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Securities and Exchange Commission
Washington, D.C. 20549
Form 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-8094
Ocean Energy, Inc.
(Exact name of registrant as specified in its charter)
Texas 74-1764876
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1001 Fannin, Suite 1600
Houston, Texas 77002-6714
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 265-6000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, par value $.10 per share New York Stock Exchange
Preferred Stock Purchase Rights 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 ___
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. []
As of March 22, 2000, the aggregate market value of the outstanding shares
of Common Stock of the Company held by non-affiliates (based on the closing
price of these shares on the New York Stock Exchange) was approximately
$1,973,247,000.
As of March 22, 2000, 166,648,211 shares of Common Stock, par value $0.10
per share, were outstanding.
Documents Incorporated by Reference
Document Part of Form 10-K
(1) Annual Report to Shareholders for PARTS I and II
year ended December 31, 1999
(2) Proxy Statement for Annual meeting PART III
of Shareholders to be held on May 10, 2000
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Ocean Energy, Inc.
Index
Page
Part I
Item 1. Business....................................................... 1
Oil and Gas Operations....................................... 2
U.S. Regulation.............................................. 9
Competition.................................................. 10
International Operations..................................... 10
Environmental Matters........................................ 11
Risk Factors................................................. 12
Employees.................................................... 15
Executive Officers of the Company............................ 16
Item 2. Properties................................................... 18
Item 3. Legal Proceedings............................................ 22
Item 4. Submission of Matters to a Vote of Security Holders.......... 22
Part II
Item 5. Market for Registrant's Common Stock and
Related Shareholder Matters................................ 22
Item 6. Selected Financial Data...................................... 23
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations...................................... 23
Item 7a. Quantitative and Qualitative Disclosures About Market Risk... 23
Item 8. Financial Statements and Supplementary Data.................. 23
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure....................................... 24
Part III
Item 10. Directors and Executive Officers of the Registrant........... 24
Item 11. Executive Compensation....................................... 24
Item 12. Security Ownership of Certain Beneficial Owners
and Management............................................. 24
Item 13. Certain Relationships and Related Transactions............... 24
Part IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K........................................ 25
Signatures............................................................. 32
(i)
Ocean Energy, Inc.
Part I
Item 1. Business
Ocean Energy, Inc. (the "Company" or "Ocean") is an independent energy
company engaged in the exploration, development, production, and acquisition of
crude oil and natural gas. North American operations are focused primarily in
the shelf and deepwater areas of the Gulf of Mexico, the Permian Basin,
Midcontinent, Arklatex, South Texas and Rocky Mountain areas. Internationally,
the Company explores for and produces oil and gas in West Africa (Angola, Cote
d'Ivoire and Equatorial Guinea), Egypt, Pakistan and Yemen. Ocean also has
exploration and exploitation programs underway in Russia and Indonesia.
On March 30, 1999, the Company merged with and into Seagull Energy
Corporation (the "Seagull Merger"). The resulting company was renamed Ocean
Energy, Inc. The merger was treated for accounting purposes as an acquisition of
Seagull by Ocean in a purchase business transaction. As such, the financial and
operating results and property descriptions presented here, unless expressly
noted otherwise, are those of Ocean Energy, Inc. on a stand-alone basis for the
first quarter of 1999 and of the combined company for the remainder of 1999,
compared to Ocean's results for 1998 and 1997 on a stand-alone basis ("Old
Ocean").
The Seagull Merger united the best of the two companies' technical,
commercial and financial staffs. The new Ocean emerged with a commitment to
produce low-cost energy, thereby enhancing shareholder success and value. At the
time of the Seagull Merger, management pledged to reduce the Company's high debt
levels, reduce general and administrative expenses by $45 million per year,
achieve a minimum 100% replacement of production and significantly improve
finding and development costs. By the end of the year, Ocean had surpassed those
targets by:
- - selling more than $700 million of assets, thereby decreasing the Company's
debt to total capital ratio from 78% at the end of 1998 to 58% at the end
of 1999;
- - achieving 504% reserve replacement from all sources and 130% reserve
replacement, excluding acquisitions;
- - improving finding and development costs to $5.13 per BOE from all sources
and $4.98 per BOE excluding acquisitions;
- - eliminating over $50 million in general and administrative
expenses; and
- - reducing 1999 all-in costs to $12.57 per BOE from $13.27
per BOE for 1998.
As Ocean moves forward, the Company is committed to maintaining its focus
on efficiency in its operations and strengthening its capital structure.
Progress in this area will be achieved by maintaining low finding and
development costs, and holding down lease operating and general and
administrative expenses.
1
Ocean Energy, Inc.
Forward-Looking Statements May Prove Inaccurate
This document includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, Section 21E of the Securities
Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995.
All statements other than statements of historical fact included in this
document, including, without limitation, statements regarding the financial
position, business strategy, production and reserve growth and other plans and
objectives for the future operations of the Company are forward-looking
statements.
Although the Company believes that such forward-looking statements are
based on reasonable assumptions, it can give no assurance that its expectations
will in fact occur. Important factors could cause actual results to differ
materially from those in the forward-looking statements. Forward-looking
statements are subject to risks and uncertainties and include information
concerning general economic conditions and possible or assumed future results of
operations of the Company, estimates of oil and gas production and reserves,
drilling plans, future cash flows, anticipated capital expenditures, the
Company's realization of its deferred tax assets, the level of future
expenditures for environmental costs, and management's strategies, plans and
objectives as set forth herein.
Oil and Gas Operations
The Company's operating activities are focused primarily in three operating
areas: (i) certain onshore areas of North America, (ii) the continental shelf
and deepwater areas (water depth of over 1,500 feet) of the Gulf of Mexico, and
(iii) the international area comprising the West African countries of Angola,
Cote d'Ivoire and Equatorial Guinea, the Asian Basin countries of Pakistan and
Indonesia, the Middle East country of Republic of Yemen, the Northern African
country of Egypt, and Russia.
The Company's capital investment program during 2000 is expected to total
approximately $500 million. The spending is expected to be funded from the
Company's cash flow from operations based on anticipated commodity prices, and
is subject to change if market conditions shift or new opportunities are
identified. Of the budget, approximately 31 percent will be spent on exploratory
drilling, 25 percent on development drilling, 20 percent on construction to
bring on production, 4 percent for leasehold and geological and geophysical
costs and 2 percent on corporate costs. In addition, capitalized interest and
general and administrative expenses are expected to be approximately $80
million.
2
Ocean Energy, Inc.
Ocean's principal oil and gas producing areas include the following:
Proved Reserves at December 31, 1999
--------------------------------------------------------------------
Gas (Bcf) Oil (MMBbl) MMBOE
------------------- -------------------- ------------------
Domestic:
North America Onshore........ 833.2 28.6 167.5
Gulf of Mexico............... 322.8 61.2 115.0
International:
Equatorial Guinea............ - 48.2 48.2
Cote d'Ivoire................ 177.0 7.1 36.6
Egypt........................ 1.4 20.5 20.7
Other International.......... 52.8 18.2 27.0
------------------- ------------------ --------------------
Total........................... 1,387.2 183.8 415.0
=================== ================== ====================
For additional information relating to the Company's oil and gas reserves,
see Note 15 to Consolidated Financial Statements included in the Company's 1999
Annual Report to Shareholders and as Exhibit 13 attached hereto. As required,
Ocean also files estimates of oil and gas reserve data with various governmental
regulatory authorities and agencies. These estimates were not materially
different from the reserve estimates reported in the Consolidated Financial
Statements.
Domestic
The Company's domestic activities reside in two main areas: the Gulf of
Mexico and certain onshore areas of North America. The domestic area accounts
for 68% of the Company's reserves and 69% of total production for the year ended
December 31, 1999.
Gulf of Mexico - The Company's Gulf of Mexico properties are located in
offshore waters along the coasts of Texas and Louisiana. For 1999, the Gulf of
Mexico area had average daily production of approximately 52 MBOE per day. This
area currently accounts for 31% of company-wide production and will be the focus
of nearly half of the Company's planned capital expenditures in 2000.
The major growth area in this area is within Ocean's deepwater prospects
(in water depth of over 1,500 feet). The Company had four deepwater discoveries
in 1999, one each at Nansen, Boomvang, Magnolia and Orion II. Development
scenarios are being evaluated for these areas and Ocean expects to spend $90
million to $100 million of its planned 2000 capital expenditures on deepwater
projects.
North America Onshore - Ocean's portfolio of onshore properties in North
America is focused primarily in the Anadarko Basin of the Texas Panhandle and
western Oklahoma, the Arklatex area of east Texas and northwest Louisiana, the
Permian Basin, South Texas, and the Bear Paw Field in north central Montana.
These properties are located mostly in mature fields where the Company can take
advantage of low-cost exploitation to maintain and replace reserves without
utilizing significant amounts of capital resources that can propel other growth
platforms.
3
Ocean Energy, Inc.
For 1999, the North America Onshore area had average daily production of
approximately 48 MBOE per day.
International
Internationally, the Company produces in five countries - Equatorial
Guinea, Cote d'Ivoire, Egypt, Russia and Indonesia. In addition, the Company has
interests in various other countries around the world, including Angola,
Pakistan and Yemen. The following is a description of each of the Company's
major international operating areas.
Equatorial Guinea - In Equatorial Guinea, the Company has four PSCs through
which the Company holds contract interests ranging from 24% to 94%. For 1999,
the Company had production of over 20,000 Mbbl per day from the Zafiro Field in
Block B. Additional development activity is underway in 2000 with the
installation of a new platform and additional drilling that should further
increase production capabilities from the field. Exploratory efforts in 2000 are
concentrated upon both Block B and Block C. Ocean plans to participate in the
Oreja Marina well on Block C that will test the Isongo formation which the
Company believes has significant reserve potential. Other potential exploratory
activities include the drilling of the Calcedonia prospect on Block B that will
test one of the sands from which the Zafiro Field produces.
Cote d'Ivoire - In Cote d'Ivoire, the Company operates five PSCs and a
liquified petroleum gas extraction plant. During 1999, the Company produced
approximately 10,000 BOE per day in Cote d'Ivoire.
Egypt - The Company's Egyptian operations consist of working interests in
six concessions that were acquired in the Seagull Merger. Four of these
concessions are producing concessions - Qarun, East Zeit, East Beni Suef and
West Abu Gharadig. For 1999, Ocean had production in Egypt of over 8,000 BOE per
day. Ocean also holds interests in two exploratory blocks in the Gulf of Suez
and plans to test one of these prospects, in the Southeast Gulf of Suez, in
2000.
Other International - The Company's other international operations include
additional exploratory opportunities and producing properties.
In the Republic of Angola, Ocean holds interests in approximately 1.2
million gross acres in Block 19, in the Lower Congo Basin where several large
fields have been discovered, and another approximately 1.2 million gross acres
in Block 24 in the neighboring Kwanza Basin - a new deepwater play. In 2000, the
Company expects to drill an exploratory well on Block 24 and continue seismic
evaluation of Block 19 with drilling scheduled for late 2000 or early 2001.
The Company drilled its first exploratory well offshore Pakistan during
1999 to gain further information about the 6.2 million offshore acres in which
it holds interests. As evaluations continue on the information gained from this
well, the Company is drilling another exploratory well on a nearby offshore
concession.
4
Ocean Energy, Inc.
During 2000, the Company expects to drill two onshore wells in Yemen's
Block 43 in which the Company has a 59.5% working interest.
In the Seagull Merger, the Company acquired a net 45% interest in a joint
venture in Tatarstan, a republic in the Russian Federation located west of the
Ural Mountains and east of the Volga River. During 1999, the joint venture's
activities included vapor recovery projects and the development and operation of
the Onbysk and Demkino fields. During 1999, the Company produced over 3,000 BOE
per day in Russia.
Also in the Seagull Merger, Ocean acquired a 1.7% interest in a joint
venture for the exploration, development and production of oil and gas in
approximately 1.1 million acres in East Kalimantan, Indonesia. The majority of
the joint venture's revenue results from the sale of liquified natural gas.
In January 2000, the Company announced a decision to discontinue any
further operations in Bangladesh.
The Company's acreage in the international area is generally held pursuant
to Production Sharing Contracts ("PSCs") with host governments. Generally, under
a PSC, the working interest partners pay all of the capital and operating costs
and production is split between the government and the working interest
partners. Working interest partners recover costs from a percentage of produced
and sold petroleum. The remaining oil and gas produced and sold, and any portion
of cost recovery not used to recover costs, is divided between the government
and the working interest partners. Included in the government's share of
remaining petroleum are all government royalties and, in certain situations, the
applicable income taxes for the working interest partners.
Production
The following table summarizes the Company's production, average sales
prices and operating costs for the periods indicated:
Year Ended December 31,
------------------------------------------------------------
1999 1998 1997
----------------- --------------- ----------------
Domestic (1) :
Net production:
Gas (MMcf)...................................... 137,195 99,346 81,154
Oil and NGL (Mbbl).............................. 13,532 14,660 12,159
Average sales price: (2)
Gas (per Mcf)................................... $ 2.11 $ 1.96 $ 2.41
Oil and NGL (per Bbl)........................... $ 16.94 $ 12.46 $ 18.88
Average operating costs (per BOE) (3)............. $ 4.43 $ 5.03 $ 4.72
Equatorial Guinea:
Oil production (Mbbl)............................. 7,323 6,537 4,453
Average oil sales price (per Bbl) (2)............. $ 17.91 $ 11.35 $ 17.71
Average operating costs (per BOE) (3)............. $ 3.02 $ 1.99 $ 1.24
5
Ocean Energy, Inc.
Cote d'Ivoire (1):
Net production:
Gas (MMcf)...................................... 11,050 7,824 4,939
Oil and NGL (Mbbl).............................. 1,765 1,081 1,027
Average sales price: (2)
Gas (per Mcf)................................... $ 1.68 $ 1.64 $ 1.81
Oil and NGL (per Bbl)........................... $ 18.24 $ 12.56 $ 18.35
Average operating costs (per BOE) (3)............. $ 3.16 $ 3.29 $ 3.03
Egypt (1):
Net production:
Gas (MMcf)...................................... 264 - -
Oil and NGL (Mbbl).............................. 2,999 - -
Average sales price: (2)
Gas (per Mcf)................................... $ 3.66 $ - $ -
Oil and NGL (per Bbl) (2)....................... $ 19.32 $ - $ -
Average operating costs (per BOE) (3)............. $ 3.51 $ - $ -
Other International (1):
Net production:
Gas (MMcf)...................................... 5,666 10,135 7,630
Oil and NGL (Mbbl)............................. 1,366 450 439
Average sales price: (2)
Gas (per Mcf)................................... $ 1.81 $ 1.37 $ 1.40
Oil and NGL (per Bbl)........................... $ 12.31 $ 11.78 $ 17.97
Average operating costs (per BOE ) (3)............ $ 3.30 $ 3.30 $ 4.03
Total (1):
Net production:
Gas (MMcf)...................................... 154,175 117,305 93,723
Oil and NGL (Mbbl)............................. 26,985 22,728 18,078
Average sales price: (2)
Gas (per Mcf)................................... $ 2.08 $ 1.89 $ 2.30
Oil and NGL (per Bbl)........................... $ 17.32 $ 12.13 $ 18.54
Average sales price including hedging: (2)
Gas (per Mcf)................................... $ 2.10 $ 1.89 $ 2.28
Oil and NGL (per Bbl)........................... $ 15.27 $ 13.21 $ 18.54
Average operating costs (per BOE) (3) ............ $ 4.12 $ 4.38 $ 4.14
(1) The Company's Egyptian operations and a portion of its domestic, Cote
d'Ivorian and other international operations were acquired as a result of
the Seagull Merger on March 30, 1999. In addition, Other International for
1998 and 1997 consists solely of the Company's Canadian operations which
were sold in April 1999.
(2) Average sales prices are before deduction of production, severance, and
other taxes and after deduction of certain transportation costs.
(3) Operating costs represent costs incurred to operate and maintain wells and
related equipment and facilities. These costs include, among other things,
repairs and maintenance, workover expenses, labor, materials, supplies,
property taxes, insurance, severance taxes, and general operating expenses.
Oil and Gas Drilling Activities
Ocean's oil and gas exploratory and developmental drilling activities are
as follows for the periods indicated. A well is considered productive for
purposes of the following table if it justifies the installation of permanent
equipment for the production of oil or gas. The term "gross wells" means the
total number of wells in which Ocean owns an interest, while the term "net
wells" means the sum of the fractional working interests Ocean owns in gross
wells. The information should not be considered indicative of future
performance, nor should it be assumed
6
Ocean Energy, Inc.
that there is necessarily any correlation between the number of productive wells
drilled, quantities of reserves found or economic value.
Year Ended December 31,
------------------------------------------------------------------------------
1999 1998 1997
---------------------- ------------------------- ----------------------
Gross Net Gross Net Gross Net
--------- --------- --------- ----------- --------- ---------
Domestic (1):
Exploratory Drilling:
Productive Wells................. 21 9.7 41 24.6 31 20.9
Dry Holes........................ 12 5.6 19 10.4 22 11.8
Development Drilling:
Productive Wells................. 151 93.6 207 98.3 221 89.9
Dry Holes........................ 38 31.4 17 13.6 19 11.0
Equatorial Guinea:
Exploratory Drilling:
Productive Wells................. - - 3 2.3 3 1.3
Dry Holes........................ 3 0.7 5 3.5 4 1.5
Development Drilling:
Productive Wells................. 3 0.7 5 1.2 9 2.3
Dry Holes........................ - - - - - -
Cote d'Ivoire (1):
Exploratory Drilling:
Productive Wells................. - - 2 1.6 2 0.7
Dry Holes........................ 1 0.4 3 2.3 4 1.5
Development Drilling:
Productive Wells................. - - - - 4 1.4
Dry Holes........................ - - - - 1 0.5
Egypt (1):
Exploratory Drilling:
Productive Wells................. - - - - - -
Dry Holes........................ 1 0.3 - - - -
Development Drilling:
Productive Wells................. 5 1.5 - - - -
Dry Holes........................ - - - - - -
Other International (1):
Exploratory Drilling:
Productive Wells................ 1 0.5 12 8.2 11 5.8
Dry Holes....................... 1 1.0 10 6.8 9 5.5
Development Drilling:
Productive Wells................ 16 7.6 52 12.9 55 8.7
Dry Holes....................... - - 2 0.2 3 1.4
Total:
Exploratory Drilling:
Productive Wells................. 22 10.2 58 36.7 47 28.7
Dry Holes........................ 18 8.0 37 23.0 39 20.3
Development Drilling:
Productive Wells................. 175 103.4 264 112.4 289 102.3
Dry Holes........................ 38 31.4 19 13.8 23 12.9
(1) The Company's Egyptian operations and a portion of its domestic, Cote
d'Ivorian and other international operations were acquired as a result of
the Seagull Merger on March 30, 1999. In addition, Other International for
1998 and 1997 consists solely of the Company's Canadian operations which
were sold in April 1999.
7
Ocean Energy, Inc.
The Company had 31 gross (13.5 net) exploratory wells and 46 gross (24.4
net) development wells in progress at December 31, 1999. Wells classified as "in
progress" at year-end represent wells where drilling activity is ongoing, wells
awaiting installation of permanent equipment and wells awaiting the drilling of
additional delineation wells.
The following table sets forth information regarding the number of
productive wells in which the Company held a working interest at December 31,
1999. Productive wells are either producing wells or wells capable of commercial
production although currently shut-in. One or more completions in the same
borehole are counted as one well.
Gross Wells Net Wells
---------------------------------------------- ----------------------------------------------
Multiple Multiple
Gas Oil Total Completions Gas Oil Total Completions
---------- --------- --------- ------------ -------- --------- ---------- ------------
Domestic:
North America
Onshore..... 2,801 2,115 4,916 95 1,477.6 298.8 1,776.4 43.6
Gulf of Mexico 154 583 737 74 79.5 502.6 582.1 60.1
Equatorial Guinea - 22 22 - - 5.5 5.5 -
Cote d'Ivoire.... 4 14 18 2 1.9 6.7 8.6 1.0
Egypt............ - 68 68 10 - 27.2 27.2 2.8
Other International - 210 210 - - 105.0 105.0 -
---------- --------- --------- ------------ -------- --------- ---------- ------------
2,959 3,012 5,971 181 1,559.0 945.8 2,504.8 107.5
========== ========= ========= ============ ======== ========= ========== ============
Developed and Undeveloped Oil and Gas Acreage
As of December 31, 1999, the Company owned working interests in the
following developed and undeveloped oil and gas acreage (amounts in thousands):
Developed Undeveloped
--------------------------------- ----------------------------------
Gross Net Gross Net
------------- ------------- -------------- --------------
Domestic:
North America Onshore......... 1,000 576 1,813 597
Gulf of Mexico................ 542 260 1,141 632
International:
Equatorial Guinea............. 36 9 1,619 797
Cote d'Ivoire................. 13 7 1,727 1,010
Egypt......................... 438 117 8,359 3,443
Other International........... 39 19 12,888 9,158
------------- ------------- -------------- --------------
Total 2,068 988 27,547 15,637
============= ============= ============== ==============
Additionally, as of December 31, 1999, the Company owned mineral and/or
royalty interests in 185,000 gross (2,000 net) developed acres located primarily
in Australia and Indonesia and 9,786,000 gross (3,252,000 net) undeveloped
acres, located primarily in Equatorial Guinea.
For additional information relating to oil and gas producing activities,
see Note 15 of Notes to the Consolidated Financial Statements included in the
Company's 1999 Annual Report to Shareholders and as part of Exhibit 13 attached
hereto.
8
Ocean Energy, Inc.
U.S. Regulation
The availability of a ready market for oil and natural gas production
depends upon numerous regulatory factors beyond the Company's control. These
factors include regulation of oil and natural gas production, federal and state
regulations governing environmental quality and pollution control and state
limits on allowable rates of production by a well or proration unit. State and
federal regulations generally are intended to prevent waste of oil and natural
gas, protect rights to produce oil and natural gas between owners in a common
reservoir, control the amount of oil and natural gas produced by assigning
allowable rates of production and control contamination of the environment.
Regulation of Oil and Natural Gas Exploration and Production. Exploration
and production operations of the Company are subject to various types of
regulation at the federal, state and local levels. Such regulation includes
requiring permits for the drilling of wells, maintaining bonding requirements in
order to drill or operate wells, and regulating the location of wells, the
method of drilling and casing wells, the surface use and restoration of
properties upon which wells are drilling and the plugging and abandonment of
wells. The Company's operations are also subject to various conservation laws
and regulations. These include the regulation of the size of drilling and
spacing units or proration units and the density of wells which may be drilled
and unitization or pooling of oil and gas properties. In this regard, some
states allow the forced pooling or integration of tracts to facilitate
exploration while other states rely on voluntary pooling of lands and leases. In
addition, state conservation laws establish maximum rates of production
requirements regarding the ratability of production.
Federal Regulation of Sales and Transportation of Natural Gas.
Historically, the transportation and sale for resale of natural gas in U.S.
interstate commerce has been regulated pursuant to several laws enacted by
Congress and the regulations promulgated under these laws by the Federal Energy
Regulatory Commission ("FERC"). In the past, the U.S. government has regulated
the prices at which gas could be sold. Congress removed all price and non-price
controls affecting wellhead sales of natural gas effective January 1, 1993.
Congress could, however, reenact price controls in the future. Our sales of
natural gas are affected by the availability, terms and cost of transportation.
The price and terms for access to pipeline transportation are subject to
extensive federal and state regulation. From 1985 to the present, several major
regulatory changes have been implemented by Congress and the FERC that affect
the economics of natural gas production, transportation and sales. In addition,
the FERC is continually proposing and implementing new rules and regulations
affecting those segments of the natural gas industry, most notably interstate
natural gas transmission companies, that remain subject to the FERC's
jurisdiction. These initiatives may also affect the intrastate transportation of
gas under certain circumstances. The stated purpose of many of these regulatory
changes is to promote competition among the various sectors of the natural gas
industry and these initiatives generally reflect more light-handed regulation.
The ultimate impact of the complex rules and regulations issued by the FERC
since 1985 cannot be predicted. In addition, many aspects of these regulatory
developments are still pending judicial and FERC final decisions. We cannot
predict what further action the FERC will take on these matters. Some of the
FERC's more
9
Ocean Energy, Inc.
recent proposals may, however, adversely affect the availability and reliability
of interruptible transportation service on interstate pipelines. We do not
believe that we will be affected by any action taken materially differently than
other natural gas producers, gatherers and marketers with which we compete.
Offshore Leasing. U.S. offshore operations the Company conducts are on
federal oil and gas leases. Ocean must comply with regulatory restrictions from
numerous agencies, including the U.S. Minerals Management Service ("MMS"), U.S.
Bureau of Land Management, U.S. Coast Guard and U.S. Environmental Protection
Agency. For offshore operations, the Company must obtain regulatory approval for
exploration, development and production plans prior to the commencement of such
operations. These agencies have stringent engineering and construction
specifications, safety-related regulations concerning the design and operating
procedures for offshore production platforms and pipelines, regulations to
prohibit the flaring of liquid hydrocarbons and oil without prior authorization,
regulations governing the plugging and abandonment of wells located offshore and
the removal of all production facilities and other rules and regulations
governing many phases of offshore operations. To cover the various obligations
of lessees, governmental agencies generally require substantial bonds or other
acceptable assurances that such obligations will be met.
The restructuring of oil and gas markets has resulted in a shifting of
markets downstream from the wells. Deregulation has altered the marketplace such
that lessors, including the MMS, are challenging the methods of valuation of
production for royalty purposes. In addition, the MMS is conducting an inquiry
into certain contract settlement agreements from which producers on MMS leases
have received settlement proceeds that are royalty bearing and the extent to
which producers have paid the appropriate royalties on those proceeds.
Competition
The Company's competitors in oil and gas exploration, development and
production include major oil companies, as well as numerous independent oil and
gas companies, individuals and drilling partnerships. Some of these competitors
have financial and personnel resources substantially in excess of those
available to the Company and, therefore, the Company may be placed at a
competitive disadvantage. The Company's success in discovering reserves will
depend on its ability to select suitable prospects for future exploration in
today's competitive environment. For further discussion of the Company's
customers and markets see Note 2 of Notes to the Consolidated Financial
Statements included in the Company's 1999 Annual Report to Shareholders and as
part of Exhibit 13 attached hereto.
International Operations
The Company's interests in countries outside the United States are subject
to the various risks inherent in foreign operations. Operations in foreign
countries, particularly in the oil and gas business, are subject to political,
economic and other uncertainties, including: the risk of war, revolution, border
disputes, expropriation, renegotiation or modification of existing contracts,
10
Ocean Energy, Inc.
import, export and transportation regulations and tariffs; taxation policies,
including royalty and tax increases and retroactive tax claims; and exchange
controls and currency fluctuations. In addition, in the event of a dispute
arising from foreign operations, the Company may be subject to the exclusive
jurisdiction of foreign courts or may not be successful in subjecting foreign
persons to the jurisdiction of the courts of the United States. The Company's
international operations may also be adversely affected by laws and policies of
the United States affecting foreign trade, taxation and investment. The Company
seeks to manage these risks by, among other things, concentrating its
international exploration efforts in areas where the Company believes that the
existing government is favorably disposed towards United States exploration and
production companies.
If a country claims superior rights to oil and gas leases or concessions
granted to the Company by another country, the Company's interests could be lost
or decreased in value. Certain areas of Africa and other areas of the world have
a history of political and economic instability. This instability could result
in new governments or the adoption of new policies that might assume a
substantially more hostile attitude toward foreign investment. In an extreme
case, such a change could result in termination of contract rights and
expropriation of foreign-owned assets. This could adversely affect the Company's
interests.
Environmental Matters
Ocean's operations are subject to federal, foreign, state and local laws
and regulations governing the discharge of materials into the environment or
otherwise relating to environmental protection. Numerous governmental
departments issue rules and regulations to implement and enforce such laws which
are often difficult and costly to comply with and which carry substantial
penalties for failure to comply. These laws and regulations may require the
acquisition of a permit before drilling or production commences, restrict the
types, quantities and concentration of various substances that can be released
into the environment in connection with drilling and production activities,
limit or prohibit drilling activities on certain lands lying within wilderness,
wetlands and other protected areas, restrict the rate of oil and gas production
and impose substantial liabilities for pollution resulting from the Company's
operations. State laws often require some form of remedial action to prevent
pollution from former operations, such as pit closure and plugging abandoned
wells. In addition, these laws and regulations may impose substantial
liabilities and penalties for the Company's failure to comply with them or for
any contamination resulting from the Company's operations.
The Company has established policies and procedures for continuing
compliance with environmental laws and regulations; however the Company does not
believe costs relating to these laws and regulations have had a material adverse
effect on the Company's operations or financial condition in the past. As these
laws and regulations are becoming more stringent and complex, there is no
assurance that changes in or additions to laws or regulations regarding the
protection of the environment will not have such an impact in the future. The
requirements imposed by these laws and regulations are frequently changed and
subject to new interpretations. It is likely that the costs of compliance with
environmental laws and regulations could increase
11
Ocean Energy, Inc.
the cost of operating drilling equipment or significantly limit drilling and
operation or production activities.
Risk Factors
In addition to the other information in this document, investors in our
common stock should consider carefully the following risks.
Dependence On Oil and Gas Prices. Ocean's success will depend on the market
prices of oil and gas. These market prices tend to fluctuate significantly in
response to market factors beyond our control. Oil prices in particular have
reached multi-year highs in some markets in recent months, but we cannot assure
you that these price levels will continue. Reductions in oil and gas prices not
only reduce revenues and profits, but could also reduce the quantities of
reserves that are commercially recoverable and could result in charges to
earnings for impairment of the value of these assets.
Significant Capital Requirements. Ocean must make a substantial amount of
capital expenditures for the acquisition, exploration and development of oil and
gas reserves. Historically, we have paid for these expenditures with cash from
operating activities, proceeds from debt and equity financings and asset sales.
Ocean's revenues or cash flows could be reduced because of lower oil and gas
prices or for some other reason. If Ocean's revenues or cash flows decrease, we
may not have the funds available to replace our reserves or to maintain
production at current levels. If this occurs, it would reduce production over
time. Other sources of financing may not be available if Ocean's cash flows from
operations are not sufficient to fund its capital expenditure requirements.
Where Ocean is not the majority owner or operator of an oil and gas project, it
may have no control over the timing or amount of capital expenditures associated
with the particular project. If Ocean cannot fund its capital expenditures, its
interests in some projects may be reduced or forfeited.
Our Oil and Gas Reserve Information Is Estimated. The proved oil and gas
reserve information included in this document represents only estimates. These
estimates are based primarily on reports prepared by internal reserve engineers.
The estimates were calculated using oil and gas prices as of December 31, 1999,
which could change. Petroleum engineering is a subjective process of estimating
underground accumulations of oil and gas that cannot be measured in an exact
manner. Estimates of economically recoverable oil and gas reserves and of future
net cash flows necessarily depend upon a number of variable factors and
assumptions, including the following:
- - historical production from the area compared with production from other
producing areas;
- - the assumed effects of regulations by governmental agencies;
- - assumptions concerning future oil and gas prices; and
- - assumptions concerning future operating costs, severance and excise taxes,
development costs and workover and remedial costs.
12
Ocean Energy, Inc.
Because all reserve estimates are to some degree subjective, each of the
following items may differ materially from those assumed in estimating reserves:
- - the quantities of oil and gas that are ultimately recovered;
- - the production and operating costs incurred;
- - the amount and timing of future development expenditures; and
- - future oil and gas sales prices.
Furthermore, different reserve engineers may make different estimates of
reserves and cash flows based on the same available data. Ocean's actual
production, revenues and expenditures with respect to reserves will likely be
different from estimates and the differences may be material. The discounted
future net cash flows included in this document should not be considered as the
current market value of the estimated oil and gas reserves attributable to
Ocean's properties. As required by the SEC, the estimated discounted future net
cash flows from proved reserves are generally based on prices and costs as of
the date of the estimate, while actual future prices and costs may be materially
higher or lower. Actual future net cash flows also will be affected by factors
such as:
- - the amount and timing of actual production;
- - supply and demand for oil and gas;
- - increases or decreases in consumption; and
- - changes in governmental regulations or taxation.
In addition, the 10% discount factor, which is required by the SEC to be
used to calculate discounted future net cash flows for reporting purposes, is
not necessarily the most appropriate discount factor based on interest rates in
effect from time to time and risks associated with the Company or the oil and
gas industry in general.
Ocean Operates in Foreign Countries and Will Be Subject to Political,
Economic and Other Uncertainties. Ocean conducts significant operations in
foreign countries, including Angola, Equatorial Guinea and Cote d'Ivoire in
Western Africa and in Yemen, Egypt, Pakistan, Indonesia and the Russian Republic
of Tatarstan. Ocean may also operate in other countries in the future.
Operations in foreign countries, particularly in the oil and gas business, are
subject to political, economic and other uncertainties, including:
- - the risk of war, revolution, border disputes, expropriation, renegotiation
or modification of existing contracts, import, export and transportation
regulations and tariffs;
- - taxation policies, including royalty and tax increases and retroactive tax
claims;
- - exchange controls, currency fluctuations and other uncertainties arising
out of foreign government sovereignty over Ocean's international
operations;
13
Ocean Energy, Inc.
- - laws and policies of the United States affecting foreign trade, taxation
and investment; and
- - the possibility of having to be subject to the exclusive jurisdiction of
foreign courts in connection with legal disputes and the possible inability
to subject foreign persons to the jurisdiction of courts in the United
States.
Nigeria and other African countries have occasionally asserted rights to
land, including oil and gas properties, through border disputes. If a country
claims superior rights to oil and gas leases or concessions granted to Ocean by
another country, Ocean's interests could be lost or decreased in value. Regions
of Africa and other regions of the world have a history of political and
economic instability. This instability could result in new governments or the
adoption of new policies that might assume a substantially more hostile attitude
toward foreign investment. In an extreme case, such a change could result in
termination of contract rights and expropriation of foreign-owned assets. This
could adversely affect Ocean's interests.
Oil and Gas Operations Involve Substantial Costs and Are Subject to Various
Economic Risks. The oil and gas operations of Ocean are subject to the economic
risks typically associated with exploration, development and production
activities, including the necessity of significant expenditures to locate and
acquire producing properties and to drill exploratory wells. In conducting
exploration and development activities, the presence of unanticipated pressure
or irregularities in formations, miscalculations or accidents may cause Ocean's
exploration, development and production activities to be unsuccessful. This
could result in a total loss of Ocean's investment. In addition, the cost and
timing of drilling, completing and operating wells is often uncertain.
Drilling Oil and Gas Wells Could Involve Blowouts, Hurricanes,
Environmental Hazards and Other Operating Risks. The nature of the oil and gas
business involves certain operating hazards such as well blowouts, cratering,
explosions, uncontrollable flows of oil, gas or well fluids, fires, formations
with abnormal pressures, pollution, releases of toxic gas and other
environmental hazards and risks. Any of these operating hazards could result in
substantial losses to Ocean. In addition, Ocean may be liable for environmental
damages caused by previous owners of property purchased by Ocean or its
predecessors. As a result, substantial liabilities to third parties or
governmental entities may be incurred. The payment of these amounts could reduce
or eliminate the funds available for exploration, development or acquisitions.
These reductions in funds could result in a loss of Ocean's properties.
Additionally, some of Ocean's oil and gas operations are located in areas that
are subject to tropical weather disturbances. Some of these disturbances can be
severe enough to cause substantial damage to facilities and possibly interrupt
production. In accordance with customary industry practices, Ocean maintains
insurance against some, but not all, of such risks and losses. The occurrence of
an event that is not fully covered by insurance could have a material adverse
effect on the financial position and results of operations of Ocean.
Competition Within the Oil and Gas Industry is Intense. The exploration and
production business is highly competitive. Many of Ocean's competitors have
substantially larger financial
14
Ocean Energy, Inc.
resources, staffs and facilities than Ocean. These competitors include other
independent oil and gas producers such as Anadarko Petroleum Corporation, Apache
Corporation, Burlington Resources Inc., EEX Corporation, EOG Resources, Inc.,
Equitable Resources, Inc., Noble Affiliates, Inc., Nuevo Energy Company, Oryx
Energy Company, Pioneer Natural Resources Company, Pogo Producing Company, Santa
Fe Snyder Corporation, Union Pacific Resources Group Inc. and Vastar Resources,
Inc. as well as major oil and gas companies such as Exxon Mobil Corporation,
Shell Oil Company and BP Amoco Corporation.
Government Agencies Can Increase Costs and Can Terminate or Suspend
Operations. Ocean's business is subject to foreign, federal, state and local
laws and regulations relating to the exploration for, and the development,
production and transportation of, oil and gas, as well as environmental and
safety matters. Many of these laws and regulations have become stricter in
recent years. These laws and regulations often impose greater liability on a
larger number of potentially responsible parties. Under some circumstances, the
U.S. Minerals Management Service may require the operations of Ocean on federal
leases to be suspended or terminated. These circumstances include Ocean's
failure to pay royalties, Ocean's failure to comply with safety and
environmental regulations and the MMS' reaction to political pressure to limit
offshore drilling in environmentally sensitive areas. This could have a material
adverse effect on Ocean's financial condition and operations. The requirements
imposed by these laws and regulations are frequently changed and subject to new
interpretations. It is likely that the costs of compliance could increase the
cost of operating offshore drilling equipment or significantly limit drilling
activity.
Employees
As of February 29, 2000, the Company had 1,150 employees. In addition to
the services of its full time employees, the Company employs, as needed, the
services of consulting geologists, engineers, regulatory consultants, contract
pumpers and certain other temporary employees. Except for local national
employees in Cote d'Ivoire, none of the Company's employees are represented by a
labor union. The Company considers its relations with its employees to be
satisfactory.
15
Ocean Energy, Inc.
Executive Officers of the Company
The executive officers of the Company, each of whom has been elected to
serve until his successor is elected and qualified, are as follows:
Name Age Present Position and Prior Business Experience
James T. Hackett.............. 46 President and Chief Executive Officer since March 1999 and Chairman of
the Board since January 2000; President and Chief Executive Officer of
Seagull from September 1998 and Chairman of the Board of Seagull from
January 1999 to March 1999; Group President of Duke Energy's unregulated
operations and Executive Vice President of Panenergy from January 1996
to September 1998. Prior to joining Duke Energy, he was Senior Vice
President of NGC Corporation (formerly Natural Gas Clearinghouse) and
President of NGC's gathering, processing and liquids marketing division.
He became Executive Vice President, partner and a member of the
management committee of Natural Gas Clearinghouse in 1993.
James C. Flores............... 40 Vice Chairman since January 2000; Chairman of the Board from March 1999
to January 2000; President and Chief Executive Officer of Old Ocean from
July 1995 to March 1999; Chairman of the Board of Old Ocean from
inception in 1992 to March 1998.
William L. Transier........... 45 Executive Vice President and Chief Financial Officer since March 1999;
Executive Vice President and Chief Financial Officer of Seagull from
September 1998 to March 1999; Senior Vice President and Chief Financial
Officer of Seagull from May 1996 to September 1998; For the previous 20
years, he held a variety of positions at KPMG LLP including partner from
July 1986 until April 1996.
Robert K . Reeves............. 42 Executive Vice President, General Counsel and Secretary since March
1999; Executive Vice President, General Counsel and Secretary of Old
Ocean from June 1997 to March 1999; Senior Vice President, General
Counsel and Secretary of Old Ocean from May 1994 to June 1997.
John D. Schiller, Jr.......... 40 Executive Vice President, Operations since March 2000; Senior Vice
President, North America Onshore and International Operations from March
1999 to March 2000; Senior Vice President, Operations of Seagull from
September 1998 to March 1999; Production Manager - Gulf Coast Division
of Burlington Resources from October 1997 to August 1998; Engineering
Manager - Offshore Division of Burlington Resources from April 1994 to
September 1997.
William S. Flores, Jr......... 43 Senior Vice President, Drilling since March 1999; Vice President, Drilling
of Old Ocean from March 1998 to March 1999; Vice President, Operations of
Old Ocean from August 1993 to March 1998.
16
Ocean Energy, Inc.
Scott A. Griffiths............ 46 Senior Vice President of International Exploration since March 1999;
Senior Vice President Domestic Exploration of Seagull from September
1998 to March 1999; Vice President Domestic Exploration of Seagull from
May 1997 to September 1998; Vice President of Domestic Exploration of
Seagull from October 1996 to May 1997; Vice President of Exploration of
Global Natural Resources from 1992 to October 1996.
Stephen A. Thorington......... 44 Senior Vice President, Finance, Treasury and Corporate Development since
March 1999; Vice President, Finance and Treasurer of Seagull from May
1996 to March 1999; Managing Director of Chase Securities Inc. from
April 1994 to May 1996.
Bruce Busmire ................ 42 Vice President, Investor Relations since February 2000; Controller of
Altura Energy Ltd. From March 1997 to January 2000; For the previous 16
years, Mr. Busmire held a variety of positions in finance, accounting
and investor relations at Amoco Corporation.
Mario M. Coll, III............ 38 Vice President, Operational Planning and Chief Information Officer since
October 1999; Vice President, Operational Planning from March 1999 to
October 1999; Vice President, Planning - Corporate and International of
Old Ocean from April 1998 to March 1999; Business Planning Coordinator
of Old Ocean from September 1996 to April 1998; From March 1987 to
September 1996, Mr. Coll held a variety of positions in engineering and
business development at Mobil Exploration and Producing U.S., Inc and
Mobil New Business Development.
Peggy T. d'Hemecourt.......... 48 Vice President, Human Resources since March 1999; Director, Human
Resources of Old Ocean from March 1998 to February 1999; Vice President,
Human Resources of UMC Petroleum Corporation from April 1997 to February
1998; Director, Human Resources of United Meridian Corporation ("UMC")
from January 1996 to March 1997; From 1974 to 1994, Ms. d'Hemecourt held
a variety of positions in Human Resources at Baroid Corporation.
Gordon L. McConnell........... 53 Vice President and Controller of the Company since March 1999; Vice
President and Controller of Seagull from November 1996 to March 1999;
Vice President - Accounting of Global Natural Resources from January
1996 to November 1996; Controller of Global Natural Resources from July
1993 to January 1996.
John J. Patton................ 59 Vice President and Associate General Counsel, since September 1999; Vice
President and Assistant General Counsel - International of Old Ocean from
March 1998 to March 1999; Senior Vice President and General Counsel of UMC
from April 1995 to March 1998.
Andrew J. Sheu................ 37 Vice President, Tax since March 1999; Assistant Vice President, Tax of
Seagull from January 1998 to March 1999; Director, Tax of Torch Energy
Advisors, Inc. from December 1995 to January 1998. Tax Senior Manager at
KPMG LLP from July 1991 to November 1995.
17
Ocean Energy, Inc.
Winston M. Talbert............ 37 Assistant Treasurer, Corporate Finance since October 1999; Assistant
Treasurer of PennzEnergy Company from November 1998 to October 1999;
Manager, International Finance of Pennzoil Company from December 1996 to
November 1998; Manager, Corporate Development & Finance of Brown & Root
from February 1996 to December 1996; Business Development Manager of
Destec Europe March 1994 to February 1996.
Frank D. Willoughby........... 34 Vice President, Financial Planning since March 1999; Prior to the
Seagull Merger, Mr. Willoughby held various financial positions with Old
Ocean, including Treasurer and Controller.
Carl E. Volke................. 56 Vice President, Administration since March 1999; Vice President,
Administration of Seagull from November 1996 to March 1999; Director,
Administration of Seagull from November 1986 to November 1996.
Defined Terms
Natural gas is stated herein in billion cubic feet ("Bcf"), million cubic
feet ("MMcf") or thousand cubic feet ("Mcf"). Oil, condensate and natural gas
liquids ("NGL") are stated in barrels ("Bbl") or thousand barrels ("MBbl").
Mmcfe and Mcfe represent the equivalent of one million and one thousand cubic
feet of natural gas, respectively. Oil, condensate and NGL are converted to gas
at a ratio of one barrel of liquids per six Mcf of gas, based on relative energy
content. MMBOE, MBOE and BOE represent one million barrels, one thousand barrels
and one barrel of oil equivalent, respectively, with six Mcf of gas converted to
one barrel of liquid. "Net" acres, production or wells refers to the total
acres, production or wells in which the Company has a working interest,
multiplied by the percentage working interest owned by the Company.
Item 2. Properties
The following information presents production and wells drilled information
for the registrant - formerly Seagull Energy Corporation - in compliance with
the requirements of Item 2. As such this information represents historical
Seagull on a stand-alone basis for the first quarter of 1999 and of the combined
company for the remainder of 1999, compared to Seagull's results for 1998 and
1997 on a stand-alone basis. The remainder of the information required by Item 2
is incorporated herein by reference to Item 1 of this Annual Report on
Form 10-K.
18
Ocean Energy, Inc.
Production - Historical Information for Seagull Energy Corporation for 1998 and
1997
The following table summarizes the registrant's production, average sales
prices and operating costs for the periods indicated:
Year Ended December 31,
-----------------------------------------------------------
1999 1998 1997
---------------- --------------- -----------------
Domestic:(1)
Net production:
Gas (MMcf)..................................... 137,896 104,023 110,595
Oil and NGL (Mbbl)............................. 10,318 1,834 1,763
Average sales price: (2)
Gas (per Mcf).................................. $ 2.12 $ 1.94 $ 2.30
Oil and NGL (per Bbl).......................... $ 19.29 $ 11.41 $ 17.60
Average operating costs (per BOE) (3)............ $ 4.32 $ 3.04 $ 2.79
Equatorial Guinea:(1)
Oil production (Mbbl)............................ 5,577 - -
Average oil sales price (per Bbl) (2)............ $ 19.99 $ - $ -
Average operating costs (per BOE) (3)............ $ 2.79 $ - $ -
Cote d'Ivoire:(1)
Net production:
Gas (MMcf)..................................... 9,814 3,106 2,245
Oil and NGL (Mbbl)............................. 1,449 360 603
Average sales price: (2)
Gas (per Mcf).................................. $ 1.64 $ 1.59 $ 1.93
Oil and NGL (per Bbl).......................... $ 20.10 $ 10.51 $ 19.34
Average operating costs (per BOE) (3)............ $ 3.39 $ 3.11 $ 3.95
Egypt:
Net production:
Gas (MMcf)..................................... 300 301 -
Oil and NGL (Mbbl)............................. 3,911 4,002 3,383
Average sales price: (2)
Gas (per Mcf).................................. $ 3.63 $ 1.42 -
Oil and NGL (per Bbl) ......................... $ 17.36 $ 11.79 $ 18.26
Average operating costs (per BOE) (3)............ $ 3.70 $ 4.18 $ 3.46
Other International:(1)
Net production:
Gas (MMcf)..................................... 3,143 2,867 17,475
Oil and NGL (Mbbl)............................ 1,637 1,568 1,811
Average sales price: (2)
Gas (per Mcf).................................. $ 2.18 $ 2.31 $ 1.90
Oil and NGL (per Bbl).......................... $ 11.10 $ 7.93 $ 14.71
Average operating costs (per BOE ) (3)........... $ 5.02 $ 6.76 $ 4.90
19
Ocean Energy, Inc.
Year Ended December 31,
-----------------------------------------------------------
1999 1998 1997
---------------- --------------- -----------------
Total:
Net production:
Gas (MMcf)..................................... 151,153 110,297 130,315
Oil and NGL (Mbbl)............................ 22,892 7,764 7,560
Average sales price: (2)
Gas (per Mcf).................................. $ 2.09 $ 1.94 $ 2.24
Oil and NGL (per Bbl).......................... $ 18.60 $ 10.86 $ 17.34
Average sales price including hedging: (2)
Gas (per Mcf).................................. $ 2.11 $ 1.93 $ 2.17
Oil and NGL (per Bbl).......................... $ 16.19 $ 10.86 $ 17.34
Average operating costs (per BOE ) (3) $ 4.07 $ 3.51 $ 3.25
(1) The Company's Equatorial Guinea operations and a portion of its domestic,
Cote d'Ivorian and other international operations were acquired as a result
of the Seagull Merger on March 30, 1999.
(2) Average sales prices are before deduction of production, severance, and
other taxes and after deduction of certain transportation costs.
(3) Operating costs represent costs incurred to operate and maintain wells and
related equipment and facilities. These costs include, among other things,
repairs and maintenance, workover expenses, labor, materials, supplies,
property taxes, insurance, severance taxes, and general operating expenses.
20
Ocean Energy, Inc.
Oil and Gas Drilling Activities - Historical Information for Seagull Energy
Corporation for 1998 and 1997
The registrant's oil and gas exploratory and developmental drilling
activities are as follows for the periods indicated.
Year Ended December 31,
------------------------------------------------------------------------------
1999 1998 1997
---------------------- ------------------------- ----------------------
Gross Net Gross Net Gross Net
--------- --------- --------- ----------- --------- ---------
Domestic (1):
Exploratory Drilling:
Productive Wells................. 10 5.6 7 1.5 18 9.5
Dry Holes........................ 8 3.6 12 5.0 12 4.2
Development Drilling:
Productive Wells................. 137 88.5 138 60.9 142 73.9
Dry Holes........................ 38 31.4 11 7.0 12 6.3
Equatorial Guinea:(1)
Exploratory Drilling:
Productive Wells................. - - - - - -
Dry Holes........................ 3 0.7 - - - -
Development Drilling: - - - -
Productive Wells................. 1 0.2 - - - -
Dry Holes........................ - -
Cote d'Ivoire (1):
Exploratory Drilling:
Productive Wells................. - - 1 0.1 1 0.1
Dry Holes........................ 1 0.4 1 0.2 2 0.3
Development Drilling:
Productive Wells................. - - - - 3 0.4
Dry Holes........................ - - - - - -
Egypt:
Exploratory Drilling:
Productive Wells................. - - 4 1.3 4 2.8
Dry Holes........................ 1 0.3 13 5.1 11 3.0
Development Drilling:
Productive Wells................. 5 1.5 7 2.8 14 3.5
Dry Holes........................ - - 3 1.3 - -
Other International (1):
Exploratory Drilling:
Productive Wells................ - - - - 4 2.2
Dry Holes....................... - - - - 2 1.2
Development Drilling:
Productive Wells................ 4 2.0 10 5.0 78 39.4
Dry Holes....................... - - 1 0.5 1 0.3
Total:
Exploratory Drilling:
Productive Wells................. 10 5.6 12 2.9 27 14.6
Dry Holes........................ 13 5.0 26 10.3 27 8.7
Development Drilling:
Productive Wells................. 147 92.2 155 68.7 237 117.2
Dry Holes........................ 38 31.4 15 8.8 13 6.6
(1) The Company's Equatorial Guinea operations and a portion of its domestic,
Cote d'Ivorian and other international operations were acquired as a result
of the Seagull Merger on March 30, 1999.
21
Ocean Energy, Inc.
Item 3. Legal Proceedings
The Company is a named defendant in lawsuits and is a party in governmental
proceedings from time to time arising in the ordinary course of business. While
the outcome of such lawsuits or other proceedings against the Company cannot be
predicted with certainty, management does not expect these matters to have a
material adverse effect on the financial positions or results of operations of
the Company.
Item 4. Submission of Matters to a Vote of Security Holders
None during the fourth quarter of 1999.
Part II
Item 5. Market for Registrant's Common Stock and Related Shareholder Matters
A. The Company's Common Stock (the "Common Stock") is traded on the New
York Stock Exchange under the ticker symbol "OEI." The high and low
sales prices on the New York Stock Exchange Composite Tape for each
quarterly period during the last two fiscal years for the registrant,
formerly Seagull Energy Corporation, were as follows:
1999 1998
--------------------------------------- ---------------------------------------
High Low High Low
----------------- ----------------- ----------------- -----------------
First Quarter............. $ 7.63 $4.31 $20.94 $15.44
Second Quarter............ 10.94 6.38 19.44 13.94
Third Quarter............. 11.81 9.13 17.69 7.63
Fourth Quarter............ 10.69 6.31 12.44 5.69
B. As of March 22, 2000, there were approximately 4,123 holders of record
of Common Stock.
C. The Company did not declare any cash dividends on its Common Stock in
1999, 1998 or 1997. The decision to pay Common Stock dividends in the
future will depend upon the Company's earnings and financial condition
and such other factors as the Company's Board of Directors deems
relevant. The Company's revolving credit agreement and outstanding
indentures restrict the Company's declaration or payment of dividends
on and repurchases of Common Stock. Under the most restrictive of
these tests, as of December 31, 1999, approximately $150 million was
available for payment of dividends or repurchase of Common Stock. For
a description of such restrictions, reference is made to Note 7 of the
Consolidated Financial Statements included in the Company's 1999
Annual Report to Shareholders and as part of Exhibit 13 attached
hereto. In addition, the terms of the Company's Series C Convertible
Preferred Stock and certain debt securities limit the Company's
ability to pay cash dividends.
22
Ocean Energy, Inc.
Item 6. Selected Financial Data
Selected Financial Data (1)
(Amounts in Thousands Except Per Share Data)
Year Ended December 31,
---------------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------- ------------- -------------- -------------- --------------
Revenues.......................... $ 735,518 $ 522,150 $ 549,194 $ 394,980 $ 241,321
Net income (loss) from continuing
operations(2)................... (21,552) (406,879) 62,220 55,000 5,552
Earnings (loss) from continuing
operations per share(2):
Basic.......................... (0.16) (4.04) 0.67 0.65 0.06
Diluted........................ (0.16) (4.04) 0.64 0.62 0.06
Net cash provided by operating
activities before changes in
operating assets and liabilities 336,148 219,075 332,115 227,183 104,628
Net cash provided by operating
activities...................... 333,751 229,924 364,202 207,249 103,354
Total assets...................... 2,783,143 2,006,960 1,642,995 1,121,241 724,460
Long-term debt.................... 1,333,410 1,371,890 672,298 440,974 416,491
Shareholders' equity.............. 947,695 376,943 725,337 493,072 171,326
Capital expenditures.............. 369,026 961,979 845,376 445,783 240,025
Acquisitions, net of cash acquired 991,409 - - - -
Standardized measure of
discounted future net cash
flows.......................... 2,415,418 903,823 1,220,407 1,326,514 667,941
(1) Includes the effect of the Seagull Merger since March 30, 1999.
(2) Includes after-tax impairments of $43 million and $335 million in 1999 and
1998, respectively, and after-tax merger expenses of $31 million and $33
million in 1999 and 1998, respectively.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Incorporated herein by reference to Management's Discussion and Analysis of
Financial Condition and Results of Operations included in the Company's 1999
Annual Report to Shareholders and as part of Exhibit 13 attached hereto.
Item 7.a. Quantitative and Qualitative Disclosures About Market Risk
Incorporated herein by reference to the Market Risk Disclosures included in
the Company's 1999 Annual Report to Shareholders and as part of Exhibit 13
attached hereto.
Item 8. Financial Statements and Supplementary Data
Incorporated herein by reference to the Consolidated Financial Statements
included in the Company's 1999 Annual Report to Shareholders and as part of
Exhibit 13 attached hereto.
23
Ocean Energy, Inc.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
KPMG LLP, the independent auditors of the registrant, formerly Seagull
Energy Corporation, were appointed as independent auditors of the Company for
the fiscal year ending December 31, 1999. Such appointment of KPMG LLP was
ratified by the Company's shareholders at the annual meeting of shareholders
held on May 25, 1999.
Part III
Item 10. Directors and Executive Officers of the Registrant
Incorporated herein by reference to "Election of Directors" included in the
Proxy Statement for the Company's Annual Meeting of Shareholders to be held on
May 10, 2000 (the "Proxy Statement"). See also "Executive Officers of the
Company" included in Part I of this Annual Report on Form 10-K, which is
incorporated by reference herein.
Item 11. Executive Compensation
Incorporated herein by reference to "Executive Compensation--Summary
Compensation Table," "--Compensation Arrangements," "--Aggregated Option/SAR
Exercises in Last Fiscal Year and Fiscal Year-End Option/SAR Values,"
"--Option/SAR Grants in Last Fiscal Year," and "--Executive Supplemental
Retirement Plan" and "Election of Directors--Compensation of Directors" included
in the Proxy Statement. Notwithstanding any provision in this Annual Report on
Form 10-K to the contrary, under no circumstances are the "Report of the
Organization and Compensation Committee on Executive Compenstion" or the
information under the heading "Shareholder Return Performance Presentation"
incorporated herein for any purpose.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Incorporated herein by reference to "Principal Shareholders" and "Election
of Directors--Security Ownership of Directors and Management" included in the
Proxy Statement.
Item 13. Certain Relationships and Related Transactions
Incorporated herein by reference to "Election of Directors--Certain
Transactions" included in the Proxy Statement.
24
Ocean Energy, Inc.
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements:
The Consolidated Financial Statements, Notes to Consolidated Financial
Statements and Independent Auditors' Reports thereon are included in the
Company's 1999 Annual Report to Shareholders and as part of Exhibit 13 attached
hereto, and are incorporated herein by reference.
2. Schedules:
All schedules have been omitted because the required information is
insignificant or not applicable.
3. Exhibits:
3.1 Articles of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3.1
to the Company's Form 10-Q for the period ended June 30, 1999).
4.1 Amended and Restated Rights Agreement dated March 17, 1989, as amended effective June 13, 1992,
and amended and restated as of December 12, 1997, between the Company and BankBoston, N.A. (as
successor to NCNB Texas National Bank), including Form of Statement of Resolution Establishing
the Series B Junior Participating Preferred Stock, the Form of Right Certificate and Form of
Summary of Rights to Purchase Preferred Shares (the Agreement is incorporated by reference to
Exhibit 2 to Current Report on Form 8-K dated December 15, 1997; Amendment No. 1 dated November
24, 1998 is incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed on
December 1, 1998). Amendment No. 2, dated as of March 10, 1999, is incorporated by reference to
Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange
Commission on March 12, 1999; Amendment No. 3, dated as of May 19, 1999, is incorporated by
reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the Securities
and Exchange Commission on May 21, 1999).
4.2 Revolving Credit Agreement, dated as of March 30, 1999, among the Company, Chase Bank of Texas,
National Association ("Chase Texas") (Individually and as Administrative Agent), The Chase
Manhattan Bank ("Chase Manhattan") (as Auction Administrative Agent), Bank of America National
Trust and Savings Association ("Bank of America") (Individually and as Syndication Agent), Bank
One Texas, N. A. ("Bank One") (Individually and as Documentation Agent), Societe Generale,
Southwest Agency ("Societe Generale") (Individually and as Managing Agent), the Bank of Montreal
(Individually and as Managing Agent), and the other Banks signatory thereto (incorporated by
reference to Exhibit 4.1 to the Company's Form 10-Q for the period ended March 31, 1999).
*4.3 364-Day Credit Agreement, dated as of November 9, 1999, among the Company, Credit Suisse First
Boston (Individually and as Administrative Agent and as Auction Administrative Agent), Bank of
America, N. A. (Individually and as Syndication Agent), Chase Bank of Texas, National
Association (Individually and as Documentation Agent), and the other Banks signatory thereto,
filed herewith).
4.4 Senior Indenture dated as of July 15, 1993, relating to the 7 7/8% Notes due 2003, by and between
25
Ocean Energy, Inc.
the Company and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.1 to
Quarterly Report on Form 10-Q for the quarter ended March 31, 1998). First Supplemental
Indenture, dated as of March 30, 1999, is incorporated by reference to Exhibit 4.11 to the
Company's Form 10-Q for the period ended March 31, 1999).
4.5 Senior Subordinated Indenture dated as of July 15, 1993, relating to the 8 5/8% Notes due 2005 by
and between the Company and The Bank of New York, as Trustee (the Indenture is incorporated by
reference to Exhibit 4.2 to Quarterly Report on Form 10-Q for the quarter ended March 31, 1998;
the First Supplemental Indenture, dated as of March 30, 1999, is incorporated by reference to
Exhibit 4.12 to the Company's Form 10-Q for the period ended March 31, 1999).
4.6 Senior Indenture among the Company and The Bank of New York, as Trustee, and Specimen of 7 1/2%
Senior Notes (incorporated by reference to Exhibit 4.4 to Annual Report on Form 10-K for the
year ended December 31, 1997; the First Supplemental Indenture, dated as of March 30, 1999, is
incorporated by reference to Exhibit 4.10 to the Company's Form 10-Q for the period ended March
31, 1999).
4.7 Terms Agreement and the resolutions of adoption by the Chairman of the Board of Directors
related to Exhibit 4.6 (incorporated by reference to Exhibit 2.3 to Current Report on Form 8-K
filed with the Securities and Exchange Commission on October 17, 1997).
4.8 Indenture, dated as of July 8, 1998, among Ocean Energy, Inc., its Subsidiary Guarantors, and
U.S. Bank Trust National Association, relating to the 8 3/8% Series A Senior Subordinated Notes
due 2008 and the 8 3/8% Series B Senior Subordinated Notes due 2008 (the Indenture is
incorporated by reference to Exhibit 10.22 to the Form 10-Q for the period ended June 30, 1998
of Ocean Energy, Inc. (Registration No. 0-25058); the First Supplemental Indenture, dated March
30, 1999, is incorporated by reference to Exhibit 4.3 to the Company's Form 10-Q for the period
ended March 31, 1999).
4.9 Indenture, dated as of July 8, 1998, among Ocean Energy, Inc., its Subsidiary Guarantors, and
Norwest Bank Minnesota, National Association (Norwest Bank) as Trustee, relating to the 7 5/8%
Senior Notes due 2005 (the Indenture is incorporated by reference to Exhibit 10.23 to the Form
10-Q for the period ended June 30, 1998 of Ocean Energy, Inc. (Registration No. 0-25058); the
First Supplemental Indenture, dated March 30, 1999, is incorporated by reference to Exhibit 4.4
to the Company's Form 10-Q for the period ended March 31, 1999).
4.10 Indenture, dated as of July 8, 1998, among Ocean Energy, Inc., its Subsidiary Guarantors, and
Norwest Bank as Trustee, relating to the 8 1/4% Senior Notes due 2018 (the Indenture is
incorporated by reference to Exhibit 10.24 to the Form 10-Q for the period ended June 30, 1998
of Ocean Energy, Inc. (Registration No. 0-25058); the First Supplemental Indenture, dated March
30, 1999, is incorporated by reference to Exhibit 4.5 to the Company's Form 10-Q for the period
ended March 31, 1999).
4.11 Indenture, dated as of July 2, 1997, among Ocean Energy, Inc., the Subsidiary Guarantors Named
Therein and State Street Bank and Trust Company, as Trustee, relating to the 8 7/8% Senior
Subordinated Notes due 2007 (the Indenture is incorporated by reference to Exhibit 4.1 to the
Registration Statement on Form S-4 (No. 333-32715) of Ocean Energy, Inc.; the First Supplemental
Indenture, dated as of March 27, 1998, is incorporated by reference to Exhibit 10.11 to the Form
8-K of Ocean Energy, Inc. (Registration No. 0-25058) filed with the SEC on March 31, 1998; the
Second Supplemental Indenture, dated as of March 30, 1999 is incorporated by reference to
Exhibit 4.6 to the Company's Form 10-Q for the period ended March 31, 1999).
10.1 Agreement and Plan of Merger, dated as of November 24, 1998 among Seagull and Ocean Energy, Inc.
("OEI"), including amendments (Agreement and Plan of Merger is incorporated by
26
Ocean Energy, Inc.
reference to Exhibit 2.1 to Current Report on Form 8-K filed on December 1, 1998; Amendment No. 1
is incorporated by reference to Exhibit 2.2 to the Company's Registration Statement on
Form S-4 (Reg. No. 333-68679)).
#10.2 1999 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Form
10-Q for the period ended June 30, 1999).
#10.3 Seagull Energy Corporation 1981 Stock Option Plan (Restated), including forms of agreements, as
amended (incorporated by reference to Exhibit 10.3 to Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998).
#10.4 Seagull Energy Corporation 1983 Stock Option Plan (Restated), including forms of agreements, as
amended (plan is incorporated by reference to Exhibit 10.4 to Quarterly Report on Form 10-Q for
the quarter ended March 31, 1998).
#10.5 Seagull Energy Corporation 1986 Stock Option Plan (Restated), including forms of agreements, as
amended (incorporated by reference to Exhibit 10.5 to Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998).
#10.6 Seagull Energy Corporation 1990 Stock Option Plan, including forms of agreements, as amended
(incorporated by reference to Exhibit 10.22 to Annual Report on Form 10-K for the year ended
December 31, 1995; Form of Amendment to Stock Option Agreement(s) is incorporated by reference
to Exhibit 10.7 to Annual Report on Form 10-K for the year ended December 31, 1996).
#10.7 Global Natural Resources Inc. 1989 Key Employees Stock Option Plan (the Plan is incorporated by
reference to Exhibit 4.1 to Registration Statement No. 33-31537 of Global Natural Resources
Inc.; the Form of Stock Option Agreement is incorporated by reference to Exhibit 4.2 to
Registration Statement No. 33-31537 of Global Natural Resources Inc.; Form of Amendment to Stock
Option Agreement(s) is incorporated by reference to Exhibit 10.8 to Annual Report on Form 10-K
for the year ended December 31, 1996).
#10.8 Global Natural Resources Inc. 1992 Stock Option Plan (the Plan is incorporated by reference to
Exhibit 10.47 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 1992 of Global
Natural Resources Inc. (Registration No. 1-8674); the Form of Stock Option Agreement is
incorporated by reference to Exhibit 10.48 to the Quarterly Report on Form 10-Q for the quarter
ended June 30, 1992 of Global Natural Resources Inc. (Registration No. 1-8674); Form of
Amendment to Stock Option Agreement(s) is incorporated by reference to Exhibit 10.9 to Annual
Report on Form 10-K for the year ended December 31, 1996).
#10.9 Seagull Energy Corporation 1993 Nonemployee Directors' Stock Option Plan, including forms of
agreements, as amended (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form
10-Q for the quarter ended September 30, 1997).
#10.10 Seagull Energy Corporation 1993 Stock Option Plan, as amended (incorporated by reference to
Exhibit 10.3 to Quarterly Report on Form 10-Q for the quarter ended September 30, 1997).
#10.11 1995 Omnibus Stock Plan (the Plan is incorporated by reference to Exhibit 10.3 to Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995; Form of Amendment to Stock Option
Agreement(s) is incorporated by reference to Exhibit 10.12 to Annual Report on Form 10-K for the
year ended December 31, 1996).
#10.12 1998 Omnibus Stock Plan (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form
10-Q for the quarter ended June 30, 1998).
27
Ocean Energy, Inc.
#10.13 UMC 1987 Nonqualified Stock Option Plan, as amended, (the Plan is incorporated herein by
reference to Exhibit 10.3 to UMC's Form S-1 (No. 33-63532) filed with the SEC on May 28, 1993;
the Third Amendment, dated November 16, 1993, is incorporated herein by reference to Exhibit
10.4 to UMC's Form 10-K for the year ended December 31, 1993; the Fourth Amendment, dated April
6, 1994, is incorporated by reference to Exhibit 10.6 to UMC's Form 10-K for the year ended
December 31, 1994; the Fifth Amendment, dated November 19, 1997, is incorporated by reference to
Exhibit 4.7 to UMC's Form S-3 (No. 333-42467); the Sixth Amendment, dated March 27, 1998, and
the Seventh Amendment, dated February 1, 1999, are incorporated by reference to Exhibit 10.3 to
Form 10-Q for the period ended March 31, 1999).
#10.14 UMC 1994 Employee Nonqualified Stock Option Plan, as amended (the Plan is incorporated by
reference to Exhibit 4.14 to UMC's Form S-8 (No. 33-79160) filed with the SEC on May 19, 1994;
the First Amendment, dated November 16, 1994, is incorporated by reference to Exhibit 4.11.1 to
UMC's Form S-8 (No. 33-86480) filed with the SEC on November 18, 1994; the Second Amendment,
dated May 22, 1996, is incorporated by reference to Exhibit 4.3.2 to UMC's Form S-8 (No.
333-05401) filed with the SEC on June 6, 1996; the Third Amendment, dated November 13, 1996, is
incorporated by reference to Exhibit 4.3.3 to UMC's Form S-8 (No. 333-28017) filed with the SEC
on May 29, 1997; the Fourth Amendment, dated May 29, 1997, is incorporated herein by reference
to Exhibit 4.3.4 to UMC's Form S-8 (No. 333-28017) filed with the SEC on May 29, 1997; the Fifth
Amendment, dated November 19, 1997, is incorporated by reference to Exhibit 4.8 to UMC's Form
S-3 (No. 333-42467) filed with the SEC on December 17, 1997; the Sixth Amendment, dated March
27, 1998 is incorporated by reference to Exhibit 10.4 to Form 10-Q for the period ended March
31, 1999).
#10.15 Amendment to UMC 1994 Non-Qualified Stock Option Agreement for Former Employees of General
Atlantic Resources, Inc. dated as of April 16, 1996 among UMC and Donald D. Wolf (incorporated
by reference to Exhibit 10.22 to UMC's Form 10-Q for the period ended September 30, 1996).
#10.16 UMC 1994 Outside Directors' Nonqualified Stock Option Plan, as amended (the Plan is incorporated
herein by reference to Exhibit 4.15 to UMC's Form S-8 (No. 33-79160) filed with the SEC on May
19, 1994; the First Amendment, dated May 22, 1996, is incorporated by reference to Exhibit 4.4.1
to UMC's Form S-8 (No. 333-05401) filed with the SEC on June 6, 1996; the Second Amendment,
dated November 13, 1996, is incorporated herein by reference to Exhibit 4.4 to UMC's Form S-8
(No. 333-28017) filed with the SEC on May 29, 1997; the Third Amendment, dated November 19,
1997, is incorporated by reference to Exhibit 4.9 to UMC's Form S-3 (No. 333-42467); Fourth
Amendment, dated March 27, 1998 is incorporated by reference to Exhibit 10.6 to Form 10-Q for
the period ended March 31, 1999).
#10.17 UMC Petroleum Corporation Supplemental Benefit Plan effective January 1, 1994, approved by the
Board of Directors on March 29, 1994 (the Plan is incorporated by reference to Exhibit 10.10 to
UMC's Form 10-K filed for the year ended December 31, 1994; the Second Amendment dated March 30,
1999 is incorporated by reference to Exhibit 10.7 to Form 10-Q for the period ended March 31,
1999).
#10.18 1994 Long-Term Incentive Plan (the Plan, as amended, is incorporated by reference to Exhibit
10.3 to Amendment No. 2 to the Registration Statement on Form S-1 (No. 33-84308) of Ocean
Energy, Inc. (Registration No. 0-25058); the Second Amendment, dated March 27, 1998 is
incorporated by reference to Exhibit 4.2 to Form 10-Q for the period ended March 31, 1999).
#10.19 1996 Long-Term Incentive Plan, as amended (the Plan, as amended, is incorporated by reference to
Exhibit 99.1 to the Form S-8 (No. 333-45117) of Ocean Energy, Inc. (Registration No. 0-25058)
filed with the SEC on January 29, 1998; the Second Amendment, dated March 27, 1998, is
incorporated by reference to Exhibit 4.2 to Form 10-Q for the period ended March 31, 1999).
28
Ocean Energy, Inc.
*#10.20 Long-Term Incentive Plan for Non-Executive Employees, as amended (the Plan, as amended, is
incorporated by reference to Exhibit 99.1 to the Form S-8 (No. 333-45119) of Ocean Energy, Inc.
(Registration No. 0-25058); Amendment No. 2, incorporated by reference to Exhibit 99.2 to the
Form S-8 (No. 333-49185) of Ocean Energy, Inc.; Amendment No. 3, dated as of May 20, 1998, is
incorporated by reference to Exhibit 10.46 to the Annual Report on Form 10-K for the year ended
December 31, 1998, of Ocean Energy, Inc. (Registration No. 0-25058); Amendment No. 4 is filed
herewith).
#10.21 1998 Long-Term Incentive Plan (incorporated by reference to Appendix E to Ocean Energy, Inc.'s
Joint Proxy Statement Prospectus on Form S-4 (333-43933) filed with the SEC on January 9, 1998).
#10.22 Seagull Energy Corporation Management Stability Plan (the Plan is incorporated by reference to
Exhibit 10.35 to Annual Report on Form 10-K for the year ended December 31, 1994; the First
Amendment is incorporated by reference to Exhibit 10.13 to Annual Report on Form 10-K for the
year ended December 31, 1996; the Second and Third Amendments are incorporated by reference to
Exhibit 10.4 to Quarterly Report on Form 10-Q for the quarter ended September 30, 1998; the
Fourth Amendment is incorporated by reference to Exhibit 10.12 to the Annual Report on Form 10-K
for the year ended December 31, 1998; the Fifth Amendment is incorporated by reference to
Exhibit 10.14 to Form 10-Q for the period ended March 31, 1999).
*#10.23 Outside Directors Deferred Fee Plan, as amended and restated effective March 30, 1999.
#10.24 Executive Supplemental Retirement Plan, as amended (the Plan, as amended, is incorporated by
reference to Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter ended September 30,
1996; the Third Amendment is incorporated by reference to Exhibit 10.11 to Quarterly Report on
Form 10-Q for the quarter ended September 30, 1998).
#10.25 Supplemental Benefit Plan, as amended, including the First Amendment thereto (the Plan, as
amended, is incorporated by reference to Exhibit 10.11 to Annual Report on Form 10-K for the
year ended December 31, 1995; the Third Amendment is incorporated by reference to Exhibit 10.12
to Quarterly Report on Form 10-Q for the quarter ended September 30, 1998; the Fourth Amendment
is incorporated by reference to Exhibit 10.22 to the Annual Report on Form 10-K for the year
ended December 31, 1998).
#10.26 Ocean Energy, Inc. 1999 Change of Control Severance Plan dated February 8, 1999; the First
Amendment dated March 29, 1999 (incorporated by reference to Exhibit 10.17 to Form 10-Q for the
period ended March 31, 1999).
#10.27 Form of Indemnification Agreements among the Company and certain executive officers and
directors (incorporated by reference to Exhibit 10.19 to Form 10-Q for the period ended March
31, 1999).
#10.28 Employment Agreement by and between the Company and James T. Hackett, as amended (the Agreement
is incorporated by reference to Exhibit 10.6 to Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998; Amendment to Employment Agreement dated November 24, 1998 is
incorporated by reference to Exhibit 10.15 to Form 10-Q for the period ended March 31, 1999;
Second Amendment to Employment Agreement, effective as of December 15, 1999, is incorporated by
reference to Exhibit 99.2 to Current Report on Form 8-K filed with the Securities and Exchange
Commission on January 7, 2000).
#10.29 Employment and Consulting Agreement by and between the Company and Barry J. Galt, as amended
(the Agreement is incorporated by reference to Exhibit 10.1 to Quarterly Report on Form
29
Ocean Energy, Inc.
10-Q for the quarter ended September 30, 1998; Amendment to Employment and Consulting Agreement
dated November 24, 1998 is incorporated by reference to Exhibit 10.16 to Form 10-Q for the
period ended March 31, 1999; Second Amendment to Employment and Consulting Agreement is
incorporated by reference to Exhibit 10.6 to Form 10-Q for the period ended June 30, 1999).
#10.30 Employment Agreement, dated as of March 27, 1998, among Ocean Energy, Inc. and John B. Brock, as
amended (the Agreement is incorporated by reference to Exhibit 10.1 to the Form 8-K of Ocean
Energy, Inc. (Registration No. 0-25058) filed with the SEC on March 31, 1998; Amendment No.1,
dated as of November 24, 1998, is incorporated by reference to Exhibit 10.33 to the Annual
Report on Form 10-K for the year ended December 31, 1998, of Ocean Energy, Inc. (Registration
No. 0-25058)).
#10.31 Form of Employment Agreement between the Company and Robert K. Reeves (incorporated by reference
to Exhibit 10.41 to Form 10-Q for the period ended June 30, 1999).
#10.32 Form of Employment Agreement between the Company and William L. Transier (incorporated by
reference to Exhibit 10.5 to Form 10-Q for the period ended June 30, 1999).
#10.33 Letter Agreement between the Company and James C. Flores, dated December 22, 1999 (incorporated
by reference to Exhibit 99.3 to Current Report on Form 8-K filed on January 7, 2000).
#10.34 Employment Agreement between the Company and James C. Flores, effective as of January 1, 2000
(incorporated by reference to Exhibit 99.4 to Current Report on Form 8-K filed on January 7,
2000).
#10.35 Severance Agreement between Ocean Energy, Inc., (the "Company") a Texas corporation formerly
known as Seagull Energy Corporation, and John D. Schiller Jr. ("Executive") dated September 27,
1999 (incorporated by reference to Exhibit 10.1 to Form 10-Q for the period ended September 30,
1999).
#10.36 Executive Supplemental Retirement Plan Membership Agreement by and between the Company and James
T. Hackett (incorporated by reference to Exhibit 10.7 to Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998).
#10.37 Executive Supplemental Retirement Plan Membership Agreement between the Company and Barry J.
Galt dated as of February 3, 1986, as amended (incorporated by reference to Exhibit 10.2 to
Quarterly Report on Form 10-Q for the quarter ended September 30, 1996).
#10.38 Severance Agreement between the Company and James T. Hackett, as amended (incorporated by
reference to Exhibit 10.8 to Quarterly Report on Form 10-Q for the quarter ended September 30,
1998). Amendment to Severance Agreement, effective as of December 15, 1999, incorporated by
reference to Exhibit 99.1 to Current Report on Form 8-K filed with the Securities and Exchange
Commission on January 7, 2000.
#10.39 Severance Agreement, including Amendment and Second Amendment to Severance Agreement, between
the Company and Barry J. Galt (incorporated by reference to Exhibit 10.2 to Quarterly Report on
Form 10-Q for the quarter ended September 30, 1998).
#10.40 Promissory Note between John D. Schiller, Jr. and Seagull (incorporated by reference to Exhibit
10.31 to Annual Report on Form 10-K for the year ended December 31, 1998).
10.41 Promissory Note between William L. Transier and Seagull (incorporated by reference to Exhibit
30
Ocean Energy, Inc.
10.32 to the Company's Annual Report on Form 10-K for the year ended December 31, 1998).
10.42 Promissory Note between Barry J. Galt and Seagull (incorporated by reference to Exhibit 10.33 to
Annual Report on Form 10-K for the year ended December 31, 1998).
10.43 Purchase and Sale Agreement dated June 15, 1999, between the Company, as Seller, and SEMCO
ENERGY, Inc., as Purchaser, for the sale of ENSTAR (incorporated by reference to Exhibit 10.2 to
Form 10-Q for the period ended June 30, 1999).
10.44 Purchase and Sale Agreement dated July 30, 1999, between the Company as Seller, and Cross
Timbers Oil Company, as Purchaser, for the sale of the Arkoma properties (incorporated by
reference to Exhibit 10.1 to Form 10-Q for the period ended June 30, 1999).
*10.45 Natural Gas Purchase and Sale Agreement dated October 1, 1999 between the Company as Seller and
Duke Energy Trading and Marketing, L.L.C., as Buyer, filed herewith.
*13.0 1999 Annual Report of the Company (selected portions), filed herewith.
*23.1 Consent of KPMG LLP.
*23.2 Consent of Arthur Andersen LLP.
*27.1 Financial Data Schedule.
(b) Reports on Form 8-K
On February 23, 2000, the Company filed a Current Report on Form 8-K dated
February 23, 2000 concerning disclosure of year 2000 estimates.
On January 7, 2000, the Company filed a Current Report on Form 8-K dated
December 15, 1999 concerning Mr. Hackett's assumption of the responsibilities of
Chairman of the Board of Directors of the Company.
31
Ocean Energy, Inc.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Ocean Energy, Inc.
Date: March 27, 2000 By: /s/ James T. Hackett
James T. Hackett, Chairman of the Board,
President and Chief Executive 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 and on the dates indicated.
By: /s/ James T. Hackett By: /s/ Peter J. Fluor
------------------------------------------------- -----------------------------------------------
James T. Hackett, Chairman of the Board, Peter J. Fluor, Director
President, Chief Executive Officer and Director Date: March 27, 2000
(Principal Executive Officer)
Date: March _27, 2000 By: /s/ Barry J. Galt
-----------------------------------------------
Barry J. Galt, Director
By: /s/ William L. Transier Date: March 27, 2000
-------------------------------------------------
William L. Transier, Executive Vice President
and Chief Financial Officer /s/ Robert L. Howard
(Principal Financial Officer) -----------------------------------------------
By: Robert L. Howard, Director
Date: March 27, 2000
By: /s/ Gordon L. McConnell /s/ Elvis L. Mason
------------------------------------------------- -----------------------------------------------
Gordon L. McConnell, Vice President and By: Elvis L. Mason, Director
Controller (Principal Accounting Officer) Date: March 27, 2000
Date: March 27, 2000
/s/ Charles F. Mitchell, M.D.
-----------------------------------------------
By: /s/ James C. Flores By: Charles F. Mitchell, M.D., Director
------------------------------------------------- Date: March 27, 2000
James C. Flores, Vice Chairman
Date: March _27, 2000
/s/ David K. Newbigging
-----------------------------------------------
By: /s/ J. Evans Attwell By: David K. Newbigging, Director
------------------------------------------------- Date: March 27, 2000
J. Evans Attwell, Director
Date: March 27, 2000
/s/ Dee S. Osborne
-----------------------------------------------
By: /s/ John B. Brock By: Dee S. Osborne, Director
------------------------------------------------- Date: March 27, 2000
John B. Brock, Director
Date: March 27, 2000
/s/ R. A. Walker
-----------------------------------------------
By: /s/ Milton Carroll By: R. A. Walker, Director
------------------------------------------------- Date: March 27, 2000
Milton Carroll, Director
Date: March 27, 2000
By: /s/ Thomas D. Clark, Jr.
-------------------------------------------------
Thomas D. Clark, Jr., Director
Date: March 27, 2000
32
Ocean Energy, Inc.
EXHIBIT INDEX
Page
3.1 Articles of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3.1
to the Company's Form 10-Q for the period ended June 30, 1999).
4.1 Amended and Restated Rights Agreement dated March 17, 1989, as amended effective June 13, 1992,
and amended and restated as of December 12, 1997, between the Company and BankBoston, N.A. (as
successor to NCNB Texas National Bank), including Form of Statement of Resolution Establishing
the Series B Junior Participating Preferred Stock, the Form of Right Certificate and Form of
Summary of Rights to Purchase Preferred Shares (the Agreement is incorporated by reference to
Exhibit 2 to Current Report on Form 8-K dated December 15, 1997; Amendment No. 1 dated November
24, 1998 is incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed on
December 1, 1998). Amendment No. 2, dated as of March 10, 1999, is incorporated by reference to
Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange
Commission on March 12, 1999; Amendment No. 3, dated as of May 19, 1999, is incorporated by
reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the Securities
and Exchange Commission on May 21, 1999).
4.2 Revolving Credit Agreement, dated as of March 30, 1999, among the Company, Chase Bank of Texas,
National Association ("Chase Texas") (Individually and as Administrative Agent), The Chase
Manhattan Bank ("Chase Manhattan") (as Auction Administrative Agent), Bank of America National
Trust and Savings Association ("Bank of America") (Individually and as Syndication Agent), Bank
One Texas, N. A. ("Bank One") (Individually and as Documentation Agent), Societe Generale,
Southwest Agency ("Societe Generale") (Individually and as Managing Agent), the Bank of Montreal
(Individually and as Managing Agent), and the other Banks signatory thereto (incorporated by
reference to Exhibit 4.1 to the Company's Form 10-Q for the period ended March 31, 1999).
*4.3 364-Day Credit Agreement, dated as of November 9, 1999, among the Company, Credit Suisse First
Boston (Individually and as Administrative Agent and as Auction Administrative Agent), Bank of
America, N. A. (Individually and as Syndication Agent), Chase Bank of Texas, National
Association (Individually and as Documentation Agent), and the other Banks signatory thereto,
filed herewith).
4.4 Senior Indenture dated as of July 15, 1993, relating to the 7 7/8% Notes due 2003, by and between
the Company and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.1 to
Quarterly Report on Form 10-Q for the quarter ended March 31, 1998). First Supplemental
Indenture, dated as of March 30, 1999, is incorporated by reference to Exhibit 4.11 to the
Company's Form 10-Q for the period ended March 31, 1999).
4.5 Senior Subordinated Indenture dated as of July 15, 1993, relating to the 8 5/8% Notes due 2005 by
and between the Company and The Bank of New York, as Trustee (the Indenture is incorporated by
reference to Exhibit 4.2 to Quarterly Report on Form 10-Q for the quarter ended March 31, 1998;
the First Supplemental Indenture, dated as of March 30, 1999, is incorporated by reference to
Exhibit 4.12 to the Company's Form 10-Q for the period ended March 31, 1999).
4.6 Senior Indenture among the Company and The Bank of New York, as Trustee, and Specimen of 7 1/2%
Senior Notes (incorporated by reference to Exhibit 4.4 to Annual Report on Form 10-K for the
year ended December 31, 1997; the First Supplemental Indenture, dated as of March 30, 1999, is
incorporated by reference to Exhibit 4.10 to the Company's Form 10-Q for the period ended March
31, 1999).
4.7 Terms Agreement and the resolutions of adoption by the Chairman of the Board of Directors
related to Exhibit 4.6 (incorporated by reference to Exhibit 2.3 to Current Report on Form 8-K
filed with the Securities and Exchange Commission on October 17, 1997).
4.8 Indenture, dated as of July 8, 1998, among Ocean Energy, Inc., its Subsidiary Guarantors, and
U.S. Bank Trust National Association, relating to the 8 3/8% Series A Senior Subordinated Notes
due 2008 and the 8 3/8% Series B Senior Subordinated Notes due 2008 (the Indenture is
incorporated by reference to Exhibit 10.22 to the Form 10-Q for the period ended June 30, 1998
of Ocean Energy, Inc. (Registration No. 0-25058); the First Supplemental Indenture, dated March
30, 1999, is incorporated by reference to Exhibit 4.3 to the Company's Form 10-Q for the period
ended March 31, 1999).
4.9 Indenture, dated as of July 8, 1998, among Ocean Energy, Inc., its Subsidiary Guarantors, and
Norwest Bank Minnesota, National Association (Norwest Bank) as Trustee, relating to the 7 5/8%
Senior Notes due 2005 (the Indenture is incorporated by reference to Exhibit 10.23 to the Form
10-Q for the period ended June 30, 1998 of Ocean Energy, Inc. (Registration No. 0-25058); the
First Supplemental Indenture, dated March 30, 1999, is incorporated by reference to Exhibit 4.4
to the Company's Form 10-Q for the period ended March 31, 1999).
4.10 Indenture, dated as of July 8, 1998, among Ocean Energy, Inc., its Subsidiary Guarantors, and
Norwest Bank as Trustee, relating to the 8 1/4% Senior Notes due 2018 (the Indenture is
incorporated by reference to Exhibit 10.24 to the Form 10-Q for the period ended June 30, 1998
of Ocean Energy, Inc. (Registration No. 0-25058); the First Supplemental Indenture, dated March
30, 1999, is incorporated by reference to Exhibit 4.5 to the Company's Form 10-Q for the period
ended March 31, 1999).
4.11 Indenture, dated as of July 2, 1997, among Ocean Energy, Inc., the Subsidiary Guarantors Named
Therein and State Street Bank and Trust Company, as Trustee, relating to the 8 7/8% Senior
Subordinated Notes due 2007 (the Indenture is incorporated by reference to Exhibit 4.1 to the
Registration Statement on Form S-4 (No. 333-32715) of Ocean Energy, Inc.; the First Supplemental
Indenture, dated as of March 27, 1998, is incorporated by reference to Exhibit 10.11 to the Form
8-K of Ocean Energy, Inc. (Registration No. 0-25058) filed with the SEC on March 31, 1998; the
Second Supplemental Indenture, dated as of March 30, 1999 is incorporated by reference to
Exhibit 4.6 to the Company's Form 10-Q for the period ended March 31, 1999).
33
Ocean Energy, Inc.
EXHIBIT INDEX
10.1 Agreement and Plan of Merger, dated as of November 24, 1998 among Seagull and Ocean Energy, Inc.
("OEI"), including amendments (Agreement and Plan of Merger is incorporated by reference to
Exhibit 2.1 to Current Report on Form 8-K filed on December 1, 1998; Amendment No. 1 is
incorporated by reference to Exhibit 2.2 to the Company's Registration Statement on Form S-4
(Reg. No. 333-68679)).
#10.2 1999 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Form
10-Q for the period ended June 30, 1999).
#10.3 Seagull Energy Corporation 1981 Stock Option Plan (Restated), including forms of agreements, as
amended (incorporated by reference to Exhibit 10.3 to Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998).
#10.4 Seagull Energy Corporation 1983 Stock Option Plan (Restated), including forms of agreements, as
amended (plan is incorporated by reference to Exhibit 10.4 to Quarterly Report on Form 10-Q for
the quarter ended March 31, 1998).
#10.5 Seagull Energy Corporation 1986 Stock Option Plan (Restated), including forms of agreements, as
amended (incorporated by reference to Exhibit 10.5 to Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998).
#10.6 Seagull Energy Corporation 1990 Stock Option Plan, including forms of agreements, as amended
(incorporated by reference to Exhibit 10.22 to Annual Report on Form 10-K for the year ended
December 31, 1995; Form of Amendment to Stock Option Agreement(s) is incorporated by reference
to Exhibit 10.7 to Annual Report on Form 10-K for the year ended December 31, 1996).
#10.7 Global Natural Resources Inc. 1989 Key Employees Stock Option Plan (the Plan is incorporated by
reference to Exhibit 4.1 to Registration Statement No. 33-31537 of Global Natural Resources
Inc.; the Form of Stock Option Agreement is incorporated by reference to Exhibit 4.2 to
Registration Statement No. 33-31537 of Global Natural Resources Inc.; Form of Amendment to Stock
Option Agreement(s) is incorporated by reference to Exhibit 10.8 to Annual Report on Form 10-K
for the year ended December 31, 1996).
#10.8 Global Natural Resources Inc. 1992 Stock Option Plan (the Plan is incorporated by reference to
Exhibit 10.47 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 1992 of Global
Natural Resources Inc. (Registration No. 1-8674); the Form of Stock Option Agreement is
incorporated by reference to Exhibit 10.48 to the Quarterly Report on Form 10-Q for the quarter
ended June 30, 1992 of Global Natural Resources Inc. (Registration No. 1-8674); Form of
Amendment to Stock Option Agreement(s) is incorporated by reference to Exhibit 10.9 to Annual
Report on Form 10-K for the year ended December 31, 1996).
#10.9 Seagull Energy Corporation 1993 Nonemployee Directors' Stock Option Plan, including forms of
agreements, as amended (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form
10-Q for the quarter ended September 30, 1997).
#10.10 Seagull Energy Corporation 1993 Stock Option Plan, as amended (incorporated by reference to
Exhibit 10.3 to Quarterly Report on Form 10-Q for the quarter ended September 30, 1997).
#10.11 1995 Omnibus Stock Plan (the Plan is incorporated by reference to Exhibit 10.3 to Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995; Form of Amendment to Stock Option
Agreement(s) is incorporated by reference to Exhibit 10.12 to Annual Report on Form 10-K for the
year ended December 31, 1996).
34
Ocean Energy, Inc.
EXHIBIT INDEX
#10.12 1998 Omnibus Stock Plan (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form
10-Q for the quarter ended June 30, 1998).
#10.13 UMC 1987 Nonqualified Stock Option Plan, as amended, (the Plan is incorporated herein by
reference to Exhibit 10.3 to UMC's Form S-1 (No. 33-63532) filed with the SEC on May 28, 1993;
the Third Amendment, dated November 16, 1993, is incorporated herein by reference to Exhibit
10.4 to UMC's Form 10-K for the year ended December 31, 1993; the Fourth Amendment, dated April
6, 1994, is incorporated by reference to Exhibit 10.6 to UMC's Form 10-K for the year ended
December 31, 1994; the Fifth Amendment, dated November 19, 1997, is incorporated by reference to
Exhibit 4.7 to UMC's Form S-3 (No. 333-42467); the Sixth Amendment, dated March 27, 1998, and
the Seventh Amendment, dated February 1, 1999, are incorporated by reference to Exhibit 10.3 to
Form 10-Q for the period ended March 31, 1999).
#10.14 UMC 1994 Employee Nonqualified Stock Option Plan, as amended (the Plan is incorporated by
reference to Exhibit 4.14 to UMC's Form S-8 (No. 33-79160) filed with the SEC on May 19, 1994;
the First Amendment, dated November 16, 1994, is incorporated by reference to Exhibit 4.11.1 to
UMC's Form S-8 (No. 33-86480) filed with the SEC on November 18, 1994; the Second Amendment,
dated May 22, 1996, is incorporated by reference to Exhibit 4.3.2 to UMC's Form S-8 (No.
333-05401) filed with the SEC on June 6, 1996; the Third Amendment, dated November 13, 1996, is
incorporated by reference to Exhibit 4.3.3 to UMC's Form S-8 (No. 333-28017) filed with the SEC
on May 29, 1997; the Fourth Amendment, dated May 29, 1997, is incorporated herein by reference
to Exhibit 4.3.4 to UMC's Form S-8 (No. 333-28017) filed with the SEC on May 29, 1997; the Fifth
Amendment, dated November 19, 1997, is incorporated by reference to Exhibit 4.8 to UMC's Form
S-3 (No. 333-42467) filed with the SEC on December 17, 1997; the Sixth Amendment, dated March
27, 1998 is incorporated by reference to Exhibit 10.4 to Form 10-Q for the period ended March
31, 1999).
#10.15 Amendment to UMC 1994 Non-Qualified Stock Option Agreement for Former Employees of General
Atlantic Resources, Inc. dated as of April 16, 1996 among UMC and Donald D. Wolf (incorporated
by reference to Exhibit 10.22 to UMC's Form 10-Q for the period ended September 30, 1996).
#10.16 UMC 1994 Outside Directors' Nonqualified Stock Option Plan, as amended (the Plan is incorporated
herein by reference to Exhibit 4.15 to UMC's Form S-8 (No. 33-79160) filed with the SEC on May
19, 1994; the First Amendment, dated May 22, 1996, is incorporated by reference to Exhibit 4.4.1
to UMC's Form S-8 (No. 333-05401) filed with the SEC on June 6, 1996; the Second Amendment,
dated November 13, 1996, is incorporated herein by reference to Exhibit 4.4 to UMC's Form S-8
(No. 333-28017) filed with the SEC on May 29, 1997; the Third Amendment, dated November 19,
1997, is incorporated by reference to Exhibit 4.9 to UMC's Form S-3 (No. 333-42467); Fourth
Amendment, dated March 27, 1998 is incorporated by reference to Exhibit 10.6 to Form 10-Q for
the period ended March 31, 1999).
#10.17 UMC Petroleum Corporation Supplemental Benefit Plan effective January 1, 1994, approved by the
Board of Directors on March 29, 1994 (the Plan is incorporated by reference to Exhibit 10.10 to
UMC's Form 10-K filed for the year ended December 31, 1994; the Second Amendment dated March 30,
1999 is incorporated by reference to Exhibit 10.7 to Form 10-Q for the period ended March 31,
1999).
#10.18 1994 Long-Term Incentive Plan (the Plan, as amended, is incorporated by reference to Exhibit
10.3 to Amendment No. 2 to the Registration Statement on Form S-1 (No. 33-84308) of Ocean
Energy, Inc. (Registration No. 0-25058); the Second Amendment, dated March 27, 1998 is
incorporated by reference to Exhibit 4.2 to Form 10-Q for the period ended March 31, 1999).
35
Ocean Energy, Inc.
EXHIBIT INDEX
#10.19 1996 Long-Term Incentive Plan, as amended (the Plan, as amended, is incorporated by reference to
Exhibit 99.1 to the Form S-8 (No. 333-45117) of Ocean Energy, Inc. (Registration No. 0-25058)
filed with the SEC on January 29, 1998; the Second Amendment, dated March 27, 1998, is
incorporated by reference to Exhibit 4.2 to Form 10-Q for the period ended March 31, 1999).
*#10.20 Long-Term Incentive Plan for Non-Executive Employees, as amended (the Plan, as amended, is
incorporated by reference to Exhibit 99.1 to the Form S-8 (No. 333-45119) of Ocean Energy, Inc.
(Registration No. 0-25058); Amendment No. 2, incorporated by reference to Exhibit 99.2 to the
Form S-8 (No. 333-49185) of Ocean Energy, Inc.; Amendment No. 3, dated as of May 20, 1998, is
incorporated by reference to Exhibit 10.46 to the Annual Report on Form 10-K for the year ended
December 31, 1998, of Ocean Energy, Inc. (Registration No. 0-25058); Amendment No. 4 is filed
herewith).
#10.21 1998 Long-Term Incentive Plan (incorporated by reference to Appendix E to Ocean Energy, Inc.'s
Joint Proxy Statement Prospectus on Form S-4 (333-43933) filed with the SEC on January 9, 1998).
#10.22 Seagull Energy Corporation Management Stability Plan (the Plan is incorporated by reference to
Exhibit 10.35 to Annual Report on Form 10-K for the year ended December 31, 1994; the First
Amendment is incorporated by reference to Exhibit 10.13 to Annual Report on Form 10-K for the
year ended December 31, 1996; the Second and Third Amendments are incorporated by reference to
Exhibit 10.4 to Quarterly Report on Form 10-Q for the quarter ended September 30, 1998; the
Fourth Amendment is incorporated by reference to Exhibit 10.12 to the Annual Report on Form 10-K
for the year ended December 31, 1998; the Fifth Amendment is incorporated by reference to
Exhibit 10.14 to Form 10-Q for the period ended March 31, 1999).
*#10.23 Outside Directors Deferred Fee Plan, as amended and restated effective March 30, 1999.
#10.24 Executive Supplemental Retirement Plan, as amended (the Plan, as amended, is incorporated by
reference to Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter ended September 30,
1996; the Third Amendment is incorporated by reference to Exhibit 10.11 to Quarterly Report on
Form 10-Q for the quarter ended September 30, 1998).
#10.25 Supplemental Benefit Plan, as amended, including the First Amendment thereto (the Plan, as
amended, is incorporated by reference to Exhibit 10.11 to Annual Report on Form 10-K for the
year ended December 31, 1995; the Third Amendment is incorporated by reference to Exhibit 10.12
to Quarterly Report on Form 10-Q for the quarter ended September 30, 1998; the Fourth Amendment
is incorporated by reference to Exhibit 10.22 to the Annual Report on Form 10-K for the year
ended December 31, 1998).
#10.26 Ocean Energy, Inc. 1999 Change of Control Severance Plan dated February 8, 1999; the First
Amendment dated March 29, 1999 (incorporated by reference to Exhibit 10.17 to Form 10-Q for the
period ended March 31, 1999).
#10.27 Form of Indemnification Agreements among the Company and certain executive officers and
directors (incorporated by reference to Exhibit 10.19 to Form 10-Q for the period ended March
31, 1999).
#10.28 Employment Agreement by and between the Company and James T. Hackett, as amended (the Agreement
is incorporated by reference to Exhibit 10.6 to Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998; Amendment to Employment Agreement dated November 24, 1998 is
incorporated by reference to Exhibit 10.15 to Form 10-Q for the period ended March 31, 1999;
Second Amendment to Employment Agreement, effective as of December 15, 1999, is incorporated by
reference to Exhibit 99.2 to Current Report on Form 8-K filed with the Securities and Exchange
Commission on January 7, 2000).
36
Ocean Energy, Inc.
EXHIBIT INDEX
#10.29 Employment and Consulting Agreement by and between the Company and Barry J. Galt, as amended
(the Agreement is incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q for
the quarter ended September 30, 1998; Amendment to Employment and Consulting Agreement dated
November 24, 1998 is incorporated by reference to Exhibit 10.16 to Form 10-Q for the period
ended March 31, 1999; Second Amendment to Employment and Consulting Agreement is incorporated by
reference to Exhibit 10.6 to Form 10-Q for the period ended June 30, 1999).
#10.30 Employment Agreement, dated as of March 27, 1998, among Ocean Energy, Inc. and John B. Brock, as
amended (the Agreement is incorporated by reference to Exhibit 10.1 to the Form 8-K of Ocean
Energy, Inc. (Registration No. 0-25058) filed with the SEC on March 31, 1998; Amendment No.1,
dated as of November 24, 1998, is incorporated by reference to Exhibit 10.33 to the Annual
Report on Form 10-K for the year ended December 31, 1998, of Ocean Energy, Inc. (Registration
No. 0-25058)).
#10.31 Form of Employment Agreement between the Company and Robert K. Reeves (incorporated by reference
to Exhibit 10.41 to Form 10-Q for the period ended June 30, 1999).
#10.32 Form of Employment Agreement between the Company and William L. Transier (incorporated by
reference to Exhibit 10.5 to Form 10-Q for the period ended June 30, 1999).
#10.33 Letter Agreement between the Company and James C. Flores, dated December 22, 1999 (incorporated
by reference to Exhibit 99.3 to Current Report on Form 8-K filed on January 7, 2000).
#10.34 Employment Agreement between the Company and James C. Flores, effective as of January 1, 2000
(incorporated by reference to Exhibit 99.4 to Current Report on Form 8-K filed on January 7,
2000).
#10.35 Severance Agreement between Ocean Energy, Inc., (the "Company") a Texas corporation formerly
known as Seagull Energy Corporation, and John D. Schiller Jr. ("Executive") dated September 27,
1999 (incorporated by reference to Exhibit 10.1 to Form 10-Q for the period ended September 30,
1999).
#10.36 Executive Supplemental Retirement Plan Membership Agreement by and between the Company and James
T. Hackett (incorporated by reference to Exhibit 10.7 to Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998).
#10.37 Executive Supplemental Retirement Plan Membership Agreement between the Company and Barry J.
Galt dated as of February 3, 1986, as amended (incorporated by reference to Exhibit 10.2 to
Quarterly Report on Form 10-Q for the quarter ended September 30, 1996).
#10.38 Severance Agreement between the Company and James T. Hackett, as amended (incorporated by
reference to Exhibit 10.8 to Quarterly Report on Form 10-Q for the quarter ended September 30,
1998). Amendment to Severance Agreement, effective as of December 15, 1999, incorporated by
reference to Exhibit 99.1 to Current Report on Form 8-K filed with the Securities and Exchange
Commission on January 7, 2000.
37
Ocean Energy, Inc.
EXHIBIT INDEX
#10.39 Severance Agreement, including Amendment and Second Amendment to Severance Agreement, between
the Company and Barry J. Galt (incorporated by reference to Exhibit 10.2 to Quarterly Report on
Form 10-Q for the quarter ended September 30, 1998).
#10.40 Promissory Note between John D. Schiller, Jr. and Seagull (incorporated by reference to Exhibit
10.31 to Annual Report on Form 10-K for the year ended December 31, 1998).
10.41 Promissory Note between William L. Transier and Seagull (incorporated by reference to Exhibit
10.32 to the Company's Annual Report on Form 10-K for the year ended December 31, 1998).
10.42 Promissory Note between Barry J. Galt and Seagull (incorporated by reference to Exhibit 10.33 to
Annual Report on Form 10-K for the year ended December 31, 1998).
10.43 Purchase and Sale Agreement dated June 15, 1999, between the Company, as Seller, and SEMCO
ENERGY, Inc., as Purchaser, for the sale of ENSTAR (incorporated by reference to Exhibit 10.2 to
Form 10-Q for the period ended June 30, 1999).
10.44 Purchase and Sale Agreement dated July 30, 1999, between the Company as Seller, and Cross
Timbers Oil Company, as Purchaser, for the sale of the Arkoma properties (incorporated by
reference to Exhibit 10.1 to Form 10-Q for the period ended June 30, 1999).
*10.45 Natural Gas Purchase and Sale Agreement dated October 1, 1999 between the Company as Seller and
Duke Energy Trading and Marketing, L.L.C., as Buyer, filed herewith.
*13.0 1999 Annual Report of the Company (selected portions), filed herewith.
*23.1 Consent of KPMG LLP.
*23.2 Consent of Arthur Andersen LLP.
*27.1 Financial Data Schedule.
38