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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-8094
Seagull Energy Corporation
(Exact name of registrant as specified in its charter)
Texas 74-1764876
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer Identification No.)
1001 Fannin, Suite 1700
Houston, Texas 77002-6714
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (713) 951-4700
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, par value $.10 per share New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ___
As of March 9, 1998, the aggregate market value of the outstanding shares
of Common Stock of the Company held by non-affiliates (based on the closing
price of these shares on the New York Stock Exchange) was approximately
$997,089,000.
As of March 9, 1998, 63,021,232 shares of Common Stock, par value $0.10 per
share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Document Part of Form 10-K
(1) Annual Report to Shareholders for PARTS I and II
year ended December 31, 1997
(2) Proxy Statement for Annual Meeting PART III
of Shareholders to be held on May 13, 1998
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Index
Page
Part I
Item 1. Business:
Oil and Gas Operations............................................... 1
Alaska Transmission and Distribution................................. 13
Corporate............................................................ 16
Environmental Matters................................................ 17
Employees............................................................ 19
Executive Officers of the Company.................................... 20
Item 2. Properties....................................................... 21
Item 3. Legal Proceedings................................................ 21
Item 4. Submission of Matters to a Vote of Security Holders.............. 22
Part II
Item 5. Market for Registrant's Common Stock and Related Shareholder
Matters................................................. 22
Item 6. Selected Financial Data.......................................... 23
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................... 23
Item 8. Financial Statements and Supplementary Data...................... 23
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.................................... 23
Part III
Item 10. Directors and Executive Officers of the Registrant.............. 23
Item 11. Executive Compensation.......................................... 24
Item 12. Security Ownership of Certain Beneficial Owners and Management.. 24
Item 13. Certain Relationships and Related Transactions.................. 24
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. 24
Signatures................................................................ 29
PART I
Item 1. Business
Seagull Energy Corporation (the "Company" or "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. The Company also transports, distributes and markets natural gas,
liquids products and petrochemicals. Seagull's long-range goal is to grow its
reserve base and its crude oil and natural gas production capacity. The Company
seeks a balanced approach of growing through its internal drilling efforts
complemented by strategic acquisitions of additional oil and gas assets in its
core operating areas. The Company's desire to grow more through internal
drilling has led it to broaden its exploration focus beyond the Gulf Coast
offshore area where Seagull originally concentrated its exploration efforts.
Seagull also has endeavored to bring more balance to its mix of crude oil and
natural gas assets, thereby lessening its dependence upon natural gas and
increasing (i) the percentage of crude oil represented in the Company's total
portfolio of proved reserves, (ii) its capacity to produce those reserves, and
(iii) the international orientation of its reserve base. To these ends, the
Company completed two business combinations in 1996 that reflect this shift in
strategy - the purchase of two Egyptian concessions from Exxon Corporation and
the merger of Global Natural Resources Inc.
These business combinations brought a substantial number of exploratory
prospects to the Company, complementing its large portfolio of long-lived
domestic natural gas producing properties and its large, stable cash flow base
generated from oil and gas sales and non-exploration and production activities.
These combinations have increased the Company's ability to generate growth in
both its proved reserves and its crude oil and natural gas production capacity.
For financial information relating to industry segments, see Note 13 of
Notes to Consolidated Financial Statements of Seagull Energy Corporation and
Subsidiaries (the "Consolidated Financial Statements") included in the Company's
1997 Annual Report to Shareholders and as part of Exhibit 13 attached hereto.
Items 1, 3 and 7 of this document include forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Although Seagull
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 that could cause actual results to differ materially from
those in the forward-looking statements include political developments in
foreign countries, federal and state regulatory developments, the timing and
extent of changes in commodity prices, the timing and extent of success in
discovering, developing and producing or acquiring oil and gas reserves, the
availability of skilled personnel, materials and equipment, operating hazards
attendant to the industry and conditions of the capital and equity markets
during the periods covered by the forward-looking statements.
OIL AND GAS OPERATIONS
Revenues from the Oil and Gas Operations ("O&G") segment accounted for 83%,
81% and 76% of the Company's consolidated revenues for 1997, 1996 and 1995,
respectively. Production of gas and liquids for 1997 averaged 357 MMcf per day
("Mcf/d") and 20,711 Bbl per day ("Bbl/d"), respectively, compared to 392 MMcf/d
and 13,409 Bbl/d, respectively, in 1996. Oil production in 1997 increased from
the prior year primarily as a result of increased production in Egypt. In
October 1997, the
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Company sold all of its Canadian oil and gas operations. In September 1995, the
Company sold substantially all of its gas gathering and processing assets. With
the sale of the gas gathering and processing assets, Seagull's former
Exploration and Production segment and the Pipeline and Marketing segment were
reclassified into Oil and Gas Operations.
Seagull's principal oil and gas producing areas include the following:
Proved Reserves at December 31, 1997
--------------------------------------------------------------------------------------
Gas (MMcf) (1) Oil (Mbbl) (2) MBOE (3)
-------------------------- ------------------------- -------------------------
UNITED STATES:
Arkoma Basin.................. 169,318 1 28,221
Arklatex Area................. 306,520 7,233 58,320
Mid-Continent Area............ 180,171 7,329 37,358
Offshore Gulf of Mexico....... 84,441 2,757 16,830
Gulf Coast Onshore............ 34,234 722 6,427
Other......................... 5,362 499 1,393
-------------------------- ------------------------- -------------------------
780,046 18,541 148,549
EGYPT:
East Beni Suef................ - 3,368 3,368
East Zeit..................... - 15,760 15,760
Qarun......................... 1,786 12,098 12,396
South Hurghada................ - 2,647 2,647
West Abu Gharadig............. - 1,130 1,130
-------------------------- ------------------------- -------------------------
1,786 35,003 35,301
COTE D'IVOIRE................... 24,835 1,212 5,351
TATARSTAN....................... - 16,455 16,455
INDONESIA....................... 61,324 1,074 11,294
-------------------------- ------------------------- -------------------------
867,991 72,285 216,950
========================== ========================= =========================
(1) Gas is stated in million cubic feet ("MMcf"). It may also be stated herein
in billion cubic feet ("Bcf"), or thousand cubic feet ("Mcf").
(2) Oil,condensate and natural gas liquids ("NGL") are stated in thousands of
barrels ("Mbbl"). It may also be stated herein in barrels ("Bbl"). As used
in this Annual Report on Form 10-K, liquids means oil, condensate and
natural gas liquids, unless otherwise indicated or the context otherwise
suggests.
(3) MBOE and BOE represent one thousand barrels of oil equivalent and one
barrel of oil equivalent, respectively, with six Mcf of gas converted to
one barrel of liquid.
For additional information relating to the Company's oil and gas reserves,
based substantially upon reports of DeGolyer and MacNaughton, Netherland, Sewell
& Associates, Inc. and Ryder Scott Company, independent petroleum engineers
(collectively the "Engineers"), see Note 15 of Notes to Consolidated Financial
Statements included in the Company's 1997 Annual Report to Shareholders and as
part of Exhibit 13 attached hereto. All information in Note 15 not provided by
the Engineers was supplied by the Company. The Company's reserve estimates in
Indonesia have been obtained from a public source which, although not
independently verified, the Company believes to be reliable. As required,
Seagull also files estimates of oil and gas reserve data with various
governmental regulatory authorities and agencies. These estimates were not
materially different from the reserve estimates reported in the Consolidated
Financial Statements.
The future results of the O&G segment will be affected by the market prices
of oil and natural gas and the Company's exploration and exploitation success.
The availability of a ready market for oil, natural gas and liquids products in
the future will depend on numerous factors beyond the control of the Company,
including weather, the Company's ability to hire and retain skilled personnel,
production of other crude oil, natural gas and liquids products, imports,
marketing of competitive fuels, proximity and capacity of oil, gas and liquids
pipelines and other transportation facilities, demand for storage refills,
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any oversupply or undersupply of gas and liquids products, operating hazards
attendant to the oil and gas business, the availability and cost of material and
equipment, the regulatory environment and other regional, international and
political events, none of which can be predicted with certainty.
United States
In excess of 65% of the Company's proved oil and gas reserves and annual
production are contributed by properties in the United States. These domestic
properties are generally located in three geographic areas -- the Mid-South,
Mid-Continent and Gulf Coast regions. The Company's capital program for 1998 is
designed to maintain domestic reserves and deliverability at approximately
year-end 1997 levels. In addition, Seagull will continue to pursue strategic
acquisitions to increase its domestic reserves and deliverability. Capital
expenditures, excluding any acquisitions, for the Company's domestic activities
are expected to be approximately $151 million for 1998, including $47 million
for exploration, $83 million for development and $21 million for leasehold.
Mid-South -- The CompanY's Mid-South properties are situated generally in
the Arkoma Basin of eastern Oklahoma and western Arkansas and the Arklatex area
of east Texas and northwest Louisiana. The Company's interests in Mid-South
provide production from long-lived assets where ongoing activities are devoted
principally to exploitation. These development activities in 1997 were
particularly successful in the Arkoma Basin of western Arkansas with the
completion of 13 successful development wells. The Company's 3-D seismic survey
in this area was one of the earliest 3-D applications to be attempted in this
relatively mature part of the Arkoma Basin. It has been successful in
identifying untested reservoirs and new pay intervals. Capital expenditures in
the Mid-South region for 1998 are expected to be near 1997's $51 million and
will continue to focus on 3-D seismic surveys and development activities.
Mid-Continent -- The Company's Mid-Continent properties are situated
generally in the Anadarko Basin of the Texas Panhandle and western Oklahoma. The
Mid-Continent region also provides production from long-lived assets where
ongoing activities are devoted principally to exploitation. Capital expenditures
in this region during 1997, which totaled $19 million, were devoted primarily to
development activities. Plans for 1998 call for a somewhat lower level of
capital spending but it will again be focused on developing existing reserves
through drilling and 3-D seismic surveys.
Gulf Coast -- The Company's Gulf Coast properties are located onshore in
south Texas and south Louisiana and offshore in the Gulf of Mexico off the
coasts of the same two states. Both exploration and exploitation activities are
conducted in this region. In 1997, the Company purchased its first interests in
the Deep Water Gulf of Mexico play where the Company plans to be an active
participant in the future. Seagull also completed two successful exploratory
wells in the Frio/Wilcox play in a tertiary trend in onshore Texas. These two
exploratory wells confirmed the Lower Wilcox can be highly productive. The
second well, the Zeidman Trust #2, tested nearly 22 MMcf/d of natural gas with
very strong pressures from the bottom third of a 1,500-foot Lower Wilcox
interval.
The Company has been evaluating the Zeidman Trust #2 since its completion,
observing flow rates and pressures and dealing with mechanical problems while
formulating plans for further drilling in 1998. The Company has a 45% interest
in some 16,000 acres in the immediate vicinity of the discovery.
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During 1997, Seagull's capital expenditures totaled some $71 million in the
Gulf Coast region, primarily for exploratory wells but also for development
drilling and the acquisition of offshore leases. Plans for 1998 will continue
this focus on exploratory drilling but once again will have some development
drilling and acquisition of offshore leases.
Egypt
The Company's Egyptian operations consist of working interests in six
concessions -- Qarun, East Beni Suef, East Zeit, South Hurghada, West Abu
Gharadig and Darag. The interest in West Abu Gharadig was purchased in 1997
while the East Zeit and South Hurghada interests were purchased in 1996. The
Company's interests in Qarun, East Beni Suef and Darag were acquired in the
Global merger. With 1997 production of 3,383 MBOE, the Company's Egyptian assets
contributed approximately 12% of total production. Capital expenditures for 1997
were approximately $83 million in Egypt and are expected to be $94 million in
1998.
Each concession is governed by a concession agreement (collectively, the
"Egyptian Concession Agreements") between the working interest partners and the
Egyptian national oil company ("EGPC"). Under the Egyptian Concession
Agreements, the working interest partners pay 100% of capital and operating
costs and production is split between EGPC and the working interest partners.
Working interest partners recover costs from a percentage, ranging from 25% to
40% depending upon the concession, of the oil and gas produced and sold from the
applicable concession ("Cost Recovery Petroleum"). Cost Recovery Petroleum forms
a single unified pool for the entire concession from which costs of all fields,
zones, products and types may be recovered without differentiation, except that
operating costs are recovered prior to the recovery of any capital costs.
Capital costs (which include exploration, development and other equipment and
facilities costs) are amortized for recovery over four to five years while
operating expenses are recoverable on a current basis. To the extent that the
costs eligible for recovery in any quarter exceed the amount of Cost Recovery
Petroleum produced and sold in that quarter, such costs are recoverable from
Cost Recovery Petroleum in future quarters with no limit on the ability to carry
forward such costs.
The remaining oil and gas produced and sold is divided between EGPC and the
working interest partners. Depending on the concession and varying with
production levels, the working interest partners receive 12% to 30% of the
remaining oil and up to 29% of the remaining gas. Included in EGPC's share of
this remaining oil or gas are all Egyptian government royalties as well as the
applicable Egyptian income taxes of the working interest partners.
Qarun -- The Company has a 25% non-operated working interest in the Qarun
Concession Agreement. The concession covers approximately 1.9 million gross
acres located 45 miles southwest of Cairo, Egypt. Initial oil production, via
trucking, began in late 1995 while conventional production facilities became
fully operational in 1997. With the completion of these production facilities,
Qarun became one of the Company's largest producing concessions. While 1998
capital expenditures are expected to decrease significantly from 1997's $35
million due to the completion of the production facilities, the expenditures
will continue to be split between additional exploratory wells, seismic work and
development activities.
East Beni Suef -- Seagull, as the operator, has a 50% working interest in
the East Beni Suef Concession Agreement. The concession covers approximately 6.8
million gross acres lying adjacent and
-4-
to the south of the Qarun concession. Thefirst exploratory well was successfully
completed in late 1997 and the Company expects to begin trucking production in
the first half of 1998.
East Zeit -- The Company, as the operator, has a 100% working interest in
the East Zeit concession which is located offshore in the Gulf of Suez. The
Company acquired its interest primarily as a producing concession and it
continues to be one of the largest producing concessions among the Company's
Egyptian interests. With this emphasis on production, capital expenditures of
approximately $27 million in 1997 were concentrated in development wells and
activities and capital expenditures are expected to be in this same range for
1998.
South Hurghada -- Seagull, as the operator, has a 100% working interest in
the 61,000-acre concession, located onshore on the coast of the Gulf of Suez
approximately 250 miles south of Cairo. After the completion of two successful
exploratory wells in mid-1997, oil production was trucked to the nearby East
Zeit production terminal. While the 1997 capital expenditures of $10 million
were concentrated on exploratory drilling, expected 1998 capital expenditures of
about this same amount will reflect the beginning of development activities.
West Abu Gharadig -- In October 1997, the Company purchased a 30%
non-operating working interest in the West Abu Gharadig concession, covering 3.5
million gross acres in upper Egypt. While three exploratory wells were producing
by year-end, the Company has identified more than 10 exploratory leads. Seagull
expects exploratory drilling will continue in this concession in 1998 or 1999.
Darag -- The Company has a 50%, non-operated working interest in the Darag
block, which is located in the northern portion of the Gulf of Suez, and covers
460,000 gross acres. Future plans for this concession are uncertain as the
working interest owners and EGPC have been unable to secure the necessary
drilling permits from marine authorities. At the end of 1997, Seagull had
approximately $5 million in capitalized costs associated with this concession.
The working interest owners and EGPC are discussing ways for the working
interest owners to recover the costs associated with the Darag concession,
however, there can be no guarantee that these discussions will be successful in
recovering the costs of the working interest owners.
Cote d'Ivoire
Seagull's operations in Cote d'Ivoire, West Africa consist of working
interests in three blocks- CI-11, CI-12 and CI-104. The CI-11 concession, where
the Company has a nearly 13% unitized working interest, extends from the western
coast to approximately eight miles offshore Cote d'Ivoire. The Company has an
almost 17% working interest in CI-12, which lies adjacent to and west of block
CI-11, and a 100% working interest in block CI-104, which lies adjacent to and
west of block CI-12.
Each block is subject to a production sharing contract whereby the working
interest partners pay 100% of capital and operating costs, and production is
split between the Ivorian government and the working interest partners. Working
interest partners recover costs from a percentage, ranging from 40% to 75%
depending upon the concession, of produced and sold petroleum. The remaining oil
and gas produced and sold, and any portion of cost recovery not used to recover
costs, is divided between the Ivorian government and the working interest
partners. Included in the Ivorian government's share of remaining petroleum are
all Ivorian government royalties as well as the applicable Ivorian income taxes
for the working interest partners.
-5-
Tatarstan
Through its 90% owned subsidiary, Texneft, the Company has a net 45%
interest in a joint venture in Tatarstan, a republic in the Russian Federation
located west of the Ural Mountains and east of the Volga River. The joint
venture is with Tatneft, a Russian closed joint stock company. The joint
venture, Tatex, operates various oil fields in Tatarstan. Under the terms of the
joint venture and various supplemental agreements, the funding for the joint
venture is supplied by Texneft and Tatneft through various credit agreements.
The joint venture's activities currently include three projects: (i) vapor
recovery, (ii) the development and operation of the Onbysk field, near the city
of Almetyevsk, and (iii) the upcoming development and operation of the Demkinsky
field, located 110 kilometers southwest of Almetyevsk. Texneft's share of
capital spending for 1998 is approximately $8 million, primarily for development
drilling and facilities.
Indonesia
Seagull has a 1.7% interest in the Indonesia Joint Venture ("IJV") for the
exploration, development and production of oil and gas in East Kalimantan,
Indonesia, under a production sharing contract with the state petroleum
enterprise of Indonesia ("Pertamina"). The majority of the revenue derived from
the IJV results from the sale of liquefied natural gas ("LNG"). Under the terms
of the PSC with Pertamina, the IJV is authorized to explore for, develop and
produce petroleum reserves in an approximately 1.1 million acre area in East
Kalimantan.
The IJV participants are entitled to recover cumulative operating and
certain capital costs out of the oil and gas produced each year, and to receive
a share of the remaining oil production and a share of the remaining revenues
from the sale of gas on an after Indonesian tax basis.
Oil and Gas Drilling Activities
Seagull's oil and gas exploratory and developmental drilling activities are
as follows for the periods indicated. A well is considered productive for
purposes of the following table if it justifies the installation of permanent
equipment for the production of oil or gas. The term "gross wells" means the
total number of wells in which Seagull owns an interest, while the term "net
wells" means the sum of the fractional working interests Seagull owns in gross
wells. The information should not be considered indicative of future
performance, nor should it be assumed that there is necessarily any correlation
between the number of productive wells drilled, quantities of reserves found or
economic value.
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Year Ended December 31,
------------------------------------------------------------------------------------
1997 1996 1995
---------------------- ---------------------- -----------------------
Gross Net Gross Net Gross Net
--------- --------- -------- --------- ---------- ---------
UNITED STATES:
Exploratory Drilling:
Productive Wells................. 18 9.5 14 6.2 9 5.7
Dry Holes........................ 12 4.2 15 6.6 14 7.5
Development Drilling:
Productive Wells................. 142 73.9 123 54.2 64 29.0
Dry Holes........................ 12 6.3 13 8.2 4 1.1
CANADA: (*)
Exploratory Drilling:
Productive Wells................. 3 1.7 5 0.8 3 1.0
Dry Holes........................ 1 1.0 2 2.0 3 3.0
Development Drilling:
Productive Wells................. 57 28.9 17 8.6 7 1.9
Dry Holes........................ 1 0.3 2 1.5 1 0.5
EGYPT:
Exploratory Drilling:
Productive Wells................. 4 2.8 2 0.5 2 0.5
Dry Holes........................ 11 3.0 5 1.3 1 0.3
Development Drilling:
Productive Wells................. 14 3.5 14 3.5 4 1.0
Dry Holes........................ - - - - 1 0.3
COTE D'IVOIRE:
Exploratory Drilling:
Productive Wells................. 1 0.1 2 0.3 - -
Dry Holes........................ 2 0.3 1 0.1 - -
Development Drilling:
Productive Wells................. 3 0.4 1 0.1 4 0.6
Dry Holes........................ - - - - - -
TATARSTAN:
Exploratory Drilling:
Productive Wells................. 1 0.5 - - 1 0.5
Dry Holes........................ - - - - - -
Development Drilling:
Productive Wells................. 21 10.5 20 10.0 17 8.5
Dry Holes........................ - - - - - -
OTHER INTERNATIONAL:
Exploratory Drilling:
Productive Wells................. - - - - - -
Dry Holes........................ 1 0.2 - - 2 0.4
TOTAL:
Exploratory Drilling:
Productive Wells................. 27 14.6 23 7.8 14 7.2
Dry Holes........................ 27 8.7 23 10.0 21 11.7
Development Drilling:
Productive Wells................. 237 117.2 175 76.4 96 41.0
Dry Holes........................ 13 6.6 15 9.7 6 1.9
(*) All of the Company's Canadian oil and gas operations were sold in October
1997.
The Company had 14 gross (4.3 net) exploratory wells and 12 gross (5.5 net)
development wells in progress at December 31, 1997. Wells classified as "in
progress" at year-end represent wells where drilling activity is ongoing, wells
awaiting installation of permanent equipment and wells awaiting the drilling of
additional delineation wells.
-7-
Production
The following table summarizes the Company's production, average sales
prices and operating costs for the periods indicated:
Year Ended December 31,
------------------------------------------------------------
1997 1996 1995
---------------- ----------------- --------------
UNITED STATES:
Net Production:
Gas (MMcf)................................................ 110,595 116,238 113,482
Oil, condensate and NGL (Mbbl)............................ 1,763 1,561 1,403
Average sales price: (1)
Gas (per Mcf)............................................. $ 2.34 $ 2.17 $ 1.62
Oil, condensate and NGL (per Bbl)......................... $ 17.60 $ 19.03 $ 15.84
Average operating costs (per BOE) (2)....................... $ 3.75 $ 3.27 $ 3.04
CANADA:(3)
Net Production:
Gas (MMcf)................................................ 13,510 21,203 22,057
Oil, condensate and NGL (Mbbl)............................ 243 361 399
Average sales price: (1)
Gas (per Mcf)............................................. $ 1.63 $ 1.32 $ 1.07
Oil, condensate and NGL (per Bbl)......................... $ 16.46 $ 16.77 $ 13.01
Average operating costs (per BOE) (2)....................... $ 3.42 $ 3.57 $ 3.17
EGYPT:
Net Oil Production (Mbbl)................................... 3,383 1,305 25
Average Oil Sales Price (per Bbl) (1)....................... $ 18.26 $ 21.56 $ 17.97
Average operating costs (per BOE) (2)....................... $ 3.46 $ 4.45 $ 2.24
COTE D'IVOIRE:
Net Production:
Gas (MMcf)................................................ 2,245 1,445 203
Oil (Mbbl)................................................ 603 511 261
Average sales price: (1)
Gas (per Mcf)............................................. $ 1.93 $ 1.77 $ 1.61
Oil (per Bbl)............................................. $ 19.34 $ 20.04 $ 15.51
Average operating costs (per BOE) (2)....................... $ 3.95 $ 3.56 $ 4.75
TATARSTAN:
Net Oil Production (Mbbl)................................... 1,512 1,117 1,062
Average Oil Sales Price (per Bbl) (1)....................... $ 14.26 $ 13.98 $ 15.11
Average operating costs (per BOE) (2)....................... $ 9.25 $ 10.17 $ 8.35
INDONESIA AND OTHER:
Net Production:
Gas (MMcf)................................................ 3,965 4,429 3,933
Oil (Mbbl)................................................ 56 51 45
Average sales price: (1)
Gas (per Mcf)............................................. $ 3.18 $ 3.36 $ 2.96
Oil (per Bbl)............................................. $ 19.31 $ 19.58 $ 17.38
Average operating costs (per BOE ) (2)...................... - - -
(1) Average sales prices are before deduction of production, severance, and
other taxes.
(2) Operating costs represent costs incurred to operate and maintain wells and
related equipment and facilities. These costs include, among other things,
repairs and maintenance, workover expenses, labor, materials, supplies,
property taxes, insurance, severance taxes, transportation costs and
general operating expenses.
(3) All of the Company's Canadian oil and gas operations were sold in October
1997.
-8-
The following table sets forth information regarding the number of
productive wells in which the Company held a working interest at December 31,
1997. Productive wells are either producing wells or wells capable of commercial
production although currently shut-in. One or more completions in the same
borehole are counted as one well.
Gross Wells Net Wells
----------------------------------------------- ----------------------------------------------------
Multiple Multiple
Gas Oil Total Completions Gas Oil Total Completions
--------- --------- --------- -------------- ---------- -------- ---------- ---------------
United States.... 2,641 1,713 4,354 264 1,074.5 185.4 1,259.9 144.0
Egypt............ - 52 52 11 - 24.4 24.4 2.8
Cote d'Ivoire.... 2 11 13 2 0.3 1.4 1.7 0.3
Tatarstan........ - 196 196 57 - 98.0 98.0 28.5
--------- --------- --------- -------------- ---------- -------- ---------- ---------------
2,643 1,972 4,615 334 1,074.8 309.2 1,384.0 175.6
========= ========= ========= ============== ========== ======== ========== ===============
Developed and Undeveloped Oil and Gas Acreage
As of December 31, 1997, the Company owned working interests in the
following developed and undeveloped oil and gas acreage:
Developed Undeveloped
--------------------------------------- --------------------------------------
Gross Net (*) Gross Net (*)
---------------- --------------- --------------- --------------
UNITED STATES:
Onshore:
Oklahoma..................... 278,753 130,038 25,215 12,735
Texas........................ 208,133 101,987 111,748 33,851
Arkansas..................... 210,071 71,225 12,645 8,177
Louisiana.................... 44,663 21,905 5,765 2,809
Montana...................... 1,175 228 161,306 147,928
Other........................ 28,397 9,882 57,291 27,686
Bays and State Waters.......... 2,609 722 9,618 6,402
Federal Offshore:
Texas........................ 156,379 64,071 309,402 214,020
Louisiana.................... 59,675 28,991 250,426 139,919
EGYPT:
Darag.......................... - - 459,606 229,803
East Beni Suef................. - - 6,819,960 3,409,980
East Zeit...................... 6,672 6,672 - -
Qarun.......................... 407,213 101,803 1,080,130 270,033
South Hurghada................. 26,934 26,934 34,627 34,627
West Abu Gharadig.............. 15,419 4,626 4,725,615 1,417,684
COTE D'IVOIRE:
CI-11.......................... 11,860 1,537 180,329 23,443
CI-12.......................... - - 393,634 65,618
CI-104......................... - - 250,300 250,300
TATARSTAN........................ 12,630 6,315 12,107 6,053
INDONESIA........................ 97,000 1,663 1,156,780 19,827
OTHER INTERNATIONAL.............. - - 2,790,298 395,615
---------------- --------------- --------------- --------------
1,567,583 578,599 18,846,802 6,716,510
================ =============== =============== ==============
(*) When describing acreage on drilling locations, the term "net" refers to the
total acres on drilling locations in which the Company has a working
interest, multiplied by the percentage working interest owned by the
Company.
Additionally, as of December 31, 1997, the Company owned mineral and/or
royalty interests in 591,032 gross (41,334 net) developed and 2,846,585
gross (105,751 net) undeveloped oil and gas acres, located primarily in the
United States.
-9-
For additional information relating to oil and gas producing activities,
see Note 15 of Notes to the Consolidated Financial Statements included in the
Company's 1997 Annual Report to Shareholders and as part of Exhibit 13 attached
hereto.
Regulation
The availability of a ready market for oil and natural gas production
depends upon numerous regulatory factors beyond the Company's control. These
factors include regulation of oil and natural gas production, federal and state
regulations governing environmental quality and pollution control and state
limits on allowable rates of production by a well or proration unit. State and
federal regulations generally are intended to prevent waste of oil and natural
gas, protect rights to produce oil and natural gas between owners in a common
reservoir, control the amount of oil and natural gas produced by assigning
allowable rates of production and control contamination of the environment.
Regulation of Oil and Natural Gas Exploration and Production. Exploration
and production operations of the Company are subject to various types of
regulation at the federal, state and local levels. Such regulation includes
requiring permits for the drilling of wells, maintaining bonding requirements in
order to drill or operate wells, and regulating the location of wells, the
method of drilling and casing wells, the surface use and restoration of
properties upon which wells are drilling and the plugging and abandonment of
wells. The Company's operations are also subject to various conservation laws
and regulations. These include the regulation of the size of drilling and
spacing units or proration units and the density of wells which may be drilled
and unitization or pooling of oil and gas properties. In this regard, some
states allow the forced pooling or integration of tracts to facilitate
exploration while other states rely on voluntary pooling of lands and leases. In
addition, state conservation laws establish maximum rates of production
requirements regarding the ratability of production.
Natural Gas Marketing and Transportation. Although maximum selling prices
of natural gas were formerly regulated, the Natural Gas Wellhead Decontrol Act
of 1989 ("Decontrol Act") terminated wellhead price controls on all domestic
natural gas on January 1, 1993, and amended the Natural Gas Policy Act of 1978
to remove completely by January 1, 1993 price and nonprice controls for all
"first sales" of natural gas, which will include all sales by the Company of its
own production. Consequently, sales of the Company's natural gas currently may
be made at market prices, subject to applicable contract provisions. The
jurisdiction of the Federal Energy Regulatory Commission (the "FERC") over
natural gas transportation was unaffected by the Decontrol Act.
The FERC regulates interstate natural gas transportation rates and service
conditions, which affect the marketing of natural gas produced by the Company,
as well as the revenues received by the Company for sales of such natural gas.
Since the latter part of 1985, the FERC has endeavored to make interstate
natural gas transportation more accessible to gas buyers and sellers on an open
and nondiscriminatory basis. The FERC's efforts have significantly altered the
marketing and pricing of natural gas. Commencing in April 1992, the FERC issued
Order Nos. 636, 636-A and 636-B (collectively, "Order No. 636"), which, among
other things, require interstate pipelines to "restructure" to provide
transportation separate or "unbundled" from the pipelines' sales of gas. Also,
Order No. 636 requires pipelines to provide open-access transportation on a
basis that is equal for all gas supplies.
-10-
Additional proposals and proceedings that might affect the natural gas
industry are considered from time to time by Congress, the FERC, state
regulatory bodies and the courts. The Company cannot predict when or if any such
proposals might become effective, or their effect, if any, on the Company's
operations. The natural gas industry historically has been very heavily
regulated; therefore, there is no assurance that the less stringent regulatory
approach recently pursued by the FERC and Congress will continue indefinitely
into the future. State regulation of gathering facilities generally includes
various transportation, safety, environmental, and nondiscriminatory purchase
and transport requirements, but does not generally entail rate regulation.
Offshore Leasing. Certain operations the Company conducts are on federal
oil and gas leases, which the Mineral Management Service ("MMS") administers.
The MMS issues such leases through competitive bidding. These leases contain
relatively standardized terms and require compliance with detailed MMS
regulations and orders pursuant to the Outer Continental Shelf Lands Act
("OCSLA") (which are subject to change by the MMS). For offshore operations,
lessees must obtain MMS approval for exploration plans and development and
production plans prior to the commencement of such operations. In addition to
permits required from other agencies (such as the Coast Guard, the Army Corps of
Engineers and the Environmental Protection Agency), lessees must obtain a permit
from the MMS prior to the commencement of drilling. The MMS has promulgated
regulations requiring offshore production facilities located on the Outer
Continental Shelf ("OCS") to meet stringent engineering and construction
specifications, and has recently proposed additional safety-related regulations
concerning the design and operating procedures for OCS production platforms and
pipelines. The MMS also has issued regulations to prohibit the flaring of liquid
hydrocarbons and oil without prior authorization. Similarly, the MMS has
promulgated other regulations governing the plugging and abandonment of wells
located offshore and the removal of all production facilities. To cover the
various obligations of lessees on the OCS, the MMS generally requires that
lessees post substantial bonds or other acceptable assurances that such
obligations will be met.
The MMS recently adopted a rule detailing the kinds of natural gas
marketing and transportation services that should be considered part of a
producer's duty to market. The rule, which is currently under appeal, may
prevent producers from deducting from royalties the full cost of transporting
and marketing natural gas to the marketplace. The Company cannot predict how it
might be affected by this rule, or the disposition of such rule on appeal.
In addition, the MMS is conducting an inquiry into certain contract
settlement agreements from which producers on MMS leases have received
settlement proceeds that are royalty bearing and the extent to which producers
have paid the appropriate royalties on those proceeds. The restructuring of oil
and gas markets has resulted in a shifting of markets downstream from the wells.
Deregulation has altered the marketplace such that lessors, including the MMS,
are challenging the methods of valuation of gas for royalty purposes.
The MMS has issued a notice of proposed rulemaking in which it proposes to
amend its regulations governing the calculation of royalties and the valuation
of oil and natural gas produced from federal leases. The principal feature in
the amendments, as proposed, would establish an alternative market-index based
method to calculate royalties on certain natural gas production sold to
affiliates or pursuant to non-arms'-length sales contracts. The MMS has proposed
this rulemaking to facilitate royalty valuation in light of changes in the gas
marketing environment. The Company cannot predict what action the MMS will take
on these matters, nor can it predict at this stage of the rulemaking proceedings
how the Company might be affected by amendments to the regulations.
-11-
Pipeline, Marketing and Other
The Company's O&G segment also includes pipeline and marketing operations
involving (i) the transportation and marketing of Seagull's own and third-party
gas, oil and natural gas liquids; (ii) gas gathering and processing; and (iii)
pipeline engineering, design, construction and operation.
The Company actively provides marketing services geared toward matching gas
supplies available in the major producing areas with attractive markets
available in the Midwest, Northeast, Mid-Atlantic, Appalachian and
Texas/Louisiana Gulf Coast areas. The matching process includes arranging
transportation on a network of open-access pipelines on a firm or interruptible
basis. Seagull contracts to provide oil and natural gas to various customers and
aggregates supplies from various sources including third-party producers,
marketing companies, pipelines, financial institutions and the Company's own
production. Marketing profit margins are often small due to competition, and
results can vary significantly from period to period. Large amounts of working
capital are involved for relatively small net margins, which makes working
capital management critical. The Company has policies and procedures in place
that are designed to minimize any potential risk of loss from these
transactions. These policies and procedures are reviewed and updated
periodically by the Company's management.
Most of the Company's natural gas is transported through gas gathering
systems and gas pipelines which are not owned by the Company. Transportation
space on such gathering systems and pipelines is occasionally limited and at
times unavailable due to repairs or improvements being made to such facilities
or due to such space being utilized by other gas shippers with priority
transportation agreements. While the Company has not experienced any inability
to market its natural gas, if transportation space is restricted or is
unavailable, the Company's cash flow from the affected properties could be
adversely affected.
In late 1995, Seagull initiated a risk management program for a portion of
its own E&P production and third-party activities, utilizing such derivative
financial instruments as futures contracts, options and swaps. In early 1997,
the Company closed substantially all of its derivative financial instruments
related to equity production and focused its risk management efforts on reducing
price and basis risk for its third-party marketing activities. Seagull accounts
for its commodity derivative contracts as hedging activities and, accordingly,
the effect is included in revenues when the commodities are produced. See Note 2
of Notes to the Company's Consolidated Financial Statements and Oil and Gas
Operations in Management's Discussion and Analysis of Financial Condition and
Results of Operations, both of which are included in the Company's 1997 Annual
Report to Shareholders and as part of Exhibit 13 attached hereto.
Pipeline Operations and Construction -- Seagull operates certain pipelines
owned by other companies. In some cases the operating agreements provide for
reimbursement of expenses incurred in connection with operations plus a profit
margin. In other cases the Company receives a negotiated annual fee. The Company
also builds pipelines for other companies for which it receives construction
fees that are fixed, cost-plus or a combination of both. The Company currently
has one ongoing construction project for an existing customer and plans to
continue its pursuit of additional operating and construction opportunities.
-12-
Competition
The Company's competitors in oil and gas exploration, development,
production and marketing include major oil companies, as well as numerous
independent oil and gas companies, individuals and drilling programs. Some of
these competitors have financial and personnel resources substantially in excess
of those available to the Company and, therefore, the Company may be placed at a
competitive disadvantage. The Company's success in discovering reserves will
depend on its ability to select suitable prospects for future exploration in
today's competitive environment.
The Company's gas marketing activities are in competition with numerous
other companies offering the same services. Some of these competitors are
affiliates of companies with extensive pipeline systems that are used for
transportation from producers to end-users. The Company believes its ability to
compete depends upon building strong relationships with producers and end-users
by consistently purchasing and supplying gas at competitive prices.
The Company actively competes with numerous other companies for the
construction and operation of short and medium length pipelines. The Company's
competitors include oil companies, other pipeline companies, natural gas
gatherers and petrochemical transporters, many of which have financial
resources, staffs and facilities substantially larger than those of the Company.
In addition, many of the Company's gas purchasers are also competitors or
potential competitors in the sense that they have extensive pipeline-building
capabilities and experience and generally operate large pipeline systems of
their own. Seagull believes that its ability to compete will depend primarily on
its ability to complete pipeline projects quickly and cost effectively, and to
operate pipelines efficiently.
International Operations
Seagull's interests in countries outside the United States are subject to
the various risks inherent in foreign operations. These risks may include, among
other things, currency restrictions and exchange rate fluctuations, loss of
revenue, property and equipment as a result of expropriation, nationalization,
war, insurrection and other political risks, risks of increases in taxes and
governmental royalties, renegotiation of contracts with governmental entities,
changes in laws and policies governing operations of foreign-based companies,
restrictions on drilling permits (such as those facing the Darag concession) and
other uncertainties arising out of foreign government sovereignty over the
Company's international operations. The Company's international operations may
also be adversely affected by laws and policies of the United States affecting
foreign trade, taxation and investment. In addition, in the event of a dispute
arising from foreign operations, the Company may be subject to the exclusive
jurisdiction of foreign courts or may not be successful in subjecting foreign
persons to the jurisdiction of the courts of the United States. The Company
seeks to manage these risks by among other things, concentrating its
international exploration efforts in areas where the Company believes that the
existing government is stable and favorably disposed towards United States
exploration and production companies.
ALASKA TRANSMISSION AND DISTRIBUTION
The Company operates in Alaska as a single business unit, ENSTAR Alaska,
which is regulated by the Alaska Public Utilities Commission (the "APUC").
ENSTAR Alaska engages in the intrastate transmission of natural gas in
South-Central Alaska and the distribution of natural gas in Anchorage and
-13-
other nearby communities in Alaska. Revenues from ENSTAR Alaska accounted for
17%, 19% and 24% of the Company's consolidated revenues for 1997, 1996 and 1995,
respectively.
Gas Transmission System
ENSTAR Alaska owns and operates the only natural gas transmission lines in
its service area that are operated for utility purposes. The pipeline
transmission system is composed of approximately 277 miles of 12 to 20-inch
diameter pipeline and approximately 74 miles of smaller diameter pipeline. The
system's present design delivery capacity is approximately 410 MMcf/d. The
average throughput of the system in 1997, 1996 and 1995 was 124, 131 and 122
MMcf/d, respectively.
Gas Distribution System
ENSTAR Alaska distributes natural gas through approximately 2,114 miles of
gas mains to approximately 96,800 residential, commercial, industrial and
electric power generation customers within the cities and environs of Anchorage,
Eagle River, Palmer, Wasilla, Girdwood, Whittier, Soldotna, Kenai and the
Nikiski area of the Kenai Peninsula, Alaska. During the year ended December 31,
1997, ENSTAR Alaska added approximately 63 miles of new gas distribution mains,
installed 2,500 new service lines and added approximately 2,700 net customers.
ENSTAR Alaska anticipates relatively modest growth in its residential customer
base and will install additional main and service lines to accommodate this
growth.
ENSTAR Alaska distributes gas to its customers under tariffs and contracts
which provide for varying delivery priorities. ENSTAR Alaska's business is
seasonal with approximately 65-70% of its revenues earned in the first and
fourth quarters of each year.
In 1997, purchase/resale volumes represented 51% of ENSTAR Alaska's
throughput and 78% of ENSTAR Alaska's operating margin. The remaining volumes
are transported for power, industrial and large commercial customers for a
transportation fee. Under tariffs approved by the APUC, ENSTAR Alaska's
transportation fees approximate ENSTAR Alaska's purchase/resale margin.
Gas Supply
ENSTAR Alaska has an APUC-approved gas purchase contract (the "Marathon
Contract") with Marathon Oil Company ("Marathon") that is a "requirements"
contract with no specified daily deliverability or annual take-or-pay
quantities. ENSTAR Alaska has agreed to purchase and Marathon has agreed to
deliver all of ENSTAR Alaska's gas requirements in excess of those provided for
in other presently existing gas supply contracts, subject to certain exceptions,
until the commitment has been exhausted and without limit as to time; however,
Marathon's delivery obligations are subject to certain specified annual
limitations after 2001. The contract has a base price, subject to annual
adjustment based on changes in the price of certain traded oil futures
contracts, of $1.55 per Mcf plus reimbursements for any severance taxes and
other charges. During 1997, the cost of gas purchased under the Marathon
Contract averaged $1.89 per Mcf, including reimbursements for severance taxes.
ENSTAR Alaska also has an APUC-approved gas purchase contract with the
Municipality of Anchorage, Chevron U.S.A., Inc. and ARCO Alaska, Inc. (the
"Beluga Contract") which provides for the delivery of up to approximately 220
Bcf of gas through the year 2009. The pricing mechanism in the
-14-
Beluga Contract is similar to that contained in the Marathon Contract. The 1997
price under the Beluga Contract, after application of contractual adjustments,
averaged $1.93 per Mcf, including reimbursements for severance taxes.
Based on gas purchases during the twelve months ended December 31, 1997,
which are not necessarily indicative of the volume of future purchases, gas
reserves committed to ENSTAR Alaska under the Marathon and Beluga Contracts are
sufficient to supply all of ENSTAR Alaska's expected gas supply requirements
through the year 2001. After that time supplies will still be available under
the Marathon and Beluga contracts in accordance with their terms, but at least a
portion of ENSTAR Alaska's requirements are expected to be satisfied outside the
terms of these contracts, as currently in effect.
Currently, ENSTAR Alaska's supply source, primarily through the Marathon
and Beluga Contracts, is confined to the Cook Inlet area with no direct access
to other natural gas pipelines. During 1997, two of the Cook Inlet area's major
suppliers filed for regulatory approval to export certain quantities of gas to
overseas LNG markets. ENSTAR Alaska has filed as an intervenor in these
proceedings and is actively working with regulatory authorities to insure that
the supply needs of its customers are met.
ENSTAR Alaska's average cost of gas sold in 1997, 1996 and 1995 was $1.89,
$1.59 and $1.75 per Mcf, respectively. ENSTAR Alaska's average gas sales price
in 1997, 1996 and 1995 was $3.65, $3.29 and $3.41 per Mcf, respectively.
As stated above, ENSTAR Alaska purchases all of its natural gas under
long-term contracts in which the price is indexed to changes in the price of
crude oil futures contracts. However, because ENSTAR Alaska's sales prices are
adjusted to include the projected cost of its natural gas, there has been and is
expected to be little or no impact on margins derived from ENSTAR Alaska's gas
sales as a result of fluctuations in oil prices due to worldwide political
events and changing market conditions.
Competition
ENSTAR Alaska competes primarily with municipal and cooperative electric
power distributors and with various suppliers of fuel oil and propane for the
available energy market. There are also extensive coal reserves proximate to
ENSTAR Alaska's operating area; however, such reserves are not presently being
produced.
During the last nine years, ENSTAR Alaska's natural gas volumes delivered
on a purchase/resale basis have declined. Beginning in 1989, several of its
major customers began purchasing gas directly from gas producers or gas
marketers. However, the APUC has approved tariffs allowing ENSTAR Alaska to
transport these volumes for a transportation fee that approximates the margin
that would have been earned had the customer remained a sales customer rather
than becoming a transportation customer. Consequently, ENSTAR Alaska anticipates
no adverse economic impact to result from these transportation arrangements.
If any other existing large customer of ENSTAR Alaska chooses to purchase
gas directly from producers, ENSTAR Alaska would expect to collect a fee for
transporting that gas equivalent to the margin earned on sales volumes for those
customers because the large distance of remaining user facilities from producing
fields would preclude the by-pass of ENSTAR Alaska's pipelines.
-15-
ENSTAR Alaska supplies natural gas to its customers at prices that at the
present time economically preclude substitution of alternative fuels. Since the
Beluga Contract and the Marathon Contract include prices that fluctuate based on
oil indices, a competitive margin favoring natural gas over oil-based energy
sources is expected to continue. However, there is no assurance that the
competitive advantage over other alternative fuels will not be reduced or
eliminated by the development of new energy technology, by changes in the price
of oil or refined products or by decreased gas supply if additional exports are
allowed out of the Cook Inlet area.
Regulation
The APUC has jurisdiction as to rates and charges for gas sales,
construction of new facilities, extensions and abandonments of service and
certain other matters. Rates are generally designed to permit the recovery of
the cost of providing service, including purchased gas costs, and a return on
investment in plant. Because ENSTAR Alaska's operations are wholly intrastate,
ENSTAR Alaska is not subject to or affected by Order 636 or any other economic
regulation by the FERC.
As a result of a proceeding filed in 1984, which was concluded in May 1986,
the APUC granted ENSTAR Alaska an aggregate rate increase of 20.27% and
authorized a regulatory rate of return on common equity of 15.65%. ENSTAR Alaska
has no significant regulatory issues pending before the APUC. Since its
inception in 1961, ENSTAR Alaska has participated in only three formal rate
proceedings.
CORPORATE
Regulation
The Company is a "public utility company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended (the "1935 Act"). Accordingly,
if any "company" (as defined for purposes of the 1935 Act and therefore
including so-called "organized groups") becomes the owner of 10% or more of the
Company's outstanding voting stock, that company would be required to register
as a "holding company" under the 1935 Act, in the absence of an exemption of the
type described below. Section 9(a)(2) also requires a person (including both
individuals and "companies") to obtain prior approval from the Securities and
Exchange Commission (the "SEC") in connection with the acquisition of 5% or more
of the outstanding voting stock of a public utility if that person is also the
owner of 5% or more of the outstanding voting stock of another public utility.
In March 1991, the Company filed an application in good faith with the SEC
pursuant to Section 2(a)(8) of the 1935 Act, seeking a determination that
Seagull was not subject to regulation as a "subsidiary company" of FMR Corp.
(the "FMR Application"), which was then the owner of 2,805,624 shares
(approximately 12.5% at such time) (shares adjusted for a 2-for-1 stock split of
all the issued shares of the Company's common stock (the "Common Stock"),
effected June 4, 1993) of the outstanding Common Stock. Under the 1935 Act, a
company is a "subsidiary company" of a "holding company" if the "holding
company" owns 10% or more of the total voting power of the "subsidiary company",
unless the SEC determines otherwise. Based upon the most recent information
furnished to the Company by FMR Corp., FMR Corp.'s beneficial shares owned have
fallen below 5% of the outstanding voting stock of the Company.
-16-
In December 1993, Seagull filed an additional application in good faith
with the SEC pursuant to Section 2(a)(8) of the 1935 Act, seeking a
determination that the Company was not subject to regulation as a "subsidiary
company" of AXA Assurances I. A. R. D. Mutuelle, AXA Assurances Vie Mutuelle,
Alpha Assurances I. A. R. D. Mutuelle, Alpha Assurances Vie Mutuelle, Uni Europe
Assurance Mutuelle and AXA (collectively, the "Mutuelles AXA") and The Equitable
Companies Incorporated ("Equitable") and their respective affiliates
(collectively, the "Equitable Entities"), (the "Equitable Application"). At such
time, the Equitable Entities beneficially owned 4,495,600 shares (approximately
12.5%) of Common Stock. Based upon the most recent information furnished to the
Company by the Equitable Entities, the Equitable Entities' beneficial shares
owned have fallen below 5% of the outstanding voting stock of the Company.
On October 3, 1996, the Company filed an application in good faith with the
SEC pursuant to Section 2(a)(8) of the 1935 Act, seeking a determination that
Seagull was not subject to regulation as a "subsidiary company" of The
Prudential Insurance Company of America ("Prudential"), (the "Prudential
Application"), which was then the owner of 5,573,061 shares (approximately 8.9%
at such time of the outstanding Common Stock). According to information provided
by Prudential, in its capacity as investment adviser, is beneficial owner of
5,883,861 shares (9.3%) of the Common Stock which are owned by numerous
investment counseling clients, none of which is known to have such interest with
respect to more than 5% of the class. Prudential has sole voting and dispositive
power as to 5,561,361 shares and shared voting and dispositive power as to
322,500 shares.
As a result of the Company's good faith filing of the Prudential
Application, the Company will not be subject to any obligation, duty or
liability imposed by the 1935 Act, unless and until the SEC enters an order
denying or otherwise adversely disposing of the Prudential Application. To date,
no such order has been issued. The Company believes that the Prudential
Application ultimately should be granted.
ENVIRONMENTAL MATTERS
Seagull's operations are subject to federal, state and local laws and
regulation governing the discharge of materials into the environment or
otherwise relating to environmental protection. Numerous governmental
departments issue rules and regulations to implement and enforce such laws which
are often difficult and costly to comply with and which carry substantial
penalties for failure to comply. These laws and regulations may require the
acquisition of a permit before drilling commences, restrict the types,
quantities and concentration of various substances that can be released into the
environment in connection with drilling and production activities, limit or
prohibit drilling activities on certain lands lying within wilderness, wetlands
and other protected areas, and impose substantial liabilities for pollution
resulting from the Company's operations. In addition, these laws, rules and
regulations may restrict the rate of oil and natural gas production below the
rate that would otherwise exist. State laws often require some form of remedial
action to prevent pollution from former operations, such as pit closure and
plugging abandoned wells.
The Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), also known as the "Superfund" law, imposes liability, without regard
to fault or the legality of the original conduct, on certain classes of persons
who are considered to be responsible for the release of a "hazardous substance"
into the environment. These persons include the owner or operator of the
disposal site or sites where the release occurred and companies that disposed or
arranged for the disposal of the
-17-
hazardous substances. Under CERCLA, such persons may be subject to joint and
several liability for the costs of cleaning up the hazardous substances that
have been released into the environment, for damages to natural resources and
for the costs of certain health studies. It is not uncommon for neighboring
landowners and other third parties to file claims for personal injury and
property damage allegedly caused by hazardous substances or other pollutants
released into the environment.
Stricter standards in environmental legislation may be imposed on the oil
and gas industry in the future. For instance, legislation has been proposed in
Congress from time to time that would reclassify certain oil and natural gas
exploration and production wastes as "hazardous wastes" and make the
reclassified wastes subject to more stringent handling, disposal and clean-up
requirements. If such legislation were to be enacted, it could have a
significant impact on the operating costs of the Company, as well as the oil and
gas industry in general. Furthermore, although petroleum, including crude oil
and natural gas, is exempt from CERCLA, at least two courts have recently ruled
that certain wastes associated with the production of crude oil may be
classified as "hazardous substances" under CERCLA and thus such wastes may
become subject to liability and regulation under CERCLA, as described above.
State initiatives to further regulate the disposal of oil and natural gas wastes
are also pending in certain states, and these various initiatives could have a
similar impact on the Company. Compliance with environmental requirements
generally could have a material adverse effect upon the capital expenditures,
earnings or competitive position of the Company. Although the Company has not
experienced any material adverse effect from compliance with environmental
requirements, there is no assurance that this will continue in the future.
The Oil Pollution Act of 1990 ("OPA") and regulations promulgated pursuant
thereto impose a variety of requirements on "responsible Parties" related to the
prevention of oil spills and liability for damages resulting from such spills.
Few defenses exist to the liability imposed by the OPA and such liability could
be substantial. A failure to comply with ongoing requirements or inadequate
cooperation in a spill event could subject a responsible party to civil or
criminal enforcement action.
On October 19, 1996, legislative amendments to OPA were enacted. These
amendments reduced the requirement of obtaining a certificate of financial
responsibility to $35 million in the event of a spill, instead of the $150
million originally called for under OPA. In addition, the Texas Railroad
Commission proposed an amendment to its regulations in line with OPA. The
proposed amendment requires operators of hazardous liquid pipeline facilities
inland of the Gulf coast to prepare facility response plans within 60 days of
the effective date of the rule or simultaneously with the filing of the plan
with federal authorities.
In addition, the OCSLA authorizes regulations relating to safety and
environmental protection applicable to lessees and permittees operating in the
OCS. Specific design and operation standards may apply to OCS vessels, rigs,
platforms, vehicles and structures. Violations of lease conditions or
regulations issued pursuant to OCSLA can result in substantial civil and
criminal penalties, as well as potential court injunctions curtailing operations
and the cancellation of leases. Such enforcement liabilities can result from
either governmental or private prosecution.
The Federal Water Pollution Control Act ("FWPCA") imposes restrictions and
strict controls regarding the discharge of pollutants to state and federal
waters. The FWPCA provides for civil, criminal and administrative penalties for
any unauthorized discharges of oil and other hazardous substances in reportable
quantities and, along with the OPA, imposes substantial potential liability for
the costs of removal, remediation and damages. State laws for the control of
water pollution also provide varying
-18-
civil, criminal and administrative penalties and liabilities in the case of a
discharge of petroleum or its derivatives into state waters. Within the next few
years, both state water discharge regulations and the federal permits are
expected to prohibit the discharge of produced water and sand, and some other
substances related to the oil and gas industry, to coastal waters. Although the
costs to comply with zero discharge mandates under federal or state law may be
significant, the entire industry will experience similar costs and the Company
believes that these costs will not have a material adverse impact on the
Company's financial condition and operations. Some oil and gas exploration and
production facilities are required to obtain permits for their storm water
discharges. Costs may be associated with treatment of wastewater or developing
storm water pollution prevention plans. Further, the Coastal Zone Management Act
authorizes state implementation and development of programs of management
measures for non-point source pollution to restore and protect coastal waters.
Many states in which the Company operates have recently begun to regulate
naturally occurring radioactive materials ("NORM") and NORM wastes that are
generated in connection with oil and gas exploration and production activities.
NORM wastes typically consist of very low-level radioactive substances that
become concentrated in pipe scale and in production equipment. State regulations
may require the testing of pipes and production equipment for the presence of
NORM, the licensing of NORM-contaminated facilities and the careful handling and
disposal of NORM wastes. The Company believes that the growing regulation of
NORM will have a minimal effect on the Company's operations because the Company
generates only a very small quantity of NORM on an annual basis.
EMPLOYEES
As of March 1, 1998, the Company had 877 full time employees. In addition
to the services of its full time employees, the Company employs, as needed, the
services of consulting geologists, engineers, regulatory consultants, contract
pumpers and certain other temporary employees.
ENSTAR Alaska operates under collective bargaining agreements with separate
bargaining units for operating and clerical employees. These units represent
approximately 80% of ENSTAR Alaska's work force. Contracts have been negotiated
that set wages and work relationships for the two units. The operating
bargaining unit contract is effective from April 1, 1996 through April 1, 2000.
The clerical bargaining unit contract is effective from April 1, 1995 through
April 1, 2000. The Company is not a party to any other collective bargaining
agreements. The Company has never had a work stoppage.
The Company considers its relations with its employees to be satisfactory.
-19-
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company, each of whom has been elected to
serve until his successor is elected and qualified, are as follows:
Name Age Present Position and Prior Business Experience
Barry J. Galt.............. 64 Chairman of the Board and Chief Executive Officer since December 1983 and President
of the Company from April 1997; President of the Company from December 1983 to
October 1996.
John W. Elias.............. 57 Executive Vice President since April 1993; For the previous 30 years, he served in a
variety of positions for Amoco Production Company and its parent, Amoco Corporation.
Richard F. Barnes.......... 54 President of ENSTAR Alaska since September 1987.
Gerald R. Colley........... 47 Senior Vice President, International Exploration and Production since November 1996;
Senior Vice President - International Exploration of Global from December 1994 to
November 1996; Vice President - International Exploration of Global from July 1993 to
December 1994; Vice President - International Exploration of Global Natural Resources
Corporation of Nevada ("GNRC"), a wholly owned subsidiary of Global, since October
1992; Vice President and Exploration Director of Hadson Europe, Inc. from August 1986
to October 1992.
John N. Goodpasture........ 49 Senior Vice President, Pipelines and Marketing since May 1993; President of Seagull
Pipeline Company since March 1990.
William L. Transier........ 43 Senior Vice President and Chief Financial Officer since May 1996; For the previous 20
years, he held a variety of positions at KPMG Peat Marwick LLP and was promoted to
partner in July 1986.
Carl B. King............... 55 Senior Vice President and General Counsel since February 1998; Senior Vice President
and General Counsel of PanEnergy Corp from 1991 to February 1998; For the previous
16 years, he served in a variety of positions with Cooper Industries/Cameron Iron
Works.
Gordon L. McConnell........ 51 Vice President and Controller since November 1996; Vice President - Accounting of
Global from January 1996 to November 1996; Controller of Global from July 1993 to
January 1996; Controller of GNRC since October 1991; Assistant Controller of GNRC
from July 1991 to October 1991.
H. Alan Payne.............. 56 Vice President, Investor Relations since November 1996; Director, Investor Relations
from December 1984 to November 1996.
Jack M. Robertson.......... 54 Vice President, Human Resources since November 1996; Director, Human Resources from
November 1990 to November 1996.
Stephen A. Thorington...... 42 Vice President, Finance and Treasurer since May 1996; Managing Director of Chase
Securities Inc. from January 1992 to May 1996; Managing Director for The Chase
Manhattan Bank, N.A. from June 1991 through April 1994.
M. Lee Van Winkle.......... 45 Vice President, Corporate Planning since November 1996; Vice President - Corporate
Planning of Global from July 1993 to November 1996; Vice President - Corporate
Planning of GNRC since August 1992; Corporate Manager - Planning and Budget for Adobe
Resources Corporation for more than five years prior to August 1992.
Carl E. Volke.............. 54 Vice President, Administration since November 1996; Director, Administration from
November 1986 to November 1996.
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Item 2. Properties
Incorporated herein by reference to Item 1 of this Annual Report on Form
10-K.
Item 3. Legal Proceedings
Royalty Litigation -- Increasingly, royalty owners under oil and gas leases
are challenging valuation methodology and post-production deductions used by
producers. These cases have arisen because oil and gas producers such as Seagull
have begun to provide services that had previously been provided by the
interstate gas pipelines prior to the "unbundling" of gas services. For example,
in 1996, Seagull was sued in Anne K. Barnaby, et al. v. Seagull Mid-South Inc.
This case is pending in state court of Latimer County, Oklahoma. In this case,
the plaintiffs seek additional royalties based upon the alledged deduction by
Seagull of post-production costs, such as those related to gathering,
compression, dehydration and treating. In addition, the plaintiffs have
questioned the sales price used by Seagull as a basis for calculating royalties
to the extent that sales were made to Seagull's gas marketing subsidiary. While
Seagull intends to vigorously defend this case, the Company cannot predict the
outcome of these matters.
NorAm Litigation -- Seagull also was sued in NorAm Gas Transmission Co., et
al. v. Seagull Mid-South Inc. (the "NorAm Litigation"). The case relates to
Seagull's termination of a 1956 gas contract which provided for the sale of gas
by Seagull from certain wells in the Aetna Field in Arkansas for approximately
$0.16 per Mcf. NorAm Gas Transmission Co. ("NorAm") and Arkansas Western Gas
Company ("AWG") have sought a declaratory judgment that the gas contract remains
in effect with respect to these wells or, in the alternative, money damages.
Since the termination by Seagull of the gas contract, Seagull has been selling
the gas in question on the spot market. Seagull believes that it had reasonable
grounds for terminating the gas contract. NorAm and AWG have also sought a
declaratory judgment to the effect that certain additional wells in the Aetna
Field (including any new wells) would be subject to the $0.16 per Mcf price (the
"Additional Well Claim"). If NorAm and AWG were successful with the Additional
Well Claim, Seagull's operations in the Aetna Field would be materially affected
in an adverse manner. By mid-1997, the plaintiffs had alleged losses in these
matters of approximately $90 million plus attorney's fees.
In November 1997, the Company, NorAm and AWG signed a Settlement Proposal
that ultimately could lead to a final settlement and resolution of the NorAm
Litigation discussed above. The Settlement Proposal calls for Seagull to make a
cash payment and deliver gas under a five-year gas sales contract. As a result
of this Settlement Proposal, the Company recorded in the fourth quarter a
one-time pre-tax charge of approximately $4.5 million, included in general and
administrative expense.
Gulf Coast Vacuum Site -- In 1993, the Environmental Protection Agency
("EPA") notified the Company that a subsidiary was a potentially responsible
party ("PRP") at the Gulf Coast Vacuum Services Superfund Site (the "GCV Site")
in Vermilion Parish, Louisiana. Based upon the Company's investigation of this
claim, the Company believes that the basis for its alleged liability is a series
of transactions between the Company's subsidiary and the operator of the GCV
Site that occurred during 1979 and 1980. While the EPA's cleanup cost estimate
of the GCV Site is in the range of $17 million, the Company believes that its
liability is unlikely to be material to its financial condition, results of
operations or cash flows because of the large number of PRPs at the GCV Site and
the relative amount of contamination, if any, that may have been caused at the
GCV Site by the disposal of wastes by the Company during 1979 and 1980.
-21-
Comstock Mill Site -- On February 21, 1996, the United States Department of
Interior Bureau of Land Management ("BLM") sent a letter to Houston Oil &
Minerals Corporation ("HO&M"), a wholly owned subsidiary of Seagull, requesting
HO&M to prepare and submit a plan for sampling and analyzing groundwater at a
former mining operation located near Virginia City, Nevada (the "Comstock Mill
Site"). The basis for the BLM's request was the alleged operation of the
Comstock Mill Site by HO&M between 1978 and 1982. Pursuant to an indemnity
provision in the stock purchase agreement by which Seagull acquired HO&M in 1988
(the "HO&M Purchase Agreement"), Seagull tendered the BLM's letter to Tenneco
Inc. ("Tenneco") with a demand for indemnity and notified the BLM that Tenneco
would respond to the BLM letter on behalf of HO&M. The BLM has also indicated
that Tenneco and HO&M might be required to address cyanide contamination of
groundwater at the Comstock Mill Site by separate action of the Nevada Division
of Environmental Protection. Seagull believes that any liability associated with
the Comstock Mill Site is the responsibility of Tenneco or its successors in
liability pursuant to the HO&M Purchase Agreement.
Other -- The Company is a party to other ongoing litigation in the normal
course of business. Management regularly analyzes current information and, as
necessary, provides accruals for probable liabilities on the eventual
disposition of these matters. While the outcome of lawsuits or other proceedings
against the Company cannot be predicted with certainty, management believes that
the effect on its financial condition, results of operations and cash flows, if
any, will not be material.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for Registrant's Common Stock and Related Shareholder Matters
A. The Company's Common Stock (the "Common Stock") is traded on the New
York Stock Exchange under the ticker symbol "SGO." The high and low sales prices
on the New York Stock Exchange Composite Tape for each quarterly period during
the last two fiscal years were as follows:
1997 1996
--------------------------------------- --------------------------------------
High Low High Low
----------------- ----------------- ---------------- ----------------
First Quarter 24 1/8 17 7/8 22 7/8 17 1/8
Second Quarter 19 1/4 16 1/2 25 1/2 21
Third Quarter 25 7/8 17 3/4 26 17 1/2
Fourth Quarter 27 5/8 19 1/16 24 3/8 20 5/8
B. As of March 9, 1998, there were approximately 4,370 holders of record of
Common Stock.
C. Seagull has not declared any cash dividends on its Common Stock since it
became a public entity in 1981. The decision to pay Common Stock dividends in
the future will depend upon the Company's earnings and financial condition and
such other factors as the Company's Board of Directors deems relevant. The
Company's revolving credit agreement (the "Revolving Credit Facility") restricts
-22-
the Company's declaration or payment of dividends on and repurchases of Common
Stock unless each of the following tests have been met: (i) the Company's Total
Debt/Capitalization Ratio cannot be more than 60% and (ii) no Default or Event
of Default shall have occurred and be continuing. The capitalized terms used
herein to describe the restrictions contained in the Revolving Credit Facility
have the meanings assigned to them in the Revolving Credit Facility. Under the
most restrictive of these tests, as of December 31, 1997, approximately $344
million was available for payment of dividends or repurchase of Common Stock. In
addition, certain debt instruments of ENSTAR Alaska restrict the ability of
ENSTAR Alaska to transfer funds to the Company in the form of cash dividends,
loans or advances. For a description of such restrictions, reference is made to
Note 6 of the Consolidated Financial Statements included in the Company's 1997
Annual Report to Shareholders and as part of Exhibit 13 attached hereto.
Item 6. Selected Financial Data
Incorporated herein by reference to the Selected Financial Data included in
the Company's 1997 Annual Report to Shareholders and as part of Exhibit 13
attached hereto.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Incorporated herein by reference to Management's Discussion and Analysis of
Financial Condition and Results of Operations included in the Company's 1997
Annual Report to Shareholders and as part of Exhibit 13 attached hereto.
Item 7a. Quantitative and Qualitative Disclosures About Market Risk
Based on the Company's market capitalization, the quantitative and
qualitative disclosures required by Rule 305 of the Securities and Exchange Act
of 1934 are required for Seagull's Form 10-K for the year ended December 31,
1998 and, if material, will be so included.
Item 8. Financial Statements and Supplementary Data
Incorporated herein by reference to the Consolidated Financial Statements
and Supplementary Data included in the Company's 1997 Annual Report to
Shareholders and as part of Exhibit 13 attached hereto.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Incorporated herein by reference to "Election of Directors" included in the
Proxy Statement for the Company's Annual Meeting of Shareholders to be held on
May 13, 1998 (the "Proxy Statement"). See also "Executive Officers of the
Company" included in Part I of this Annual Report on Form 10-K, which is
incorporated by reference herein.
-23-
Item 11. Executive Compensation
Incorporated herein by reference to "Executive Compensation--Summary
Compensation Table," "--Compensation Arrangements," "--Option Exercises and
Fiscal Year-End Values," "--Option Grants," "--Executive Supplemental Retirement
Plan," "--ENSTAR Natural Gas Company Supplemental Executive Retirement Plan" and
"--ENSTAR Natural Gas Company Retirement Plan"; and "Election of
Directors--Compensation of Directors" included in the Proxy Statement.
Notwithstanding any provision in this Annual Report on Form 10-K to the
contrary, under no circumstances are the "Compensation Committee Report" or the
information under the heading "Shareholder Return Performance Presentation"
incorporated herein for any purpose.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Incorporated herein by reference to "Principal Shareholders" and "Election
of Directors--Security Ownership of Directors and Management" included in the
Proxy Statement.
Item 13. Certain Relationships and Related Transactions
Incorporated herein by reference to "Election of Directors--Certain
Transactions" included in the Proxy Statement.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements:
The Consolidated Financial Statements, Notes to Consolidated Financial
Statements and Independent Auditors' Report thereon are included in the
Company's 1997 Annual Report to Shareholders and as part of Exhibit 13 attached
hereto, and are incorporated herein by reference:
2. Schedules:
All schedules have been omitted because the required information is
insignificant or not applicable.
3. Exhibits:
3.1 Articles of Incorporation of the Company, as amended, including
Articles of Amendment filed May 12, 1988, May 21, 1991, and May 21,
1993 with the Secretary of State of the State of Texas, that certain
Statement of Relative Rights and Preferences related to the
designation and issuance of the Company's $2.25 Convertible
Exchangeable Preferred Stock, Series A, filed August 6, 1986 with the
Secretary of State of the State of Texas and that certain Statement of
Resolution Establishing Series of Shares of Series B Junior
Participating Preferred Stock of Seagull Energy Corporation filed
March 21, 1989 with the Secretary of State of the State of Texas
(incorporated by reference to Exhibit 3.1 to Quarterly Report on Form
10-Q for the quarter ended June 30, 1993).
3.2 Bylaws of the Company, as amended through March 7, 1997 (incorporated
by reference to Exhibit 4.9 to Form S-3 filed with the Securities and
Exchange Commission on September 18, 1997).
-24-
*4.1 $500,000,000 Revolving Credit and Competitive Bid Facility among
Seagull Energy Corporation, The Chase Manhattan Bank, Morgan Guaranty
Trust Company of New York, NationsBank of Texas, N.A., and The Other
Banks Signatory Thereto, dated December 27, 1997.
4.2 Senior Indenture dated as of July 15, 1993 by and between the Company
and The Bank of New York, as Trustee (incorporated by reference to
Exhibit 4.1 to Current Report on Form 8-K dated August 4, 1993;
Specimen of 7 7/8% Senior Note due 2003 and resolutions adopted by the
Chairman of the Board of Directors is incorporated by reference to
Exhibit 4.3 to Current Report on Form 8-K dated August 4, 1993).
4.3 Senior Subordinated Indenture dated as of July 15, 1993 by and between
the Company and The Bank of New York, as Trustee (incorporated by
reference to Exhibit 4.2 to Current Report on Form 8-K dated August 4,
1993; Specimen of 8 5/8% Senior Subordinated Note due 2005 and
resolutions adopted by the Chairman of the Board of Directors is
incorporated by reference to Exhibit 4.4 to Current Report on Form 8-K
dated August 4, 1993).
*4.4 Senior Indenture among the Company and The Bank of New York, as
Trustee, and Specimen of 7 1/2% Senior Notes due September 15, 2027.
4.5 Terms Agreement and the resolutions of adoption by the Chairman of the
Board of Directors related to Exhibit 4.4 (incorporated by reference
to Exhibit 2.3 to Current Report on Form 8-K filed with the Securities
and Exchange Commission on October 17, 1997).
*4.6 Note Agreement dated June 17, 1985 by and among Alaska Pipeline
Company and The Travelers Insurance Company, The Travelers Life
Insurance Company, and the Equitable Life Assurance Society of the
United States (collectively, the "Insurance Companies") (including
forms of notes and other exhibits thereto) and Inducement Agreement of
even date therewith by and among Seagull and the Insurance Companies
(the Note Agreement including exhibits thereto incorporated by
reference to Exhibit 4.1 to Annual Report on Form 10-K for the year
ended December 31, 1995; the Form of Consent and Agreement dated April
15, 1991 by and among Alaska Pipeline Company and the Insurance
Companies (including exhibits thereto) is filed herewith).
4.7 Note Agreement dated May 14, 1992 by and among Alaska Pipeline Company
and each of the purchasers thereto (including forms of notes and other
exhibits thereto) and Inducement Agreement of even date therewith by
and among Seagull and Aid Association for Lutherans, The Equitable
Life Assurance Society of the United States, Equitable Variable Life
Insurance Company, Provident Life & Accident Insurance Company and
Teachers Insurance & Annuity Association of America (including
exhibits thereto) (incorporated by reference to Exhibit 4.1 to
Quarterly Report on Form 10-Q for the quarter ended September 30,
1997).
4.8 Trust Agreement dated as of September 1, 1995 for the Seagull Series
1995 Trust (the Trust Agreement is incorporated by reference to
Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995; the Guaranty by Seagull Energy Corporation in
favor of the Seagull Series 1995 Trust is incorporated by reference to
Exhibit 10.2 to Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995).
4.9 Amended and Restated Rights Agreement dated March 17, 1989, as amended
effective June 13, 1992, and amended and restated as of December 12,
1997, between the Company and BankBoston, N.A. (as successor to NCNB
Texas National Bank), including Form of Statement of Resolution
Establishing the Series B Junior Participating Preferred Stock, the
Form of Right Certificate and Form of Summary of Rights to Purchase
Preferred Shares (incorporated by reference to Exhibit 2 to Current
Report on Form 8-K dated December 15, 1997).
#10.1 Seagull Energy Corporation 1995 Executive Incentive Plan(incorporated
by reference to Exhibit 10.2 to Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995).
#10.2 Seagull Energy Corporation 1996 Executive Incentive Plan(incorporated
by reference to Exhibit 10.3 to Annual Report on Form 10-K for the
year ended December 31, 1996).
-25-
#10.3 Seagull Energy Corporation 1997 Executive Incentive Plan
(incorporated by reference to Exhibit 10.1 to Quarterly Report on Form
10-Q for the quarter ended June 30, 1997).
#10.4 Seagull Energy Corporation 1981 Stock Option Plan (Restated),
including forms of agreements, as amended (the amended and restated
plan is incorporated by reference to Exhibit 10.6 to Quarterly Report
on Form 10-Q for the quarter ended June 30, 1993; Form of Amendment to
Stock Option Agreement(s) for the Seagull Energy Corporation is
incorporated by reference to Exhibit 10.5 to the Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995; Form of Amendment to
Stock Option Agreement(s) is incorporated by reference to Exhibit 10.4
to Annual Report on Form 10-K for the year ended December 31, 1996).
#10.5 Seagull Energy Corporation 1983 Stock Option Plan (Restated),
including forms of agreements, as amended (the amended and restated
plan is incorporated by reference to Exhibit 10.7 to Quarterly Report
on Form 10-Q for the quarter ended June 30, 1993; the amended form of
Nonstatutory Stock Option Agreement is incorporated by reference to
Exhibit 10.15 to Annual Report on Form 10-K for the year ended
December 31, 1993; Form of Amendment to Stock Option Agreement(s) for
the Seagull Energy Corporation is incorporated by reference to Exhibit
10.5 to the Quarterly Report on Form 10-Q for the quarter ended June
30, 1995; Form of Amendment to Stock Option Agreement(s) is
incorporated by reference to Exhibit 10.5 to Annual Report on Form
10-K for the year ended December 31, 1996).
#10.6 Seagull Energy Corporation 1986 Stock Option Plan (Restated),
including forms of agreements, as amended (the amended and restated
plan is incorporated by reference to Exhibit 10.8 to Quarterly Report
on Form 10-Q for the quarter ended June 30, 1993; the amended form of
Nonstatutory Stock Option Agreement is incorporated by reference to
Exhibit 10.16 to Annual Report on Form 10-K for the year ended
December 31, 1993; Form of Amendment to Stock Option Agreement(s) for
the Seagull Energy Corporation is incorporated by reference to Exhibit
10.5 to the Quarterly Report on Form 10-Q for the quarter ended June
30, 1995; Form of Amendment to Stock Option Agreement(s) is
incorporated by reference to Exhibit 10.6 to Annual Report on Form
10-K for the year ended December 31, 1996).
#10.7 Seagull Energy Corporation 1990 Stock Option Plan, including forms of
agreements, as amended (incorporated by reference to Exhibit 10.22 to
Annual Report on Form 10-K for the year ended December 31, 1995; Form
of Amendment to Stock Option Agreement(s) is incorporated by reference
to Exhibit 10.7 to Annual Report on Form 10-K for the year ended
December 31, 1996).
#10.8 Global Natural Resources Inc. 1989 Key Employees Stock Option Plan
(the Plan is incorporated by reference to Exhibit 4.1 to Registration
Statement No. 33-31537 of Global Natural Resources Inc.; the Form of
Stock Option Agreement is incorporated by reference to Exhibit 4.2 to
Registration Statement No. 33-31537 of Global Natural Resources Inc.;
Form of Amendment to Stock Option Agreement(s) is incorporated by
reference to Exhibit 10.8 to Annual Report on Form 10-K for the year
ended December 31, 1996).
#10.9 Global Natural Resources Inc. 1992 Stock Option Plan (the Plan is
incorporated by reference to Exhibit 10.47 to the Quarterly Report on
Form 10-Q for the quarter ended June 30, 1992 of Global Natural
Resources Inc. (Registration No. 1-8674); the Form of Stock Option
Agreement is incorporated by reference to Exhibit 10.48 to the
Quarterly Report on Form 10-Q for the quarter ended June 30, 1992 of
Global Natural Resources Inc. (Registration No. 1-8674); Form of
Amendment to Stock Option Agreement(s) is incorporated by reference to
Exhibit 10.9 to Annual Report on Form 10-K for the year ended December
31, 1996).
#10.10 Seagull Energy Corporation 1993 Nonemployee Directors' Stock Option
Plan, including forms of agreements, as amended (incorporated by
reference to Exhibit 10.1 to Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997).
#10.11 Seagull Energy Corporation 1993 Stock Option Plan, as amended
(incorporated by reference to Exhibit 10.3 to Quarterly Report on Form
10-Q for the quarter ended September 30, 1997).
#10.12 1995 Omnibus Stock Plan (the Plan is incorporated by reference to
Exhibit 10.3 to Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995; Form of Amendment to Stock Option Agreement(s) is
-26-
incorporated by reference to Exhibit 10.12 to Annual Report on Form
10-K for the year ended December 31, 1996).
#10.13 Seagull Energy Corporation Management Stability Plan (the Plan is
incorporated by reference to Exhibit 10.35 to Annual Report on Form
10-K for the year ended December 31, 1994; the First Amendment is
incorporated by reference to Exhibit 10.13 to Annual Report on Form
10-K for the year ended December 31, 1996).
#10.14 Outside Directors Deferred Fee Plan of the Company, as amended and
restated (incorporated by reference to Exhibit 10.2 to Quarterly
Report on Form 10-Q for the quarter ended June 30, 1996).
#10.15 Employment Agreement dated December 30, 1983 by and between the
Company and Barry J. Galt, Chairman of the Board, President and Chief
Executive Officer of the Company (the Agreement is incorporated by
reference to Exhibit 10.1 to Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993; Amendment to Employment Agreement is
incorporated by reference to Exhibit 10.15 to Annual Report on Form
10-K for the year ended December 31, 1996).
#10.16 Executive Supplemental Retirement Plan Membership Agreement between
the Company and Barry J. Galt dated as of February 3, 1986, as amended
(incorporated by reference to Exhibit 10.2 to Quarterly Report on Form
10-Q for the quarter ended September 31, 1996).
#10.17 Restricted Stock Agreement made and entered into as of March 17, 1995
between Seagull Energy Corporation and Barry J. Galt (incorporated by
reference to Exhibit 10.32 to Annual Report on Form
10-K for the year ended December 31, 1994).
#10.18 Severance Agreement between Seagull Energy Corporation and Barry J.
Galt (incorporated by reference to Exhibit 10.3 to Quarterly Report on
Form 10-Q for the quarter ended September 30, 1995).
#10.19 Seagull Energy Corporation Executive Supplemental Retirement Plan, as
amended (incorporated by reference to Exhibit 1.1 to Quarterly Report
on Form 10-Q for the quarter ended September 30, 1996).
#10.20 Seagull Energy Corporation Supplemental Benefit Plan, as amended,
including the First Amendment thereto (incorporated by reference to
Exhibit 10.11 to Annual Report on Form 10-K for the year ended
December 31, 1995).
#10.21 Form of Restricted Stock Agreement made and entered into as of March
17, 1995 between Seagull Energy Corporation and, individually, Richard
F. Barnes (granted 2,000 shares of restricted Common Stock), John W.
Elias (granted 3,000 shares of restricted Common Stock) and William L.
Transier (granted 3,000 shares of restricted Common Stock)
(incorporated by reference to Exhibit 10.33 to Annual Report on Form
10-K for the year ended December 31, 1994).
#10.22 Form of Severance Agreement between Seagull Energy Corporation and
Richard F. Barnes, John W. Elias and William L. Transier (incorporated
by reference to Exhibit 10.34 to Annual Report on Form 10-K for the
year ended December 31, 1994).
#10.23 Consulting Agreement between Robert Vagt and Seagull Energy
Corporation (incorporated by reference to Exhibit 10.9 to Quarterly
Report on Form 10-Q for the quarter ended September 30, 1997).
10.24 Royalty Incentive Plan, as amended (incorporated by reference to
Exhibit 1.4 to the Annual Report on Form 20-F for the year ended
December 31, 1981 of the U.K. Company).
10.25 Purchase and Sale Agreement by and among Seagull Energy Corporation,
Amoco Gas Company, Houston Pipe Line Company, Enron Gas Processing
Company and Mantaray Pipeline Company, as sellers and Seahawk
Gathering & Liquids Company as buyer and Tejas Power Corporation as
Guarantor dated July 28, 1995 (incorporated by reference to Exhibit
10.6 to Quarterly Report on Form 10-Q for the quarter ended June 30,
1995).
-27-
10.26 Stock Purchase Agreement Between Seagull Energy Corporation and Exxon
Corporation relating to all of the Outstanding Capital Stock of Esso
Suez Inc., as executed in Houston, Texas on July 22, 1996
(incorporated by reference to Exhibit 2.1 to the Current Report on
Form 8-K filed on August 28, 1996).
10.27 Purchase and Sale Agreement Between Esso Egypt Limited and Seagull
Energy Corporation dated July 22, 1996 (incorporated by reference to
Exhibit 2.2 to the Current Report on Form 8-K filed on August 28,
1996).
10.28 Agreement and Plan of Merger dated as of July 22, 1996 by and among
Seagull Energy Corporation, GNR Merger Corporation and Global Natural
Resources Inc. (incorporated by reference to Exhibit 2.1 to
Registration Statement No. 333-09845 on Form S-4 of Seagull Energy
Corporation).
10.29 Share Sale Agreement, dated as of September 11, 1997, by and between
Seagull Energy Canada Holding Company, Seagull Energy Corporation and
Rio Alto Exploration Ltd. (incorporated by reference to Exhibit 2.1 to
Current Report on Form 8-K dated September 11, 1997).
*13 Portions of the Seagull Energy Corporation and Subsidiaries Annual
Report to Shareholders for the year ended December 31, 1996 which are
incorporated by reference herein to this Annual Report on Form 10-K of
Seagull Energy Corporation and Subsidiaries for the year ended
December 31,1997.
*21 Subsidiaries of Seagull Energy Corporation.
*23.1 Consent of KPMG Peat Marwick LLP.
*23.2 Consent of Ryder Scott Company, independent petroleum engineers.
*23.3 Consent of DeGolyer and MacNaughton, independent petroleum engineers.
*23.4 Consent of Netherland, Sewell and Associates, Inc., independent
petroleum engineers.
*27.1 Financial Data Schedule.
----------------------------
* Filed herewith.
# Identifies management contracts and compensatory plans or arrangements.
(b) Reports on Form 8-K
The Company filed a current report on Form 8-K, dated December 15, 1997,
with respect to certain amendments to the Rights Agreement governing its
Preferred Share Purchase Rights.
-28-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SEAGULL ENERGY CORPORATION
Date: March 17, 1998 By: /s/ Barry J. Galt
Barry J. Galt, Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
By: /s/ Barry J. Galt By: /s/ Peter J. Fluor
Barry J. Galt, Chairman of the Board, President Peter J. Fluor, Director
and Chief Executive Officer and Director Date March 17, 1998
(Principal Executive Officer) By: /s/ William R. Grant
Date: March 17, 1998 William R. Grant, Director
By: /s/ John W. Elias Date: March 17, 1998
John W. Elias, Executive Vice President By: /s/ Dean P. Guerin
and Director Dean P. Guerin, Director
Date: March 17, 1998 Date: March 17, 1998
By: /s/ William L. Transier By: /s/ Richard M. Morrow
William L. Transier, Senior Vice President Richard M. Morrow, Director
and Chief Financial Officer Date: March 17, 1998
(Principal Financial Officer) By: /s/ Dee S. Osborne
Date: March 17, 1998 Date: Dee S. Osborne, Director
By: /s/ Gordon L. McConnell March 17, 1998
Gordon L. McConnell, Vice President and By: /s/ Sidney R. Petersen
Controller (Principal Accounting Officer) Sidney R. Petersen, Director
Date: March 17, 1998 Date: March 17, 1998
By: /s/ J. Evans Attwell By: /s/ Sam F. Segnar
J. Evans Attwell, Director Sam F. Segnar, Director
Date: March 17, 1998 Date: March 17, 1998
By: /s/ Richard J. Burgess By:
Richard J. Burgess, Director Robert F. Vagt, Director
Date: March 17, 1998 Date: March 17, 1998
By: /s/ Milton Carroll By: /s/ R. A. Walker
Milton Carroll, Director R. A. Walker, Director
Date: March 17, 1998 Date: March 17, 1998
By: /s/ Thomas H. Cruikshank
Thomas H. Cruikshank, Director
Date: March 17, 1998
-29-
EXHIBIT INDEX
EXHIBITS:
3.1 Articles of Incorporation of the Company, as amended, including
Articles of Amendment filed May 12, 1988, May 21, 1991, and May
21, 1993 with the Secretary of State of the State of Texas, that
certain Statement of Relative Rights and Preferences related to
the designation and issuance of the Company's $2.25 Convertible
Exchangeable Preferred Stock, Series A, filed August 6, 1986 with
the Secretary of State of the State of Texas and that certain
Statement of Resolution Establishing Series of Shares of Series B
Junior Participating Preferred Stock of Seagull Energy
Corporation filed March 21, 1989 with the Secretary of State of
the State of Texas (incorporated by reference to Exhibi 3.1 to
Quarterly Report on Form 10-Q for the quarter ended June 30,
1993).
3.2 Bylaws of the Company, as amended through March 7, 1997
(incorporated by reference to Exhibit 4.9 to Form S-3 filed with
the Securities and Exchange Commission on September 18, 1997).
*4.1 $500,000,000 Revolving Credit and Competitive Bid Facility among
Seagull Energy Corporation, The Chase Manhattan Bank, Morgan
Guaranty Trust Company of New York, NationsBank of Texas, N.A.,
and The Other Banks Signatory Thereto, dated December 27, 1997.
4.2 Senior Indenture dated as of July 15, 1993 by and between the
Company and The Bank of New York, as Trustee (incorporated by
reference to Exhibit 4.1 to Current Report on Form 8-K dated
August 4, 1993; Specimen of 7 7/8% Senior Note due 2003 and
resolutions adopted by the Chairman of the Board of Directors is
incorporated by reference to Exhibit 4.3 to Current Report on
Form 8-K dated August 4, 1993).
4.3 Senior Subordinated Indenture dated as of July 15, 1993 by and
between the Company and The Bank of New York, as Trustee
(incorporated by reference to Exhibit 4.2 to Current Report on
Form 8-K dated August 4, 1993; Specimen of 8 5/8% Senior
Subordinated Note due 2005 and resolutions adopted by the
Chairman of the Board of Directors is incorporated by reference
to Exhibit 4.4 to Current Report on Form 8-K dated
August 4, 1993).
*4.4 Senior Indenture among the Company and The Bank of New York, as
Trustee, and Specimen of 7 1/2 Senior Notes due September 15,
2027.
4.5 Terms Agreement and the resolutions of adoption by the Chairman
of the Board of Directors related to Exhibit 4.4 (incorporated by
reference to Exhibit 2.3 to Current Report on Form 8-K filed with
the Securities and Exchange Commission on October 17, 1997).
*4.6 Note Agreement dated June 17, 1985 by and among Alaska Pipeline
Company and The Travelers Insurance Company, The Travelers Life
Insurance Company, and the Equitable Life Assurance Society of
the United States (collectively, the "Insurance Companies")
(including forms of notes and other exhibits thereto) and
Inducement Agreement of even date therewith by and among Seagull
and the Insurance Companies (the Note Agreement including
exhibits thereto incorporated by reference to Exhibit 4.1 to
Annual Report on Form 10-K for the year ended December 31, 1995;
the Form of Consent and Agreement dated April 15, 1991 by and
among Alaska Pipeline Company and the Insurance Companies
(including exhibits thereto) is filed herewith).
4.7 Note Agreement dated May 14, 1992 by and among Alaska Pipeline
Company and each of the purchasers thereto (including forms of
notes and other exhibits thereto) and Inducement Agreement of
even date therewith by and among Seagull and Aid Association for
Lutherans, The Equitable Life Assurance Society of the United
States, Equitable Variable Life Insurance Company, Provident Life
& Accident Insurance Company and Teachers Insurance & Annuity
Association of America (including exhibits thereto) (incorporated
by reference to Exhibit 4.1 to Quarterly Report on Form 10-Q for
the quarter ended September 30, 1997).
4.8 Trust Agreement dated as of September 1, 1995 for the Seagull
Series 1995 Trust (the Trust Agreement is incorporated by
reference to Exhibit 10.1 to Quarterly Report on Form 10-Q for
the quarter ended September 30, 1995; the Guaranty by Seagull
Energy Corporation in favor of the Seagull Series 1995 Trust is
incorporated by reference to Exhibit 10.2 to Quarterly Report on
Form 10-Q for the quarter ended September 30, 1995).
4.9 Amended and Restated Rights Agreement dated March 17, 1989, as
amended effective June 13, 1992, and amended and restated as of
December 12, 1997, between the Company and BankBoston, N.A. (as
successor to NCNB Texas National Bank), including Form of
Statement of Resolution Establishing the Series B Junior
Participating Preferred Stock, the Form of Right Certificate and
Form of Summary of Rights to Purchase Preferred Shares
(incorporated by reference to Exhibit 2 to Current Report on Form
8-K dated December 15, 1997).
#10.1 Seagull Energy Corporation 1995 Executive Incentive Plan
(incorporated by reference to Exhibit 10.2 to Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995).
#10.2 Seagull Energy Corporation 1996 Executive Incentive Plan
(incorporated by reference to Exhibit 10.3 to Annual Report on
Form 10-K for the year ended December 31, 1996).
#10.3 Seagull Energy Corporation 1997 Executive Incentive Plan
(incorporated by reference to Exhibit 10.1 to Quarterly Report on
Form 10-Q for the quarter ended June 30, 1997).
#10.4 Seagull Energy Corporation 1981 Stock Option Plan (Restated),
including forms of agreements, as amended (the amended and
restated plan is incorporated by reference to Exhibit 10.6 to
Quarterly Report on Form 10-Q for the quarter ended June 30,
1993; Form of Amendment to Stock Option Agreement(s) for the
Seagull Energy Corporation is incorporated by reference to
Exhibit 10.5 to the Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995; Form of Amendment to Stock Option
Agreement(s) is incorporated by reference to Exhibit 10.4 to
Annual Report on Form 10-K for the year ended December 31, 1996).
#10.5 Seagull Energy Corporation 1983 Stock Option Plan (Restated),
including forms of agreements, as amended (the amended and
restated plan is incorporated by reference to Exhibit 10.7 to
Quarterly Report on Form 10-Q for the quarter ended June 30,
1993; the amended form of Nonstatutory Stock Option Agreement is
incorporated by reference to Exhibit 10.15 to Annual Report on
Form 10-K for the year ended December 31, 1993; Form of Amendment
to Stock Option Agreement(s) for the Seagull Energy Corporation
is incorporated by reference to Exhibit 10.5 to the Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995; Form of
Amendment to Stock Option Agreement(s) is incorporated by
reference to Exhibit 10.5 to Annual Report on Form 10-K for the
year ended December 31, 1996).
#10.6 Seagull Energy Corporation 1986 Stock Option Plan (Restated),
including forms of agreements, as amended (the amended and
restated plan is incorporated by reference to Exhibit 10.8 to
Quarterly Report on Form 10-Q for the quarter ended June 30,
1993; the amended form of Nonstatutory Stock Option Agreement is
incorporated by reference to Exhibit 10.16 to Annual Report on
Form 10-K for the year ended December 31, 1993; Form of Amendment
to Stock Option Agreement(s) for the Seagull Energy Corporation
is incorporated by reference to Exhibit 10.5 to the Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995; Form of
Amendment to Stock Option Agreement(s) is incorporated by
reference to Exhibit 10.6 to Annual Report on Form 10-K for the
year ended December 31, 1996).
#10.7 Seagull Energy Corporation 1990 Stock Option Plan, including
forms of agreements, as amended (incorporated by reference to
Exhibit 10.22 to Annual Report on Form 10-K for the year ended
December 31, 1995; Form of Amendment to Stock Option Agreement(s)
is incorporated by reference to Exhibit 10.7 to Annual Report on
Form 10-K for the year ended December 31, 1996).
#10.8 Global Natural Resources Inc. 1989 Key Employees Stock Option
Plan (the Plan is incorporated by reference to Exhibit 4.1 to
Registration Statement No. 33-31537 of Global Natural Resources
Inc.; the Form of Stock Option Agreement is incorporated by
reference to Exhibit 4.2 to Registration Statement No. 33-31537
of Global Natural Resources Inc.; Form of Amendment to Stock
Option Agreement(s) is incorporated by reference to Exhibit 10.8
to Annual Report on Form 10-K for the year ended December 31,
1996).
#10.9 Global Natural Resources Inc. 1992 Stock Option Plan (the Plan
is incorporated by reference to Exhibit 10.47 to the Quarterly
Report on Form 10-Q for the quarter ended June 30, 1992 of Global
Natural Resources Inc. (Registration No. 1-8674); the Form of
Stock Option Agreement is incorporated by reference to Exhibit
10.48 to the Quarterly Report on Form 10-Q for the quarter ended
June 30, 1992 of Global Natural Resources Inc. (Registration No.
1-8674); Form of Amendment to Stock Option Agreement(s) is
incorporated by reference to Exhibit 10.9 to Annual Report on
Form 10-K for the year ended December 31, 1996).
#10.10 Seagull Energy Corporation 1993 Nonemployee Directors' Stock
Option Plan, including forms of agreements, as amended
(incorporated by reference to Exhibit 10.1 to Quarterly Report on
Form 10-Q for the quarter ended September 30, 1997).
#10.11 Seagull Energy Corporation 1993 Stock Option Plan, as amended
(incorporated by reference to Exhibit 10.3 to Quarterly Report on
Form 10-Q for the quarter ended September 30, 1997).
#10.12 1995 Omnibus Stock Plan (the Plan is incorporated by reference to
Exhibit 10.3 to Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995; Form of Amendment to Stock Option
Agreement(s) is incorporated by reference to Exhibit 10.12 to
Annual Report on Form 10-K for the year ended December 31, 1996).
#10.13 Seagull Energy Corporation Management Stability Plan (the Plan is
incorporated by reference to Exhibit 10.35 to Annual Report on
Form 10-K for the year ended December 31, 1994; the First
Amendment is incorporated by reference to Exhibit 10.13 to Annual
Report on Form 10-K for the year ended December 31, 1996).
#10.14 Outside Directors Deferred Fee Plan of the Company, as amended
and restated (incorporated by reference to Exhibit 10.2 to
Quarterly Report on Form 10-Q for the quarter ended June 30,
1996).
#10.15 Employment Agreement dated December 30, 1983 by and between the
Company and Barry J. Galt, Chairman of the Board, President and
Chief Executive Officer of the Company (the Agreement is
incorporated by reference to Exhibit 10.1 to Quarterly Report on
Form 10-Q for the quarter ended June 30, 1993; Amendment to
Employment Agreement is incorporated by reference to Exhibit
10.15 to Annual Report on Form 10-K for the year ended December
31, 1996).
#10.16 Executive Supplemental Retirement Plan Membership Agreement
between the Company and Barry J. Galt dated as of February 3,
1986, as amended (incorporated by reference to Exhibit 10.2 to
Quarterly Report on Form 10-Q for the quarter ended September 31,
1996).
#10.17 Restricted Stock Agreement made and entered into as of March 17,
1995 between Seagull Energy Corporation and Barry J. Galt
(incorporated by reference to Exhibit 10.32 to Annual Report on
Form 10-K for the year ended December 31, 1994).
#10.18 Severance Agreement between Seagull Energy Corporation and Barry
J. Galt (incorporated by reference to Exhibit 10.3 to Quarterly
Report on Form 10-Q for the quarter ended September 30, 1995).
#10.19 Seagull Energy Corporation Executive Supplemental Retirement
Plan, as amended (incorporated by reference to Exhibit 1.1 to
Quarterly Report on Form 10-Q for the quarter ended September 30,
1996).
#10.20 Seagull Energy Corporation Supplemental Benefit Plan, as amended,
including the First Amendment thereto (incorporated by reference
to Exhibit 10.11 to Annual Report on Form 10-K for the year ended
December 31, 1995).
#10.21 Form of Restricted Stock Agreement made and entered into as of
March 17, 1995 between Seagull Energy Corporation and,
individually, Richard F. Barnes (granted 2,000 shares of
restricted Common Stock), John W. Elias (granted 3,000 shares of
restricted Common Stock) and William L. Transier (granted 3,000
shares of restricted Common Stock) (incorporated by reference to
Exhibit 10.33 to Annual Report on Form 10-K for the year ended
December 31, 1994).
#10.22 Form of Severance Agreement between Seagull Energy Corporation
and Richard F. Barnes, John W. Elias and William L. Transier
(incorporated by reference to Exhibit 10.34 to Annual Report on
Form 10-K for the year ended December 31, 1994).
#10.23 Consulting Agreement between Robert Vagt and Seagull Energy
Corporation (incorporated by reference to Exhibit 10.9 to
Quarterly Report on Form 10-Q for the quarter ended September 30,
1997).
10.24 Royalty Incentive Plan, as amended (incorporated by reference to
Exhibit 1.4 to the Annual Report on Form 20-F for the year ended
December 31, 1981 of the U.K. Company).
10.25 Purchase and Sale Agreement by and among Seagull Energy
Corporation, Amoco Gas Company, Houston Pipe Line Company, Enron
Gas Processing Company and Mantaray Pipeline Company, as sellers
and Seahawk Gathering & Liquids Company as buyer and Tejas Power
Corporation as Guarantor dated July 28, 1995 (incorporated by
reference to Exhibit 10.6 to Quarterly Report on Form 10-Q for
the quarter ended June 30, 1995).
10.26 Stock Purchase Agreement Between Seagull Energy Corporation and
Exxon Corporation relating to all of the Outstanding Capital
Stock of Esso Suez Inc., as executed in Houston, Texas on July
22, 1996 (incorporated by reference to Exhibit 2.1 to the Current
Report on Form 8-K filed on August 28, 1996).
10.27 Purchase and Sale Agreement Between Esso Egypt Limited and
Seagull Energy Corporation dated July 22, 1996 (incorporated by
reference to Exhibit 2.2 to the Current Report on Form 8-K filed
on August 28, 1996).
10.28 Agreement and Plan of Merger dated as of July 22, 1996 by and
among Seagull Energy Corporation, GNR Merger Corporation and
Global Natural Resources Inc. (incorporated by reference to
Exhibit 2.1 to Registration Statement No. 333-09845 on Form S-4
of Seagull Energy Corporation).
10.29 Share Sale Agreement, dated as of September 11, 1997, by and
between Seagull Energy Canada Holding Company, Seagull Energy
Corporation and Rio Alto Exploration Ltd. (incorporated by
reference to Exhibit 2.1 to Current Report on Form 8-K dated
September 11, 1997).
*13 Portions of the Seagull Energy Corporation and Subsidiaries
Annual Report to Shareholders for the year ended December 31,
1996 which are incorporated by reference herein to this Annual
Report on Form 10-K of Seagull Energy Corporation and
Subsidiaries for the year ended December 31, 1997.
*21 Subsidiaries of Seagull Energy Corporation.
*23.1 Consent of KPMG Peat Marwick LLP.
*23.2 Consent of Ryder Scott Company, independent petroleum engineers.
*23.3 Consent of DeGolyer and MacNaughton, independent petroleum
engineers.
*23.4 Consent of Netherland, Sewell and Associates, Inc., independent
petroleum engineers.
*27.1 Financial Data Schedule.
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* Filed herewith.
# Identifies management contracts and compensatory plans or arrangements.