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Securities And Exchange Commission
Washington, D.C. 20549
Form 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 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
incorporation or organization) Identification No.)
1001 Fannin, Suite 1600, Houston, Texas 77002-6714
(Address of principal executive offices) (Zip code)
(713) 265-6000
(Registrant's telephone number, including area code)
1001 Fannin, Suite 1700, Houston, Texas 77002-6714
(Former name,former address and former fiscal year,if changed since last report)
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 .
As of May 14, 1999, 165,913,600 shares of Common Stock, par value $0.10 per
share, were outstanding.
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OCEAN ENERGY, INC.
INDEX
Page
Number
Part I. Financial Information
Item 1. Unaudited Consolidated Financial Statements
Consolidated Statements of Operations for the Three Months
Ended March 31, 1999 and 1998...................................................... 1
Consolidated Balance Sheets - March 31, 1999
and December 31, 1998.............................................................. 2
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1999 and 1998...................................................... 3
Consolidated Statements of Comprehensive Income
for the Three Months Ended March 31, 1999 and 1998 ................................ 4
Notes to Consolidated Financial Statements......................................... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................................... 15
Item 3. Quantitative and Qualitative Disclosures about Market Risks............................ 26
Part II. Other Information.......................................................................... 27
Signatures........................................................................................... 32
On March 30, 1999, Ocean Energy, Inc., a Delaware corporation, merged with
and into Seagull Energy Corporation, a Texas corporation, and 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 results presented here are primarily those
of Ocean Energy, Inc. on a stand-alone basis for the first quarter of 1999
compared to Ocean's results in the first quarter of 1998 on a stand-alone basis.
However, unless the context otherwise requires, the information set forth
outside of Part I relates to the surviving Texas corporation, formerly known as
Seagull Energy Corporation.
(i)
ITEM. 1 UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
OCEAN ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended March 31,
---------------------------------------
1999 1998
----------------- ------------------
Revenues.................................................................. $ 105,694 $ 141,056
Costs of Operations:
Operations and maintenance............................................. 45,160 42,652
Depreciation, depletion and amortization............................... 58,608 72,771
Provision loss on sale of Canadian assets.............................. 28,500 -
General and administrative............................................. 4,576 4,296
----------------- ------------------
136,844 119,719
----------------- ------------------
Operating Profit (Loss)................................................... (31,150) 21,337
Other (Income) Expense:
Merger expense......................................................... 40,652 39,000
Interest expense....................................................... 25,170 12,504
Interest income and other.............................................. (483) (486)
----------------- ------------------
65,339 51,018
----------------- ------------------
Loss Before Income Taxes.................................................. (96,489) (29,681)
Income Tax Benefit........................................................ (15,438) (1,548)
----------------- ------------------
Net Loss.................................................................. (81,051) (28,133)
Preferred Stock Dividend.................................................. 801 -
----------------- ------------------
Net Loss Available to Common Shareholders................................. $ (81,852) $ (28,133)
================= ==================
Loss Per Share:
Basic and Diluted...................................................... $ (0.79) $ (0.28)
================= ==================
Weighted Average Number of Common Shares Outstanding:
Basic and Diluted...................................................... 103,192 100,091
================= ==================
See accompanying Notes to Consolidated Financial Statements.
1
OCEAN ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except Share Data)
March 31, December 31,
1999 1998
------------------ ------------------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents............................................ $ 32,790 $ 10,706
Accounts receivable, net............................................. 183,803 111,829
Inventories.......................................................... 28,943 16,802
Prepaid expenses and other........................................... 20,061 14,444
------------------ ------------------
Total Current Assets............................................... 265,597 153,781
Property, Plant and Equipment, at cost, full cost method for oil and gas:
Evaluated oil and gas properties..................................... 3,699,580 2,759,686
Unevaluated oil and gas properties excluded from amortization........ 546,473 488,689
Other................................................................ 342,208 44,960
------------------ ------------------
4,588,261 3,293,335
Accumulated Depreciation, Depletion and Amortization.................... 1,798,478 1,711,696
------------------ ------------------
2,789,783 1,581,639
Deferred Income Taxes................................................... 204,295 217,824
Other Assets............................................................ 79,355 53,716
------------------ ------------------
Total Assets............................................................ $ 3,339,030 $ 2,006,960
================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITy
Current Liabilities:
Accounts and notes payable........................................... $ 291,894 $ 184,828
Accrued interest payable............................................. 33,396 36,206
Accrued liabilities.................................................. 96,398 15,312
Current maturities of long-term debt................................. 836 836
------------------ ------------------
Total Current Liabilities.......................................... 422,524 237,182
Long-Term Debt.......................................................... 1,944,524 1,371,890
Other Noncurrent Liabilities............................................ 73,878 20,945
Commitments and Contingencies...........................................
Shareholders' Equity:
Preferred stock, $1.00 par value; authorized 50,000,000 shares; issued
50,000 shares...................................................... 1 1
Common stock, $.10 par value; authorized 450,000,000 shares;
issued 166,385,878 and 101,753,646 shares, respectively............ 16,639 1,018
Additional paid-in capital........................................... 1,481,725 892,339
Accumulated deficit.................................................. (581,966) (500,114)
Accumulated other comprehensive loss................................. (9,741) (10,720)
Less - note receivable from employee stock ownership plan............ (2,178) -
Less - notes receivable from employees relating to stock purchases... (2,083) -
Less - treasury stock, at cost; 472,278 shares....................... (4,293) -
Less - deferred compensation......................................... - (5,581)
------------------ ------------------
Total Shareholders' Equity......................................... 898,104 376,943
------------------ ------------------
Total Liabilities and Shareholders' Equity.............................. $ 3,339,030 $ 2,006,960
================== ==================
See accompanying Notes to Consolidated Financial Statements.
2
OCEAN ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Three Months Ended March 31,
---------------------------------------
1999 1998
----------------- ------------------
Operating Activities:
Net loss............................................................... $ (81,051) $ (28,133)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation, depletion and amortization............................. 58,608 72,771
Provision for loss on sale of Canadian assets........................ 28,500 -
Merger expenses not paid............................................. 40,652 -
Deferred income taxes................................................ (17,361) (3,491)
Other................................................................ 3,309 5,446
----------------- ------------------
32,657 46,593
Changes in operating assets and liabilities, net of acquisitions:
Decrease in accounts receivable.................................... 8,642 2,429
Decrease in inventories, prepaid expenses and other................ 20,818 -
Increase (decrease) in accounts and notes payable.................. (23,581) 41,167
Increase in accrued expenses and other............................. 37,234 1,041
----------------- ------------------
Net Cash Provided By Operating Activities............................ 75,770 91,230
----------------- ------------------
Investing Activities:
Capital expenditures................................................... (51,726) (204,754)
Acquisition costs, net of cash acquired................................ (1,841) -
Proceeds from sales of property, plant and equipment................... 39,564 1,327
----------------- ------------------
Net Cash Used In Investing Activities................................ (14,003) (203,427)
----------------- ------------------
Financing Activities:
Proceeds from debt..................................................... 542,461 439,892
Principal payments on debt ............................................ (574,983) (326,480)
Proceeds from sales of common stock.................................... - 2,028
Deferred debt issue costs.............................................. (6,370) -
Other.................................................................. (791) (1,532)
----------------- ------------------
Net Cash Provided By (Used In) Financing Activities.................. (39,683) 113,908
----------------- ------------------
Increase In Cash And Cash Equivalents.................................... 22,084 1,711
Cash And Cash Equivalents At Beginning Of Period......................... 10,706 11,689
----------------- ------------------
Cash And Cash Equivalents At End Of Period............................... $ 32,790 $ 13,400
================= ==================
See accompanying Notes to Consolidated Financial Statements.
3
OCEAN ENERGY, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in Thousands)
(Unaudited)
Three Months Ended March 31,
---------------------------------------
1999 1998
----------------- ------------------
Net loss............................................................... $ (81,051) $ (28,133)
Other comprehensive income, net of tax:
Foreign currency translation adjustment............................. 979 524
----------------- ------------------
Comprehensive loss..................................................... $ (80,072) $ (27,609)
================= ==================
See accompanying Notes to Consolidated Financial Statements.
4
OCEAN ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Presentation of Financial Information
The consolidated financial statements of Ocean Energy, Inc. ("OEI" or "the
Company"), a Texas corporation, included herein have been prepared, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC"). Although certain information normally included in financial
statements prepared in accordance with generally accepted accounting principles
has been condensed or omitted, management believes that the disclosures are
adequate to make the information presented not misleading. The financial
statements reflect all normal recurring adjustments that, in the opinion of
management, are necessary for a fair presentation.
Effective March 30, 1999, pursuant to the Agreement and Plan of Merger (the
"Merger") dated November 24, 1998, as amended, Ocean Energy, Inc. ("Old Ocean")
was merged with and into Seagull Energy Corporation ("Seagull"). Seagull is an
international oil and gas company engaged primarily in exploration and
development activities in the United States, Egypt, Cote d'Ivoire, Indonesia and
the Russian Republic of Tatarstan. Seagull's other operating segment, referred
to as ENSTAR Alaska, operates natural gas transmission and distribution systems
which serve the greater Anchorage area. In conjunction with the Merger, Seagull
amended its Articles of Incorporation to change its name to Ocean Energy, Inc.
As a result of this Merger, each outstanding share of Old Ocean common stock was
exchanged for one share of Seagull common stock, and as of March 30, 1999, the
stockholders of Old Ocean owned approximately 61.5% of the outstanding common
stock of the Company, with the shareholders of Seagull owning the remaining
38.5%. Certain reclassifications have been made to the historical results of the
Company to conform the presentation used by the companies.
Effective March 27, 1998, pursuant to the Agreement and Plan of Merger
dated December 22, 1997, as amended, United Meridian Corporation ("UMC") was
merged into Old Ocean (the "UMC Merger"). As a result of the UMC Merger, each
outstanding share of UMC common stock was converted into 1.3 shares of Old Ocean
common stock with approximately 46 million shares issued to the shareholders of
UMC, representing approximately 46% of all of the issued and outstanding shares
of Old Ocean. Old Ocean's shareholders received 2.34 shares of Old Ocean shares
for each share outstanding immediately preceding the UMC Merger, representing
approximately 54% of all of the then issued and outstanding shares. The UMC
Merger was accounted for as a pooling of interests. Accordingly, the
consolidated financial statements for periods prior to the UMC Merger were
restated to conform accounting policies and combine the historical results of
Old Ocean and UMC. Merger costs of $39 million relating to the UMC Merger
consisted primarily of investment banking and other transaction fees, employee
severance and relocation costs as well as the write-off of deferred financing
costs.
The accompanying consolidated financial statements of the Company should be
read in conjunction with the consolidated financial statements and notes thereto
of Old Ocean and Seagull for the year ended December 31, 1998.
Property, Plant and Equipment - The Company capitalizes interest expense
and certain-employee related costs that are directly attributable to oil and gas
operations. For the three
5
OCEAN ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
months ended March 31, 1999 and 1998, the Company capitalized interest expense
in the amount of $7 million and $5 million, respectively, and certain
employee-related costs in the amount of $5 million and $5 million, respectively.
Earnings Per Share - Options to purchase a weighted average of 12,737,000
and 9,601,000 shares of common stock at prices ranging from $2.11 to $36.54 per
share were outstanding during 1999 and 1998, respectively, but were not included
in the computation of diluted loss per share because such options would have an
antidilutive effect on the computation of diluted loss per share. These options
expire at various dates from 1999 to 2009.
Treasury Stock - The Company follows the average cost method of accounting
for treasury stock transactions.
Regulation - The Company operates in Alaska through a division of the
Company and a wholly-owned subsidiary (collectively referred to herein as
"ENSTAR Alaska"). ENSTAR Alaska is subject to regulation by the Alaska Public
Utilities Commission, which has jurisdiction over, among other things, rates,
accounting procedures and standards of service. The Company follows Financial
Accounting Standards Board ("FASB") Statement of Financial Accounting Standards
("SFAS") No. 71 for ENSTAR Alaska; however, the provisions of SFAS No. 71 do not
materially impact the Company's operating results.
Accounting Pronouncements - In June 1998, the FASB issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. This statement
establishes standards of accounting for and disclosures of derivative
instruments and hedging activities. This statement is effective for fiscal years
beginning after June 15, 1999. The Company has not yet determined the impact of
this statement on the Company's financial condition or results of operations.
Note 2. Acquisition and Disposition of Assets
Merger - On March 30, 1999, the shareholders approved the Merger. The
Merger has been accounted for as a purchase under generally accepted accounting
principles. Because Old Ocean stockholders own a majority of the outstanding
shares of common stock of the merged company, the accounting treatment of the
Merger reflects Old Ocean acquiring Seagull in a "reverse purchase." Under this
method of accounting, the merged company's historical results for periods prior
to the Merger are the same as Old Ocean's historical results. At the date of the
Merger, assets and liabilities of Old Ocean were recorded based upon their
historical costs, and the assets and liabilities of Seagull were recorded at
their estimated fair market values.
6
OCEAN ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following is a calculation of purchase price:
Calculation of purchase price (in thousands, except per share data):
Shares of common stock issued.............................................. 64,630
Average of OEI stock price three days before and after the
merger announcement...................................................... $ 9.09
----------------------
Fair value of stock issued.................................................. $ 587,484
Add: Merger costs........................................................... 64,054
----------------------
Purchase Price.............................................................. $ 651,538
======================
Capitalized merger costs consisted primarily of severance costs of Seagull
($22 million), value of Seagull stock options maintained by OEI ($17 million),
investment banking fees ($10 million), and other transaction fees and
professional expenses ($15 million). In addition, merger expenses of $41 million
were expensed in the first quarter of 1999 and consisted primarily of Old
Ocean's severance costs ($21 million), the write-off of certain costs relating
to Old Ocean's information technology system ($14 million) and compensation
expense related to the vesting of Old Ocean's restricted stock ($6 million).
The allocation of purchase price to specific assets and liabilities is
based on certain estimates of fair values and costs which will be adjusted to
actual amounts as determined. Such adjustments are not expected to be material.
The following table presents the unaudited pro forma results (in thousands
except per share data) of the Company as though the Merger had occurred on
January 1, 1998:
Unaudited Pro Forma Information
Three Months Ended March 31,
--------------------------------------------
1999 1998
----------------------- ------------------
Revenues ......................................................... $ 201,460 $ 260,413
Net loss available to common shareholders......................... $ (46,952) $ (19,797)
Basic and diluted loss per share ................................. $ (0.28) $ (0.12)
The above pro forma amounts have been determined as follows:
The income statements for 1999 and 1998 are a result of combining the three
month income statement of Old Ocean with the three month income statement of
Seagull adjusted for 1) certain costs that Seagull had expensed under the
successful efforts method of accounting that are capitalized under the full cost
method of accounting; 2) depreciation, depletion and amortization expense of
Seagull calculated in accordance with the full cost method of accounting applied
to the adjusted basis of the properties acquired using the purchase method of
accounting; 3) decreased interest expense resulting from the revaluation of
Seagull debt under the purchase method of accounting, including the elimination
of amortization of historical debt issuance costs; and 4) the related income tax
effects of these adjustments based on the applicable statutory tax rate. It
should be noted that the pro forma net loss for the three months ended March 31,
1999 and 1998, does not include impairments of oil and gas properties that were
recorded by the
7
OCEAN ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
companies in the second and fourth quarters of 1998 and does not include
expensed merger costs relating to the Merger.
Disposition of Oil and Gas Assets - During March 1999, the Company
completed sales of its interests in certain non-core U.S. onshore assets located
primarily in the MidContinent, Permian Basin and Rocky Mountain regions and
realized proceeds of $40 million from the sale. The proceeds were used to pay
down amounts outstanding under the Company's existing credit facilities.
On April 15, 1999, the Company completed a sale of its Canadian oil and gas
assets, realizing net proceeds of $63 million which were used to repay existing
long-term debt. A loss of $28.5 million on the sale was provided for at March
31, 1999. The Canadian assets disposed of contributed revenue of $6.2 million
and $4.3 million for the three months ended March 31, 1999 and 1998,
respectively, and had operating profit (loss) of $1.7 million, prior to
recording the provision for loss on the sale, and $(0.7) million, respectively.
After recording the provision for loss on the sale, the Canadian assets had a
net book value of approximately $40.7 million at March 31, 1999.
Note 3. Supplemental Disclosures of Cash Flow Information
Three Months Ended March 31,
-------------------------------
1999 1998
------------ ------------
(amounts in thousands)
Cash paid during the period for:
Interest.................................................. $ 36,254 $ 11,423
Income taxes.............................................. $ 1,131 $ 663
As discussed in Note 2, the Merger was completed through the issuance of
common stock. Therefore, the Merger increased property, plant and equipment by
$1.3 billion, working capital by $686 million, debt by $563 million and equity
by $595 million through a non-cash transaction that was not reflected in the
statement of cash flows. However, $1.8 million of acquisition costs reflected in
"investing activities" in the statement of cash flows represents the cash
expenses paid in connection with the Merger, less the cash of Seagull on the
date of the Merger.
Note 4. Financial Instruments
The Company hedges certain of its production through master swap
agreements ("Swap Agreements") which provide for separate contracts tied to the
NYMEX light sweet crude oil and natural gas futures contracts. In addition, the
Company occasionally engages in combined contracts that have agreed-upon price
floors and ceilings ("Collars"). Natural gas Collars outstanding at December 31,
1998 were cancelled in January 1999, resulting in net proceeds of $6.9 million
which will be recognized in income as the hedged volumes are produced. Oil and
gas revenues have been increased by $2 million and $5 million for the three
months ended March 31, 1999 and 1998, respectively, as a result of the
derivative contracts.
8
OCEAN ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Currently, the Company has entered into various derivative financial
instruments for gas and oil production throughout the remainder of 1999. In
connection with these transactions, the Company recorded a decrease in oil
revenues of $7 million during the first quarter of 1999. The derivative
financial instruments for gas and oil production discussed in the preceding
sentence were cancelled in April 1999 and replaced with Collars. At May 14,
1999, Collars are in place for portions of the Company's oil production for the
remainder of 1999 at floors of $12.00 and $15.00 per barrel and ceilings of
$15.00, $18.85 and $19.00 per barrel. In addition, Collars are in place for
portions of the Company's gas production through October 1999 at a floor of
$2.15 per MMBtu and a ceiling of $2.45 per MMBtu. While derivative financial
instruments are intended to reduce the Company's exposure to declines in the
market price of natural gas and crude oil, these derivative financial
instruments will significantly limit the Company's loss/gain from
decrease\increases in the market price of natural gas and crude oil below/above
the floors/ceilings noted above. As a result, gains and losses on derivative
financial instruments are generally offset by similar changes in the realized
price of natural gas and crude oil. Gains and losses from these financial
instruments are recognized in revenues for the periods to which the derivative
financial instruments relate.
Note 5. Debt
March 31, 1999 December 31, 1998
------------------------- -----------------------
Credit Facility (average interest rate of 6.2%), due 2004... $ 585,000 $ -
OEI credit facility (average interest rate of 7.0%)......... - 357,000
13 1/2% senior notes, due 2004.............................. 245 245
8 1/4% senior notes, due 2018............................... 125,000 125,000
7 5/8% senior notes, due 2005............................... 125,000 125,000
10 3/8% senior subordinated notes, due 2005................. 150,000 150,000
9 3/4% senior subordinated notes, due 2006.................. 159,340 159,318
8 7/8% senior subordinated notes, due 2007.................. 199,719 199,711
8 3/8% senior subordinated notes, due 2008.................. 250,000 250,000
7 7/8% senior notes, due 2003............................... 98,250 -
7 1/2% senior notes, due 2027............................... 124,500 -
8 5/8% senior subordinated notes, due 2005.................. 99,500 -
Monetary production payment, due 2000....................... 20,362 -
Other....................................................... 8,444 6,452
------------------------- -----------------------
1,945,360 1,372,726
Less: current maturities................................. (836) (836)
------------------------- -----------------------
$ 1,944,524 $ 1,371,890
========================= =======================
Concurrently with the closing of the Merger on March 30, 1999, the Company
entered into an $800 million credit facility (the "Credit Facility") which
combined the existing credit facilities of both Old Ocean and Seagull. The
Credit Facility consists of a $500 million five-year revolving facility and a
renewable $300 million 364-day facility. The Credit Facility bears interest, at
the Company's option, at a competitive bid or LIBOR or prime rates plus
applicable margins ranging from zero to 1.7%. Financing fees of approximately $6
million were incurred related to the
9
OCEAN ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Credit Facility. As of March 31, 1999, borrowings outstanding against the Credit
Facility totaled $585 million, leaving $186 million of available credit.
The Credit Facility contains certain covenants and restrictive provisions
including limitations on the incurrence of additional debt and payment of
dividends and the maintenance of certain financial ratios. Under the most
restrictive of these provisions, approximately $38 million was available for
payment of cash dividends on common stock or to repurchase common stock as of
March 31, 1999.
As a result of the Merger, the liabilities of both Seagull and Old Ocean
became the liabilities of the Company. Accordingly, the financial statements of
the Company include an aggregate of approximately $563 million of outstanding
Seagull debt as of March 31, 1999. As discussed above, Seagull's existing
revolving credit facility was replaced by the Credit Facility. The remaining
Seagull debt was recorded at a discount as follows: the 7 1/2% Senior Notes at a
discount of $26 million, the 7 7/8% Senior Notes at a discount of $2 million,
and the 8 5/8% Senior Subordinated Notes at a discount of $1 million.
Note 6. Segment Information
As a result of the Merger, the Company now has two reportable segments. The
reportable segments consist of the Company's oil and gas operations and the
Company's Alaska transmission and distribution operations. Information about the
Company's operations by business segment for the three months ended March 31,
1999 and 1998 is set forth below (stated in thousands):
Three Months Ended March 31,
-------------------------------------------------
1999 1998
--------------------- -----------------------
Revenues:
Oil and gas operations.......................................... $ 105,694 $ 141,056
===================== =======================
Operating profit (loss):
Oil and gas operations.......................................... $ (25,137) $ 26,678
Corporate....................................................... (6,013) (5,341)
--------------------- -----------------------
$ (31,150) $ 21,337
===================== =======================
March 31, 1999 December 31, 1998
--------------------- -----------------------
Total assets:
Oil and gas operations.......................................... $ 2,902,932 $ 1,982,274
ENSTAR Alaska (1)............................................... 312,143 -
Corporate....................................................... 123,955 24,686
--------------------- -----------------------
$ 3,339,030 $ 2,006,960
===================== =======================
(1) As discussed in Note 1, the Company's Alaska transmission and distribution
operations were acquired as a result of the Merger on March 30, 1999.
10
OCEAN ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 7. Supplemental Guarantor Information
Ocean Energy, Inc., a Louisiana corporation and wholly-owned subsidiary of
the Company ("Ocean Louisiana"), has unconditionally guaranteed the full and
prompt performance of the Company's obligations under certain of the notes and
related indentures, including the payment of principal, premium (if any) and
interest. None of the referenced indentures place significant restrictions on a
wholly-owned subsidiary's ability to make distributions to the parent. In order
to provide meaningful financial data relating to the guarantor (i.e., Ocean
Louisiana on an unconsolidated basis), the following condensed consolidating
financial information has been provided following the policies set forth below:
1) Investments in subsidiaries are accounted for by the Company on the cost
basis. Earnings of subsidiaries are therefore not reflected in the related
investment accounts.
2) Certain reclassifications were made to conform all of the financial
information to the financial presentation on a consolidated basis. The
principal eliminating entries eliminate investments in subsidiaries and
intercompany balances.
11
OCEAN ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Supplemental Condensed Consolidating Statements of Operations
For the Three Months Ended March 31, 1999 and 1998
(Amounts in Thousands)
Unconsolidated
--------------------------------------------------------------
Guarantor Non-Guarantor Consolidated
1999 OEI Subsidiary Subsidiaries OEI
------------------ -------------------- ------------------- ------------------
Revenues........................... $ - $ 48,800 $ 56,894 $ 105,694
Costs of Operations:
Operations and maintenance...... - 24,469 20,691 45,160
Depreciation, depletion and
amortization.................. - 30,328 28,280 58,608
Provision for loss on sale of
Canadian assets .............. - - 28,500 28,500
General and administrative...... - 4,330 246 4,576
------------------ -------------------- ------------------- ------------------
Operating Loss..................... - (10,327) (20,823) (31,150)
Merger Expense..................... - 40,652 - 40,652
Interest Expense................... 14,484 12,477 (1,791) 25,170
Interest Income and Other.......... (1) (3,487) 3,005 (483)
------------------ -------------------- ------------------- ------------------
Loss Before Taxes.................. (14,483) (59,969) (22,037) (96,489)
Income Tax Provision (Benefit)..... (27,716) 9,041 3,237 (15,438)
------------------ -------------------- ------------------- ------------------
Net Income (Loss).................. $ 13,233 $ (69,010) $ (25,274) $ (81,051)
================== ==================== =================== ==================
1998
Revenues........................... $ - $ 83,495 $ 57,561 $ 141,056
Costs of Operations:
Operations and maintenance...... - 27,455 15,197 42,652
Depreciation, depletion and
amortization.................. - 36,817 35,954 72,771
General and administrative...... - 4,041 255 4,296
------------------ -------------------- ------------------- ------------------
Operating Profit - 15,182 6,155 21,337
Merger Expense..................... - 39,000 - 39,000
Interest Expense................... 4,029 10,549 (2,074) 12,504
Interest Income and Other.......... - 116 (602) (486)
------------------ -------------------- ------------------- ------------------
Income (Loss) Before Taxes......... (4,029) (34,483) 8,831 (29,681)
Income Tax Provision (Benefit)..... (21,822) 19,768 506 (1,548)
------------------ -------------------- ------------------- ------------------
Net Income (Loss).................. $ 17,793 $ (54,251) $ 8,325 $ (28,133)
================== ==================== =================== ==================
12
OCEAN ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Supplemental Condensed Consolidating Balance Sheets
At March 31, 1999 and December 31, 1998
(Amounts in Thousands)
Unconsolidated
--------------------------------------------------
Guarantor Non-Guarantor Eliminating Consolidated
March 31, 1999 OEI Subsidiary Subsidiaries Entries OEI
-------------- --------------- --------------- --------------- ---------------
ASSETS
Current Assets................ $ 535 $ 49,248 $ 215,814 $ - $ 265,597
Intercompany Investments...... 2,746,861 173,435 (1,331,617) (1,588,679) -
Property, Plant and Equipment,
Net........................ 10,148 622,797 2,156,838 - 2,789,783
Other Assets.................. 113,272 196,484 (26,106) - 283,650
-------------- --------------- --------------- --------------- ---------------
Total Assets.................. $ 2,870,816 $ 1,041,964 $ 1,014,929 $(1,588,679) $ 3,339,030
============== =============== =============== =============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities........... $ 114,984 $ 209,874 $ 97,666 $ - $ 422,524
Long-Term Debt................ 1,623,676 313,240 7,608 - 1,944,524
Other Liabilities............. 14,406 14,454 45,018 - 73,878
Shareholders' Equity.......... 1,117,750 504,396 864,637 (1,588,679) 898,104
-------------- --------------- --------------- --------------- ---------------
Total Liabilities and
Shareholders' Equity....... $ 2,870,816 $ 1,041,964 $ 1,014,929 $(1,588,679) $ 3,339,030
============== =============== =============== =============== ===============
December 31, 1998
ASSETS
Current Assets................ $ - $ 49,680 $ 104,101 $ - $ 153,781
Intercompany Investments...... 1,645,933 174,608 (410,255) (1,410,286) -
Property, Plant and Equipment,
Net........................ - 674,598 907,041 - 1,581,639
Other Assets.................. 24,686 214,868 31,986 - 271,540
-------------- --------------- --------------- --------------- ---------------
Total Assets.................. $ 1,670,619 $ 1,113,754 $ 632,873 $(1,410,286) $ 2,006,960
============== =============== =============== =============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities........... $ 31,271 $ 187,878 $ 18,033 $ - $ 237,182
Long-Term Debt................ 1,009,274 357,000 5,616 - 1,371,890
Other Liabilities............. - 981 19,964 - 20,945
Shareholders' Equity.......... 630,074 567,895 589,260 (1,410,286) 376,943
-------------- --------------- --------------- --------------- ---------------
Total Liabilities and
Shareholders' Equity....... $ 1,670,619 $ 1,113,754 $ 632,873 $(1,410,286) $ 2,006,960
============== =============== =============== =============== ===============
13
OCEAN ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Supplemental Condensed Consolidating Statements of Cash Flows
For the Three Months Ended March 31, 1999 and 1998
(Amounts in Thousands)
Unconsolidated
----------------------------------------------------------
Guarantor Non-Guarantor Consolidated
1999 OEI Subsidiary Subsidiaries OEI
------------------ ----------------- ----------------- ------------------
Cash Flows from Operating
Activities:
Net Income (Loss)............... $ 13,233 $ (69,010) $ (26,274) $ (81,051)
Adjustments to reconcile net
income (loss) to net cash from
operating activities.......... (27,262) 69,613 71,357 113,708
Changes in assets and liabilities 14,793 34,908 (6,588) 43,113
------------------ ----------------- ----------------- ------------------
Net Cash Provided By
Operating Activities............ 764 35,511 39,495 75,770
Cash Flows Used in Investing
Activities...................... - (9,124) (4,879) (14,003)
Cash Flows Used In
Financing Activities............ (764) (26,387) (12,532) (39,683)
------------------ ----------------- ----------------- ------------------
Net Increase in Cash and
Cash Equivalents................ - - 22,084 22,084
Cash and Cash Equivalents:
Beginning of Period............. - - 10,706 10,706
------------------ ----------------- ----------------- ------------------
End of Period................... $ - $ - $ 32,790 $ 32,790
================== ================= ================= ==================
1998
Cash Flows from Operating
Activities:
Net Income (Loss)............... $ 17,793 $ (54,251) $ 8,325 $ (28,133)
Adjustments to reconcile net income
(loss) to net cash from
operating activities.......... (21,684) 61,830 34,580 74,726
Changes in assets and liabilities 3,863 64,288 (23,514) 44,637
------------------ ----------------- ----------------- ------------------
Net Cash Provided By (Used In)
Operating Activities............ (28) 71,867 19,391 91,230
Cash Flows Used in Investing
Activities...................... - (133,882) (69,545) (203,427)
Cash Flows Provided By Financing
Activities...................... 28 68,702 45,178 113,908
------------------ ----------------- ----------------- ------------------
Net Increase (Decrease) in Cash and
Cash Equivalents................ - 6,687 (4,976) 1,711
Cash and Cash Equivalents:
Beginning of Period............. 2 2,653 9,034 11,689
------------------ ----------------- ----------------- ------------------
End of Period................... $ 2 $ 9,340 $ 4,058 $ 13,400
================== ================= ================= ==================
14
OCEAN ENERGY, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion is intended to assist in understanding the
Company's financial position, results of operations and cash flows for the
quarters ended March 31, 1999 and 1998.
As discussed in Note 1, effective March 30, 1999, Ocean Energy, Inc. ("Old
Ocean") was merged with and into Seagull Energy Corporation ("Seagull"). In
conjunction with the Merger, Seagull amended its Articles of Incorporation to
change its name to Ocean Energy, Inc. In addition, effective March 27, 1998,
United Meridian Corporation ("UMC") was merged into Old Ocean ("UMC Merger").
The UMC Merger was accounted for as a pooling of interests. Accordingly, the
consolidated financial statements for periods prior to the UMC Merger were
restated to conform accounting policies and combine the historical results of
Old Ocean and UMC.
The Company's accompanying unaudited consolidated financial statements and
the notes thereto and the consolidated financial statements and notes thereto
included in the Annual Reports on Form 10-K for the year ended December 31, 1998
of Old Ocean and Seagull contain detailed information that should be referred to
in conjunction with the following discussion.
Results Of Operations
Consolidated Highlights
(Amounts in Thousands)
Three Months Ended March 31,
---------------------------------------
1999 1998
----------------- ----------------
Revenues:
Oil and gas operations ............................................. $ 105,694 $ 141,056
================= ================
Operating profit (loss):
Oil and gas operations ............................................. (25,137) 26,678
Corporate........................................................... (6,013) (5,341)
----------------- ----------------
$ (31,150) $ 21,337
================= ================
Net loss............................................................... $ (81,051) $ (28,133)
Net cash provided by operating activities before
changes in operating assets and liabilities......................... $ 32,657 $ 46,593
Net cash provided by operating activities.............................. $ 75,770 $ 91,230
Revenues decreased $35.4 million and the Company incurred an operating loss
of $31.2 million for the first quarter of 1999 compared to operating profit of
$21.3 million for the first quarter of 1998 primarily due to lower realized oil
and gas prices and the loss on sale of Canadian assets of $28.5 million,
partially offset by an increase in production for the quarter. Net loss
increased from $28.1 million for the first quarter of 1998 to $81.1 million for
the same period in 1999 due to these same factors and an increase in interest
expense, partially offset by an increase in income tax benefit.
15
OCEAN ENERGY, INC.
Oil And Gas Operations
(Amounts in Thousands)
Three Months Ended March 31,
-------------------------------------------
1999 1998
-------------------- ------------------
Revenues:
Natural gas......................................................... $ 47,024 $ 57,651
Oil and NGLs........................................................ 58,670 83,405
-------------------- ------------------
105,694 141,056
-------------------- ------------------
Operations and maintenance............................................ 45,160 42,652
Depreciation, depletion and amortization.............................. 57,171 71,726
Provision for loss on sale of Canadian assets......................... 28,500 -
-------------------- ------------------
Operating profit (loss)............................................. $ (25,137) $ 26,678
==================== ==================
Revenues - The Company's total revenues decreased approximately 25%, to
$105.7 million for the three months ended March 31, 1999, from $141.1 million
for the comparable period in 1998. The decrease in oil and gas revenues is
primarily attributable to lower realized oil and gas prices, partially offset by
a 2% increase in production for the first quarter of 1999. Production levels for
the three months ended March 31, 1999, increased to 116.8 MBOE per day from
114.4 MBOE per day for the comparable period in 1998.
Oil revenues decreased $24.7 million, or 30%, to $58.7 million for the
three months ended March 31, 1999, from $83.4 million for the three months ended
March 31, 1998. This decrease is the result of the precipitous decline in world
crude oil prices experienced in 1998, partially offset by a 6% increase in
production for the first quarter of 1999. The average realized price for oil
decreased 33% to $10.04 in the first quarter of 1999 compared to $15.09 in the
same period in 1998. Daily oil production increased to 64,933 Bbl in the first
quarter of 1999 as compared to 61,401 Bbl for the same period in 1998. The
production increase was due primarily to increased production in Cote d'Ivoire
and Equatorial Guinea.
Natural gas revenues decreased $10.7 million, or 18%, to $47.0 million for
the three months ended March 31, 1999, from $57.7 million for the three months
ended March 31, 1998, primarily due to the decline in gas prices along with a
slight reduction in domestic production. The average realized price for natural
gas decreased 16% to $1.68 per Mcf in the first quarter of 1999 as compared to
$2.01 in the first quarter of 1998. Natural gas production for the first quarter
of 1999 was 27,989 MMcf, a decrease of 2% over 1998 volumes due primarily to
natural production declines in North America.
For the quarters ended March 31, 1999 and 1998, oil and gas revenues have
been increased by $2 million and $5 million, as a result of derivative
contracts. In addition, the Company's oil revenues for the first quarter of
1999 were also affected by a $7 million loss in derivative activities.
16
OCEAN ENERGY, INC.
Exploration And Production Operating Data
Three Months Ended March 31,
--------------------------------------------------------------------------------------
Net Daily Production Unit Price
1999 1998 1999 1998
---------------- ----------------- ----------------- -----------------
Gas Sales (1):
Domestic.............. 251.5 272.6 $ 1.69 $ 2.10
Canada (2)............ 36.0 25.1 $ 1.54 $ 1.31
Cote d'Ivoire......... 23.5 20.4 $ 1.83 $ 1.71
---------------- -----------------
Total................... 311.0 318.1 $ 1.68 $ 2.01
================ =================
Oil and NGL Sales(1):
Domestic.............. 39,811 42,401 $ 9.42 $ 15.34
Canada (2)............ 1,233 1,189 $ 11.10 $ 12.88
Cote d'Ivoire......... 4,489 2,322 $ 9.88 $ 15.67
Equatorial Guinea..... 19,400 15,489 $ 11.28 $ 14.52
---------------- -----------------
Total................... 64,933 61,401 $ 10.04 $ 15.09
================ =================
(1) Natural gas is stated in MMcf and $ per Mcf. Oil and NGLs are stated in Bbl
and $ per Bbl.
(2) The Company's Canadian operations were sold April 15, 1999.
Operations and Maintenance Costs - Total operations and maintenance costs
increased $2.5 million, or 6%, to $45.2 million for the three months ended March
31, 1999 from $42.7 million for the comparable 1998 period. This increase
primarily results from fluctuations in normal operating expenses, including
operating expenses associated with increased production from new facilities.
Production and operating costs remained relatively flat at $4.30 per BOE for the
quarter ended March 31, 1999, compared to $4.14 per BOE in the comparable 1998
period.
Depreciation, Depletion and Amortization Expense - Depreciation, depletion
and amortization (DD&A) expense related to oil and gas operations decreased
$14.5 million, or 20%, to $57.2 million for the three months ended March 31,
1999, from $71.7 million for the comparable 1998 period. DD&A for Oil and Gas
Operations decreased $1.53 per BOE, or 22%, to $5.44 per BOE for the quarter
ended March 31, 1999, from $6.97 per BOE for the comparable 1998 period. This
variance is primarily attributable to the effect of the non-cash impairments of
oil and gas properties recognized by the Company in 1998.
Other
General and Administrative Expenses - General and administrative expenses
remained relatively constant at $4.6 million for the three months ended March
31, 1999 versus $4.3 million in the comparable 1998 period.
Interest Expense - Interest and debt expense increased $12.7 million to
$25.2 million for the three months ended March 31, 1999 from $12.5 million in
the comparable 1998 period. This increase is primarily the result of an increase
in debt levels in the first quarter of 1999 resulting from the higher capital
spending program throughout 1998. Interest expense for the remainder of 1999
will continue to be higher than 1998 levels due to the inclusion of the
outstanding debt of
17
OCEAN ENERGY, INC.
Seagull of approximately $563 million in the Company's financial statements.
However, proceeds from the expected sales of certain non-core oil and gas assets
during the remainder of 1999 will be used to repay existing long-term debt.
Merger Expense - Merger expenses of $41 million associated with the Merger
between Old Ocean and Seagull have been recorded in the first quarter of 1999.
Merger expenses of $39 million associated with the March 1998 merger between Old
Ocean and UMC were recorded in the first quarter of 1998.
Income Tax Benefit - An income tax benefit of $15.4 million was recognized
for the three months ended March 31, 1999, compared to a benefit of $1.5 million
for the three months ended March 31,1998. Consistent with SFAS No. 109,
Accounting for Income Taxes, the deferred income tax provision or benefit was
derived primarily from changes in deferred income tax assets and liabilities
recorded on the balance sheet. The Company currently believes that it is more
likely than not that the net deferred tax asset will be realized. This will be
evaluated again during integration of the operations of Old Ocean and Seagull
and as assets sales take place.
Unaudited Pro Forma Condensed
Combined Financial and Operating Data
The following table sets forth summary unaudited pro forma condensed
combined financial and operating data which are presented to give effect to the
Merger as if it had occurred as of January 1, 1998. The information does not
purport to be indicative of actual results, if the Merger had been in effect for
the periods indicated, or of future results. The information was prepared based
on the following assumptions:
The income statements for 1999 and 1998 are a result of combining the three
month income statement of Old Ocean with the three month income statement of
Seagull adjusted for 1) certain costs that Seagull had expensed under the
successful efforts method of accounting that are capitalized under the full cost
method of accounting; 2) depreciation, depletion and amortization expense of
Seagull calculated in accordance with the full cost method of accounting applied
to the adjusted basis of the properties acquired using the purchase method of
accounting; 3) decreased interest expense resulting from the revaluation of
Seagull debt under the purchase method of accounting, including the elimination
of amortization of historical debt issuance costs; and 4) the related income tax
effects of these adjustments based on the applicable statutory tax rate. It
should be noted that the pro forma net loss for the three months ended March 31,
1998, does not include the impairments of oil and gas properties that were
recorded by the companies in the second and fourth quarters of 1998 and does not
include expensed merger costs relating to the Merger. The allocation of purhase
price to specific assets and liabilities is based on certain estimates of fair
values and costs which will be adjusted to actual amounts as determined. Such
adjustments are not expected to be material.
18
OCEAN ENERGY, INC.
Unaudited Pro Forma Information
(Amounts in Thousands, Except Per Unit Data)
Three Months Ended March 31,
-------------------------------------------
1999 1998
------------------- --- -------------------
Unaudited Pro Forma Condensed Combined Statements of Income:
Revenues:
Oil and gas operations.............................................. $ 162,799 $ 228,537
Alaska transmission and distribution................................ 38,661 31,876
------------------- -------------------
201,460 260,413
------------------- -------------------
Cost of operations:
Operations and maintenance.......................................... 70,978 78,046
ENSTAR Alaska cost of gas sold...................................... 17,852 14,763
Depreciation, depletion and amortization............................ 93,258 114,172
Provision for loss on sale of Canadian assets....................... 28,500 -
General and administrative.......................................... 8,867 7,680
------------------- -------------------
219,455 214,661
------------------- -------------------
Operating profit (loss)................................................ (17,995) 45,752
Other (income) expense:
Merger expenses (1)................................................. - 39,000
Interest expense.................................................... 35,375 20,896
Interest income and other........................................... (5,517) (1,018)
------------------- -------------------
29,858 58,878
------------------- -------------------
Loss before income taxes............................................... (47,853) (13,126)
Income tax expense (benefit)........................................... (1,702) 6,671
------------------- -------------------
Net loss............................................................... (46,151) (19,797)
Preferred stock dividend............................................... 801 -
------------------- -------------------
Net loss available to common shareholders.............................. $ (46,952) $ (19,797)
=================== ===================
Loss per common share:
Basic and Diluted................................................... $ (0.28) $ (0.12)
=================== ===================
Weighted average number of common shares outstanding:
Basic and Diluted................................................... 165,914 163,113
=================== ===================
Capital Expenditures:
Oil and gas operations.............................................. $ 78,341 $ 257,636
ENSTAR Alaska ...................................................... 1,698 1,539
Corporate........................................................... 3,877 3,713
------------------- -------------------
Total (2)........................................................... $ 83,916 $ 262,888
=================== ===================
(1) Excludes approximately $41 million of merger expenses recorded in the
quarter ended March 31, 1999. During 1998, the Company recorded $39 million
in merger expenses related to the UMC Merger, which was accounted for as a
pooling transaction.
(2) Includes capitalized interest of $9 million and $7 million and certain
employee-related costs of $6 million and $7 million respectively.
19
OCEAN ENERGY, INC.
Unaudited Pro Forma Information
(Amounts in Thousands, Except Per Unit Data)
Three Months Ended March 31,
-------------------------------------------
1999 1998
------------------- --- -------------------
Operations Data:
Oil and gas operations
Net daily natural gas production (MMcf):
Domestic.......................................................... 510.9 564.3
Canada (1)........................................................ 35.9 25.1
Cote d'Ivoire..................................................... 33.2 30.8
Other international............................................... 8.4 12.3
------------------- -------------------
Total....................................................... 588.4 632.5
=================== ===================
Average natural gas prices ($ per Mcf):
Domestic.......................................................... $ 1.64 $ 2.06
Canada (1)........................................................ $ 1.54 $ 1.31
Cote d'Ivoire..................................................... $ 1.73 $ 1.64
Other international............................................... $ 2.28 $ 2.74
Weighted average.................................................. $ 1.65 $ 2.02
Net daily oil and NGL production (Bbl):
Domestic.......................................................... 43,907 47,454
Canada (1)........................................................ 1,233 1,189
Egypt............................................................. 10,131 10,504
Cote d'Ivoire..................................................... 5,474 3,422
Russia............................................................ 4,190 3,993
Equatoral Guinea.................................................. 19,400 15,489
Other international............................................... 54 286
------------------- -------------------
Total.......................................................... 84,389 82,337
=================== ===================
Net daily production (MBOE):........................................ 182.5 187.8
=================== ===================
Average oil and NGL prices ($ per Bbl):
Domestic.......................................................... $ 9.44 $ 15.15
Canada (1)........................................................ $ 11.10 $ 12.84
Egypt............................................................. $ 10.91 $ 13.16
Cote d'Ivoire..................................................... $ 10.00 $ 13.92
Russia............................................................ $ 6.64 $ 11.62
Equatorial Guinea................................................. $ 11.28 $ 14.52
Other international............................................... $ 14.22 $ 17.61
Total......................................................... $ 9.96 $ 14.53
Average costs ($ per BOE):
Production and operating costs...................................... $ 4.00 $ 4.30
General and administrative expenses................................. 0.54 0.45
Interest expense.................................................... 2.09 1.17
------------------- -------------------
Cash costs 6.63 5.92
Depletion, depreciation and amortizaton............................. 5.55 6.63
------------------- -------------------
All-in costs $ 12.18 $ 12.55
=================== ===================
(1) The Company's Canadian operations were sold April 15, 1999.
20
OCEAN ENERGY, INC.
Unaudited Pro Forma Information
(Amounts in Thousands, Except Per Unit Data)
Three Months Ended March 31,
1999 1998
------------------- --- -------------------
ENSTAR Alaska Operating Data: (1)
Degree days (2)..................................................... 4,516 3,697
Sales and transport volumes (MMcf).................................. 16,417 13,622
Sales and transport margin per MMcf................................. $ 1.27 $ 1.26
(1) This segment's business is seasonal with approximately 65% - 70% of its
sales made in the first and fourth quarters of each year.
(2) A measure of weather severity calculated by subtracting the mean
temperature for each day from 65 degrees Fahrenheit. More degree days
equate to colder weather.
Liquidity And Capital Resources
Liquidity - Concurrently with the closing of the Merger on March 30, 1999,
the Company entered into an $800 million credit facility (the "Credit Facility")
which combined the existing credit facilities of both Old Ocean and Seagull. The
Credit Facility consists of a $500 million five-year revolving facility and a
renewable $300 million 364-day facility. The Credit Facility bears interest, at
the Company's option, at a competitive bid or LIBOR or prime rates plus
applicable margins ranging from zero to 1.7%. Financing fees of approximately $6
million were incurred related to the Credit Facility. As of March 31, 1999,
borrowings outstanding against the facility totaled $585 million, leaving $186
million of available credit.
The Company's debt to total capitalization ratio has decreased to 68% at
March 31, 1999, from 78% at December 31, 1998. The Company plans to pursue
additional property sales in 1999, the proceeds from which will be used to pay
down amounts outstanding under the Credit Facility.
The ability of the Company to satisfy its obligations and fund planned
capital expenditures will be dependent upon its future performance. Such future
performance is subject to many conditions that are beyond the Company's control,
particularly oil and gas prices, and the Company's ability to obtain additional
debt and equity financing, if necessary. The Company currently expects that its
cash flow from operations and availability under the Credit Facility will be
adequate to execute its 1999 business plan. However, no assurance can be given
that the Company will not experience liquidity problems from time to time or on
a long-term basis. If the Company's cash flow from operations and availability
under the Credit Facility are not sufficient to satisfy its cash requirements,
there can be no assurance that additional debt or equity financing will be
available to meet its requirements.
Effects of Leverage - The Company has outstanding indebtedness of
approximately $1.9 billion as of March 31, 1999. The Company's level of
indebtedness has several important effects on its future operations, including
(i) a substantial portion of the Company's cash flow from
21
OCEAN ENERGY, INC.
operations must be dedicated to the payment of interest on its indebtedness and
will not be available for other purposes, (ii) the covenants contained in the
various indentures require the Company to meet certain financial tests, and
contain other restrictions that limit the Company's ability to borrow additional
funds or to dispose of assets and may affect the Company's flexibility in
planning for, and reacting to, changes in its business, including possible
acquisition activities and (iii) the Company's ability to obtain additional
financing in the future for working capital, expenditures, acquisitions, general
corporate or other purposes may be impaired. None of the indentures place
significant restrictions on a wholly-owned subsidiary's ability to make
distributions to the parent company.
The Company believes it is currently in compliance with all covenants
contained in the respective indentures.
Capital Expenditures
(Amounts in Thousands)
Three Months Ended March 31,
-------------------------------------------
1999 1998
------------------ ------------------
Oil and Gas Operations:
Leasehold acquisitions............................................. $ 3,899 $ 8,807
Exploration costs.................................................. 8,991 86,949
Development costs.................................................. 36,019 107,671
------------------ ------------------
48,909 203,427
Corporate............................................................ 2,817 1,327
------------------ ------------------
$ 51,726 $ 204,754
================== ==================
The Company's capital expenditure budget for 1999 is expected to be
approximately $350-400 million (excluding proved property acquisitions). Actual
capital spending may vary from the capital expenditure budget. The Company will
evaluate its level of capital spending throughout the year based upon drilling
results, commodity prices, cash flows from operations and property acquisitions.
The Company makes, and will continue to make, substantial capital
expenditures for the acquisition, exploration, development, production and
abandonment of its oil and natural gas reserves. The Company has historically
funded its expenditures from cash flows from operating activities, bank
borrowings, sales of equity and debt securities, sales of non-strategic oil and
natural gas properties, sales of partial interests in exploration concessions
and project finance borrowings. The Company intends to finance 1999 capital
expenditures primarily with funds provided by operations.
Accounting Pronouncements
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. This statement establishes standards of
accounting for and disclosures of derivative instruments and hedging activities.
This statement is effective for fiscal years beginning after June 15, 1999. The
Company has not yet determined the impact of this statement on the Company's
financial condition or results of operations.
22
OCEAN ENERGY, INC.
Environmental
Compliance with applicable environmental and safety regulations by the
Company has not required any significant capital expenditures or materially
affected its business or earnings. The Company believes it is in substantial
compliance with environmental and safety regulations and foresees no material
expenditures in the future; however, the Company is unable to predict the impact
that compliance with future regulations may have on capital expenditures,
earnings and competitive position.
Year 2000
Historically, most computer systems (including microprocessors embedded
into field equipment and other machinery) utilized software that recognized a
calendar year by its last two digits. Beginning in the year 2000, these systems
will require modification to distinguish twenty-first century dates from
twentieth century dates ("Year 2000 issues").
Accordingly, the Company has initiated a comprehensive plan to address the
Year 2000 issues associated with its operations and business (the "Year 2000
plan"). The Company's Board of Directors has been briefed about the Year 2000
problem generally and as it may affect the Company. The Board has created a
committee consisting of senior executives and a representative from the Board to
oversee the adoption and implementation of the Year 2000 plan covering all of
the Company's business units. The plan has been developed with an aim towards
taking reasonable steps to prevent the Company's mission-critical functions from
being impaired due to the Year 2000 problem.
The plan includes several phases - (i) assessment of all of the Company's
systems and technology; (ii) implementation and testing of modifications to or
replacements of existing systems and technology, both financial and operational;
(iii) communication with key business partners regarding Year 2000 issues; and
(iv) contingency planning.
In planning and developing the project, the Company has considered both its
information technology ("IT") and its non-IT systems. The term "computer
equipment and software" includes systems that are commonly thought of as IT
systems, including accounting, data processing, telephone systems, scanning
equipment, and other miscellaneous systems. Non-IT systems include alarm
systems, fax machines, monitors for field operations, and other miscellaneous
systems. Both IT and non-IT systems may contain embedded technology, which
complicates the Company's Year 2000 identification, assessment, remediation, and
testing efforts. In those cases where the Company has identified equipment and
software that is not Year 2000 ready, the Company is in the process of replacing
or upgrading such items so they will calculate dates correctly in the new
century. Furthermore, as new equipment and software are purchased in the
ordinary course of business, the Company ensures that such purchases are Year
2000 ready.
During 1997, the Company utilized both internal and external resources to
test, reprogram or replace many of its IT systems, primarily financial and
operational software, for necessary
23
OCEAN ENERGY, INC.
modifications identified in its assessment of Year 2000 issues. As of the date
of this filing, the Company estimates that approximately 90% of its Year 2000
plan related to these IT systems has been implemented and anticipates that the
remainder of the plan, including any necessary remedial action, will be
completed by June 30, 1999, except for the reserves system which is scheduled
for the third quarter of 1999. During September 1998, the Company began
utilizing internal and external resources to evaluate its vulnerability to Year
2000 issues related to its non-IT systems, primarily field operational systems
and equipment.
The Company has employed outside engineering firms to inventory and
evaluate embedded chips in control, metering and monitoring devices on the
Company's producing properties. Such devices are extensively used in offshore
operations. While some remedial work has been required, it was not extensive and
is essentially complete.
The Company has also initiated formal communications with all of its key
business partners to determine the extent to which the Company is vulnerable to
those third parties' potential failure to remediate their own Year 2000 issues.
Key business partners were identified in four categories of companies including:
(a) major vendors and contractors (including banks and other financial service
companies); (b) major customers; (c) utility companies; and (d) third party
operators of major oil and gas properties. Questionnaires were sent to the
Company's key business partners to confirm their Year 2000 activities and
follow-up letters, telephone calls, and meetings are being used, as appropriate,
to obtain additional information.
During the fourth quarter of 1998, the Company began developing contingency
plans for its financial and operational systems. The Company's contingency plans
are being designed to minimize the disruptions or other adverse effects
resulting from Year 2000 incompatibilities regarding these systems, and to
facilitate the early identification and remediation of Year 2000 problems that
first manifest themselves after January 1, 2000.
The failure to correct a material Year 2000 issue could result in an
interruption in, or a failure of, certain normal business activities, resulting
in a material, adverse affect on the Company's results of operations, liquidity
and financial position. The Company's remediation efforts are expected to reduce
significantly the Company's level of uncertainty about Year 2000 compliance and
the possibility of interruptions of normal operations. However, there can be no
guarantee that other companies' systems, on which the Company's systems rely,
will be timely converted, or that a failure to convert by another company, or a
conversion that is incompatible with the Company's systems, would not have a
material adverse effect on the Company. Disruptions to the oil and gas
transportation networks controlled by third-party carriers could result in
reduced production volumes delivered to market.
In addition, risks associated with foreign operations may increase with the
uncertainty of Year 2000 compliance by foreign governments and their supporting
infrastructures. The Company's Year 2000 task force members have been asked to
investigate the compliance activities of certain third parties and foreign
governments to determine the risks to the Company. This investigation is in
progress.
24
OCEAN ENERGY, INC.
In a recent Securities and Exchange Commission release regarding Year 2000
disclosures, the Securities and Exchange Commission stated that public companies
must disclose the most reasonably likely worst case Year 2000 scenario. Analysis
of the most reasonably likely worst case Year 2000 scenarios the Company may
face leads to contemplation of the following possibilities which, though
unlikely in some or many cases, must be included in any consideration of worst
cases: widespread failure of electrical, gas, and similar supplies by utilities
serving the Company domestically and internationally; widespread disruption of
the services of communications common carriers domestically and internationally;
similar disruption to means and modes of transportation for the Company and its
employees, contractors, suppliers, and customers; significant disruption to the
Company's ability to gain access to, and remain working in, office buildings and
other facilities; the failure of substantial numbers of the Company's
mission-critical information (computer) hardware and software systems, including
both internal business systems and systems (such as those with embedded chips)
controlling operational facilities such as onshore and offshore oil and gas
rigs, oil and gas pipelines and gas plants domestically and internationally, the
effects of which would have a cumulative material adverse impact on the Company.
Among other things, the Company could face substantial claims by customers or
loss of revenues due to service interruptions, inability to fulfill contractual
obligations, inability to account for certain revenues or obligations or to bill
customers accurately and on a timely basis, and increased expenses associated
with litigation, stabilization of operations following mission-critical
failures, and the execution of contingency plans. the Company could also
experience an inability by customers, traders, and others to pay, on a timely
basis or at all, obligations owed to the Company. Under these circumstances, the
adverse effect on the Company, and the diminution of the Company's revenues,
would be material, although not quantifiable at this time. Further in this
scenario, the cumulative effect of these failures could have a substantial
adverse effect on the economy, domestically and internationally. The adverse
effect on the Company, and the diminution of the Company's revenues, from a
domestic or global recession or depression is also likely to be material,
although not quantifiable at this time.
The total costs for the Year 2000 compliance review, evaluation, assessment
and remediation efforts are not expected to be in excess of $1.0 million. Of
this amount, approximately $545,000 had been incurred as of March 31, 1999.
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. MMbtu means one million British Thermal Units. A British
Thermal Unit is the quantity of heat required to raise the temperature of one
pound of water by one degree Fahrenheit.
25
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 cost savings from the Merger, integration of the businesses of Old
Ocean and Seagull, 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.
When used in this document, the words "believes," "expects," "anticipates,"
"intends" or similar expressions are intended to identify such forward-looking
statements. The following important factors, in addition to those discussed
elsewhere in this document could affect the future results of the energy
industry in general and could cause those results to differ materially from
those expressed in such forward-looking statements:
- - Risks incident to the drilling and operation of oil and gas wells;
- - Future production and development costs;
- - The effect of existing and future laws and regulatory actions;
- - The political and economic climate in the foreign jurisdictions in which
the Company conducts oil and gas operations;
- - The effect of changes in commodity prices, hedging activities and conditions
in the capital markets; and
- - Competition from others in the energy industry.
Item 3. Quantitative and Qualitative Disclosures About Market Risks.
Currently, the Company has entered into various derivative financial
instruments for gas and oil production throughout the remainder of 1999. In
connection with these transactions, the Company recorded a decrease in oil
revenues of $7 million during the first quarter of 1999. The derivative
financial instruments for gas and oil production discussed in the preceding
sentence were cancelled in April 1999 and replaced with Collars. At May 14,
1999, Collars are in place for portions of the Company's oil production for the
remainder of 1999 at floors of $12.00 and $15.00 per barrel and ceilings of
$15.00, $18.85 and $19.00 per barrel. In addition, Collars are in place for
portions of the Company's gas production through October 1999 at a floor of
$2.15 per
26
OCEAN ENERGY, INC.
MMBtu and a ceiling of $2.45 per MMBtu. While derivative financial instruments
are intended to reduce the Company's exposure to declines in the market price of
natural gas and crude oil, these derivative financial instruments will
significantly limit the Company's loss/gain from decrease/increases in the
market price of natural gas and crude oil below/above the floors/ceilings noted
above.. As a result, gains and losses on derivative financial instruments are
generally offset by similar changes in the realized price of natural gas and
crude oil. Gains and losses from these financial instruments are recognized in
revenues for the periods to which the derivative financial instruments relate.
The Company also evaluated the potential effect that reasonably possible
near term changes in interest rates may have on the Company's Credit Facility.
The Credit Facility represents approximately 30% of the Company's total debt as
of March 31, 1999 and is the only floating rate debt. Based upon an analysis,
utilizing the actual interest rates in effect and balances outstanding as of
March 31, 1999 and assuming a 10% increase in interest rates, the potential
increase in annual interest expense is approximately $3.5 million.
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
On March 30, 1999, the shareholders approved a merger of Ocean Energy, Inc.
with and into Seagull Energy Corporation and elected certain directors. Votes
were cast as follows:
Broker
For Against Non-Votes Abstained
--------------- -------------- -------------- -------------
Ratification of the Agreement and Plan of
Merger between Seagull and OEI......... 44,408,585 8,815,291 - 193,931
Election as a Director of the Company of:
J. Evans Attwell....................... 49,852,075 - - 3,565,732
John B. Brock.......................... 49,984,447 - - 3,433,360
Milton Carroll......................... 49,981,813 - - 3,435,994
Thomas D. Clark, Jr.................... 49,976,281 - - 3,441,526
James L. Dunlap........................ 49,980,683 - - 3,437,124
James C. Flores........................ 49,970,597 - - 3,447,210
Peter J. Fluor......................... 49,992,945 - - 3,424,862
Barry J. Galt.......................... 49,957,732 - - 3,460,075
James T. Hackett....................... 49,983,771 - - 3,434,036
Robert L. Howard....................... 49,981,097 - - 3,436,710
Elvis L. Mason......................... 49,979,881 - - 3,437,926
Charles F. Mitchell.................... 49,972,865 - - 3,444,942
David K. Newbigging.................... 49,984,669 - - 3,433,138
Dee S. Osborne......................... 49,990,337 - - 3,427,470
R.A. Walker............................ 49,988,939 - - 3,428,868
27
OCEAN ENERGY, INC.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
*4.1 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.
*4.2 364-Day Credit Agreement, dated as of March 30, 1999, among the Company,
Chase Texas (Individually and as Administrative Agent), Chase Manhattan (as
Auction Administrative Agent), Bank of America (Individually and as
Syndication Agent), Bank One (Individually and as Documentation Agent),
Societe Generale (Individually and as Managing Agent), the Bank of Montreal
(Individually and as Managing Agent), and the other Banks signatory
thereto.
*4.3 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) filed with the
Securities and Exchange Commission ("SEC") on August 14, 1998; the First
Supplemental Indenture, dated March 30, 1999, is filed herewith).
*4.4 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) filed with the SEC on August 14, 1998; the First Supplemental
Indenture, dated March 30, 1999, is filed herewith).
*4.5 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) filed with the SEC on August 14,
1998; the First Supplemental Indenture, dated March 30, 1999, is filed
herewith).
*4.6 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.
filed with the SEC on August 1, 1997; 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 filed herewith).
*4.7 Indenture, dated as of September 26, 1996, among Ocean Energy, Inc. (f/k/a
Flores & Rucks, Inc.), the Subsidiary Guarantors Named Therein and Fleet
National Bank, as Trustee, relating to the 9 3/4% Senior Subordinated Notes
Due 2006 (the Indenture is incorporated by reference to Exhibit 4.1 to the
Quarterly Report on Form 10-Q for the quarter ended September 30, 1996 of
Ocean Energy, Inc. (Registration No. 0-25058); the First Supplemental
Indenture, dated as of March 27, 1998, is incorporated by reference to
Exhibit 10.10 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 March 30, 1999, is filed herewith).
28
OCEAN ENERGY, INC.
*4.8 Indenture, dated as of October 30, 1995, among Ocean Energy, Inc., a
Delaware corporation (successor by merger to United Meridian Corporation),
Ocean Energy, Inc., a Louisiana corporation (successor by merger to UMC
Petroleum Corporation) and Bank of Montreal Trust Company, as Trustee,
relating to the 10 3/8% Senior Subordinated Notes Due 2005 (the Indenture
is incorporated by reference to Exhibit 4.20 to UMC's Annual Report on Form
10-K for the year ended December 31, 1995; the First Supplemental
Indenture, dated as of November 4, 1997, is incorporated by reference to
Exhibit 4.11 to the Form 10-Q for the quarter ended September 30, 1998 of
Ocean Energy, Inc. (Registration No. 0-25058); the Second Supplemental
Indenture, dated as of March 27, 1998, is incorporated by reference to
Exhibit 10.12 to the Form 8-K of Ocean Energy, Inc. (Registration No.
0-25058) filed with the SEC on March 31, 1998; the Third Supplemental
Indenture, dated March 30, 1999, is filed herewith).
*4.9 Indenture, dated as of December 1, 1994, among Ocean Energy, Inc. (f/k/a
Flores & Rucks, Inc.), the Subsidiary Guarantors Named Therein and Shawmut
Bank Connecticut, National Association, as Trustee, relating to the 13 1/2%
Senior Notes Due 2004, (the Indenture is incorporated by reference to
Exhibit 4.1 to the Annual Report on Form 10-K for the year ended December
31, 1994 of Ocean Energy, Inc. (Registration No. 0-25058); the First
Supplemental Indenture, dated as of September 19, 1996, is incorporated by
reference to Exhibit 4.1 to the Form 8-K of Ocean Energy, Inc.
(Registration No. 0-25058) filed with the SEC on October 10, 1996; the
Second Supplemental Indenture, dated as of July 14, 1997, is incorporated
by reference to Exhibit 4.1 to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997 of Ocean Energy, Inc. (Registration No.
0-25058); the Third Supplemental Indenture, dated as of March 27, 1998, is
incorporated by reference to Exhibit 10.9 to the Form 8-K of Ocean Energy,
Inc. (Registration No. 0-25058) filed with the SEC on March 31, 1998; the
Fourth Supplemental Indenture, dated March 30, 1999, is filed herewith).
*4.10First Supplemental Indenture, date as of March 30, 1999, to the Senior
Indenture, dated as of September 1, 1997, relating to the 7 1/2% Senior
Notes Due 2027.
*4.11First Supplemental Indenture, date as of March 30, 1999, to the Senior
Indenture, dated as of July 15, 1993, relating to the 7 7/8% Senior Notes
Due 2003.
*4.12First Supplemental Indenture, date as of March 30, 1999, to the Senior
Subordinated Indenture, dated as of July 15, 1993, relating to the 8 5/8%
Senior Subordinated Notes Due 2005.
4.13 Amendment No. 2 to Amended and Restated Rights Agreement, dated as of March
10, 1999, by and between the Company and BankBoston, N.A. (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).
#10.1 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).
#10.2 Employment Agreement, dated as of March 27, 1998, among Ocean Energy, Inc.
and James C. Flores, as amended (the Agreement is incorporated by reference
to Exhibit 10.2 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 10.34 to the
Annual Report on Form 10-K for the year ended December 31, 1998, of Ocean
Energy, Inc. (Registration No. 0-25058).
*#10.3 UMC 1987 Nonqualified Stock Option Plan, as amended, (the Plan is
incorporated herein by
29
OCEAN ENERGY, INC.
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 1993 Form 10-K filed with the SEC on March 7, 1994; the Fourth
Amendment, dated April 6, 1994, is incorporated by reference to Exhibit
10.6 to UMC's 1994 Form 10-K filed with the SEC on March 10, 1995; the
Fifth Amendment, dated November 19, 1997, is incorporated by reference to
Exhibit 4.7 to UMC's Form S-3 (No. 333-42467) filed with the SEC on
December 17, 1997); the Sixth Amendment, dated March 27, 1998 (filed
herewith); the Seventh Amendment, dated February 1, 1999 (filed herewith).
*#10.4 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 filed herewith).
#10.5Amendment 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 filed with the
Securities and Exchange Commission on August 8, 1996).
*#10.6 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) filed with the
SEC on December 17, 1997); Fourth Amendment, dated March 27, 1998 is filed
herewith).
*#10.7 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 1994 Form 10-K filed
with the SEC on March 10, 1995; the Second Amendment dated March 30, 1999
is filed herewith).
*#10.8 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)
filed with the SEC on October 31, 1994); the Second Amendment, dated March
27, 1998 is filed herewith).
*#10.9 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 filed
herewith).
#10.10 Long-Term Incentive Plan for Non-Executive Employees, as amended
(incorporated by reference to Exhibit 99.1 to the Form S-8 (No. 333-45119)
of Ocean Energy, Inc. (Registration No. 0-25058) filed with the SEC on
January 29, 1998; Amendment No. 2, incorporated by reference to Exhibit
99.2 to the Form S-8 (No. 333-49185) of Ocean Energy, Inc., filed with the
SEC on April 1, 1998;
30
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).
#10.11 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.
#10.12 Ocean Energy, Inc. Deferred Compensation Plan incorporated by reference
to Exhibit 10.24 to the Annual Report on Form 10-K for the year ended
December 31, 1997 of Ocean Energy, Inc. (Registration No. 0-25058).
#10.13 Severance Protection Agreement, dated as of December 20, 1997, by and
between United Meridian Corporation, UMC Petroleum Corporation and the
Executives named therein incorporated by reference to Exhibit 10.1 to
United Meridian's Form 8-K filed with the Securities and Exchange
Commission on December 23, 1997; Amendment No. 1 to Severance Protection
Agreement, dated as of November 24, 1998 by and between Ocean Energy, Inc.
and Jonathan M. Clarkson, as incorporated by reference to Exhibit 10.36 to
the Annual Report on Form 10-K for the year ended December 31, 1998, of
Ocean Energy, Inc. (Registration No. 0-25058).
*10.14 The Fifth Amendment to the Seagull Energy Corporation Management
Stability Plan dated March 29, 1999.
*#10.15 Amendment to Employment Agreement by and between the Company and James
T. Hackett dated November 24, 1998.
*#10.16 Amendment to Employment and Consulting Agreement by and between the
Company and Barry J. Galt dated November 24, 1998.
*#10.17 Ocean Energy, Inc. 1999 Change of Control Severance Plan dated February
8, 1999; the First Amendment dated March 29, 1999.
#10.18 Form of Employment Agreement among the Company and certain executive
officers and directors (incorporated by reference to Exhibit 10.21 to
Annual Report on Form 10-K of Ocean Energy, Inc. (Registration No. 0-25058)
filed with the SEC on February 20, 1998).
*#10.19 Form of Indemnification Agreements among the Company and certain
executive officers and directors .
*27.1 Financial Data Schedule.
27.2 Restated Financial Data Schedule for the year ended December 31, 1998
(incorporated by reference to the Annual Report on Form 10-K of Ocean
Energy, Inc. (Registration No. 0-25058) filed with the SEC on February 16,
1999).
27.3 Restated Financial Data Schedule for the years ended December 31, 1997 and
1996 and the quarterly periods in the year ended December 31, 1997
(incorporated by reference to Exhibit 27.1 to the Current Report on Form
8-K of Ocean Energy, Inc. (Registration No. 0-25058) filed with the SEC on
May 6, 1998).
27.4 Restated Financial Data Schedule for the quarter ended March 31, 1998
(incorporated by reference to Exhibit 27.1 to the Form 10-Q of Ocean
Energy, Inc. (Registration No. 0-25058) filed with the SEC on May 15,
1998).
27.5 Restated Financial Data Schedule for the quarter ended June 30, 1998
(incorporated by reference to Exhibit 27.1 to the Form 10-Q of Ocean
Energy, Inc. (Registration No. 0-25058) filed with the SEC
31
OCEAN ENERGY, INC.
on August 14, 1998).
27.6 Restated Financial Data Schedule for the quarter ended September 30, 1998
(incorporated by reference to Exhibit 27.1 to the Form 10-Q of Ocean
Energy, Inc. (Registration No. 0-25058) filed with the SEC on November 16,
1998).
* Filed herewith.
# Identifies management contracts and compensatory plans or arrangements.
(b) Reports on Form 8-K: On March 12, 1999, the Company filed a Current Report
on Form 8-K dated March 10, 1999 with respect to the Amendment and
Restatement of the Seagull Energy Corporation Rights Agreement. The items
reported in such Current Report were Item 5 (Other Events) and Item 7
(Financial Statements and Exhibits). On April 8, 1999, the Company filed a
Current Report on Form 8-K dated March 30, 1999 with respect to the Merger.
The items reported in such Current Report were Item 2 (Acquisition or
Disposition of Assets) and Item 7 (Financial Statements and Exhibits).
On May 4, 1999, the Company filed a Current Report on Form 8-K dated April
26, 1999 with respect to the appointment of auditors. The item reported in
such Current Report was Item 5 (Other Events).
Signatures
Pursuant to the requirements 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 Corporation
By: /s/ William L. Transier
William L. Transier
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: May 17, 1999
By: /s/ Gordon L. McConnell
Gordon L. McConnell
Vice President and Controller
(Principal Accounting Officer)
Date: May 17, 1999
32
Exhibit Index
Page
Number
*4.1 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.
*4.2 364-Day Credit Agreement, dated as of March 30, 1999, among the Company,
Chase Texas (Individually and as Administrative Agent), Chase Manhattan (as
Auction Administrative Agent), Bank of America (Individually and as
Syndication Agent), Bank One (Individually and as Documentation Agent),
Societe Generale (Individually and as Managing Agent), the Bank of Montreal
(Individually and as Managing Agent), and the other Banks signatory
thereto.
*4.3 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) filed with the
Securities and Exchange Commission ("SEC") on August 14, 1998; the First
Supplemental Indenture, dated March 30, 1999, is filed herewith).
*4.4 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) filed with the SEC on August 14, 1998; the First Supplemental
Indenture, dated March 30, 1999, is filed herewith).
*4.5 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) filed with the SEC on August 14,
1998; the First Supplemental Indenture, dated March 30, 1999, is filed
herewith).
*4.6 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.
filed with the SEC on August 1, 1997; 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 filed herewith).
*4.7 Indenture, dated as of September 26, 1996, among Ocean Energy, Inc. (f/k/a
Flores & Rucks, Inc.), the Subsidiary Guarantors Named Therein and Fleet
National Bank, as Trustee, relating to the 9 3/4% Senior Subordinated Notes
Due 2006 (the Indenture is incorporated by reference to Exhibit 4.1 to the
Quarterly Report on Form 10-Q for the quarter ended September 30, 1996 of
Ocean Energy, Inc. (Registration No. 0-25058); the First Supplemental
Indenture, dated as of March 27, 1998, is incorporated by reference to
Exhibit 10.10 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 March 30, 1999, is filed herewith).
Exhibit Index
Page
Number
*4.8 Indenture, dated as of October 30, 1995, among Ocean Energy, Inc., a
Delaware corporation (successor by merger to United Meridian Corporation),
Ocean Energy, Inc., a Louisiana corporation (successor by merger to UMC
Petroleum Corporation) and Bank of Montreal Trust Company, as Trustee,
relating to the 10 3/8% Senior Subordinated Notes Due 2005 (the Indenture
is incorporated by reference to Exhibit 4.20 to UMC's Annual Report on Form
10-K for the year ended December 31, 1995; the First Supplemental
Indenture, dated as of November 4, 1997, is incorporated by reference to
Exhibit 4.11 to the Form 10-Q for the quarter ended September 30, 1998 of
Ocean Energy, Inc. (Registration No. 0-25058); the Second Supplemental
Indenture, dated as of March 27, 1998, is incorporated by reference to
Exhibit 10.12 to the Form 8-K of Ocean Energy, Inc. (Registration No.
0-25058) filed with the SEC on March 31, 1998; the Third Supplemental
Indenture, dated March 30, 1999, is filed herewith).
*4.9 Indenture, dated as of December 1, 1994, among Ocean Energy, Inc. (f/k/a
Flores & Rucks, Inc.), the Subsidiary Guarantors Named Therein and Shawmut
Bank Connecticut, National Association, as Trustee, relating to the 13 1/2%
Senior Notes Due 2004, (the Indenture is incorporated by reference to
Exhibit 4.1 to the Annual Report on Form 10-K for the year ended December
31, 1994 of Ocean Energy, Inc. (Registration No. 0-25058); the First
Supplemental Indenture, dated as of September 19, 1996, is incorporated by
reference to Exhibit 4.1 to the Form 8-K of Ocean Energy, Inc.
(Registration No. 0-25058) filed with the SEC on October 10, 1996; the
Second Supplemental Indenture, dated as of July 14, 1997, is incorporated
by reference to Exhibit 4.1 to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997 of Ocean Energy, Inc. (Registration No.
0-25058); the Third Supplemental Indenture, dated as of March 27, 1998, is
incorporated by reference to Exhibit 10.9 to the Form 8-K of Ocean Energy,
Inc. (Registration No. 0-25058) filed with the SEC on March 31, 1998; the
Fourth Supplemental Indenture, dated March 30, 1999, is filed herewith).
*4.10First Supplemental Indenture, date as of March 30, 1999, to the Senior
Indenture, dated as of September 1, 1997, relating to the 7 1/2% Senior
Notes Due 2027.
*4.11First Supplemental Indenture, date as of March 30, 1999, to the Senior
Indenture, dated as of July 15, 1993, relating to the 7 7/8% Senior Notes
Due 2003.
*4.12First Supplemental Indenture, date as of March 30, 1999, to the Senior
Subordinated Indenture, dated as of July 15, 1993, relating to the 8 5/8%
Senior Subordinated Notes Due 2005.
4.13 Amendment No. 2 to Amended and Restated Rights Agreement, dated as of March
10, 1999, by and between the Company and BankBoston, N.A. (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).
#10.1 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).
#10.2 Employment Agreement, dated as of March 27, 1998, among Ocean Energy, Inc.
and James C. Flores, as amended (the Agreement is incorporated by reference
to Exhibit 10.2 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 10.34 to the
Annual Report on Form 10-K for the year ended December 31, 1998, of Ocean
Energy, Inc. (Registration No. 0-25058).
Exhibit Index
Page
Number
*#10.3 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 1993 Form 10-K filed with the SEC on March 7, 1994; the Fourth
Amendment, dated April 6, 1994, is incorporated by reference to Exhibit
10.6 to UMC's 1994 Form 10-K filed with the SEC on March 10, 1995; the
Fifth Amendment, dated November 19, 1997, is incorporated by reference to
Exhibit 4.7 to UMC's Form S-3 (No. 333-42467) filed with the SEC on
December 17, 1997); the Sixth Amendment, dated March 27, 1998 (filed
herewith); the Seventh Amendment, dated February 1, 1999 (filed herewith).
*#10.4 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 filed herewith).
#10.5Amendment 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 filed with the
Securities and Exchange Commission on August 8, 1996).
*#10.6 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) filed with the
SEC on December 17, 1997); Fourth Amendment, dated March 27, 1998 is filed
herewith).
*#10.7 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 1994 Form 10-K filed
with the SEC on March 10, 1995; the Second Amendment dated March 30, 1999
is filed herewith).
*#10.8 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)
filed with the SEC on October 31, 1994); the Second Amendment, dated March
27, 1998 is filed herewith).
*#10.9 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 filed
herewith).
Exhibit Index
Page
Number
#10.10 Long-Term Incentive Plan for Non-Executive Employees, as amended
(incorporated by reference to Exhibit 99.1 to the Form S-8 (No. 333-45119)
of Ocean Energy, Inc. (Registration No. 0-25058) filed with the SEC on
January 29, 1998; Amendment No. 2, incorporated by reference to Exhibit
99.2 to the Form S-8 (No. 333-49185) of Ocean Energy, Inc., filed with the
SEC on April 1, 1998; 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).
#10.11 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.
#10.12 Ocean Energy, Inc. Deferred Compensation Plan incorporated by reference
to Exhibit 10.24 to the Annual Report on Form 10-K for the year ended
December 31, 1997 of Ocean Energy, Inc. (Registration No. 0-25058).
#10.13 Severance Protection Agreement, dated as of December 20, 1997, by and
between United Meridian Corporation, UMC Petroleum Corporation and the
Executives named therein incorporated by reference to Exhibit 10.1 to
United Meridian's Form 8-K filed with the Securities and Exchange
Commission on December 23, 1997; Amendment No. 1 to Severance Protection
Agreement, dated as of November 24, 1998 by and between Ocean Energy, Inc.
and Jonathan M. Clarkson, as incorporated by reference to Exhibit 10.36 to
the Annual Report on Form 10-K for the year ended December 31, 1998, of
Ocean Energy, Inc. (Registration No. 0-25058).
*10.14 The Fifth Amendment to the Seagull Energy Corporation Management
Stability Plan dated March 29, 1999.
*#10.15 Amendment to Employment Agreement by and between the Company and James
T. Hackett dated November 24, 1998.
*#10.16 Amendment to Employment and Consulting Agreement by and between the
Company and Barry J. Galt dated November 24, 1998.
*#10.17 Ocean Energy, Inc. 1999 Change of Control Severance Plan dated February
8, 1999; the First Amendment dated March 29, 1999.
#10.18 Form of Employment Agreement among the Company and certain executive
officers and directors (incorporated by reference to Exhibit 10.21 to
Annual Report on Form 10-K of Ocean Energy, Inc. (Registration No. 0-25058)
filed with the SEC on February 20, 1998).
*#10.19 Form of Indemnification Agreements among the Company and certain
executive officers and directors .
Exhibit Index
Page
Number
*27.1 Financial Data Schedule.
27.2 Restated Financial Data Schedule for the year ended December 31, 1998
(incorporated by reference to the Annual Report on Form 10-K of Ocean
Energy, Inc. (Registration No. 0-25058) filed with the SEC on February 16,
1999).
27.3 Restated Financial Data Schedule for the years ended December 31, 1997 and
1996 and the quarterly periods in the year ended December 31, 1997
(incorporated by reference to Exhibit 27.1 to the Current Report on Form
8-K of Ocean Energy, Inc. (Registration No. 0-25058) filed with the SEC on
May 6, 1998).
27.4 Restated Financial Data Schedule for the quarter ended March 31, 1998
(incorporated by reference to Exhibit 27.1 to the Form 10-Q of Ocean
Energy, Inc. (Registration No. 0-25058) filed with the SEC on May 15,
1998).
27.5 Restated Financial Data Schedule for the quarter ended June 30, 1998
(incorporated by reference to Exhibit 27.1 to the Form 10-Q of Ocean
Energy, Inc. (Registration No. 0-25058) filed with the SEC on August 14,
1998).
27.6 Restated Financial Data Schedule for the quarter ended September 30, 1998
(incorporated by reference to Exhibit 27.1 to the Form 10-Q of Ocean
Energy, Inc. (Registration No. 0-25058) filed with the SEC on November 16,
1998).
* Filed herewith.
# Identifies management contracts and compensatory plans or arrangements.