SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934

Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12

MESA INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.

(1) Title of each class of securities to which transaction applies:
N/A
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
N/A
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
- --------------------------------------------------------------------------------
(5) Total fee paid:
N/A
- --------------------------------------------------------------------------------

/ / Fee paid previously with preliminary materials.

/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:
N/A
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
N/A
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(3) Filing Party:
N/A
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(4) Date Filed:
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2

MESA INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD JULY 30, 1996
IRVING, TEXAS

To the Stockholders of MESA Inc.:

Notice is hereby given that the Annual Meeting of the Stockholders of MESA
Inc. will be held at the Omni Mandalay Hotel at Las Colinas, 221 E. Las Colinas
Blvd., Irving, Texas 75039, at 10:00 a.m. on Tuesday, July 30, 1996, for the
following purposes:

(1) To elect three persons to serve on the Board of Directors of the
Company;

(2) To ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants for 1996; and

(3) To transact such other business as may properly come before the
meeting.

Holders of record of shares of MESA Inc. Common Stock as of the close of
business on June 3, 1996, will be entitled to notice of, and to vote at, the
Annual Meeting or any postponements or adjournments thereof.

Stockholders are cordially invited to attend the Annual Meeting in person.
Whether or not you plan to attend in person, please sign, date, and promptly
mail the enclosed proxy card for which a self-addressed, postage-paid, return
envelope is provided.

Stockholders are urged to read carefully the attached Proxy Statement for
additional information concerning the matters to be considered at the Annual
Meeting.

By order of the Board of Directors

/s/ STEPHEN K. GARDNER
Stephen K. Gardner
Vice President and Chief Financial
Officer
June 27, 1996
3

MESA INC.
1400 WILLIAMS SQUARE WEST
5205 NORTH O'CONNOR BOULEVARD
IRVING, TEXAS 75039-3746

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS

JULY 30, 1996

ANNUAL MEETING; VOTING PROCEDURES

This Proxy Statement (the "Proxy Statement") is furnished in connection
with the solicitation of proxies by the Board of Directors of MESA Inc. for use
at the Annual Meeting of Stockholders to be held at the Omni Mandalay Hotel at
Las Colinas, 221 E. Las Colinas Blvd., Irving, Texas 75039, at 10:00 a.m. on
Tuesday, July 30, 1996, and at any postponements or adjournments thereof (the
"Annual Meeting"). The Annual Meeting is being held to consider and act on the
matters stated in the accompanying Notice. Unless the context otherwise
requires, references herein to "the Company" or "Mesa" are to MESA Inc. and its
subsidiaries and predecessors viewed as a single entity.

This Proxy Statement and the enclosed form of proxy are first being mailed
to stockholders on or about June 28, 1996. Each proxy will be voted in
accordance with the specifications marked thereon. If no voting specification is
made, shares represented by proxies will be voted (i) FOR the election of the
three nominees named herein as Directors of the Company (subject to any
cumulative voting as described below and on the proxy), (ii) FOR ratification of
the appointment of Arthur Andersen LLP as the Company's independent public
accountants for 1996, and (iii) in the discretion of the persons named in the
accompanying proxy card in connection with any other business that may properly
come before the Annual Meeting. A stockholder may revoke his or her proxy by
written notice of revocation received by The Corporation Trust Company, the
independent collection agent for the Annual Meeting, at Corporation Trust
Center, 1209 Orange Street, Wilmington, Delaware 19801, any time before it is
voted, by executing and delivering a later-dated proxy for the Annual Meeting to
the independent collection agent, or by attending the Annual Meeting and voting
in person.

At the close of business on June 3, 1996, the record date for the
determination of stockholders entitled to notice of, and to vote at, the Annual
Meeting (the "Record Date"), there were 64,050,009 shares of the Company's
Common Stock, par value $.01 per share ("Common Stock"), outstanding. Each share
of Common Stock is entitled to one vote with respect to the matters to be acted
upon at the Annual Meeting, except with respect to the election of directors. In
accordance with the Texas Business Corporation Act, cumulative voting is allowed
in the election of directors at the Annual Meeting only if a stockholder who
intends to cumulate his or her votes gives written notice of such intention to
the Secretary of the Company (at the Company's address above) on or before the
day preceding the date of the Annual Meeting. All stockholders may cumulate
their votes if any stockholder gives the written notice provided for under the
Texas Business Corporation Act. Delivery of a signed and dated proxy card
specifying cumulative votes to the independent collection agent will not
constitute the notice to the Company required under the Texas Business
Corporation Act to allow cumulative voting. Under cumulative voting, each
stockholder would be entitled to cast three votes per share (one vote per share
multiplied by the number of positions on the Board of Directors to be filled).
Under cumulative voting, each stockholder could cumulate his or her votes by
giving one nominee a number of votes equal to the number of positions on the
Board of Directors to be filled (i.e., three) multiplied by the number of shares
he or she is entitled to vote at the Annual Meeting, or could distribute such
number of votes on the same principle among any number of candidates.

In the event there is cumulative voting at the Annual Meeting, the Board of
Directors is also soliciting discretionary authority to cumulate votes in the
election of directors. In the event of cumulative voting, the
4

persons named in the accompanying proxy card will vote the shares covered by
proxies received by them with a view to causing the three nominees named herein
to be elected as members of the Company's Board of Directors or, if election of
all three does not appear possible, then the proxies will be voted with a view
to causing as many of such nominees to be elected as possible utilizing the
cumulative voting provision. Such persons may use cumulative voting in any
fashion they deem appropriate and may select, at their discretion, one or more
of the three nominees named herein who will not receive their votes if it
appears unlikely to elect all three as directors. A stockholder may, in the
manner set forth in the enclosed proxy card, instruct the proxyholders not to
vote that stockholder's shares for one or more of the named nominees.

In the event of cumulative voting, if a stockholder wishes to cumulate his
or her votes for the election of directors, such stockholder should clearly
indicate on the proxy card the number of votes such holder wishes to cast for
each nominee. However, by virtue of cumulative voting, the persons named as
proxies will have three votes for each share held by each stockholder granting
them proxies (unless voting authority is withheld) and could likely offset the
instruction not to vote for one or more of the three nominees or the exercise of
cumulative voting by the use of votes granted in other proxies.

The Company's Bylaws require the Board of Directors to designate an
independent third party not affiliated with the Company or with any other third
party soliciting proxies to collect, count and hold all proxies and ballots that
identify stockholders. Pursuant to this provision, the Board of Directors has
designated The Corporation Trust Company as the independent collection agent for
the Annual Meeting. The Board of Directors believes that the Bylaw provision
requiring independent and confidential collection and counting of proxies helps
assure the integrity of the election process and is in the best interests of the
stockholders and the Company.

The affirmative vote of the holders of a majority of the shares of Common
Stock that are represented in person or by proxy and entitled to vote at the
Annual Meeting will be required to approve each proposal, except that the
election of the directors will be determined by a plurality vote of shares voted
at the Annual Meeting.

Only holders of Common Stock on the Record Date will be entitled to notice
of and to vote at the Annual Meeting. Neither the holders of rights to purchase
shares of Series A 8% Cumulative Convertible Preferred Stock of the Company (the
"Series A Preferred Stock"), the holders of Series A Preferred Stock nor the
holders of Series B 8% Cumulative Convertible Preferred Stock of the Company
(the "Series B Preferred Stock") (in each case if issued prior to the Annual
Meeting) will have any right to receive notice of or to vote at the Annual
Meeting. See "The Recapitalization" below.

Under the Company's Articles of Incorporation and Bylaws, as well as the
Texas Business Corporation Act, the holders of a majority of the shares of
Common Stock entitled to vote on a matter, represented in person or by proxy,
shall constitute a quorum as to that matter at the Annual Meeting. In addition,
if a quorum is present at the Annual Meeting, the stockholders represented in
person or by proxy at the Annual Meeting may conduct such business as may be
properly brought before the Annual Meeting, including the two proposals
described herein, until it is adjourned; and, the subsequent withdrawal from the
Annual Meeting of any stockholder or the refusal of any stockholder represented
in person or by proxy to vote shall not affect the presence of a quorum at the
Annual Meeting. Accordingly, at the Annual Meeting, any proxy cards that include
abstentions will be counted as being present for purposes of determining the
existence of a quorum for that matter at the Annual Meeting. Proxy cards
reflecting abstentions with respect to a matter other than the election of
directors will be so reflected with respect to that matter in calculating
stockholder votes, and will therefore have the same effect as votes "against."
If a broker indicates on the proxy card that it does not have discretionary
authority as to certain shares to vote on a particular matter (a "broker
non-vote"), those shares will be counted as present for purposes of determining
the existence of a quorum at the Annual Meeting for all matters; however, broker
non-votes will not be counted as having been cast with respect to any matter and
will therefore have no effect on any matter to be brought before the meeting,
including the election of directors.

The Board of Directors recommends a vote (i) FOR the election of three
nominees named herein as directors and (ii) FOR ratification of the appointment
of Arthur Andersen LLP as the Company's independent public accountants for 1996.

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5

Management does not intend to bring any matters before the Annual Meeting
other than those set forth in the accompanying Notice of Annual Meeting. The
Bylaws of the Company require advance notice to the Company of proposals by
stockholders for action to be taken at the Annual Meeting and of nominations by
stockholders of persons for election to the Board of Directors. If any other
matter should properly come before the Annual Meeting, it is the intention of
the persons named in the accompanying proxy to vote proxies in accordance with
their judgment on such matters. The proxy card, when properly executed, will be
voted as specified therein by the stockholder. If no specification is made, the
proxy will be voted for proposals (i) and (ii). With regard to the election of
the Board of Directors, if there is cumulative voting, votes will be distributed
as instructed or in the discretion of the proxy holders as described in this
Proxy Statement and the proxy card.

The Company has retained Morrow & Co., Inc., to solicit proxies in the
enclosed form and will pay such firm a fee of approximately $15,000 plus
reasonable expenses for so acting. In addition, certain officers,
representatives and regular employees of the Company may also contact
stockholders by telephone, telegram or personal interview. The Company will
reimburse brokers and other custodians or nominees for their reasonable expenses
incurred in forwarding the solicitation material to beneficial owners of Common
Stock. The entire cost of this solicitation will be borne by the Company.

THE RECAPITALIZATION

On April 26, 1996, Mesa entered into a Stock Purchase Agreement (the "Stock
Purchase Agreement") with DNR-MESA Holdings, L.P., a Texas limited partnership
("DNR"), whose sole general partner is Rainwater Inc., a Texas corporation owned
by Richard E. Rainwater. The agreement contemplates that Mesa will issue $265
million in new equity and will repay and/or refinance substantially all of its
$1.2 billion of existing debt (the "Recapitalization"). DNR will purchase
approximately 58.8 million shares of Series B Preferred Stock, a new class of
convertible preferred stock, in a private placement that will close on July 2,
1996 (the "First Closing Date"), and Mesa will subsequently offer rights (the
"Rights") to purchase approximately 58.4 million shares of Series A Preferred
Stock, a new class of convertible preferred stock with substantially similar
terms as the Series B Preferred Stock, to Mesa stockholders in a rights offering
(the "Rights Offering"). DNR will provide a standby commitment (the "Standby
Commitment") to purchase an additional number of shares of Series B Preferred
Stock equal to the number of shares of Series A Preferred Stock not subscribed
for in the Rights Offering. Each holder of Common Stock will receive .912 Rights
in respect of each share of Common Stock held by such holder on July 3, 1996,
the record date for the Rights Offering. Each Right will entitle the holder to
purchase one share of Series A Preferred Stock at $2.26 per share, the same per
share price at which DNR will purchase shares of Series B Preferred Stock. The
Rights will be transferrable and holders of the Rights will be offered
over-subscription privileges for shares not purchased by other Rights holders.
The Rights Offering will be made by a Prospectus relating thereto and to the
Series A Preferred Stock.

The sale of shares to DNR and certain related matters were approved by
Mesa's stockholders at a special meeting (the "Special Meeting") held on June
25, 1996. At the Special Meeting the stockholders approved the Stock Purchase
Agreement and an amendment to Mesa's Amended and Restated Articles of
Incorporation to increase the number of authorized shares of Common Stock and
preferred stock and to permit the taking of action by written consent of the
holders of any class or series of preferred stock (to the extent provided by the
resolution of the Board of Directors establishing such class or series). A third
proposal relating to a four-for-one reverse stock split was not approved.

On June 25, 1996, Mesa commenced a registered, underwritten public offering
of $475 million of senior subordinated notes ("New Notes") consisting of $325
million principal amount of 10 5/8% Senior Subordinated Notes due 2006 and
$150.1 million initial accreted value of 11 5/8% Senior Subordinated Discount
notes due 2006. In addition, concurrently with the issuance and sale of the New
Notes, Mesa expects to enter into a new $525 million senior secured revolving
credit facility ("New Credit Facility"). Borrowings under the New Credit
Facility and the New Notes, together with existing cash and investment balances
and the $265 million of new equity, will be used to repay and/or refinance
substantially all of Mesa's existing debt.

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6

1. ELECTION OF DIRECTORS

Pursuant to the terms of the Stock Purchase Agreement, the size of the
Board of Directors of Mesa will be reduced to seven directors on the First
Closing Date when DNR purchases shares of Series B Preferred Stock. Pursuant to
the terms of the Series B Preferred Stock, DNR, as the sole holder of such
shares, will obtain the right to elect a majority of Mesa's Board of Directors,
or four of the seven positions on the Board. At that time, DNR intends to elect
Richard E. Rainwater, Darla D. Moore, Kenneth A. Hersh and Philip B. Smith to
the four seats on the Board of Directors to which the holders of the Series B
Preferred Stock will be entitled. DNR's right to elect a majority of the Board
will continue so long as DNR and/or its affiliates own shares of Series B
Preferred Stock and meet certain minimum stock ownership requirements. The
holders of shares of Common Stock, together with the holders of shares of Series
A Preferred Stock (when such shares have been issued), voting together as a
single class, will have the right to elect the other three members of the Board
of Directors.

Accordingly, at the Annual Meeting, three persons will be elected by the
holders of Common Stock to the Board of Directors to hold office until the next
Annual Meeting of Stockholders or until their respective successors have been
duly elected and qualified. The Company does not contemplate that any of the
nominees named below will become unable to serve or for good cause will not
serve as director, but if that should occur before the Annual Meeting, the
persons named as proxies in the accompanying proxy card will vote the shares
represented by the proxies for another nominee or nominees to be selected by
designated directors of the Company.

The following table sets forth with respect to each person being nominated
by the Board of Directors (i) his name and age, (ii) the period during which he
has served as a director, and (iii) his principal occupation over the last five
years (including other directorships and business experience).

BUSINESS EXPERIENCE
NAME AND AGE OVER PAST FIVE YEARS
- --------------------------------- ----------------------------------------------------------

Boone Pickens, age 68............ January 1992 - Present, Chairman of the Board of Directors
and Chief Executive Officer of Mesa; June 1,
1996 - Present, President and Chief Operating Officer of
Mesa; October 1985 - December 1991, General Partner of
the Partnership and Chief Executive Officer and Director
of Pickens Operating Co. (the corporate general partner
of the Partnership); 1964 - January 1987, Chairman of
the Board, President, and founder of Original Mesa.
John S. Herrington, age 56....... January 1992 - Present, Director of Mesa; December 1991 -
Present, personal investments and real estate activities;
May 1990 - November 1991, Chairman of the Board of
Harcourt Brace Jovanovich, Inc. (publishing); May 1989 -
May 1990, Director of Harcourt Brace Jovanovich, Inc.;
February 1985 - January 1989, Secretary of the
Department of Energy of the United States.
Robert L. Stillwell, age 59...... January 1992 - Present, Director of Mesa; December 1985 -
December 1991, Member of the Advisory Committee of the
Partnership; 1969 - January 1987, Director of Original
Mesa; Partner in the law firm of Baker & Botts, L.L.P.,
for more than the last five years.

The Board of Directors recommends a vote FOR the Nominees named above.

SERIES B PREFERRED STOCK DIRECTORS

The following table sets forth, with respect to each director anticipated
to be elected by DNR as the holder of Series B Preferred Stock (when issued),
(i) his or her name and age and (ii) his or her principal occupation over the
last five years (including other directorships and business experience). Mr.
Rainwater and Ms. Moore are married to each other.

4
7

NAME AND AGE BUSINESS EXPERIENCE OVER PAST FIVE YEARS
- ----------------------------------- --------------------------------------------------------

Richard E. Rainwater, age 52....... 1986 - Present, independent investor and sole
shareholder, President and Director of Rainwater, Inc.;
1970-1986, chief investment advisor to the Bass family
of Texas; 1994 - Present, founder and Chairman of the
Board of Crescent Real Estate Equities, Inc.; 1992,
co-founder of Mid Ocean Limited; 1987, co-founder of
Columbia Hospital Corporation (predecessor to
Columbia/HCA Healthcare Corporation); 1986, founder of
ENSCO International, Inc.
Darla D. Moore, age 41............. 1994 - Present, private investment activities and chief
executive officer and Director of Rainwater, Inc.;
1989-1994, Managing Director of Chemical Bank,
Restructuring and Reorganization Unit and Retail
Industries Group; Director of Magellan Health
Services, Inc.; Trustee of George Washington
University.
Kenneth A. Hersh, age 33........... 1994 - Present, chief investment officer and Director of
Rainwater, Inc. and co-manager of investment activities
of Natural Gas Partners investment funds; 1989-1994,
co-manager of investment activities of Natural Gas
Partners, L.P.; 1985-1987, Morgan Stanley & Co.
investment banking division, energy group; Director of
Tide West Oil Company and HS Resources, Inc.
Philip B. Smith, age 45............ 1991 - Present, Director, President and Chief Executive
Officer of Tide West Oil Company; 1986-1991, Senior Vice
President of Mega Natural Gas Company; 1980-1986,
executive positions with two small exploration and
production companies; 1976-1980, various positions
with Samson Resources Company; 1974-1976, production
engineer with Texaco, Inc.

It is anticipated that the Series B Preferred Stock directors will be
elected to office on or about July 2, 1996.

DIRECTOR COMPENSATION AND COMMITTEES

Paul W. Cain, Wales H. Madden, Jr., Dorn Parkinson, Joel L. Reed and Fayez
S. Sarofim have notified the Company that they will resign from the Board of
Directors effective as of the First Closing Date, as contemplated by the Stock
Purchase Agreement.

Each director of the Company serving throughout 1995 who was not also an
employee of the Company or its subsidiaries received compensation of $20,000
allocated quarterly in 1995, except for Messrs. Parkinson, Batchelder and Reed.
Mr. Parkinson received $15,000, Mr. Batchelder received $10,000, and Mr. Reed
received $5,000 for serving as directors for approximately seven months, four
months, and three months, respectively. Directors who are also employees of the
Company receive no remuneration for their services as directors.

Mr. Sarofim, a director and member of the Compensation and Stock Option
Committees, is Chairman of the Board, President, and owner of a majority of the
outstanding capital stock of Fayez Sarofim & Co., which acts as an investment
adviser to certain employee benefit plans of the Company. During the year ended
December 31, 1995, Fayez Sarofim & Co. received fees, paid by the employee
benefit plans, of $175,459 for such services and has been retained to provide
such services in 1996.

Mr. Stillwell, a director, is a partner in the law firm of Baker & Botts,
L.L.P. The Company retained Baker & Botts, L.L.P., and incurred legal fees for
such services in 1995. Baker & Botts, L.L.P., has been retained to provide legal
services in 1996.

5
8

The Board of Directors of the Company held ten meetings in 1995. Other than
Mr. Herrington, all directors attended at least 75 percent of the meetings of
the Board of Directors and committees of the Board of Directors on which they
served. The Board of Directors has the following standing committees: the Audit
Committee, the Compensation Committee and the Stock Option Committee. It does
not have a nominating committee or committee performing similar functions.

As of the date hereof, the Audit Committee is composed of Messrs.
Herrington, Madden, and Parkinson. The composition of the Audit Committee
following the completion of the Recapitalization has not yet been determined.
Its primary functions are (i) the recommendation of independent public
accountants; (ii) the review of the independence of the independent public
accountants, audit engagement, and other professional services of the
independent public accountants; and (iii) the provision for the availability to
the independent public accountants of all aspects of the Company's accounting
practices and procedures. The Audit Committee held two meetings in 1995.

As of the date hereof, the Compensation Committee is composed of Messrs.
Sarofim and Reed. The composition of the Compensation Committee following
completion of the Recapitalization has not yet been determined. The Compensation
Committee held one meeting in 1995.

The Stock Option Committee, which administers the 1991 Stock Option Plan,
was previously composed of Messrs. Sarofim and Reed. Effective June 26, 1996,
Mr. Reed resigned from the Stock Option Committee and he was replaced by Mr.
Herrington. The composition of the Stock Option Committee following completion
of the Recapitalization has not yet been determined. On June 26, 1996, in
accordance with the 1991 Stock Option Plan, the Stock Option Committee
accelerated the vesting of all outstanding options and extended the expiration
date of options granted to employees later terminated from 3 months to 3 years,
subject to the 10 year limitation on options.

2. APPROVAL OF SELECTION OF INDEPENDENT ACCOUNTANTS

The Board of Directors has appointed the firm of Arthur Andersen LLP as the
Company's independent public accountants for 1996. Arthur Andersen LLP has been
the Company's independent public accountants since 1964.

A representative of Arthur Andersen LLP will be available at the Annual
Meeting and will have the opportunity to make a statement if he or she desires
to do so and to respond to appropriate questions.

The Board of Directors recommends a vote FOR ratification of the
appointment of Arthur Andersen LLP as the Company's independent public
accountants for 1996.

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MANAGEMENT

The following table sets forth the name, age, and five-year employment
history of each executive officer of the Company:

NAME AND AGE BUSINESS EXPERIENCE OVER PAST FIVE YEARS
- ----------------------------------- --------------------------------------------------------

Boone Pickens, age 68.............. January 1992 - Present, Chairman of the Board of
Directors and Chief Executive Officer of Mesa; June 1,
1996 - Present, President and Chief Operating Officer of
Mesa; October 1985 - December 1991, General Partner of
the Partnership and Chief Executive Officer and Director
of Pickens Operating Co.; 1964 - January 1987, Chairman
of the Board, President, and founder of Original Mesa.
Dennis E. Fagerstone, age 47....... January 1992 - Present, Vice President-Exploration and
Production of Mesa; May 1991 - December 1991, Vice
President - Exploration and Production of Pickens
Operating Co.; June 1988 - May 1991, Vice
President-Operations of Pickens Operating Co.
Stephen K. Gardner, age 36......... June 1994 - Present, Vice President and Chief Financial
Officer of Mesa; January 1992 - May 1994, Vice President
of BTC Partners Inc. (financial consultant to the
Company); May 1988 - December 1991, Financial Analyst of
BTC Partners, Inc.; June 1987 - April 1988, Financial
Analyst of the Partnership; Director of Bicoastal
Corporation.
Andrew J. Littlefair, age 35....... January 1992 - Present, Vice President-Public Affairs of
Mesa; August 1987 - December 1991, Assistant to the
General Partner of the Partnership; January 1984 -
August 1987, Staff Assistant to the President of the
United States, Washington, D.C.
William D. Ballew, age 38.......... January 1992 - Present, Controller of Mesa; May 1991 -
December 1991, Controller of the Partnership; January
1991 - May 1991, Manager - Accounting of Pickens
Operating Co.; December 1988 - December 1990, Assistant
to the Controller of Pickens Operating Co.; July 1986 -
December 1988, Audit Manager for Price Waterhouse,
Dallas, Texas.

DNR has requested that Mr. Pickens assist DNR in identifying and retaining
a new Chief Executive Officer and that he resign when such person is retained.
Mr. Pickens, who will remain on the Board of Directors following the
Recapitalization, has agreed to assist with this transition. Mr. Ballew will
terminate his employment with Mesa effective on July 3, 1996.

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10

EXECUTIVE COMPENSATION

The table set forth below contains certain information regarding
compensation earned by, awarded to, or paid to the Chief Executive Officer and
the other four most highly compensated executive officers of Mesa for services
rendered to Mesa during the years 1993, 1994 and 1995.

SUMMARY COMPENSATION TABLE

LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS-NUMBER
-------------------------------------- OF SHARES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS/SARS COMPENSATION(2)
- ------------------------------------- ---- -------- -------- --------------- ------------- ---------------

Boone Pickens,....................... 1995 $675,000 $ 0 $ -- 0 $ 35,914(4)
Chairman of the Board of 1994 675,000 175,000 -- 200,000 1,094,500(5)
Directors and Chief 1993 675,000 0 -- 275,000 114,750
Executive Officer(3)
Paul W. Cain,........................ 1995 400,020 0 -- 0 22,165(7)
President and Chief 1994 400,020 150,000 -- 150,000 93,503
Operating Officer(6) 1993 400,020 225,000 -- 100,000 106,253
Dennis E. Fagerstone,................ 1995 199,980 50,000 -- 0 14,663(8)
Vice President -- Exploration 1994 199,980 100,000 -- 85,000 50,997
and Production 1993 199,980 75,000 -- 10,000 46,747
Stephen K. Gardner,.................. 1995 175,020 40,000 -- 0 12,915(9)
Vice President and Chief 1994(10) 92,095 60,000 -- 135,000 25,856
Financial Officer 1993 -- -- -- -- --
Andrew J. Littlefair,................ 1995 139,980 40,000 -- 0 11,163(11)
Vice President -- Public 1994 115,980 100,000 -- 85,000 36,717
Affairs 1993 115,980 75,000 -- 25,000 32,467

- ---------------

(1) Apart from the compensation set forth in the summary compensation table and
under the plans and pursuant to the transactions described below, other
compensation paid for services during the years ended December 31, 1995,
1994, and 1993, respectively, to each individual named in the summary
compensation table aggregated less than 10% of the total salary and bonus
reported for such individual in the summary compensation table, or $50,000,
if lower.

(2) Except as reflected in other notes, "All Other Compensation" consists of
the following items. First, Mesa maintains an Employees Premium Plan and a
Profit Sharing Plan, both of which are retirement plans (the "Retirement
Plans"), for all employees (see separate discussion below). Mesa declared
contributions to the Retirement Plans of 5% of each employee's compensation
in 1995 and 17% of each employee's compensation in 1994 and 1993. However,
total employer contributions to the Retirement Plans for the account of a
participant in any calendar year are limited as specified by the Code and
the Retirement Plans. See "Limitation on Contributions to Benefit Plans"
below. The maximum annual amount of employer contributions to a
participant's accounts in the Retirement Plans totaled $7,500 in 1995,
$25,500 in 1994, and $30,000 in 1993. Second, to the extent that 5% of an
employee's total compensation exceeded $7,500 in 1995, that 17% of an
employee's total compensation exceeded $25,500 in 1994 (in both cases, all
employees with total compensation in excess of $150,000), and that 17% of
an employee's total compensation exceeded $30,000 in 1993 (all employees
with total compensation in excess of $176,470), Mesa, as a matter of
policy, paid the excess amount in cash to such employee. Third, in 1995
there was a reallocation to participant accounts of forfeitures in the
Profit Sharing Plan from unvested balances in the accounts of employees who
terminated during 1994.

(3) DNR has requested that Mr. Pickens assist DNR in identifying and retaining
a new Chief Executive Officer and that he resign when such person is
retained. Mr. Pickens, who will remain on the Board of Directors following
the Recapitalization, has agreed to assist with this transition.

(4) Includes the following: a $7,500 Retirement Plans contribution; a $2,164
reallocation of forfeitures in the Profit Sharing Plan; a $26,250 payment
in lieu of a Retirement Plans contribution in excess of the contribution
limitation as described in Note 2 above.

8
11

(5) Includes the following: a $25,500 Retirement Plans contribution; a $119,000
payment in lieu of a Retirement Plans contribution in excess of the
contribution limitation as described in Note 2 above; a $950,000 bonus
payment that has been deferred until Mr. Pickens' retirement and that was
subject to his continued employment (except in certain events) through
December 31, 1995, with respect to the Parent's 1994 commodities and
securities investment activities managed by him.

(6) Mr. Cain retired as Mesa's President and Chief Operating Officer effective
May 31, 1996.

(7) Amounts include the following: a $7,500 Retirement Plans contribution; a
$2,164 reallocation of forfeitures in the Profit Sharing Plan; a $12,501
payment in lieu of a Retirement Plans contribution in excess of the
contribution limitation as described in Note 2 above.

(8) Includes the following: a $7,500 Retirement Plans contribution; a $2,164
reallocation of forfeitures in the Profit Sharing Plan; a $4,999 payment in
lieu of a Retirement Plans contribution in excess of the contribution
limitation as described in Note 2 above.

(9) Includes the following: a $7,500 Retirement Plans contribution; a $2,164
reallocation of forfeitures in the Profit Sharing Plan; a $3,251 payment in
lieu of a Retirement Plans contribution in excess of the contribution
limitation as described in Note 2 above.

(10) Mr. Gardner became an officer of Mesa in June 1994.

(11) Includes the following: a $7,500 Retirement Plans contribution; a $2,164
reallocation of forfeitures in the Profit Sharing Plan; a $1,499 payment in
lieu of a Retirement Plans contribution in excess of the contribution
limitation as described in Note 2 above.

EMPLOYEES PREMIUM AND PROFIT SHARING PLANS

Mesa maintains the Retirement Plans for the benefit of its employees. Each
year, Mesa is required to contribute to the Employees Premium Plan 5% of the
total compensation (as defined in the plan) paid to participants and may also
contribute up to 12% of total compensation (as defined) to the Profit Sharing
Plan. In previous years, Mesa had declared contributions of 17% to the
Retirement Plans. In 1995 Mesa declared contributions of 5% to the Retirement
Plans.

Participants become 30% vested in their account balances in the Retirement
Plans after three years of service and 40% vested after four years of service.
Participants become vested an additional 20% for each additional year of service
through year seven. Effective December 31, 1991, in conjunction with the
conversion of the Partnership to corporate form, all participants were fully
vested in their account balances in the Retirement Plans as of that date as a
result of certain property dispositions consummated in 1990 and 1991.
Participants remain fully vested in their 1991 balances, but contributions in
1992 and later years under the Retirement Plans are subject to the vesting
schedule described above.

Prior years of service with Mesa's predecessors are counted in the vesting
schedule. Amounts accumulated and vested are distributable only under certain
circumstances, including termination of the Retirement Plans.

LIMITATION ON CONTRIBUTIONS TO BENEFIT PLANS

Total employer contributions to the Retirement Plans for the account of a
participant in any calendar year are limited to the lesser of what is specified
by the Code or by the Retirement Plans. The Code provides that annual additions
to a participant's account may not exceed the lesser of $30,000 or 25% of the
amount of the participant's annual compensation. The Retirement Plans provide
that aggregate annual additions to a participant's account may not exceed 17% of
eligible compensation as defined by the Retirement Plans. The eligible
compensation per the Code was limited to $150,000 in 1995, $150,000 in 1994, and
$228,000 in 1993. Mesa, in its discretion, may determine to make cash payments
of amounts attributable to an employee's participation in the Retirement Plans
to the extent such amounts exceed the Code limitations. As a matter of general
policy for employees of Mesa, Mesa makes annual cash payments directly to
employees to the extent that the annual additions to the account of each such
employee pursuant to the Retirement Plans would exceed the Code limitations.

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12

1991 STOCK OPTION PLAN

The 1991 Stock Option Plan (the "Option Plan") was approved by stockholders
of Mesa in 1991 and amended with the approval of stockholders in 1994. Its
purpose is to serve as an incentive to, and aid in the retention of, key
executives and other employees whose training, experience, and ability are
considered important to the operations and success of Mesa. The Option Plan is
administered by the Stock Option Committee composed of non-employee directors of
Mesa who meet the requirements of "disinterested person" in Rule 16b-3(c)(2)(i)
of the Exchange Act. Pursuant to the Option Plan, the Stock Option Committee is
given the authority to designate plan participants, to determine the terms and
provisions of options granted thereunder, and to supervise the administration of
the plan. A total of 4,000,000 shares of Common Stock are currently subject to
the plan, of which options for 3,062,950 shares have been granted. At December
31, 1995, the following stock options were outstanding:

NUMBER OF
OPTIONS
---------

Granted................................................................... 3,062,950
Exercised................................................................. (62,720)
Forfeited................................................................. (67,840)
---------
Outstanding at December 31, 1995.......................................... 2,932,390
=========

Shares of Common Stock subject to an option are awarded at an exercise
price that is equivalent to at least 100% of the fair market value of the Common
Stock on the date the option is granted. The purchase price of the shares as to
which the option is exercised is payable in full at exercise in cash or in
shares of Common Stock previously held by the optionee for more than six months,
valued at their fair market value on the date of exercise. Subject to Stock
Option Committee approval and to certain legal limitations, an optionee may pay
all or any portion of the purchase price by electing to have Mesa withhold a
number of shares of Common Stock having a fair market value equal to the
purchase price. Options granted under the Option Plan include a limited right of
relinquishment that permits an optionee, in lieu of purchasing the entire number
of shares subject to purchase thereunder and subject to consent of the Stock
Option Committee, to relinquish all or part of the unexercised portion of an
option, to the extent exercisable, for cash and/or shares of Common Stock in an
amount representing the appreciation in market value of the shares subject to
such options over the exercise price thereof. In this discretion, the Stock
Option Committee may provide for the acceleration of any unvested installments
of outstanding options. The Board of Directors may amend, alter, or discontinue
the Option Plan, subject in certain cases to stockholder approval.

The options granted and outstanding at December 31, 1995, have exercise
prices as set forth in the following table:

EXERCISE
NUMBER OF PRICE PER
OPTIONS SHARE
- --------- ---------

1,126,000................................................................... $ 6.8125
134,500.................................................................... 11.6875
101,890.................................................................... 5.8125
475,000.................................................................... 7.3750
75,000................................................................... 6.1875
1,000,000................................................................... 4.2500
20,000................................................................... 5.6875

On June 26, 1996, the Stock Option Committee accelerated the vesting of all
unvested options.

There were no options granted to the Chief Executive Officer or to the
other four most highly compensated executive officers of Mesa during 1995.

10
13

Options exercised in 1995, and the number and value of exercisable and
unexercisable options at December 31, 1995, for the Chief Executive Officer and
the other four most highly compensated executive officers of Mesa are as
follows:

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUES

YEAR ENDED NUMBER OF SHARES
DECEMBER 31, 1995 UNDERLYING VALUE OF UNEXERCISED
---------------------- UNEXERCISED IN-THE-MONEY
NUMBER OF OPTIONS/SARS AT OPTIONS/SARS AT
SHARES DECEMBER 29, 1995 DECEMBER 29, 1995
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------------------------------- -------- ----------- ------------- ----------- -------------

Boone Pickens................. -- $ -- 1,130,000 145,000 $ 0 $ 0
Paul W. Cain.................. -- -- 312,500 87,500 0 0
Dennis E. Fagerstone.......... -- -- 104,750 40,250 0 0
Stephen K. Gardner............ -- -- 74,250 60,750 0 0
Andrew J. Littlefair.......... -- -- 96,750 43,250 0 0

At December 29, 1995, the final trading day of the year, the Common Stock
closed at $3.75 per share. The exercise price of the four grants of stock
options reflected in the aggregate in the above tables are $6.8125, $7.375,
$6.1875, and $4.25, respectively, per share. Thus, no outstanding options were
in-the-money at such date.

OTHER

There were no awards made under any long-term incentive plans from January
1, 1995, through December 31, 1995; therefore, no disclosure is required in the
Long-Term Incentive Plan Awards table. From January 1, 1995, through December
31, 1995, no options or stock appreciation rights were repriced (as defined in
Item 402(i) of Regulation S-K of the Securities Act of 1933). Except as
described below under "Employee Retention Provisions," the Company does not have
any employment contracts or termination or change-in-control arrangements with
respect to a named executive officer of the Company that would require
disclosure pursuant to Item 402(h) of Regulation S-K.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Mr. Sarofim, a director and member of the Compensation and Stock Option
Committees, is Chairman of the Board, President, and owner of a majority of the
outstanding capital stock of Fayez Sarofim & Co., which acts as an investment
adviser for certain amounts invested in certain funds in the Retirement Plans.
During the year ended December 31, 1995, Fayez Sarofim & Co. received fees, paid
by the Retirement Plans, of $175,459 for such services and has been retained to
provide such services in 1996.

COMPENSATION COMMITTEE REPORT

The Company's Compensation Committee and Stock Option Committee are
composed of the two non-employee directors named below. The Compensation
Committee's decisions as to changes in annual base salaries and annual bonuses,
and the Stock Option Committee's decision as to annual stock option grants, if
any, for Mr. Pickens, Chairman and Chief Executive Officer, and for the other
executive officers of the Company are based on the subjective judgment of each
Committee as to (1) a reasonable value to the Company of the services of Mr.
Pickens and the other officers in their respective capacities and for their
respective contributions; (2) a reasonable competitive market value of the
services of Mr. Pickens and the other officers in such capacities; (3) a
reasonable relationship with the compensation levels of the chief executive and
other comparable officers of other public companies, including where possible
but not limited to those companies named in the Company's "Peer Group" discussed
under "Performance Group" below; and (4) the recommendations of senior
management as to compensation levels for all executive officers other than Mr.
Pickens. The Committee's decisions in this regard are not based on any
objective, required, or projected performance criteria for the Company or its
securities. Mr. Pickens' base salary and the 1995 salaries listed in the summary
compensation table for the four other most highly compensated executive officers
were the result of such judgment. The Committee made similar judgments based on
its assessment of accountability, efforts,

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14

and contributions of individual officers during the year and on the above-listed
criteria with respect to 1995 bonuses for Mr. Pickens and the other executive
officers (as listed in the summary compensation table), as well as stock option
grants to such persons. Messrs. Pickens and Cain were not awarded bonuses with
respect to 1995 performance, and none of the executive officers received stock
option grants during 1995.

The Internal Revenue Service regulations under Section 162(m) of the Code
deals with non-deductibility of executive compensation in excess of $1 million
dollars annually except under certain permitted circumstances that deal
generally with shareholder-approved "performance-based compensation." The
Company has complied in the past and intends to comply in the future with this
regulation.

Submitted by the Compensation Committee:

Joel L. Reed
Fayez S. Sarofim

February 1996

COMMON STOCK PURCHASE PLAN

The Company has established a Common Stock purchase program whereby
employees, except officers, can buy Common Stock through after-tax payroll
deductions. All other full-time employees of the Company and its participating
affiliates are eligible to participate. The Company pays the brokerage fees for
these open-market transactions.

INDEMNIFICATION ARRANGEMENTS

The Company's Bylaws provide for the indemnification of its executive
officers and directors, and the advancement to them of expenses in connection
with proceedings and claims, to the fullest extent permitted by the Texas
Business Corporation Act. The Company has also entered into indemnification
agreements with its executive officers and directors that contractually provide
for indemnification and expense advancement and include related provisions meant
to facilitate the indemnitees' receipt of such benefits. In addition, the
Company purchased customary directors' and officers' liability insurance
policies for its directors and officers. The Bylaws and agreements with
directors and officers also provide for indemnification for amounts (i) in
respect of the deductibles for such insurance policies, (ii) that exceed the
liability limits of such insurance policies, and (iii) that would have been
covered by prior insurance policies of the Company or its predecessors. Such
indemnification may be made even though directors and officers would not
otherwise be entitled to indemnification under other provisions of the Bylaws or
such agreements.

EMPLOYEE RETENTION PROVISIONS

On August 22, 1995, the Board of Directors adopted the MESA Inc. Change in
Control Retention/Severance Plan, as amended, (the "Retention Plan"). Pursuant
to the Retention Plan, all regular employees of the Company (other than Mr.
Pickens) will be entitled to receive certain benefits upon the occurrence of
certain involuntary termination events (as described below) following a "Change
in Control" (as defined below) of the Company. The severance benefits consist of
200% of defined pay for officers (which includes the highest salary and highest
bonus during the then-current and prior three calendar years before the
Retention Plan was adopted), 150% of defined pay for certain key employees
(which includes salary and bonus amounts) and a formula-based amount for all
other employees, plus, in each case, any other accrued or vested or earned but
deferred compensation, rights, options, or benefits otherwise owed to such
employee upon his termination. In addition, on the same date, the Board of
Directors' Stock Option Committee determined that all outstanding but unvested
stock options granted to an employee under the Company's 1991 Stock Option Plan
would immediately vest and become exercisable upon such a termination event
following a Change in Control.

The Company developed the Retention Plan in consultation with an
independent compensation consultant. That consulting firm advised the Board of
Directors that the Retention Plan is conservatively in line with common
practices. The independent firm noted, among other things, that most such plans
it surveyed provide officers with three times their defined pay, rather than
two.

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15

For purposes of the Retention Plan, a "Change in Control" means (i) any
acquisition by an individual, entity or group resulting in such person's
obtaining beneficial ownership of 35% or more of the then outstanding Common
Stock or the combined voting power of the then outstanding voting securities of
the Company entitled to vote in an election of directors, provided that the
following acquisitions shall not in and of themselves constitute a Change in
Control hereunder: (a) any acquisition of securities of the Company made
directly from the Company and approved by a majority of the directors then
comprising the members of the Board of Directors as of May 16, 1995 (the
"Incumbent Board"); (b) any acquisition of beneficial ownership of a higher
percentage of the Common Stock outstanding of the Company or the Voting
Securities of the Company that results solely from the acquisition, purchase or
redemption of securities of the Company by the Company so long as such action by
the Company was approved by a majority of the directors then comprising the
Incumbent Board; or (c) any acquisition by any corporation pursuant to a
transaction that complies with certain clauses; (ii) a change in the membership
of the Incumbent Board, together with members elected subsequent to May 16,
1995, whose election or nomination for election was approved by a majority of
the members of the Incumbent Board as then constituted (excluding for this
purpose any individual whose initial assumption of office occurred as a result
of an actual or threatened election contest, including Messrs. Batchelder,
Parkinson and Reed), cease for any reason to constitute a majority of the Board
of Directors; (iii) a reorganization, merger, consolidation or sale of all or
substantially all of the assets of the Company, subject to certain exceptions;
or (iv) approval by the stockholders of the Company of the complete liquidation
or dissolution of the Company.

Following the occurrence of a Change in Control, an eligible employee would
be entitled to receive full severance benefits if, within 24 months of the
occurrence of a Change in Control: (i) the employee was terminated by the
Company without "Cause" (as defined below); or (ii) the employee's duties,
responsibilities or rate of pay as an employee were materially and adversely
diminished in comparison to the duties, responsibilities and rate of pay enjoyed
by the employee on the effective date of the Retention Plan; or (iii) the
employee was relocated to any location in excess of 35 miles from his location
immediately prior to the Change in Control. All severance benefits with respect
to an eligible employee are payable in a lump sum within ten days after the
termination date of such employee. Under the Retention Plan, "Cause" means the
willful and continued failure of an employee to perform substantially the
employee's duties with the Company following written demand for performance or
the willful engaging by the employee in illegal conduct or gross misconduct that
is materially and demonstrably injurious to the Company.

The Recapitalization will not constitute a "Change in Control" for purposes
of the Retention Plan, because the incumbent Board of Directors has approved the
issuance of the Series B Preferred Stock to DNR and the nomination of the
persons DNR intends to elect as directors.

PERFORMANCE GRAPH

The graph below compares the Company's cumulative total stockholder return
(the change in stock price plus dividend reinvestment) to the Standard & Poor's
500 Index and an index derived from the performance of a group of independent
oil and gas producers similar to the Company (the "Peer Group"), over the last
five fiscal years. The Peer Group consists of Anadarko Petroleum Corporation,
Apache Corporation, Enron Oil & Gas Company, Louisiana Land and Exploration
Company, Maxus Energy Corporation (included only in 1991-1994 Peer Group Index
given that Maxus was acquired by YPF Sociedad Anonima on July 17, 1995), Noble
Affiliates, Inc., Oryx Energy Company, and Plains Petroleum Company (included
only in 1991-1994 Peer Group Index given that Plains Petroleum was acquired by
Barrett Resources on August 21, 1995). The Peer Group was selected from
companies of similar size or with similar assets as the Company. MESA Inc.'s
Common Stock began trading on the New York Stock Exchange on January 2, 1992,
upon completion of the Company's conversion to corporate form. Prior to that
time, the common equity securities of the Company's predecessor also traded on
such exchange. The five-year cumulative total return for the Company shown on
the graph below reflects the trading prices of such securities for the relevant
time periods and is adjusted to give effect retroactively to the one-for-five
reverse stock split effected on December 31, 1991, in connection with the
Company's conversion to corporate form.

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16

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*

MEASUREMENT PERIOD PEER GROUP
(FISCAL YEAR COVERED) MESA INC. S&P 500 INDEX INDEX

1991 46 130 84
1992 31 140 95
1993 38 155 116
1994 33 157 103
1995 25 216 131

+* Total Return assumes dividends are reinvested.

+ Assumes $100 invested on December 31, 1990, in MESA Inc., S&P 500 Index, and
the Peer Group Index.

+ The Peer Group Index return was based on Common Stock. Each company's return
is weighted according to the respective company's stock market
capitalization.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Richard E. Rainwater is the sole shareholder and President, Darla D. Moore
is the chief executive officer, and Kenneth A. Hersh is the chief investment
officer, of Rainwater Inc., the sole general partner of DNR. It is anticipated
that such persons will be elected as directors of Mesa by DNR at the First
Closing. At that time, DNR is expected to be the sole holder of Series B
Preferred Stock, which will represent approximately 32.5% of Mesa's voting stock
(on a fully diluted basis, and prior to the payment of any dividends in
additional shares of Preferred Stock). In addition, DNR may acquire up to an
additional 32.2% of Mesa's voting stock by purchasing additional shares of
Series B Preferred Stock pursuant to the Standby Commitment, depending on the
number of Rights that are exercised in the Rights Offering. As a result of its
Series B Preferred Stock ownership, DNR will have the right to elect a majority
of Mesa's directors and to receive dividends. Mesa has agreed to pay DNR (i) a
fee of $4,655,000 (constituting 3.5% of the aggregate amount of Series B
Preferred Stock to be purchased at the First Closing) at the First Closing (or
as promptly as practicable thereafter as funds are available therefor, but no
later than the Second Closing) and (ii) a fee of $4,620,000 (constituting 3.5%
of the maximum aggregate amount of Series B Preferred Stock to be purchased
pursuant to DNR's Standby Commitment) at the Second Closing, less the amount by
which DNR's reimbursable expenses are less than the initial $500,000 payment
Mesa made at the time it entered into the February 28, 1996 letter of intent
with Rainwater, Inc. In addition, the Stock Purchase Agreement provides that DNR
will receive a fee of $400,000 per year in consideration of DNR's obligations
under such agreement and to compensate DNR for the time that DNR has agreed its
representatives will devote to Mesa's affairs, including the provision of
certain investment analysis and assistance to Mesa during the course of DNR's
investment, and DNR will be reimbursed by Mesa for all fees and expenses (up to
a maximum of $50,000 for any calendar year) reasonably incurred by it in
connection with monitoring its investment in Mesa.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

SECURITY OWNERSHIP OF MANAGEMENT

The following table presents certain information as to the beneficial
ownership of Mesa's Common Stock as of June 26, 1996, by the current directors,
director nominees and officers of Mesa, individually and as a group. The
following table also indicates the number of shares of Common Stock to be
beneficially owned by such persons assuming that such persons (i) sell or
otherwise fail to exercise all of the Rights to be distributed to them in the
Rights Offering or (ii) exercise all of the Rights to be distributed to them, as
well as the percentage of the number of fully diluted shares of Common Stock to
be owned by such persons under such circumstances (assuming that there will be
181,306,646 shares of Common Stock outstanding on a fully diluted basis,
including 117,256,637 shares issuable upon conversion of shares of Series A and
Series B Preferred Stock).

SHARES OWNED AFTER THE SALE OF SERIES B
SHARES OWNED BEFORE THE PREFERRED STOCK AND THE RIGHTS OFFERING(1)
SALE OF SERIES B -----------------------------------------------------
PREFERRED STOCK AND THE
RIGHTS OFFERING NO RIGHTS EXERCISED ALL RIGHTS EXERCISED
----------------------- ------------------------- ------------------------
NUMBER(2) PERCENTAGE NUMBER PERCENTAGE NUMBER PERCENTAGE
--------- ---------- ----------- ---------- ---------- ----------

CURRENT DIRECTORS(3):
Boone Pickens(4)..........................5,206,626 8.0% 5,206,626 2.9% 8,792,269 4.8%
John S. Herrington........................ 10,000 * 10,000 * 19,120 *
Robert L. Stillwell....................... 26,500 * 26,500 * 50,668 *
Paul W. Cain.............................. 410,139 * 410,139 * 419,386 *
Wales H. Madden, Jr....................... 22,200 * 22,200 * 42,447 *
Fayez S. Sarofim..........................1,400,000 2.2% 1,400,000 * 2,676,800 1.5%
Dorn Parkinson............................ -- * -- * -- *
Joel L. Reed.............................. -- * -- * -- *

ANTICIPATED SERIES B PREFERRED STOCK
DIRECTORS:

Richard E. Rainwater(5)................... -- * 117,256,637 64.7% 58,849,557 32.5%
Darla D. Moore............................ -- * -- * -- *
Kenneth A. Hersh.......................... -- * -- * -- *
Philip B. Smith........................... -- * -- * -- *
OFFICERS:
Dennis E. Fagerstone...................... 145,000 * 145,000 * 145,000 *
Stephen K. Gardner........................ 151,229 * 151,229 * 166,030 *
Andrew J. Littlefair(6)................... 156,688 * 156,688 * 171,907 *
William D. Ballew......................... 87,103 * 87,103 * 89,021 *
Directors (Current and Future) and
Officers as a group (16 persons)........7,619,485 11.5% 124,872,122 68.1% 71,422,205 38.9%

- ---------------

* Less than 1.0%

(1) Includes shares of Common Stock issuable upon conversion of Series A and
Series B Preferred Stock, but assumes that no Rights will be issued in
respect of the option shares referred to in note (2) below.

(2) Includes shares issuable upon the exercise of options that are exercisable
within sixty days of May 30, 1996, as follows: 1,275,000 shares for Mr.
Pickens; 400,000 for Mr. Cain; 145,000 for Mr. Fagerstone; 135,000 for Mr.
Gardner; 140,000 for Mr. Littlefair; 85,000 for Mr. Ballew; and 2,180,000
for all current directors and officers as a group. No Rights will be issued
in respect of outstanding options pursuant to the Rights Offering.

(3) Messrs. Pickens, Herrington and Stillwell have been nominated by the Board
of Directors for re-election to the Board of Directors. The remaining
members of the Board of Directors have given notice of their resignation
from the Board of Directors effective on or prior to the First Closing
Date.

(4) Includes 7,545 shares of Common Stock owned by several trusts for Mr.
Pickens' children of which he is a trustee, and over which shares he has
sole voting and investment power, although he has no economic interest
therein. Excludes 2,798 shares of Common Stock owned by Mrs. Pickens as her
separate property, as to which Mr. Pickens disclaims beneficial ownership
and with respect to which he does not have or share voting or investment
power.

(5) Represents shares of Common Stock issuable upon conversion of shares of
Series B Preferred Stock to be held by DNR. Mr. Rainwater is the sole
shareholder and President of Rainwater, Inc., the sole general

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18

partner of DNR, and, as such, may be deemed to beneficially own the shares
of stock to be held by DNR. Mr. Rainwater and Ms. Moore are married to each
other but she disclaims beneficial ownership of shares owned by Mr.
Rainwater.

(6) Excludes 1,125 shares of Common Stock owned by Mrs. Littlefair as her
separate property, as to which Mr. Littlefair disclaims beneficial
ownership and with respect to which he does not have or share voting or
investment power.

CERTAIN BENEFICIAL OWNERS

The following table sets forth certain information as of June 26, 1996,
regarding each person or "group" (as that term is used in Section 13(d)(3) of
the Securities Exchange Act of 1934) known by Mesa to own beneficially more than
5% of the Common Stock. Information is based on the most recent Schedule 13D or
13G filed by such holder with the Securities and Exchange Commission (the
"Commission"), or other information provided by the holder to Mesa. The
following table also indicates the number of shares of Common Stock to be
beneficially owned by such persons assuming that such persons (i) sell or
otherwise fail to exercise all of the Rights to be distributed to them in the
Rights Offering or (ii) exercise all of the Rights to be distributed to them, as
well as the percentage of the number of fully diluted shares of Common Stock to
be owned by such persons under such circumstances (assuming that there will be
181,306,646 shares of Common Stock outstanding on a fully diluted basis,
including 117,256,637 shares issuable upon conversion of shares of Series A and
Series B Preferred Stock).

SHARES OWNED AFTER THE SALE OF SERIES B
SHARES OWNED BEFORE PREFERRED STOCK AND THE RIGHTS OFFERING(1)
THE SALE OF SERIES B --------------------------------------------------
PREFERRED STOCK AND THE
RIGHTS OFFERING NO RIGHTS EXERCISED ALL RIGHTS EXERCISED
NAME AND ADDRESS OF ----------------------- ----------------------- -----------------------
BENEFICIAL OWNER NUMBER PERCENTAGE NUMBER PERCENTAGE NUMBER PERCENTAGE
- ------------------------------------ --------- ---------- --------- ---------- --------- ----------

Boone Pickens....................... 5,206,626(2) 8.0% 5,206,626 2.9% 8,792,269 4.8%
1400 Williams Square West
5205 North O'Connor Boulevard
Irving, Texas 75039-3746
FMR Corp............................ 5,140,400(3) 8.0% 5,140,400 2.8% 9,828,445 5.4%
82 Devonshire Street
Boston, Massachusetts 02109

- ---------------

(1) Includes shares of Common Stock issuable upon conversion of Series A
Preferred Stock, but assumes that no Rights will be issued in respect of
the option shares referred to in note (2) below.

(2) See notes (2) and (4) to the table under "Security Ownership of
Management."

(3) The Schedule 13G filed with the Commission on February 14, 1996, by FMR
Corp. states that as of December 31, 1995, Fidelity Management & Research
Company ("Fidelity"), a wholly owned subsidiary of FMR Corp. and an
investment adviser registered under Section 203 of the Investment Advisers
Act of 1940, is the beneficial owner of 5,140,400 shares or 8.0% of Common
Stock as a result of acting as investment adviser to various investment
companies registered under Section 8 of the Investment Company Act of 1940.
The ownership of one investment company, Fidelity Capital Appreciation Fund
("Fund"), amounted to 5,140,400 shares or 8.0% of Common Stock outstanding.
Edward C. Johnson, III, chairman of FMR Corp., FMR Corp., through its
control of Fidelity, and the Fund each has sole power to dispose of the
5,140,400 shares owned by the Fund.

BENEFICIAL OWNERSHIP OF DNR

The following table sets forth the percentage of the number of fully
diluted shares of Common Stock to be beneficially owned by DNR upon the Second
Closing assuming certain percentages of the Rights are exercised in the Rights
Offering.

PERCENTAGE OF RIGHTS EXERCISED
-------------------------------------------------
0% 25% 50% 75% 100%
----- ----- ----- ----- -----

Percentage Ownership of DNR.......... 64.7% 56.7% 48.6% 40.6% 32.5%

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As used in this Proxy Statement, the number of "fully diluted" shares of
Common Stock includes shares issuable upon conversion of Series A and Series B
Preferred Stock, but excludes (i) shares issuable pursuant to employee stock
options because no such options have an exercise price below current market
prices of the Common Stock and (ii) unless otherwise indicated, shares issuable
as dividends on the Preferred Stock.

OTHER MATTERS

You are respectfully requested to sign, date, and return the accompanying
proxy card in the enclosed envelope at your earliest convenience, whether or not
you plan to attend the Annual Meeting in person.

If you desire a copy of the Company's Annual Report on Form 10-K, you
should send a written request to MESA Inc., Stockholder Services, 1400 Williams
Square West, 5205 North O'Connor Boulevard, Irving, Texas 75039-3746, and a copy
will be provided to you without charge.

Any stockholder desiring to have a statement of the Company's 1995
political contributions should send a written request to MESA Inc., Stockholder
Services, 1400 Williams Square West, 5205 North O'Connor Boulevard, Irving,
Texas 75039-3746.

1997 STOCKHOLDER PROPOSALS

Proposals that stockholders of the Company intend to present for inclusion
in the Company's Proxy Statement and form of proxy with respect to the 1997
Annual Meeting of Stockholders must be received by the Company at its principal
executive offices in Irving, Texas, not later than February 28, 1997. In
addition, the Bylaws generally require stockholders to give the Company 80 days
notice in advance of a meeting to present proposals (whether or not such
proposals are to be included in the Company's proxy material) or to nominate
directors, unless the meeting date is not publicly announced at least 90 days in
advance of such meeting, in which case notice must be received within 10 days
after the first public announcement of the date of such meeting.

By order of the Board of Directors

/s/ BOONE PICKENS
Boone Pickens
Chairman of the Board and
Chief Executive Officer

Irving, Texas
June 28, 1996

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PROXY PROXY

MESA INC.

PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 30, 1996

The undersigned stockholder hereby appoints Stephen K. Gardner and G. Michael
Prescott, jointly and severally, proxies, with full power of substitution, to
vote, as specified below, all shares of MESA Inc. (the "Company") that the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held at the Omni Mandalay Hotel at Las Colinas, 221 E. Las Colinas
Blvd., Irving, Texas 75039, at 10:00 a.m. on Tuesday, July 30, 1996, or any
adjournment or postponement thereof (the "Meeting"), and directs said proxies to
vote as instructed on the matters set forth below and otherwise at their
discretion. Receipt of a copy of the Notice of said Meeting and the accompanying
Proxy Statement is hereby acknowledged. This proxy revokes all prior proxies
given by the undersigned.

Please sign EXACTLY as name(s)
appears hereon, and in signing as
Attorney, Administrator, Guardian,
Trustee, or Corporate Officer, please
add your title as such.

Signature
-------------------------------------

Title
-------------------------------------

Date
-------------------------------------

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES IDENTIFIED IN PROPOSAL
1 BELOW AND FOR PROPOSAL 2.

Proposal 1. Election of Board of Directors.

/ / FOR all nominees listed below (including the use of cumulative
voting as described in the Company's Proxy Statement).

/ / WITHHOLD VOTE from all nominees.
(To withhold authority to vote for any individual nominee(s)

print the name(s) of such nominee(s) on the following line.)

- --------------------------------------------------------------------------------
NOMINEES: Boone Pickens, John S. Herrington and Robert L. Stillwell.

Proposal 2. Ratify the appointment of Arthur Andersen LLP as the
Company's independent public accountants for 1996.

/ / FOR / / AGAINST / / ABSTAIN

In their discretion the proxies are authorized to vote for the election of such
substitute nominee(s) for director(s) as such proxies shall select if any
nominee(s) named above become(s) unable to serve and upon such other business as
may properly come before the Meeting and any adjournments or postponements
thereof.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. WITH RESPECT TO THE ELECTION OF THE BOARD OF DIRECTORS (PROPOSAL 1),
WHERE NO VOTE IS SPECIFIED OR WHERE A VOTE FOR ALL NOMINEES IS MARKED, THE VOTES
REPRESENTED BY A PROXY WILL BE CAST, UNLESS CONTRARY INSTRUCTIONS ARE GIVEN, TO
ELECT THE NOMINEES NAMED ABOVE (OR, IN THE EVENT OF CUMULATIVE VOTING, AT THE
DISCRETION OF THE PROXIES NAMED HEREIN IN ORDER TO ELECT AS MANY NOMINEES AS
BELIEVED POSSIBLE UNDER THE THEN PREVAILING CIRCUMSTANCES; UNLESS INDICATED TO
THE CONTRARY, IF YOU WITHHOLD YOUR VOTE FOR A NOMINEE(S), ALL OF YOUR CUMULATIVE
VOTES WILL BE DISTRIBUTED AMONG THE REMAINING NOMINEES AT THE DISCRETION OF THE
PROXIES). WHERE NO VOTE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSAL 2.
THE INDIVIDUALS NAMED HEREIN ARE AUTHORIZED TO VOTE IN THEIR DISCRETION ON ANY
OTHER MATTERS THAT PROPERLY COME BEFORE THE MEETING. DELIVERY OF A SIGNED AND
DATED PROXY CARD TO THE INDEPENDENT COLLECTION AGENT FOR THE ANNUAL MEETING WILL
NOT CONSTITUTE THE NOTICE TO THE COMPANY REQUIRED UNDER THE TEXAS BUSINESS
CORPORATION ACT TO ALLOW CUMULATIVE VOTING IN THE ELECTION OF DIRECTORS.