acquisitions of producing
properties during those years.
The Company's exploration program has been directed primarily 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. At the end of 1996, oil
accounted for 14% of the Company's proved reserves, up from 4% at the end of
1995. The increase in oil reserves was primarily related to the acquisition of
the oil and gas producing properties of L.B. Simmons, Inc. (Simmons), effective
November 1, 1996. SEPCO's and Diamond M's combined gas and oil sales accounted
for 39% of total exploration and production operating revenues in 1996, 31% in
1995, and 33% in 1994.
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, 1996, after transfers and
revisions, the remaining proved undeveloped reserves identified by the study
were 36.4 Bcf. The data base developed is periodically updated by drilling
activity and provides guidance to the Company's development drilling program.
The development drilling program added 12.1 Bcf in 1996, 17.1 Bcf in 1995, and
22.2 Bcf in 1994 of new natural gas reserve additions. SEECO participated in a
total of 61 development wells during 1996 with a completion rate of 69%.
During recent years the Company increased its emphasis on acquisitions of
producing properties. The Company acquired approximately 32.7 Bcf of gas and
6,350 MBbls of oil during 1996, 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 1996 acquisitions
were primarily in Texas and Oklahoma, 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. The largest acquisition completed
by the Company in 1996 was a transaction in which the Company acquired
substantially all the oil and gas properties owned by L.B. Simmons Energy, Inc.
of Houston for $30.9 million. The acquisition closed on November 1, 1996. Proved
reserves acquired were 6 million barrels of oil and 17 Bcf of natural gas,
located primarily in west Texas and Oklahoma. The oil reserves are predominantly
produced through secondary recovery. The properties offer the potential for
additional production through recompletions and development drilling. The other
large acquisition completed in 1996 was the purchase of reserves which totaled
16.9 Bcfe in four fields in south Texas from a major oil company. The purchase
price was $13.5 million.
Outside Arkansas, the Company added from drilling 4.4 Bcf of new reserves
in 1996, 18.0 Bcf in 1995, and 8.7 Bcf in 1994. Of that total, .5 Bcf in 1996,
11.3 Bcf in 1995, and 8.5 Bcf in 1994 were from discoveries in the coastal areas
of Texas and Louisiana. The cost of reserve additions in recent years has
reflected the increased emphasis in spending for leasehold and seismic costs as
the Company has been
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establishing an inventory of prospects for future drilling. South Louisiana and
the Gulf Coast region continues to be the primary focus of most of the Company's
exploration activity.
Southwestern's initial strategy during entry into south Louisiana and the
upper Texas Gulf Coast revolved around participating in wells drilled to prove a
prospect. These exploratory wells had the potential for significant reserve
additions, but development opportunities were limited and a dry hole generally
condemned the prospect. This initial strategy did not meet Southwestern's
reserve growth and production goals, but it did enable the Company to establish
a presence in the region. As 3-D seismic technology became more widely accepted
as an exploration tool, Southwestern gained entry to a number of high potential
joint ventures to develop multiple, high quality prospects. The Company's
typical project relies on options to obtain access to leasehold acreage over a
large prospective area. The committed acreage is evaluated for lease after 3-D
seismic data is acquired, thus optimizing the Company's investment.
Participation in these projects has required a heavy investment prior to
drilling. The Company had incurred $54.0 million of oil and gas property costs
at the end of 1996 which were not being amortized because the related properties
had not been evaluated through drilling. Most of these costs were incurred over
the last three years and are concentrated in south Louisiana and the upper Texas
Gulf Coast. The most significant ventures in which Southwestern is participating
are:
East Atchafalaya: Southwestern became involved in this project in mid-1995
through a 50-50 joint venture with Union Pacific Resources. The venture acquired
130 square miles of proprietary 3-D seismic data covering portions of St. Martin
and Iberia Parishes, Louisiana. The survey area covers a number of large gas
fields. Options are held on 100,000 acres with rights to all depths. An
inventory of 10 defined prospects has been developed to date. These prospects
range from lower risk development type wells to higher risk exploration wells
with high potentials, some with the possibility of reserves in excess of 100 Bcf
of gas. Two wells-one higher risk and one lower risk-have spudded since late
January, 1997. At least two additional wells are planned for 1997.
Henry: This project was originated by Southwestern and includes the
acquisition of 130 square miles of proprietary 3-D seismic data in Vermillion
and Iberia Parishes, Louisiana. The area covered is a prolific gas producing
region, including fields which have produced in excess of 1.7 trillion cubic
feet of gas and 57 million barrels of oil. The data acquired will be merged with
Southwestern's Abbeville survey, covering an area to the immediate west, to
create a proprietary data volume encompassing more than 180 square miles.
Prospects to be generated are expected to range from low risk development wells
to high potential wildcat locations. Data acquisition is presently underway and
should be completed by May, 1997. Southwestern presently owns a 100% working
interest in the project, but plans to market a 50% working interest to an
industry partner. First drilling will likely take place in early 1998.
Boure': The Boure' project is a large regional 3-D survey encompassing
about 275 square miles adjacent to the East Atchafalaya project area.
Southwestern is part of a venture which has 100,000 acres under option. The
venture is in its early stages, but Southwestern expects to retain a 25% working
interest which will be carried at a small cost through the lease option and data
acquisition stages. Drilling is expected to begin in 1999.
East Galveston Bay: This project was originated by Southwestern and
currently includes two prospects in Texas state waters of East Galveston Bay.
Southwestern is retaining a 50% working interest in the project after its recent
sale of the other 50% working interest to Texas Meridian Resources. Currently,
6,900 acres are under lease. Southwestern recently accepted delivery of 138
square miles of non-proprietary 3-D seismic data covering East Galveston Bay and
will be using the data to further define the existing properties and to identify
additional acreage which may be obtained at upcoming state lease sales. The two
prospects
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identified thus far target drilling to depths between 14,000 feet and 18,000
feet and have reserve potentials in excess of 100 Bcfe. First drilling is
expected in the second half of 1997.
Southwestern also has interests in three other smaller prospect areas in
south Louisiana which are supported by 3-D seismic data and has active
exploration prospects in Oklahoma and New Mexico. The Company's strategy is to
balance the risks inherent in its exploration program with continued development
drilling, primarily in the Arkoma Basin of Arkansas, and with producing property
acquisitions in its core operating areas.
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. Additionally, at
December 31, 1996, the Company controls through lease options in excess of
225,000 gross acres in south Louisiana.
The Company expects its 1997 capital expenditures for gas and oil
exploration and development to total $75.4 million, down from $110.3 million in
1996. Expenditures in 1997 for this segment include $20.0 million for producing
property acquisitions and $16.0 million for continuation of the Company's Arkoma
Basin development drilling program. Spending plans for 1997 will direct more
funds toward the drilling of exploratory wells, reflecting the inventory of
drilling prospects which has been established. 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 distribution, transmission, and marketing
The Company's natural gas distribution operations are concentrated
primarily in north Arkansas and southeast Missouri. The Company serves
approximately 173,000 retail customers and obtains a substantial portion of the
gas they consume through its Arkoma Basin gathering facilities. A new Energy
Services group was formed in 1996 to create and capture value existing beyond
the wellhead in midstream activities, concentrating on building opportunities
from the Company's existing asset base. The Company is also a 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 105,000 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 68,000
customers primarily in northeast Arkansas and southeast Missouri. Associated,
formerly a wholly-
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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. Deliveries to industrial customers have increased for the
tenth consecutive year, reflecting both the success of the Company's industrial
marketing efforts and the continued economic strength of its service territory.
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. 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 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. The minimums can be met by aggregating
facilities under common ownership. Transportation service is available in
Missouri to any customer whose average monthly usage exceeds 2,000 Mcf. A total
of twelve customers are currently using the Arkansas transportation service,
including six of AWG's seven largest customers in northwest Arkansas and
Associated's four largest customers in northeast Arkansas. Ten of Associated's
twelve largest Missouri customers are currently using transportation service. No
industrial customer accounts for more than 6% of Arkansas Western's total
throughput.
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AWG purchases its system gas supply directly at the wellhead under
long-term contracts. Purchases are made from approximately 254 working interest
owners in 502 producing wells. As previously indicated, SEECO furnished
approximately 62% of AWG's system requirements in 1996, 65% in 1995, and 64% in
1994. A significant portion of AWG's unaffiliated supply comes from market
responsive, long-term contracts.
At December 31, 1996, AWG had a gas supply available to its northwest
Arkansas system of approximately 196 Bcf of proved developed reserves, equal to
12 times current annual usage. Of this total, approximately 97 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.
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 Federal Energy Regulatory Commission's (FERC)
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
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 $2.7 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 $2.1 million of the contract reformation
costs and take-or-pay costs from its utility sales customers in the state of
Missouri. Of the remaining unrecovered contract reformation and take-or-pay
costs, $.5 million is applicable to Associated's transportation customers in the
state of Missouri and $.1 million is applicable to all transportation customers
in the state of Arkansas.
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,
7
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 supply
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.
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 recently as tariffs implemented as a result of a recent rate
increase for the Company's AWG division contain a weather normalization clause
to lessen the impact of revenue increases and decreases which might result from
weather variations during the winter heating season.
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 3.0% to 4.0% annually,
while Associated has experienced customer growth of approximately 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 Arkansas Public Service Commission (APSC) and the Missouri
Commission regulate the Company's utility rates and operations. In December,
1996, AWG received approval from the APSC for a rate increase of $5.1 million
annually. In January, 1997, the Company filed rate increase requests totaling
$5.4 million with the APSC and the Missouri Commission for Associated's
operations. The APSC has 10 months and the Missouri Commission has 11 months to
respond to the requests. 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.
The Company formed an Energy Services division during 1996 to better enable
the Company to capture downstream opportunities which arise through marketing
and transportation activity. Through utilization of existing assets, such as the
Company's unregulated storage facility and its interest in NOARK, the Energy
Services group's mission is to optimize the value created by the Company's
business activities. The group is also focused on the expansion of third party
business, creating a framework of options to better serve the needs of its
customer base. The Energy Services group will enable Southwestern to compete
effectively in a changing energy environment and reflects the Company's
recognition that a full service approach is required to meet the needs of its
customers.
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. In 1996, NOARK had an average daily throughput of 58 MMcfd, compared to 86
MMcfd in 1995, and 82 MMcfd in 1994. Arkansas Western has contracted for 41
MMcfd of firm capacity on NOARK under a
8
transportation contract with an original term of ten years. The remaining term
of that contract is six years and the contract is renewable year to year until
terminated by 180 days notice.
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. The Company and the partners of NOARK are
currently investigating options which would improve NOARK's future financial
prospects, including an extension into Oklahoma that would provide additional
access to gas supply.
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, 1996. 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, 1996, the Company had 689 employees, 99 of whom are
represented under a collective bargaining agreement.
Industry segment and statistical information
The following portions of the 1996 Annual Report to Shareholders (filed as
Exhibit 13 to this filing) are hereby incorporated by reference for the purpose
of providing additional information about the Company's business. Refer to page
35 (Note 9 to the financial statements) for information about industry segments
and pages 38 and 39 ("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 1996 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 "Gas
Distribution Systems" at the Appendix for information concerning miles of pipe
of the Company's gas distribution systems. Also, see pages 32 and 33 (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 22 ("Capital Expenditures" section
9
of "Management's Discussion and Analysis of Financial Condition and Results
of Operations"). Also refer to page 39 ("Financial and Operating Statistics")
for information concerning gas and oil produced.
The following information is provided to supplement that presented in the
1996 Annual Report to Shareholders:
Acreage and Producing Wells
Undeveloped Developed Wells
Gross Net Gross Net Gross Net
------------------------------------------------------------------------
Arkansas 206,857 96,367 301,238 138,901 762 401.4
Louisiana 31,340 19,845 39,646 6,695 51 23.5
Oklahoma 33,269 17,271 105,628 45,682 1,193 262.5
Texas 34,839 17,590 71,908 23,293 401 249.3
New Mexico 9,040 7,064 22,951 8,371 21 12.5
Other areas 378 378 18,192 4,778 135 37.8
------------------------------------------------------------------------
315,723 158,515 559,563 227,720 2,563 987.0
========================================================================
Net Wells Drilled During the Year
Exploratory
Productive
Year Wells Dry Holes Total
----------------------------------------------------------------
1996 . . . . . . . . . 5.3 3.0 8.3
1995 . . . . . . . . . 6.3 7.1 13.4
1994 . . . . . . . . . 4.7 1.8 6.5
Development
Productive
Year Wells Dry Holes Total
-----------------------------------------------------------------
1996 . . . . . . . . . 29.4 11.8 41.2
1995 . . . . . . . . . 37.5 19.4 56.9
1994 . . . . . . . . . 45.5 14.7 60.2
10
Wells in Progress as of December 31, 1996
Type of Well Gross Net
-------------------------------------------------------
Exploratory................... 3.0 1.4
Development................... 8.0 4.4
-------------------------------------------------------
Total......................... 11.0 5.8
=======================================================
Due to the insignificance of the Company's crude oil reserves and
production to its total reserves and production, 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, 1996.
During 1996, 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 1996 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
In May, 1996, a lawsuit was filed against the Company involving the
disputed ownership of overriding royalty interests in a number of oil and gas
properties. In a related matter, a purported class action suit was filed against
the Company in May, 1996 on behalf of royalty owners alleging improprieties in
the disbursement of royalty proceeds. The Company feels these claims are
substantially without merit and intends to vigorously contest the claims brought
in each matter. While the amount of the potential claims is significant in the
aggregate, management believes, based on its investigation, that the Company's
ultimate liability, if any, will not be material to its consolidated financial
position or results of operations.
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, 1996, to a vote of security holders, through the solicitation
of proxies or otherwise.
11
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 69
Energy Company and Subsidiaries, and Chief Executive
Officer (since 1968), Southwestern Energy Company
and Subsidiaries.
Harold M. Korell........Executive Vice President and Chief Operating Officer 52
(effective April 28, 1997), Southwestern Energy
Company. Previously, Senior Vice President-Operations
(since 1994), and Vice President-Production (since
1992) of American Exploration Company. Previously,
Executive Vice President of McCormick Resources and
various positions with Tenneco Oil Company, including
Vice President, Production.
Stanley D. Green........Executive Vice President - Finance and Corporate 43
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 66
(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), 41
and Chief Accounting Officer (since 1990), Controller
(since 1990), Southwestern Energy Company and
Subsidiaries.
Debbie J. Branch........Senior Vice President (since 1996), Southwestern 45
Energy Services Company and Southwestern Energy
Pipeline Company (subsidiaries of Southwestern Energy
Company). Previously, Executive Vice President,
Stalwart Energy Company (since 1994), founder and
President of Vesta Energy Company (since 1983).
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.
12
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Shareholder Information on page 41 and "Common Stock Statistics" included
in the Company's Financial and Operating Statistics on page 38 of the 1996
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, 1996, $116.3
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.
Dividends totaling $5.9 million were paid during 1996.
The Company paid dividends at an annual rate of $.24 per share in 1996 and
1995. 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 1996 Annual Report to Shareholders (filed as
Exhibit 13 to this filing) are hereby incorporated by reference.
Refer to pages 38 and 39 ("Financial and Operating Statistics") for
selected financial data of the Company.
Refer to the text on pages 18 through 23 for "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
Refer to pages 25 through 37 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 22, 1997 (the 1997 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.
13
Item 11. Executive Compensation
The 1997 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 1997 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 1997 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 25 through 37 of its 1996 Annual Report to
Shareholders (filed as Exhibit 13 to this filing) and the report of independent
public accountants on page 24 of such report are hereby incorporated by
reference:
Report of Independent Public Accountants.
Consolidated Balance Sheets as of December 31, 1996 and 1995.
Consolidated Statements of Income for the years ended December 31,
1996, 1995, and 1994.
Consolidated Statements of Cash Flows for the years ended December
31, 1996, 1995, and 1994.
Consolidated Statements of Retained Earnings for the years ended
December 31, 1996, 1995, and 1994.
Notes to Consolidated Financial Statements, December 31, 1996,
1995, and 1994.
(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 16 - 18)
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 February 11, 1997,
referencing the press release issued February 10, 1997, announcing
the operating results of the Registrant for 1996.
A Current Report on Form 8-K was filed on February 21, 1997,
referencing the Form of Distribution Agreement dated February 21,
1997, for the Registrants $125,000,000 Medium-Term
Notes program.
14
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 26, 1997 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 26, 1997.
/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
15
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).
4.3 Prospectus Supplement and Form of Distribution Agreement on $125,000,000
of Medium-Term Notes dated February 21, 1997 (Prospectus Supplement
incorporated by reference to the Company's filing of a Prospectus
Supplement on February 21, 1997, Form of Distribution Agreement
incorporated by reference to Exhibit 10 filed with the Company's Form
8-K dated February 21, 1997).
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).
16
Exhibit
No. Description
(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).
(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, incorporated
by reference to Exhibit 10.5 to Annual Report on Form 10-K for the year
ended December 31, 1995).
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 (incorporated by reference to Exhibit 10.7 to Annual
Report of Form 10-K for the year ended December 31, 1995).
10.8 Split-Dollar Life Insurance Agreement for Stanley D. Green, effective
February 1, 1996 (incorporated by reference to Exhibit 10.8 to Annual
Report on Form 10-K for the year ended December 31, 1995).
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 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).
17
Exhibit
No. Description
10.13 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).
10.14 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).
13. 1996 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).
21. Subsidiaries of the Registrant (filed herewith).
27. Financial Data Schedule (filed herewith).
18