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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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 (I.R.S. EMPLOYER IDENTIFICATION NO.)
OR ORGANIZATION)
1001 FANNIN, SUITE 1700
HOUSTON, TEXAS 77002-6714
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 951-4700
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Stock, par value $.10 per share 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 11, 1994, 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
$876,067,940.
Indicate the number of shares outstanding of each of the registrant's
classes of Common Stock, as of the latest practicable date.
OUTSTANDING
AT MARCH
CLASS 11, 1994
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Common Stock, par value $.10 per share 36,064,649
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT PART OF FORM 10-K
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(1) Annual Report to Shareholders for year ended PARTS I and II
December 31, 1993
(2) Proxy Statement for Annual Meeting of PART III
Shareholders to be held on June 1, 1994
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PART I
ITEM 1. BUSINESS
Seagull Energy Corporation (the "Company" or "Seagull") is an
independent energy company primarily engaged in natural gas exploration,
development and production. The Company's operations are focused offshore
Texas and Louisiana in the Gulf of Mexico and onshore in three principal
geographic regions: (i) in the Mid-Continent Region located in western
Oklahoma and the Texas Panhandle; (ii) in the Mid-South Region, primarily in
the Arklatex area in eastern Texas and northern Louisiana and the Arkoma Basin
in eastern Oklahoma and western Arkansas; and (iii) in western Canada.
Seagull's two other business segments are also natural gas related: (i)
pipeline and marketing, which include natural gas supply, marketing and
transportation, principally in the southwestern United States; pipeline
transportation of hydrocarbon products and petrochemicals in Texas and
Louisiana; pipeline engineering, design, construction and operation; and
natural gas processing in Texas; and (ii) natural gas transmission and
distribution in Alaska. The Company was incorporated in Texas in 1973 as a
wholly owned subsidiary of Houston Oil & Minerals Corporation ("HO&M"). In
March 1981, the Company became an independent entity as a result of the
spin-off of its shares to the stockholders of HO&M. The "Company" or "Seagull"
refers to Seagull and its consolidated subsidiaries, unless otherwise indicated
or the context otherwise suggests.
For financial information relating to industry segments, see Note 15
of Notes to Consolidated Financial Statements of Seagull Energy Corporation and
Subsidiaries. The Consolidated Financial Statements of Seagull Energy
Corporation and Subsidiaries and the Notes related thereto (the "Consolidated
Financial Statements") are included in the Company's 1993 Annual Report to
Shareholders and as part of Exhibit 99.1 attached hereto. During 1993, the
Company derived no revenues and had no material assets outside the United
States. See discussions below regarding the Seagull Canada Acquisition and
interests in production licenses acquired in United Kingdom waters.
EXPLORATION AND PRODUCTION
Seagull's exploration and production ("E&P") segment is the Company's
primary growth area and is comprised of the following material direct and
indirect wholly owned subsidiaries of the Company: Seagull Energy E&P Inc.;
HO&M; Wacker Oil Inc; Seagull Midcon Inc.; Seagull Mid-South Inc., formerly
Arkla Exploration Company; and Seagull Energy Canada Ltd., formerly Novalta
Resources Inc.
On January 4, 1994, an indirect wholly owned subsidiary of Seagull
acquired all of the outstanding shares of stock of Novalta Resources Inc.
("Novalta") from Novacor Petrochemicals Ltd. (the "Seagull Canada
Acquisition"). Effective as of the January 4, 1994 Closing Date, Novalta was
amalgamated with Seagull Energy Canada Ltd., the indirect subsidiary of Seagull
that acquired Novalta. The resulting amalgamated company was named Seagull
Energy Canada Ltd. ("Seagull Canada").
Seagull Canada's assets (the "Seagull Canada Properties") consist
primarily of natural gas and oil reserves and developed and undeveloped lease
acreage concentrated principally in a small number of fields located in
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Alberta, Canada. According to reserve estimates prepared as of December 31,
1993 by the independent petroleum engineering firm, DeGolyer and MacNaughton,
the Seagull Canada Properties had proved reserves totaling 257.4 billion cubic
feet ("Bcf") of natural gas and 2.8 million barrels ("Bbl") of oil, condensate
and natural gas liquids. Approximately 80% of these reserves and 75% of
Seagull Canada's total producing wells are concentrated in 16 of 95 total
fields.
In 1993, a four-company exploration group including Seagull was
awarded four production licenses in United Kingdom waters. The awards gave
Seagull a 10% interest in three licenses in the Irish Sea totaling 398,319
acres and a 20% interest in a fourth license in the North Sea which totals
60,785 acres. Seismic studies and other evaluation activities on the licensed
blocks have been ongoing since mid-1993. The first two of eight planned
exploratory wells are scheduled during the latter part of 1994. During the
first quarter of 1994, Seagull increased its interests in these licenses to 20%
and 30%, respectively. Seagull anticipates that its share of
exploration-related costs will approximate $13 million over the next five years
as the program is currently structured.
Seagull also has an active ongoing exploration program that has
resulted in numerous natural gas discoveries since 1988 in the Gulf of Mexico,
primarily in shallow waters off the central Texas Gulf Coast. The Company has
in the past financed its gas and oil exploration and development activities
through internally generated funds, bank borrowings and participation by
industry partners on a prospect-by-prospect basis. The Company believes that
its gas and oil exploration and development activities in the foreseeable
future will be financed by internally generated funds. In 1994, the Company
expects E&P capital expenditures to total approximately $160 million. Of this
amount, about $50 million will be devoted to exploration, primarily in the
Seagull Trend and elsewhere in the Gulf of Mexico, $100 million to development
and $10 million to leasehold acquisition. Of the expected development capital
expenditures, about $34 million is targeted for the Mid-South Region, $31
million for the Gulf of Mexico, $20 million for the Mid-Continent Region and
$15 million for Western Canada. By comparison, 1993 capital expenditures for
E&P activities totaled $98 million.
Revenues from the sale of gas and liquids accounted for 60%, 38% and
32% of the Company's consolidated revenues for 1993, 1992 and 1991,
respectively. 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. Gas production in 1993 increased primarily as a result of
contributions attributable to properties in the Mid-South Region acquired in
December 1992. Production of gas and liquids for 1993 averaged 279.5 million
cubic feet ("MMcf") per day ("MMcf/d") and 4,641 Bbl per day ("Bbl/d"),
respectively, compared to 104.2 MMcf/d and 3,494 Bbl/d, respectively, in
1992.
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Seagull's principal gas and oil properties include the following:
Average Net Daily Production
for the Year Ended
At December 31, 1993 December 31, 1993
--------------------------- ------------------------------
Proved
Number of Reserves Natural Gas Liquids
Field/Province State Gross Wells (Bcfe) (1) (MMcf) (Bbl)
-------------- ----- ----------- ---------- ----------- -------
UNITED STATES
Mid-South Region:
Arklatex Area:
Carthage . . . . . . . . . Texas 242 194 27.4 631
Waskom . . . . . . . . . . Texas 77 66 17.6 129
Ruston . . . . . . . . . . Louisiana 48 47 10.0 109
Sligo . . . . . . . . . . . Louisiana 73 16 4.4 32
Arkoma Basin:
Cecil . . . . . . . . . . . Arkansas 223 73 26.6 -
Aetna . . . . . . . . . . . Arkansas 151 35 12.4 -
Wilburton . . . . . . . . . Oklahoma 69 25 11.4 -
Other . . . . . . . . . . . . . . . . . . . 332 145 49.0 962
Mid-Continent Region:
Panhandle West . . . . . . . Texas 61 59 12.7 2
Panhandle Gray . . . . . . . Texas 119 31 0.3 677
Watonga-Chickasha . . . . . . Oklahoma 221 40 11.4 73
Strong City . . . . . . . . . Oklahoma 96 35 11.4 99
Other . . . . . . . . . . . . . . . . . . . 340 78 17.5 325
Offshore Texas . . . . . . . . . . . . . . . 46 92 55.9 197
Offshore Louisiana . . . . . . . . . . . . . 13 49 6.2 367
Gulf Coast Onshore . . . . . . . . . . . . . 29 19 5.3 1,038
----- ----- ----- -----
2,140 1,004 279.5 4,641
===== ===== ===== =====
CANADA (2)
Alberta . . . . . . . . . . . . . . . . . . . 648 272 49.9 797
Saskatchewan . . . . . . . . . . . . . . . . 10 2 - 334
----- ----- ----- -----
658 274 49.9 1,131
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(1) The equivalent of one billion cubic feet ("Bcfe") of natural gas.
Liquids are converted to gas at a ratio of one barrel of liquids per
six Mcf ("Mcf" represents one thousand cubic feet) of gas, based on
relative energy content.
(2) The Seagull Canada Properties were acquired on January 4, 1994 in
connection with the Seagull Canada Acquisition. Average net daily
production amounts assume the Seagull Canada Acquisition occurred on
December 31, 1992.
For additional information relating to the Company's gas and oil
reserves, based substantially upon reports of Netherland, Sewell & Associates,
Inc. (for the years ended December 31, 1993 and 1992), DeGolyer and MacNaughton
(for the years ended December 31, 1993, 1992 and 1991), Ryder Scott Company
(for the years ended December 31, 1993, 1992 and 1991), and K&A Energy
Consultants, Inc. and R. A. Lenser & Associates, Inc. (for the year ended
December 31, 1991), independent petroleum engineers (collectively the
"Engineers"), see Note 4 of the Consolidated Financial Statements included in
the Company's 1993 Annual Report to Shareholders and as part of Exhibit 99.1
attached hereto. The Engineers provided the estimates of "proved developed and
undeveloped reserves" and "proved developed reserves" at the beginning and end
of each of the three years included in Note 4. Under "Standardized Measure of
Discounted Future Net Cash Flows" in Note 4, the Engineers provided all
information except "discounted income taxes" and "standardized
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measure of discounted future net cash flows". All information in Note 4 not
provided by the Engineers was supplied by the Company. As required, Seagull
also files estimates of gas and oil reserve data with various governmental
regulatory authorities and agencies. The basis for reporting reserves to these
authorities and agencies, in some cases, may not be comparable. However, the
difference in estimates does not exceed five %.
The future results of this segment will be affected by the market
prices of natural gas and liquids. The availability of a ready market for gas
and liquids products in the future will depend on numerous factors beyond the
control of the Company, including weather, production of other domestic natural
gas and liquids products, imports, marketing of competitive fuels, proximity
and capacity of gas and liquids pipelines and other transportation facilities,
any oversupply of gas and liquids products, the regulatory environment and
other domestic and political events, none of which can be predicted with
certainty. As in the past, the Company would expect to curtail gas production
during times of inferior prices. However, due to the sustained improvements in
natural gas prices and demand throughout 1993 and various field operating
considerations, Seagull does not anticipate curtailing gas sales in the coming
year to the significant extent of curtailments in years prior to 1993.
GAS AND OIL DRILLING ACTIVITIES
Seagull's gas and oil exploratory and developmental drilling
activities are as follows for the periods indicated. Totals shown in each
category include wells completed as productive wells and wells abandoned as dry
holes. A well is considered productive for purposes of the following table if
it justifies the installation of permanent equipment for the production of gas
or oil. A well is deemed to be a dry hole if it is determined to be incapable
of commercial production. 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.
Year Ended December 31,
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1993 1992 1991
Gross Net Gross Net Gross Net
----- --- ----- --- ----- ---
Exploratory Drilling:
Productive Wells . . . . 8 5.19 3 1.28 8 2.86
Dry Holes . . . . . . . . 19 9.20 12 5.51 10 6.38
Development Drilling:
Productive Wells . . . . 100 54.62 24 16.11 24 16.23
Dry Holes . . . . . . . . 22 13.71 2 0.73 6 3.87
From January 1, 1994 to February 28, 1994, the Company has drilled 1
gross (0.66 net) successful exploratory well and 1 gross (1.0 net) dry
exploratory well. In addition, the Company has drilled 12 gross (7.70 net)
successful development wells. The Company is currently drilling 1 gross (0.50
net) exploratory well and 21 gross (15.46 net) development wells. As of the
beginning of 1994, the Company had an inventory of approximately 90 exploratory
prospects, including at least 20 in Canada.
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PRODUCTION
The following table summarizes the Company's production, average sales
prices and lifting costs for the periods indicated:
Year Ended December 31,
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1993 1992 1991
---- ---- ----
Net Production:
Gas (MMcf) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102,025 38,137 32,906
Oil and condensate (Mbbl)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,412 1,014 1,111
Natural gas liquids (Mbbl) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282 265 225
Combined (MMcfe) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112,188 45,809 40,922
Average sales price (2):
Gas (per Mcf) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.99 $ 1.85 $ 1.69
Oil and condensate (per Bbl) . . . . . . . . . . . . . . . . . . . . . . . . . . . $16.72 $18.60 $20.30
Natural gas liquids (per Bbl) . . . . . . . . . . . . . . . . . . . . . . . . . . . $11.10 $10.20 $11.17
Combined (per Mcfe) (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.03 $ 2.01 $ 1.97
Average lifting costs of gas and liquids (per Mcfe) (4) . . . . . . . . . . . . . . . $ 0.47 $ 0.57 $ 0.59
(1) Thousands of Bbl ("Mbbl").
(2) Before deduction of production, severance, and other taxes.
(3) The equivalent of one thousand cubic feet ("Mcfe") of natural gas.
(4) Lifting costs represent costs incurred to operate and maintain wells
and related equipment and facilities. These costs include, among
other things, repairs and maintenance, workover expenses, labor,
materials, supplies, property taxes, insurance, severance taxes and
transportation costs.
The following table sets forth information regarding the number of
productive wells in which the Company held a working interest at December 31,
1993. 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 (2) Net (2)
--------- -------
Gas (1) 1,840 896.31
Oil 305 159.52
----- --------
Total 2,145 1,055.83
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(1) Includes 314 gross (152.36 net) gas wells with multiple completions.
(2) Excludes 643 gross (346.10 net) gas wells and 15 gross (10.40 net) oil
wells acquired January 4, 1994 in connection with the Seagull
Canada Acquisition.
For additional information relating to gas and oil producing
activities, see Note 4 of the Consolidated Financial Statements included in the
Company's 1993 Annual Report to Shareholders and as part of Exhibit
99.1 attached hereto.
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PRODUCTIVE AND UNDEVELOPED GAS AND OIL ACREAGE
As of December 31, 1993, the Company owned working interests in the
following developed and undeveloped gas and oil acreage in the United States:
Developed (1) Undeveloped (1)
------------------------------ ------------------------------
Gross Net (2) Gross Net (2)
----- ------- ----- -------
Onshore:
Oklahoma . . . . . . . . . . . . . . . 393,005 127,711 119,645 49,169
Arkansas . . . . . . . . . . . . . . . 348,363 96,946 86,011 57,793
Texas . . . . . . . . . . . . . . . . . 183,988 82,981 36,008 13,724
Louisiana . . . . . . . . . . . . . . . 53,717 25,672 9,986 8,364
Mississippi . . . . . . . . . . . . . . 24,355 11,139 28,582 13,518
Other . . . . . . . . . . . . . . . . . 8,779 6,450 9,837 7,477
Bays and State Waters . . . . . . . . . . 1,045 792 8,398 6,970
Federal Offshore:
Texas . . . . . . . . . . . . . . . . . 133,624 57,624 119,685 73,956
Louisiana . . . . . . . . . . . . . . . 39,658 15,758 84,259 54,821
--------- ------- ------- -------
Total . . . . . . . . . . . . . . . . . . 1,186,534 425,073 502,411 285,792
========= ======= ======= =======
(1) Excludes 396,800 gross (195,985 net) developed acres and 451,510 gross
(244,010 net) undeveloped acres acquired January 4, 1994 in connection
with the Seagull Canada Acquisition.
(2) 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, 1993, the Company owned mineral
and/or royalty interests in 375,488 gross (45,547 net) developed and 158,447
gross (28,040 net) undeveloped gas and oil acreage.
The Company also currently owns interests in production licenses
covering 459,104 gross (97,899 net) undeveloped acres in United Kingdom waters
(see discussion above regarding interests in production licenses acquired in
United Kingdom waters).
COMPETITION
The Company's competitors in gas and oil 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.
MARKETS
The Company believes there currently exists a very delicate balance
between supply and demand in the marketplace. Extreme fluctuations in weather
conditions may cause a real or perceived imbalance at any given time,
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in any given area of the United States or Canada. Although markets project
their usage well in advance of actual purchases based on historical data and
weather forecasting, the projections may be adjusted for unexpected weather
conditions, creating a temporary increase or decrease in demand. These
unexpected demand fluctuations, combined with conservation and competition from
alternative fuels, continue to cause radical swings in gas prices. Monthly
pricing indices often do not follow the trends of prior years and, with each
passing month, average price projections continue to be adjusted and revised.
REGULATION
UNITED STATES
Aspects of the production, sale and transportation of natural gas and
crude oil in federal Outer Continental Shelf waters are regulated pursuant to
various federal statutes, including the Outer Continental Shelf Lands Act
("OCSLA"). The interstate transportation of natural gas is regulated under the
Natural Gas Act ("NGA") or the Natural Gas Policy Act of 1978 ("NGPA"). Until
January 1, 1993, certain first sales (generally, wellhead or producing field
sales) of natural gas remained price regulated under the NGPA. Effective
January 1, 1993, all price-regulation of first sales of natural gas was
eliminated by the Natural Gas Wellhead Decontrol Act of 1989.
Operations conducted by the Company on federal gas and oil leases must
comply with numerous statutory and regulatory restrictions. Additionally,
certain operations must be conducted pursuant to appropriate permits issued by
government agencies, such as the Bureau of Land Management and the Minerals
Management Service of the Department of Interior and, in regard to certain
federal leases, prior approval of drill site locations must be obtained from
the Environmental Protection Agency.
In all states in which the Company engages in gas and oil exploration
and production, its activities are subject to regulation. These regulations
generally require permits for the drilling and spacing of wells, the prevention
of waste of gas and oil reserves, the prevention and cleanup of pollution and
other matters. Government agencies in various states regulate, among other
things, the amount and rate of gas and oil production. The states of Texas and
Oklahoma have recently revised their regulations regarding proration of
production. These kinds of regulations by state agencies may affect
determinations of deliverability under certain of the Company's gas purchase
contracts and thereby affect the purchasers' volumetric purchase obligations.
In addition to the proration changes, Oklahoma has promulgated regulations
pursuant to Senate Bill 168, which governs sharing of gas markets among working
interest owners and disbursement of royalty proceeds.
Over the past several years, the Federal Energy Regulatory Commission
(the "FERC") has issued certain orders that have brought sweeping changes to
the fundamental regulatory structure governing interstate sales and
transportation of natural gas. Collectively, these orders have changed the gas
pricing structure and altered the traditional relationship among producers,
pipelines and end-use markets. Most pipelines are in the process of
transforming themselves from their strictly-merchant role to a combination of
merchant and open-access transporter. Producers frequently contract directly
with end-users or other gas buyers and, if the transporting pipeline
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is open-access, transportation services can be arranged by either the buyer,
the seller or a broker on a first-come, first-serve basis. These FERC orders
therefore provide the Company with greater marketing options.
CANADA
Seagull Canada has exploration and development operations in Alberta
and Saskatchewan. The oil and natural gas industry is subject to extensive
controls and regulations imposed by various levels of government in Canada.
Natural Gas Pricing
Prior to deregulation of natural gas markets, prices in Canada were
legislated by the government having jurisdiction. In the current deregulated
environment, the price of natural gas is determined by negotiation between
buyers and sellers. Exports of natural gas require approvals similar to those
required for exports of oil, as described below.
Crude Oil Pricing
Since June 1, 1985, producers of oil have been entitled to negotiate
sales contracts directly with oil purchasers. Oil exporters are entitled to
export oil pursuant to contracts, the terms of which do not exceed one year in
the case of light crude and two years in the case of heavy crude, provided that
an order approving the export has been obtained from the Natural Energy Board
("NEB"). Any export to be made pursuant to a contract of a longer duration
requires the exporter to obtain a license from the NEB, and the issuance of
such a license requires the approval of the Governor General in
Council.
Provincial Royalties and Incentives
The royalty regime is a significant factor in the profitability of oil
and gas production. Royalties payable on production from lands other than
Crown lands are determined by negotiations between the mineral owner and the
lessee. Crown royalties are determined by government regulation and are
generally calculated as a percentage of the value of the gross production; the
rate of royalties payable depends in part on well productivity and field
discovery date. From time to time the governments of Canada, Alberta and
Saskatchewan have established incentive programs which have included royalty
rate reductions, royalty holidays and tax credits for the purpose of
encouraging oil and gas exploration.
In November 1991, the Government of Alberta announced temporary
royalty incentives for oil exploration and development. The relief program
provides for: (i) a two year royalty holiday for oil exploration wells drilled
between November 1, 1991 and March 31, 1992 and a one year royalty holiday for
exploratory wells drilled between April 1, 1992 and March 31, 1993 and an extra
one year royalty holiday for exploratory wells drilled in the foothills and
northern regions of the Province, with a cap of $1 million per well; (ii) a one
year royalty holiday on development oil wells drilled between November 1, 1991
and March 31, 1993 with a cap of $400,000 per well; (iii) a five year royalty
holiday for reactivated oil wells which obtained a well license prior to July
30, 1993 and which have been continuously inactive since August 31, 1990, with
a 25,000 barrel cap which was raised to
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50,000 barrels pursuant to the October 13, 1992 announcement; and (iv) new oil
royalty rates for reactivated wells.
On October 13, 1992, the Government of Alberta announced major changes
to its royalty structure and permanent incentives for exploring and developing
oil and gas reserves. The regulations incorporating these changes were adopted
on January 20, 1993. The significant changes announced include the following:
(i) new oil discovered after September 30, 1992 will have a permanent one year
oil royalty holiday, subject to a maximum of $1 million and a reduced royalty
rate thereafter; (ii) reduction of royalties on existing production of oil and
gas; (iii) incentives by way of royalty holidays and reduced royalties on
reactivated and horizontal wells; (iv) introduction of separate par pricing for
light, medium and heavy oil; and (v) modification of the royalty formula
structure to provide for sensitivity to price fluctuations.
The Government of Alberta recently announced a plan to simplify the
natural gas royalty scheme. The regulations are not yet available and it is
anticipated the new scheme will take effect some time in 1994.
A price and productivity sensitive royalty structure for crude oil and
natural gas in the Province of Saskatchewan has been in effect since 1987. The
royalty structure provides for royalty holidays for certain categories of wells
drilled in the Province of Saskatchewan and royalties which vary with the price
of a particular commodity.
For a description of regulation of environmental matters affecting
Seagull Canada, see Environmental Matters below.
PIPELINE AND MARKETING
Seagull is involved in the pipeline transportation of natural gas,
hydrocarbon products and petrochemicals in Texas, Louisiana and Mississippi.
In addition, the Company is engaged in pipeline engineering, design,
construction and operation, natural gas processing, third-party natural gas
marketing and the marketing of Seagull's natural gas and liquids production.
Revenue from the pipeline and marketing segment accounted for 11%, 16% and 15%
of the Company's consolidated revenues for 1993, 1992 and 1991,
respectively.
GAS PIPELINES
The Company owns and operates short and medium length gathering
pipelines that carry gas from producing fields to other pipelines which are
owned by utility companies, large gas transmission companies, or others, and to
industrial customers (referred to herein collectively as "Gas Purchasers").
The Company owns and operates 22 onshore and offshore natural gas gathering
systems having an aggregate length of approximately 431 miles. Seagull's gas
pipelines, which do not form an interconnected system, are principally located
in Texas, Louisiana and offshore along the Texas coast. In addition, the
Company owns partial interests in and operates two other offshore gas
pipelines.
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Seagull transports gas under arrangements where customers are charged
a fee for gas carried through Seagull's pipelines. Seagull also delivers gas
through its pipelines pursuant to contracts whereby it purchases and resells
gas. In the case of purchase and sales contracts, the margin between Seagull's
cost of gas and its resale revenues constitutes, in effect, a transportation
fee.
Natural gas producers prefer flexibility in commitment of gas reserves
both as to term and pricing. Some of the wells connected to the Company's
pipelines are not dedicated to those pipelines. It is probable that most gas
wells currently connected to the Seagull gas gathering systems will remain
connected from year to year with deliverability of reserves declining until
depleted. It is no longer practical for a major pipeline company to consider
gas reserves to be firmly committed to its facilities. Several systems are
located in good prospective gas development areas where some new gas wells have
been drilled, and more development may occur. In areas of active drilling, it
is likely that new wells and additional gas volumes can be added to the
systems.
The following table shows the volumes of gas transported for
the periods shown:
Year Ended December 31,
---------------------------------------------------
1993 1992 1991
---- ---- ----
Volume (MMcf):
Sales Contracts . . . . . . . . . . . . . . . . . . . . . . . . 1,419 2,290 3,734
Transportation Fee Arrangements . . . . . . . . . . . . . . . . 112,081 69,660 66,602
------- ------ ------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113,500 71,950 70,336
======= ====== ======
HYDROCARBON PRODUCTS AND PETROCHEMICAL PIPELINES
The Company owns and/or operates pipelines for the transportation of
liquid hydrocarbon products and petrochemicals. Seagull operates seven such
pipelines, four of which it owns and all of which are located in
Texas and Louisiana.
GAS MARKETING
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.
Marketing profit margins are often small due to competition, and
results can vary significantly from month to month. 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.
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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 operation 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 recognized operating profit in 1993 on an 8.7 mile, 16-inch gas
pipeline that Seagull constructed for an international exploration company from
a platform to a gathering pipeline offshore Louisiana. The project was
completed in early 1994.
Historically, the Company has not been engaged in pipeline
construction projects on a regularly recurring basis. Seagull had no other new
construction projects in 1993 and none are currently pending; however, Seagull
is currently conducting marketing efforts in order to generate new
projects.
GAS PROCESSING
The Company owns interests in a number of gas processing plants. The
largest of the plants is located in Matagorda County, Texas (the "Matagorda
Plant"), and has been in operation since March 1981. Seagull owns a 65%
undivided interest in and operates the Matagorda Plant, and the other 35%
interest is owned by a subsidiary of Enron Corp.
The Matagorda Plant processes natural gas, producing a full-range
demethanized raw mix products stream. The actual throughput at the Matagorda
Plant varies depending upon gas sales demand and production-related mechanical
factors. For the year ended December 31, 1993, throughput averaged
approximately 244 MMcf/d, which is close to the maximum design capacity of 250
MMcf/d but is slightly lower than the prior year. Throughput volumes are
expected to remain at the same level for the foreseeable future. Profitability
will depend largely on the relative prices of products and natural gas.
COMPETITION
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.
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
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to compete depends upon building strong relationships with producers and
end-users by consistently purchasing and supplying gas at competitive prices.
REGULATION
Government regulation has a significant effect on various segments of
the Company's pipeline operations. Its pipeline systems are regulated by state
regulatory commissions with respect to safety, location and other
matters.
The FERC has jurisdiction over, among other things, the construction
and operation of pipelines and related facilities used in the transportation,
storage and sale of natural gas in interstate commerce. The FERC also has
jurisdiction over the rates and charges levied by companies subject to the NGA
for the transportation of natural gas in interstate commerce and for the sale
of natural gas for resale in interstate commerce. At the Company's request,
FERC has decertified the Company's former interstate facility and it is no
longer subject to NGA jurisdiction.
Sales of natural gas by the Company's marketing subsidiary were
generally not regulated by the FERC prior to January 1, 1993, and will not be
subject to any FERC regulation on or after that date. Transportation and sales
for resale of gas in interstate commerce by the Company's intrastate pipelines
are regulated by the FERC pursuant to Section 311 of the NGPA. Section 311
permits intrastate pipelines to engage in certain transactions with interstate
pipelines and their customers without being regulated as interstate pipelines
under the NGA, thus allowing more flexibility in operations between intrastate
and interstate gas pipeline companies. The FERC has revised its Section 311
regulations to allow intrastate pipelines to transport gas destined for
interstate commerce under new self-implementing blanket certificates. The
Company currently offers these services on several of its intrastate pipelines.
In April 1992, the FERC issued its Order No. 636 (and related orders),
which basically requires interstate pipelines to "unbundle" or separate their
transportation services from their merchant sales of gas. This permits
end-users of gas to contract directly with producers to purchase gas and to
contract separately with pipelines for transportation services. As the
interstate pipelines began operating under Order No. 636 during 1993, new
opportunities were created throughout the industry. While it remains difficult
to predict the ultimate impact Order No. 636 will have on the Company, new
opportunities to market and transport natural gas are being explored by the
Company. The extensive regulatory proceedings required under this order have
not directly affected the Company's pipelines significantly to date.
With regard to pipeline design, construction, operation and
maintenance, state regulatory commissions generally have the authority to take
all steps necessary to ensure compliance by intrastate pipeline and gathering
companies with applicable safety regulations. The FERC also regulates certain
aspects of intrastate pipeline construction related to Section 311
transportation or storage services. The Company is also subject to safety
regulations imposed by the Office of Pipeline Safety of the Department of
Transportation (the "DOT"), promulgated pursuant to the Natural Gas Pipeline
Safety Act of 1968 and enforced by the Railroad Commission.
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Pursuant to regulations regarding drug abuse enacted by the DOT and
adopted by the Railroad Commission, the Company has implemented a drug abuse
program that strives for a safe and drug-free workplace for its employees.
ALASKA TRANSMISSION AND DISTRIBUTION
The Company operates in Alaska through its ENSTAR Natural Gas Company
division ("ENG") and Alaska Pipeline Company ("APC"), an Alaska corporation and
a wholly owned subsidiary. APC and ENG are regulated by the Alaska Public
Utilities Commission (the "APUC") as a single operating unit, ENSTAR Alaska
("ENSTAR Alaska"). APC engages in the intrastate transmission of natural gas
in South-Central Alaska. ENG engages in the distribution of natural gas in
Anchorage and other nearby communities in Alaska and is APC's only customer.
Revenues from the natural gas transmission and distribution segment accounted
for 29%, 46% and 52% of the Company's consolidated revenues for 1993, 1992 and
1991, respectively.
ENSTAR Alaska's predecessor was formed and began serving the Anchorage
area with natural gas in 1961. Five years later, in 1966, the predecessor
became one of the original entities that formed Alaska Interstate Company, a
newly organized public company the shares of which were traded on the New York
Stock Exchange. Alaska Interstate Company changed its name to ENSTAR
Corporation in 1982.
In 1985, the Company purchased ENSTAR Alaska for $55 million in cash
plus $10 million in the form of a seven-year unsecured, 10% subordinated note.
At the time of the acquisition, APC had outstanding debt of approximately $65
million. The transaction received the final approval of the APUC in June 1985.
GAS TRANSMISSION SYSTEM
APC 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 71 miles of smaller diameter pipeline. The system's
present design delivery capacity is approximately 410 MMcf/d.
GAS DISTRIBUTION SYSTEM
ENG distributes natural gas through approximately 1,916 miles of gas
mains to approximately 88,200 residential, commercial, industrial and electric
power generation customers within the cities and environs of Anchorage, Eagle
River, Palmer, Wasilla, Soldotna, Kenai and the Nikiski area of the Kenai
Peninsula, Alaska. During the year ended December 31, 1993, ENG added
approximately 55 miles of new gas distribution mains, installed 1,791 new
service lines and added approximately 1,800 net customers. ENG anticipates
relatively modest growth in its residential customer base and will install
additional main and service lines to accommodate this growth.
ENG distributes gas to its customers under tariffs which provide for
varying delivery priorities. ENG's business is seasonal with approximately 65%
of its sales made in the first and fourth quarters of each year.
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In 1993, purchase/resale volumes represented 72% of ENG's throughput.
The remaining volumes are transported for power and industrial customers for a
transportation fee. Purchase/resale volumes accounted for 91% of ENG's
operating margin in 1993.
ENG's five largest customers are Municipal Light and Power ("ML&P"),
an electric utility; the U. S. Air Force; the U. S. Army; the Anchorage School
District; and Unocal Corporation. Together, they account for about $6.8
million in annual operating margin and about 14 Bcf per year in volumes, which
represent about 14% and 35%, respectively, of ENG totals.
GAS SUPPLY
In May 1988, the Company entered into a contract (the "Marathon
Contract") with Marathon Oil Company ("Marathon") providing for the delivery of
approximately 450 Bcf of gas. The Marathon Contract is a "requirements"
contract with no specified daily deliverability or annual take-or-pay
quantities. APC has agreed to purchase and Marathon has agreed to deliver all
of APC'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 of $1.55 per Mcf plus reimbursements for
any severance taxes and other charges. The base price is subject to annual
adjustment based on changes in the price of certain traded oil futures
contracts. During 1993, the cost of gas purchased under the Marathon Contract
averaged $2.00 per Mcf, including reimbursements for severance taxes. The
Marathon Contract, as amended, has been approved by the APUC.
Effective January 1, 1992, APC amended a gas purchase contract with
Shell Oil Company and ARCO Alaska, Inc. (the "Shell Contract") to extend the
term of the contract through the year 2009, modify the price, delivery and the
deliverability provisions and provide procedures for reducing take-or-pay
volumes for the effect of APC sales volumes that are displaced by gas sales
made by others. The Shell Contract provides for the delivery of up to
approximately 220 Bcf of gas. The amendments revised the price to a base price
of $1.971 per Mcf plus reimbursements for any severance taxes and an annual
adjustment based on changes in the price of certain traded oil futures
contracts from the relevant base price. Certain portions of the gas purchased
under the amendments may be priced under a pricing term similar to the Marathon
Contract. The 1993 price under the Shell Contract, after application of
contractual adjustments, was approximately $2.03 per Mcf, including
reimbursements for severance taxes. The amendments provide for varying
deliverability, before displaced gas sales adjustments, up to a maximum of 110
MMcf/d through 1995, and take-or-pay quantities, before displaced gas sales
adjustments, up to a maximum of 15.4 Bcf per year through 1994. The Shell
Contract, as amended, has been approved by the APUC.
Combined, the Marathon and Shell Contracts will supply all of ENSTAR
Alaska's gas supply requirements through the year 2001, after which time the
annual limitations contained in the Marathon Contract begin to take effect.
Based on gas purchases during the twelve months ended December 31,
1993, which are not necessarily indicative of the volume of future purchases,
APC's
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gas reserves committed under the Marathon and Shell Contracts would have a
current reserve life index of approximately 14 years.
ENSTAR Alaska's average cost of gas sold in 1993, 1992 and 1991 was
$2.07, $1.94 and $2.32 per Mcf, respectively. The average price of gas sold by
ENSTAR Alaska in 1993, 1992 and 1991 was $3.56, $3.41 and $3.64 per
Mcf, respectively.
As stated above, ENSTAR Alaska purchases all of its natural gas under
contracts in which the price is indexed to crude oil futures contracts.
However, because ENSTAR Alaska's sales prices are adjusted to include the
projected cost of its 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 fuel oil prices due to world-wide political events and changing
market conditions.
ENSTAR Alaska has no material take-or-pay obligations and does not
anticipate any such obligations in the foreseeable future.
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.
A 90-megawatt hydroelectric facility at Bradley Lake, completed in
September 1991, reduced ENSTAR Alaska's lower-margin power volumes by
approximately 1.0 to 1.5 Bcf per year. ENSTAR Alaska's margin on gas sales was
reduced by approximately $500,000 to $750,000 per year as a result of this
facility.
During the last five years, ENSTAR Alaska's natural gas volumes
delivered on a purchase/resale basis have declined primarily due to two of its
major customers electing to purchase gas directly from gas producers. During
the fourth quarter of 1991, ML&P the larger of the two customers, began
purchasing gas directly from three gas producers, which displaced gas sales of
approximately 8.0 Bcf per year. However, the APUC has approved a tariff
allowing ENSTAR Alaska to transport these volumes from ML&P's purchase points
to the ML&P electric generation facilities for a transportation fee that
approximates the margin that would have been earned had ML&P remained a sales
customer rather than becoming a transportation customer. Deliveries of gas to
ML&P during 1993, 1992 and 1991 amounted to approximately 18%, 19% and 19%,
respectively, of the total deliveries of gas by ENSTAR Alaska.
During 1988, Chugach Electric Association, the smaller of the two
customers, entered into a contract to purchase gas directly from a producer.
The contract became effective on April 1, 1989, displacing gas sales of
approximately 1.3 Bcf per year. However, ENSTAR Alaska continues to transport
these volumes, although at a lower fee than the margin earned on sales volumes.
The net result of this loss of business was approximately $800,000 in operating
margin per year.
If any other existing large customer of ENSTAR Alaska chooses to
purchase gas directly from producers, ENSTAR Alaska would expect to collect
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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 pipeline by-pass.
ENSTAR Alaska supplies natural gas to its customers at prices that at
the present time economically preclude substitution of alternative fuels.
Since the Shell 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 or by
changes in the price of oil or refined products.
REGULATION
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. The rates, services and operations of ENSTAR Alaska
are subject to regulation by the APUC.
In May 1986, the APUC granted ENSTAR Alaska a rate increase of 3.26%
and authorized a 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.
The Company is a "public utility company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended (the "1935 Act"). In
March 1991, the Company filed in good faith with the Securities and Exchange
Commission (the "SEC") an application 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. was
the beneficial owner (albeit within the meaning of Section 13(d) of the
Securities Exchange Act of 1934) of 2,891,574 shares, which is approximately 8%
of the Common Stock as of February 28, 1994. However, although FMR Corp.'s
ownership and control, within the meaning of the 1935 Act, has fallen below 10%
of the outstanding voting stock of the Company, the Company does not currently
intend to withdraw the FMR Application.
In December 1993, Seagull filed in good faith with the SEC an
additional application 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
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recent information furnished to the Company by the Equitable Entities, the
Equitable Entities were the beneficial owners (albeit within the meaning of
Section 13(d) of the Securities Exchange Act of 1934) of 3,399,600 shares,
which represents approximately 9.4% of the Common Stock as of February 28,
1994. However, although the Equitable Entities' ownership and control has
fallen below 10% of the outstanding voting stock of the Company, the Company
does not currently intend to withdraw the Equitable Application.
Even if FMR Corp. or the Equitable Entities held greater than 10% of
the outstanding voting stock of the Company, as a result of its good faith
filing of the two applications, the Company currently would 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
applications. To date, no such order has been issued. The Company believes
that the FMR Application and the Equitable Application ultimately should
be granted.
ENVIRONMENTAL MATTERS
Seagull, as an owner and operator of oil and gas properties, is
subject to various federal, state, local and foreign country laws and
regulations relating to discharge of materials into, and protection of, the
environment. These laws and regulations may, among other things, impose
liability on the lessee under an oil and gas lease for the cost of pollution
clean-up resulting from operations, subject the lessee to liability for
pollution damages, require suspension or cessation of operations in affected
areas and impose restrictions on the injection of liquids into subsurface
aquifers that may contaminate groundwater. For a discussion of the Gulf Coast
Vacuum Site matter, see Legal Proceedings below.
Seagull Canada's oil and gas operations are largely regulated by the
Energy Resources Conservation Board ("ERCB") for the province of Alberta and
the Energy and Mines Board for the province of Saskatchewan ("SEM"). These
bodies enforce legislation which regulates all aspects of exploration,
development and production, including the licensing of wells, pipelines and
facilities. Environmental legislation provides for restrictions and
prohibitions on releases or emissions of various substances produced in
association with certain oil and gas industry operations. In addition,
legislation requires that well and facility sites must be abandoned and
reclaimed to the satisfaction of provincial authorities, typically to
pre-disturbance quality. A breach of such legislation may result in the
imposition of fines and penalties.
Environmental legislation in Alberta has recently undergone a major
revision to update and consolidate the various acts applicable into the
Environmental Protection and Enhancement Act, which was proclaimed on April 21,
1993 and took effect on September 1, 1993. The Act imposes stricter
environmental standards requiring more stringent compliance and significantly
increased penalties.
Seagull has made and will continue to make expenditures in its efforts
to comply with these requirements, which it believes are necessary business
costs in the oil and gas industry. Although environmental requirements do have
a substantial impact upon the energy industry, generally these
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requirements do not appear to affect Seagull any differently or to any greater
or lesser extent than other companies in the industry.
Seagull maintains insurance coverages which it believes are customary
in the industry, although it is not fully insured against all environmental
risks. The Company is not aware of any environmental claims existing as of
December 31, 1993, which would have a material impact upon the Company's
financial position or results of operations. Seagull does not believe that
compliance with federal, state, local or foreign country provisions regulating
the discharge of materials into the environment, or otherwise relating to the
protection of the environment, will have a material adverse effect upon the
capital expenditures, earnings or competitive position of the Company or its
subsidiaries, but there is no assurance that changes in or additions to laws or
regulations regarding the protection of the environment will not have such an
impact. Seagull has established policies that provide for continuing
compliance with environmental laws and regulations, as well as operational
procedures designed to limit the environmental impact on its field facilities.
EMPLOYEES
As of February 28, 1994, the Company had 742 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 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 70% of ENSTAR Alaska's work force. Contracts effective
April 1, 1992 were negotiated that set wages and work relationships extending
to April 1, 1995 for the clerical bargaining unit and until April 1, 1996 for
the operating bargaining unit. 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.
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EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company, each of whom has been elected
to serve until his or her successor is elected and qualified, are as follows:
Years Served Years in
As Executive Current
Name Age Officer Position Positions
---- --- ------------ -------- ---------
Barry J. Galt 60 10 10 Chairman of the Board, President and Chief
Executive Officer
John W. Elias 53 1 1 Executive Vice President
Robert W. Shower 56 2 - Executive Vice President and Chief Financial
Officer
Richard F. Barnes 50 6 6 President of ENSTAR Natural Gas Company (a
division of the Company) and Alaska Pipeline
Company (a subsidiary of the Company)
John N. Goodpasture 45 12 1 President, Seagull Pipeline Company (a division
of the Company) and Senior Vice President,
Pipelines
T. P. McConn 60 5 1 President, Seagull Energy
E&P Inc. (a subsidiary of
the Company) and Senior
Vice President, Exploration and Production
Rodney W. Bridges 44 4 1 Vice President and Controller
Janice K. Hartrick 41 1 1 Chief Counsel and Vice President, Environmental
Affairs
Robert M. King 33 4 1 Vice President, Corporate Development and
Treasurer
The business experience of each of the executive officers named above
who has held the position(s) set forth opposite his or her name for less than
five years, is as follows:
Mr. Elias joined the Company in his present position in April 1993.
For the previous 30 years, he served in a variety of positions for Amoco
Production Company and its parent, Amoco Corporation, most recently as Group
Vice President of Worldwide Natural Gas for Amoco Production Company.
Mr. Shower joined the Company as Senior Vice President and Chief
Financial Officer in March 1992 and was named Executive Vice President of the
Company in December 1993. He served as Senior Vice President, Corporate
Development for Albert Fisher, Inc. from 1991 to February 1992. From 1990 to
1991, he was Vice President and Chief Financial Officer with AmeriServ Food
Company. From 1986 to 1990, he served as a Managing Director, Corporate
Finance, for Lehman Brothers Inc., formerly Shearson Lehman Hutton Inc.
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Mr. Goodpasture joined the Company in May 1980 as General Manager of
Products and Petrochemicals. He has been an executive officer of the Company
since 1981, most recently, he was named President of Seagull Pipeline Company
in March 1990, and Senior Vice President, Pipelines, in December 1992.
Mr. McConn joined Seagull in 1988 as Vice President - Production
Operations of Seagull Energy E&P Inc., one of the Company's exploration and
production subsidiaries. He was named Vice President, Exploration and
Production of the Company in January 1990 and President of Seagull Energy E&P
Inc. in March 1991. In December 1992, he was named Senior Vice President,
Exploration and Production.
Mr. Bridges joined the Company as Corporate Controller in August 1990,
and was named Vice President and Controller in December 1992. From 1988 to
1990, he was Corporate Controller for TransAmerican Natural Gas Corporation
and, for the previous six years, he was with Damson Oil Corporation, most
recently as Chief Accounting Officer.
Ms. Hartrick joined Seagull as Staff Counsel in 1987 and became Chief
Counsel in 1989. She was named Chief Counsel and Vice President, Environmental
Affairs in December 1992.
Mr. King joined the Company as Treasurer in August 1990, and was named
Vice President, Corporate Development and Treasurer in December 1992. From
1986 to 1990, he was with Mellon Bank, where he served as Vice President in the
Energy Division.
ITEM 2. PROPERTIES
Incorporated herein by reference to Item 1 of this Annual Report on
Form 10-K.
ITEM 3. LEGAL PROCEEDINGS
Gulf Coast Vacuum Site. On March 19, 1993, Franks Petroleum, Inc.
("Franks") submitted a claim to Seagull Mid-South Inc., a subsidiary of the
Company ("Seagull Mid-South"), for a portion of Franks' costs incurred in
connection with the Gulf Coast Vacuum Services Superfund Site (the "GCV Site")
in Vermillion Parish, Louisiana. The United States Environmental Protection
Agency Region 6 (the "EPA") currently is seeking the cleanup of the GCV Site
under the authority of the federal Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA").
Franks previously has been identified as a potentially responsible
party at the GCV Site as a result of Franks' arrangements with the former
operator of the GCV Site to transport wastes from various oil and gas leases
owned or operated by Franks in trucks owned by the GCV Site operator. Franks'
claim against Seagull Mid-South asserts that some of the wastes hauled by the
GCV Site operator on behalf of Franks came from a gas well owned by Seagull
Mid-South.
On February 9, 1993, the EPA also sent a notice to Houston Oil &
Minerals Corporation, a subsidiary of the Company ("HO&M"), indicating that
HO&M may be a potentially responsible party at the GCV Site. Based upon the
Company's investigation of this claim, the Company believes that the basis
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for HO&M's alleged liability is a series of transactions between HO&M and the
operator of the GCV Site that occurred during 1979 and 1980, long before
Seagull acquired HO&M.
The EPA's cleanup cost estimate of the GCV Site is in the range of $17
million, although other unofficial estimates indicate the cost may be higher.
Under certain circumstances, liability under CERCLA is joint and several,
although parties whose liability is joint and several have contribution rights
against each other under CERCLA. Nevertheless, if Seagull Mid-South and/or
HO&M is found to be a responsible party at the GCV Site, the Company believes
that its liability is unlikely to be material to its financial condition or its
results of operations because of the large number of potentially responsible
parties 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 arising from the
wells identified in the claims.
Other. The Company is a party to ongoing litigation in the normal
course of business or other litigation with respect to which the Company is
indemnified pursuant to various purchase agreements or other contractual
arrangements. 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 or results of operations,
if any, will not be material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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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 for each quarterly period during the
last two fiscal years were as follows:
High (*) Low (*)
-------- -------
1992 First Quarter 12 3/4 10 7/8
Second Quarter 14 1/4 11 3/8
Third Quarter 16 11 7/8
Fourth Quarter 16 7/8 14 5/8
High Low
----- -----
1993 First Quarter 24 1/2 14 7/8
Second Quarter 30 22 7/8
Third Quarter 32 7/8 24
Fourth Quarter 31 1/4 21
(*) Prices have been adjusted to reflect a two-for-one
split of the Common Stock effected June 4, 1993.
B. As of March 10, 1994, there were approximately 2,910 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 credit agreement (the "Credit Agreement")
restricts the Company's declaration or payment of dividends on
and repurchases of Common Stock unless each of the following
tests have been met and after making such dividend payment
such tests continue to be met: (i) the Tangible Net Worth is
not less than $350 million, (ii) the ratio of the Company's
earnings before interest expense, taxes, depreciation and
amortization to the Company's interest expense (including
operating lease rentals and capitalized interest) is not less
than 3.5:1.0, (iii) the Debt to Capitalization Ratio is less
than 60%, (iv) the aggregate amount of outstanding loans under
the Credit Agreement, together with all other senior
indebtedness of Seagull and its subsidiaries (excluding Alaska
Pipeline Company ("APC")) then outstanding, must not exceed
the Borrowing Base and (v) no Event of Default or unmatured
Event of Default shall have occurred and be continuing;
provided that in any event the aggregate dividend payments may
not exceed 33 1/3% of the
22
24
consolidated cumulative net income of Seagull and its subsidiaries on
a cumulative annual basis from January 1, 1993. The foregoing
restrictions do not apply to dividends payable solely in the form of
additional shares of Common Stock or to dividends payable on up to
$100 million of preferred stock. The capitalized terms used herein to
describe the restrictions contained in the Credit Agreement have the
meanings assigned to them in the Credit Agreement. Under the most
restrictive of these tests, as of December 31, 1993, approximately
$9.1 million was available for payment of dividends on (other than the
stock dividends described above) or repurchase of Common Stock.
However, as of January 4, 1994, immediately following the Company's
acquisition of Novalta Resources Inc., the Company's consolidated Debt
to Capitalization Ratio increased to 60.2%. In the event the
Company's consolidated Debt to Capitalization Ratio is in excess of
60% as of March 31, 1994, the Company would not be able to pay any
cash dividends on or repurchase any Common Stock under these currently
existing provisions. In addition, certain debt instruments of APC
restrict the ability of APC 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 1993 Annual Report to
Shareholders and as part of Exhibit 99.1 attached hereto.
ITEM 6. SELECTED FINANCIAL DATA(1)(2)
(Thousands of Dollars Except Per Share Amounts)
Year Ended December 31,
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
Revenues . . . . . . . . . . . . . . . . . . . . . . . 377,165 238,829 248,537 219,908 178,401
Earnings applicable to common stock (3) . . . . . . . . 27,198 6,688 5,107 20,564 7,691
Earnings per share (3)(4) . . . . . . . . . . . . . . . 0.76 0.26 0.23 1.10 1.07
Net cash provided by operating activities
before changes in operating assets
and liabilities . . . . . . . . . . . . . . . . . . . 160,762 81,368 66,654 64,822 39,167
Net cash provided by operating activities . . . . . . . 119,761 72,187 69,773 87,321 53,264
Total assets . . . . . . . . . . . . . . . . . . . . . 1,118,251 1,102,964 618,552 389,619 332,152
Long-term portion of debt . . . . . . . . . . . . . . . 459,787 608,011 219,154 49,239 113,829
Shareholders' equity (5) . . . . . . . . . . . . . . . 439,379 243,673 235,797 192,516 101,025
Capital expenditures . . . . . . . . . . . . . . . . . 112,042 43,651 71,709 50,293 33,920
Acquisitions, net of cash acquired . . . . . . . . . . 29,470 401,888 201,767 54,320 6,988
(1) Reference is made to the Consolidated Financial Statements included in
the Company's 1993 Annual Report to Shareholders and as part of
Exhibit 99.1 attached hereto.
(2) Includes Houston Oil Trust since December 31, 1989, Wacker Oil Inc.
since June 28, 1990, the Mid-Continent Assets since March 8, 1991, and
Seagull Mid-South Inc. since December 31, 1992.
(3) 1992 includes the cumulative effect of two changes in accounting
principles representing an increase in earnings of approximately $2.3
million, or $0.09 per share.
(4) Per share data have been restated to reflect a two-for-one split of
the Common Stock effected June 4, 1993.
(5) The Company has not declared any cash dividends on the Common Stock
since it became a public entity in 1981.
23
25
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 1993 Annual Report to Shareholders and as part of Exhibit
99.1 attached hereto.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated herein by reference to the Consolidated Financial
Statements and Supplementary Data included in the Company's 1993 Annual Report
to Shareholders and as part of Exhibit 99.1 attached hereto.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
24
26
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated herein by reference to "Proposal 1 - Election of
Directors" included in the Proxy Statement for the Company's Annual Meeting of
Shareholders to be held on June 1, 1994 (the "Proxy Statement"). See also
"Executive Officers of the Company" included in Part I of this Annual Report on
Form 10-K, which is incorporated by reference herein.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated herein by reference to "Proposal 1 - Election of
Directors --Executive Compensation--Summary Compensation Table",
"--Compensation Arrangements," "--Option Exercises and Fiscal Year-End Values,"
"--Option Grants," "--Executive Supplemental Retirement Plan," and "--ENSTAR
Natural Gas Company Retirement Plan"; and "Election of Directors-Compensation
of Directors" included in the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Incorporated herein by reference to "Principal Shareholders" and
"Proposal 1 - 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 "Proposal 1 - Election of
Directors--Certain Transactions and Other Matters" included in the Proxy
Statement.
25
27
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(A) 1. FINANCIAL STATEMENTS:
The following Consolidated Financial Statements and Independent
Auditors' Report thereon are included in the Company's 1993 Annual Report to
Shareholders and as part of Exhibit 99.1 attached hereto, and are incorporated
herein by reference:
Consolidated Financial Statements
Notes to Consolidated Financial Statements
Independent Auditors' Report
2. SCHEDULES: PAGE
----
Independent Auditors' Report........................ 35
Schedule II - Amounts Receivable from Related
Parties and Underwriters, Promoters, and
Employees Other Than Related Parties........ 36
Schedule V - Property, Plant and Equipment.......... 37
Schedule VI - Accumulated Depreciation,
Depletion and Amortization of Property,
Plant and Equipment......................... 38
Schedule X - Supplementary Income Statement
Information................................. 39
All other 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).
26
28
3.2 Bylaws of the Company, as amended through January
30, 1990 (incorporated by reference to Exhibit 3.2
to Quarterly Report on Form 10-Q for the quarter
ended June 30, 1993).
4.1 Note Agreement dated June 17, 1985 by and among
APC 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 (including exhibits thereto)
(incorporated by reference to Exhibit 4.1 to
Annual Report on Form 10-K for the year ended
December 31, 1990).
4.2 Form of Consent and Agreement dated April 15, 1991
by and among APC and the Insurance Companies
(including exhibits thereto) (incorporated by
reference to Exhibit 4.2 to Annual Report on Form
10-K for the year ended December 31, 1992).
4.3 Rights Agreement dated as of March 17, 1989
between the Company and NCNB Texas National Bank,
as Rights Agent, which includes the form of
Statement of Resolution setting forth the terms of
the Series B Junior Participating Preferred Stock,
par value $1.00 per share, as Exhibit A, the form
of Right Certificate as Exhibit B and the Summary
of Rights to Purchase Preferred Shares as Exhibit
C (incorporated by reference to Exhibit 4.8 to
Quarterly Report on Form 10-Q for the quarter
ended June 30, 1993).
4.4 First Amendment to Rights Agreement by and between
the Company and NationsBank of Texas, N. A.
(formerly NCNB Texas National Bank) dated as of
June 18, 1992 (incorporated by reference to
Exhibit 3.4 to Registration Statement on Form
S-3 (File No. 33-55426)).
4.5 Amended and Restated Credit Agreement dated June
25, 1993 by and among Seagull, each of the banks
signatory thereto and Texas Commerce Bank National
Association, as agent (without exhibits and
schedules) (incorporated by reference to Exhibit
4.1 to Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993).
4.6 Form of Revolving Credit Loan Note executed in
connection with the Amended and Restated Credit
Agreement included as Exhibit 4.5 hereto
(incorporated by reference to Exhibit 4.2 to
Quarterly Report on Form 10-Q for the quarter
ended June 30, 1993).
4.7 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).
4.8 Senior Subordinated Indenture dated as of July 15,
1993 by and between the Company and The Bank of
New York, as Trustee
27
29
(incorporated by reference to Exhibit 4.2 to
Current Report on Form 8-K dated August 4, 1993).
4.9 Specimen of 7 7/8% Senior Note due 2003 and
resolutions adopted by the Chairman of the Board
of Directors (incorporated by reference to Exhibit
4.3 to Current Report on Form 8-K dated August 4,
1993).
4.10 Specimen of 8 5/8% Senior Subordinated Note due
2005 and resolutions adopted by the Chairman of
the Board of Directors (incorporated by reference
to Exhibit 4.4 to Current Report on Form 8-K dated
August 4, 1993).
4.11 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 4.7 to Quarterly Report on Form 10-Q for
the quarter ended June 30, 1992).
4.12 First Amendment to Amended and Restated Credit
Agreement by and among Seagull, each of the banks
signatory thereto, and Texas Commerce Bank
National Association, as agent, dated December 30,
1993 (without exhibits and schedules)
(incorporated by reference to Exhibit 2.3 to
Current Report on Form 8- K filed January 19,
1994).
4.13 Credit Agreement, U. S. $175 Million Reducing
Revolving Credit Facility, dated December 30, 1993
by and among Seagull Energy Canada Ltd., each of
the banks signatory thereto, and Chemical Bank of
Canada, The Bank of Nova Scotia and Canadian
Imperial Bank of Commerce, as co-agents (without
exhibits) (incorporated by reference to Exhibit
2.4 to Current Report on Form 8-K filed January
19, 1994).
4.14 Form of Revolving Credit Loan Note (U. S. Dollars)
executed in connection with the Credit Agreement
included as Exhibit 4.13 hereto (incorporated by
reference to Exhibit 2.5 to Current Report on Form
8-K filed January 19, 1994).
4.15 Form of Revolving Credit Loan Note (Canadian
Dollars) executed in connection with the Credit
Agreement included as Exhibit 4.13 hereto
(incorporated by reference to Exhibit 2.6 to
Current Report on Form 8-K filed January 19,
1994).
4.16 Intercreditor Agreement executed in connection
with the Credit Agreement included as Exhibit 4.13
hereto (incorporated by reference to Exhibit 2.7
to Current Report on Form 8-K filed January 19,
1994).
28
30
4.17 Form of Bankers' Acceptance executed in connection
with the Credit Agreement included as Exhibit 4.13
hereto (incorporated by reference to Exhibit 2.8
to Current Report on Form 8-K filed January 19,
1994).
4.18 Guarantee executed in connection with the Credit
Agreement included as Exhibit 4.13 hereto
(incorporated by reference to Exhibit 2.9 to
Current Report on Form 8-K filed January 19,
1994).
# 10.1 Seagull Thrift Plan, as amended and restated (the
amended and restated plan is incorporated by
reference to Exhibit 10.46 to the Annual Report on
Form 10-K for the year ended December 31, 1990;
the First and Second Amendments thereto are
incorporated by reference to Exhibit 10.1 to
Annual Report on Form 10-K for the year ended
December 31, 1991; the Third Amendment thereto is
incorporated by reference to Exhibit 10.1 to
Annual Report on Form 10-K for the year ended
December 31, 1992).
# 10.2 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 (incorporated by
reference to Exhibit 10.1 to Quarterly Report on
Form 10-Q for the quarter ended June 30, 1993).
# 10.3 Outside Directors Deferred Fee Plan of the
Company, as amended and restated (incorporated by
reference to Exhibit 10.3 to Annual Report on Form
10-K for the year ended December 31, 1991).
# 10.4 Seagull Energy Corporation Executive Supplemental
Retirement Plan, as amended (incorporated by
reference to Exhibit 10.4 to Annual Report on Form
10-K for the year ended December 31, 1991).
# 10.5 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 10.5 to
Annual Report on Form 10-K for the year ended
December 31, 1991).
#*10.6 ENSTAR Natural Gas Company Thrift Investment Plan,
as amended and restated (the amended and restated
plan is incorporated by reference to Exhibit 10.6
to Annual Report on Form 10-K for the year ended
December 31, 1992; the First and Second Amendments
thereto are filed herewith).
# 10.7 ENSTAR Natural Gas Company Retirement Plan for
Salaried Employees, as renamed, amended and
restated (incorporated by reference to Exhibit
10.7 to Annual Report on Form 10-K for the year
ended December 31, 1992).
# 10.8 ENSTAR Natural Gas Company Retirement Plan for
Operating Unit Employees, as amended and restated
(incorporated by
29
31
reference to Exhibit 10.8 to Annual Report on
Form 10-K for the year ended December 31, 1992).
#*10.9 ENSTAR Natural Gas Company Profit by Service Plan
for Salaried Employees, as amended and restated
(the amended and restated plan is incorporated by
reference to Exhibit 10.9 to Annual Report on Form
10-K for the year ended December 31, 1992; the
First Amendment thereto is filed herewith).
#*10.10 ENSTAR Natural Gas Company Profit by Service Plan
for Classified Employees, as amended and restated
(the amended and restated plan is incorporated by
reference to Exhibit 10.10 to Annual Report on
Form 10-K for the year ended December 31, 1992;
the First and Second Amendments thereto are filed
herewith).
# 10.11 Seagull Energy Corporation Supplemental Benefit
Plan, as amended (the original plan is
incorporated by reference to Exhibit 10.11 to
Annual Report on Form 10-K for the year ended
December 31, 1990; the First Amendment thereto is
incorporated by reference to Exhibit 10.9 to
Annual Report on Form 10-K for the year ended
December 31, 1991).
10.12 Gas Purchase Agreement among Alaska Pipeline
Company and Marathon Oil Company dated as of May
1, 1988, as amended (incorporated by reference to
Exhibit 10.2 to Quarterly Report on Form 10-Q for
the quarter ended June 30, 1993).
10.13 Agreement to terminate Gas Purchase Contract among
Alaska Pipeline Company and Union Oil Company of
California (incorporated by reference to Exhibit
10.3 to Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993).
# 10.14 Seagull Energy Corporation 1981 Stock Option Plan
(Restated), including forms of agreements, as
amended (incorporated by reference to Exhibit 10.6
to Quarterly Report on Form 10-Q for the quarter
ended June 30, 1993).
#*10.15 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 filed
herewith).
#*10.16 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 filed
herewith).
# 10.17 Seagull Employee Stock Ownership Plan (the "Plan")
as amended, including the First through Fourth
Amendments thereto (incorporated by reference to
Exhibit 10.9 to
30
32
Quarterly Report on Form 10-Q for the quarter
ended June 30, 1993).
10.18 Non-Recourse Promissory Note from the Plan to the
Company, dated November 15, 1989 (incorporated by
reference to Exhibit 10.10 to Quarterly Report on
Form 10-Q for the quarter ended June 30, 1993).
10.19 Security (Pledge) Agreement dated November 15,
1989 by and between the Plan and the Company
(incorporated by reference to Exhibit 10.11 to
Quarterly Report on Form 10-Q for the quarter
ended June 30, 1993).
10.20 Sale Agreement made and entered into as of
November 19, 1993 between Novacor Petrochemicals
Ltd. and Seagull Energy Corporation (including
Appendix J, "Tax Provisions") (incorporated by
reference to Exhibit 2.1 to Current Report on Form
8-K filed January 19, 1994).
10.21 Guarantee executed in connection with Sale
Agreement included as Exhibit 10.20 hereto
(incorporated by reference to Exhibit 2.2 to
Current Report on Form 8-K filed January 19,
1994).
10.22 Purchase and Sale Agreement made and entered into
February 6, 1991 among Mesa Limited Partnership,
Mesa Operating Limited Partnership, Mesa
Midcontinent Limited Partnership and Seagull
(without exhibits and schedules), as amended
(incorporated by reference to Exhibits 2.3 and 2.4
to Amendment No. 1 dated March 5, 1991 to Current
Report on Form 8-K dated December 7, 1990 and to
Exhibits 2.3 and 2.4 to Current Report on Form 8-K
dated March 8, 1991).
#*10.23 Seagull Energy Corporation 1990 Stock Option Plan,
including forms of agreements (the Plan is
incorporated by reference to Exhibit 10.42 to
Annual Report on Form 10-K for the year ended
December 31, 1990; the amended form of
Nonstatutory Stock Option Agreement is filed
herewith).
10.24 Gas Purchase Contract among Alaska Pipeline
Company and Shell Oil Company dated as of December
20, 1982, as amended (incorporated by reference to
Exhibit 10.29 to Annual Report on Form 10-K for
the year ended December 31, 1991).
# 10.25 Seagull Energy Corporation 1991 Executive
Incentive Plan (incorporated by reference to
Exhibit 10.31 to Annual Report on Form 10-K for
the year ended December 31, 1991).
# 10.26 Seagull Energy Corporation 1992 Executive
Incentive Plan (incorporated by reference to
Exhibit 10.32 to Annual Report on Form 10-K for
the year ended December 31, 1991).
# 10.27 Seagull Energy Corporation 1993 Executive
Incentive Plan (incorporated by reference to
Exhibit 10.35 to Annual Report on Form 10-K for
the year ended December 31, 1992).
31
33
10.28 Stock Purchase Agreement made and entered into as
of November 16, 1992 between Arkla, Inc. and
Seagull (not including disclosure schedules)
(incorporated by reference to Exhibit 2.1 to
Current Report on Form 8-K dated December 4, 1992,
as amended).
#*10.29 Seagull Energy Corporation 1993 Nonemployee
Directors' Stock Option Plan, including forms of
agreements (the Plan is incorporated by reference
to Exhibit 10.37 to Annual Report on Form 10-K for
the year ended December 31, 1992; the amended
form of Nonstatutory Stock Option Agreement
is filed herewith).
#*10.30 Seagull Energy Corporation 1993 Stock Option Plan,
including forms of agreements (the Plan is
incorporated by reference to Exhibit 10.38 to
Annual Report on Form 10-K for the year ended
December 31, 1992; the amended form of
Nonstatutory Stock Option Agreement is filed
herewith).
*21. Subsidiaries of Seagull Energy Corporation.
*23.1 Consent of KPMG Peat Marwick.
*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.
*23.5 Consent of K&A Energy Consultants, Inc.,
independent petroleum engineers.
23.6 Consent of R. A. Lenser & Associates, Inc.,
independent petroleum engineers (incorporated by
reference to Exhibit 24.6 to Annual Report on Form
10-K for the year ended December 31, 1992).
*99.1 Portions of the Seagull Energy Corporation and
Subsidiaries Annual Report to Shareholders for the
year ended December 31, 1993 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,
1993.
____________________________
* Filed herewith.
# Identifies management contracts and compensatory plans or
arrangements.
32
34
(B) REPORTS ON FORM 8-K
There were no Reports on Form 8-K filed during the three months ended
December 31, 1993.
The Company filed a current report on Form 8-K dated January 4, 1994,
as amended, with respect to Seagull's acquisition of all the outstanding shares
of stock of Novalta Resources Inc. The items reported in such current report
were Item 2 (Acquisition or Disposition of Assets) and Item 7 (Financial
Statements and Exhibits). The following financial statements were included in
this report:
( i) Financial statements of business acquired.
The financial statements of Novalta Resources Inc.
and Subsidiaries - Years ended December 1993 and 1992
(incorporated by reference to Exhibit 2.1 of the
Company's Current Report on Form 8-K dated January 4,
1994, as amended).
(ii) Pro forma financial information.
The pro forma financial information giving effect to
the Seagull Canada Acquisition (incorporated by
reference to the "Unaudited Pro Forma Condensed
Financial Statements" contained in Item 7(b) of the
Company's Current Report on Form 8-K dated January 4,
1994, as amended).
33
35
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 18, 1994 By: /s/ Barry J. Galt
------------------------------
Barry J. Galt, Chairman of
the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
By: /s/ Barry J. Galt By: /s/ J. Evans Attwell
----------------------------------------------- ----------------------------
Barry J. Galt, Chairman of the Board, President J. Evans Attwell, Director
and Chief Executive Officer and Director Date: March 18, 1994
(Principal Executive Officer)
Date: March 18, 1994 By:
----------------------------
John B. Brock, Director
By: /s/ Robert W. Shower Date: March 18, 1994
-----------------------------------------------
Robert W. Shower, Executive Vice President and
Chief Financial Officer and Director (Principal By: /s/ John W. Elias
Financial Officer) ----------------------------
Date: March 18, 1994 John W. Elias, Director
Date: March 18, 1994
By: /s/ Rodney W. Bridges By: /s/ Peter J. Fluor
----------------------------------------------- ----------------------------
Rodney W. Bridges, Vice President and Peter J. Fluor, Director
Controller (Principal Accounting Officer) Date: March 18, 1994
Date: March 18, 1994
By: /s/ William R. Grant
----------------------------
William R. Grant, Director
Date: March 18, 1994
By: /s/ Dean P. Guerin
----------------------------
Dean P. Guerin, Director
Date: March 18, 1994
By: /s/ Richard M. Morrow
----------------------------
Richard M. Morrow, Director
Date: March 18, 1994
By: /s/ Dee S. Osborne
----------------------------
Dee S. Osborne, Director
Date: March 18, 1994
By: /s/ Sam F. Segnar
----------------------------
Sam F. Segnar, Director
Date: March 18, 1994
By: /s/ George M. Sullivan
----------------------------
George M. Sullivan, Director
Date: March 18, 1994
34
36
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Seagull Energy Corporation:
Under date of January 31, 1994, except the last three paragraphs of
Note 17, Subsequent Events, which are as of March 11, 1994, we reported on the
consolidated balance sheets of Seagull Energy Corporation and Subsidiaries as
of December 31, 1993 and 1992, and the related consolidated statements of
earnings, shareholders' equity and cash flows for each of the years in the
three- year period ended December 31, 1993, as contained in the 1993 annual
report to shareholders. These consolidated financial statements and our report
thereon are incorporated by reference in the annual report on Form 10-K for the
year 1993. In connection with our audits of the aforementioned consolidated
financial statements, we also audited the related financial statement schedules
as listed in the accompanying index. These financial statement schedules are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered
in relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
KPMG PEAT MARWICK
Houston, Texas
January 31, 1994
35
37
SCHEDULE II
SEAGULL ENERGY CORPORATION AND SUBSIDIARIES
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES (*)
Balance
at Balance
Name of Beginning at End of
Debtor of Period Additions Deductions Period
---------------------- ---------- --------- ----------------------------- ----------------------
Amounts Amounts Not
Collected Written Off Current Current
--------- ----------- ------- -------
(Dollars in Thousands)
Year ended
December 31, 1991:
Barry J. Galt $250 $ - $ 25 $ - $ 25 $200
Year ended
December 31, 1992:
Barry J. Galt $225 $ - $ 25 $ - $ 25 $175
Year ended
December 31, 1993:
Barry J. Galt $200 $ - $200 $ - $ - $ -
(*) Principal payments were made in equal annual installments beginning
April 2, 1991 . Annual interest payments at the rate of 6% per annum
were provided for throughout the term of the promissory notes. The
remaining principal balance of the notes and accrued interest for the
period were repaid in full in August 1993.
36
38
SCHEDULE V
SEAGULL ENERGY CORPORATION AND SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT (1)
Other
Balance at Changes Balance
Beginning Additions Add at End
Descriptions of Period at Cost (2) Retirements (Deduct) of Period
------------ --------- ----------- ----------- -------- ---------
(Dollars in Thousands)
Year ended December 31, 1991:
Gas and oil properties $ 172,140 $ 260,012 $ 17,971 $ (4,195) (3) $ 409,986
Pipeline facilities 66,710 473 121 - 67,062
Gas processing plant 10,963 161 - - 11,124
Utility plant 191,058 10,492 1,519 904 (4) 200,935
Equipment and other 5,027 2,557 194 - 7,390
---------- --------- -------- ----------- ----------
$ 445,898 $ 273,695 $ 19,805 $ (3,291) $ 696,497
========== ========= ======== =========== ==========
Year ended December 31, 1992:
Gas and oil properties $ 409,986 $ 485,767 $ 2,343 $ (5,232) (3) $ 888,178
Pipeline facilities 67,062 10,802 5,451 - 72,413
Gas processing plant 11,124 1,177 - - 12,301
Utility plant 200,935 9,024 804 (736) (5) 208,419
Equipment and other 7,390 3,172 298 - 10,264
---------- --------- -------- ----------- ----------
$ 696,497 $ 509,942 $ 8,896 $ (5,968) $1,191,575
========== ========= ======== =========== ==========
Year ended December 31, 1993:
Gas and oil properties $ 888,178 $ 120,740 $ 24,635 $ (10,534) (3) $ 972,460
(1,289) (6)
Pipeline facilities 72,413 468 9,862 - 63,019
Gas processing plants 12,301 1,647 - 1,860 (6) 15,808
Utility plant 208,419 10,094 1,630 - 216,883
Equipment and other 10,264 2,015 1,177 (571) (6) 10,531
---------- --------- --------- ----------- ----------
$1,191,575 $ 134,964 $ 37,304 $ (10,534) $1,278,701
========== ========= ========= =========== ==========
(1) See Note 1 ("Gas and Oil Properties" and "Other Property, Plant and
Equipment") of the Consolidated Financial Statements included in the
Company's 1993 Annual Report to Shareholders and as part of Exhibit
99.1 attached hereto for information regarding depreciation methods.
(2) The additions to property, plant and equipment for the acquisitions of
Wacker, the Mid-Continent Assets and Seagull Mid-South are included
under "Additions at Cost" (see Note 2 of the Consolidated Financial
Statements included in the Company's 1993 Annual Report to
Shareholders and as part of Exhibit 99.1 attached hereto).
(3) Dry hole expense.
(4) Adjustment to investment tax credit related to ENSTAR Alaska.
(5) Adjustment for prior purchase business combination resulting from the
Company's adoption of Statement of Financial Accounting Standards No.
109, Accounting for Income Taxes, effective January 1, 1992 (see Notes
1 ("Income Taxes") and 13 of the Consolidated Financial Statements
included in the Company's 1993 Annual Report to Shareholders and as
part of Exhibit 99.1 attached hereto).
(6) Intercompany transfers.
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SCHEDULE VI
SEAGULL ENERGY CORPORATION AND SUBSIDIARIES
ACCUMULATED DEPRECIATION, DEPLETION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
Additions Other
Balance at Charged to Changes Balance
Beginning Costs and Add at End
Descriptions of Period Expenses Retirements (Deduct) of Period
------------ --------- -------- ----------- -------- ---------
(Dollars in Thousands)
Year ended December 31, 1991:
Gas and oil properties $ 60,252 $ 42,646 $16,759 $ - $ 86,139
Pipeline facilities 56,610 2,382 103 - 58,889
Gas processing plant 6,443 897 - - 7,340
Utility plant 34,359 7,868 1,428 - 40,799
Equipment and other 2,224 1,018 167 - 3,075
-------- -------- ------- -------- --------
$159,888 $ 54,811 $18,457 $ - $196,242
======== ======== ======= ======== ========
Year ended December 31, 1992:
Gas and oil properties $ 86,139 $ 52,855 $ 1,793 $ - $137,201
Pipeline facilities 58,889 2,290 5,048 - 56,131
Gas processing plant 7,340 902 - - 8,242
Utility plant 40,799 7,920 659 - 48,060
Equipment and other 3,075 1,271 207 - 4,139
-------- -------- ------- -------- --------
$196,242 $ 65,238 $ 7,707 $ - $253,773
======== ======== ======= ======== ========
Year ended December 31, 1993:
Gas and oil properties $137,201 $103,552 $15,611 $(691)(*) $224,451
Pipeline facilities 56,131 4,255 9,591 - 50,795
Gas processing plants 8,242 1,238 - 691 (*) 10,171
Utility plant 48,060 8,587 1,768 - 54,879
Equipment and other 4,139 1,912 835 - 5,216
-------- -------- ------- -------- --------
$253,773 $119,544 $27,805 $ - $345,512
======== ======== ======= ======== ========
(*) Intercompany transfers.
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SCHEDULE X
SEAGULL ENERGY CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
Item Charged to Costs and Expenses
---- ----------------------------------------------------------
Year Ended December 31,
----------------------------------------------------------
1993 1992 1991
---- ---- ----
(Dollars in Thousands)
Maintenance and Repairs $5,576 $3,844 $4,156
Taxes, other than payroll
and income taxes:
Ad Valorem $6,080 $4,400 $4,137
Production $9,134 $4,045 $3,531
Other $1,817 $1,301 $1,533
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EXHIBIT INDEX
EXHIBITS: Page
----
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 January 30,
1990 (incorporated by reference to Exhibit 3.2 to
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1993).
4.1 Note Agreement dated June 17, 1985 by and among APC
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 (including exhibits thereto)
(incorporated by reference to Exhibit 4.1 to Annual
Report on Form 10-K for the year ended December 31,
1990).
4.2 Form of Consent and Agreement dated April 15, 1991 by
and among APC and the Insurance Companies (including
exhibits thereto) (incorporated by reference to
Exhibit 4.2 to Annual Report on Form 10-K for the
year ended December 31, 1992).
4.3 Rights Agreement dated as of March 17, 1989 between
the Company and NCNB Texas National Bank, as Rights
Agent, which includes the form of Statement of
Resolution setting forth the terms of the Series B
Junior Participating Preferred Stock, par value $1.00
per share, as Exhibit A, the form of Right
Certificate as Exhibit B and the Summary of Rights to
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42
Purchase Preferred Shares as Exhibit C (incorporated
by reference to Exhibit 4.8 to Quarterly Report on
Form 10-Q for the quarter ended June 30, 1993).
4.4 First Amendment to Rights Agreement by and between
the Company and NationsBank of Texas, N. A. (formerly
NCNB Texas National Bank) dated as of June 18, 1992
(incorporated by reference to Exhibit 3.4 to
Registration Statement on Form S-3 (File No.
33-55426)).
4.5 Amended and Restated Credit Agreement dated June 25,
1993 by and among Seagull, each of the banks
signatory thereto and Texas Commerce Bank National
Association, as agent (without exhibits and
schedules) (incorporated by reference to Exhibit 4.1
to Quarterly Report on Form 10-Q for the quarter
ended June 30, 1993).
4.6 Form of Revolving Credit Loan Note executed in
connection with the Amended and Restated Credit
Agreement included as Exhibit 4.5 hereto
(incorporated by reference to Exhibit 4.2 to
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1993).
4.7 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).
4.8 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).
4.9 Specimen of 7 7/8% Senior Note due 2003 and
resolutions adopted by the Chairman of the Board of
Directors (incorporated by reference to Exhibit 4.3
to Current Report on Form 8-K dated August 4, 1993).
4.10 Specimen of 8 5/8% Senior Subordinated Note due 2005
and resolutions adopted by the Chairman of the Board
of Directors (incorporated by reference to Exhibit
4.4 to Current Report on Form 8-K dated August 4,
1993).
4.11 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
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43
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 4.7 to Quarterly Report on Form
10-Q for the quarter ended June 30, 1992).
4.12 First Amendment to Amended and Restated Credit
Agreement by and among Seagull, each of the banks
signatory thereto, and Texas Commerce Bank National
Association, as agent, dated December 30, 1993
(without exhibits and schedules) (incorporated by
reference to Exhibit 2.3 to Current Report on Form
8-K filed January 19, 1994).
4.13 Credit Agreement, U. S. $175 Million Reducing
Revolving Credit Facility, dated December 30, 1993 by
and among Seagull Energy Canada Ltd., each of the
banks signatory thereto, and Chemical Bank of Canada,
The Bank of Nova Scotia and Canadian Imperial Bank of
Commerce, as co-agents (without exhibits)
(incorporated by reference to Exhibit 2.4 to Current
Report on Form 8-K filed January 19, 1994).
4.14 Form of Revolving Credit Loan Note (U. S. Dollars)
executed in connection with the Credit Agreement
included as Exhibit 4.13 hereto (incorporated by
reference to Exhibit 2.5 to Current Report on Form
8-K filed January 19, 1994).
4.15 Form of Revolving Credit Loan Note (Canadian Dollars)
executed in connection with the Credit Agreement
included as Exhibit 4.13 hereto (incorporated by
reference to Exhibit 2.6 to Current Report on Form
8-K filed January 19, 1994).
4.16 Intercreditor Agreement executed in connection with
the Credit Agreement included as Exhibit 4.13 hereto
(incorporated by reference to Exhibit 2.7 to Current
Report on Form 8-K filed January 19, 1994).
4.17 Form of Bankers' Acceptance executed in connection
with the Credit Agreement included as Exhibit 4.13
hereto (incorporated by reference to Exhibit 2.8 to
Current Report on Form 8-K filed January 19, 1994).
4.18 Guarantee executed in connection with the Credit
Agreement included as Exhibit 4.13
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44
hereto (incorporated by reference to Exhibit 2.9 to
Current Report on Form 8-K filed January 19, 1994).
# 10.1 Seagull Thrift Plan, as amended and restated (the
amended and restated plan is incorporated by
reference to Exhibit 10.46 to the Annual Report on
Form 10-K for the year ended December 31, 1990; the
First and Second Amendments thereto are incorporated
by reference to Exhibit 10.1 to Annual Report on Form
10-K for the year ended December 31, 1991; the Third
Amendment thereto is incorporated by reference to
Exhibit 10.1 to Annual Report on Form 10-K for the
year ended December 31, 1992).
# 10.2 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 (incorporated by reference to Exhibit
10.1 to Quarterly Report on Form 10-Q for the quarter
ended June 30, 1993).
# 10.3 Outside Directors Deferred Fee Plan of the Company,
as amended and restated (incorporated by reference to
Exhibit 10.3 to Annual Report on Form 10-K for the
year ended December 31, 1991).
# 10.4 Seagull Energy Corporation Executive Supplemental
Retirement Plan, as amended (incorporated by
reference to Exhibit 10.4 to Annual Report on Form
10-K for the year ended December 31, 1991).
# 10.5 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 10.5 to Annual Report on Form
10-K for the year ended December 31, 1991).
#*10.6 ENSTAR Natural Gas Company Thrift Investment Plan, as
amended and restated (the amended and restated plan
is incorporated by reference to Exhibit 10.6 to
Annual Report on Form 10-K for the year ended
December 31, 1992; the First and Second Amendments
thereto are filed herewith).
# 10.7 ENSTAR Natural Gas Company Retirement Plan for
Salaried Employees, as renamed, amended and restated
(incorporated by reference to Exhibit 10.7 to Annual
Report on Form 10-K for the year ended December 31,
1992).
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45
# 10.8 ENSTAR Natural Gas Company Retirement Plan for
Operating Unit Employees, as amended and restated
(incorporated by reference to Exhibit 10.8 to Annual
Report on Form 10-K for the year ended December 31,
1992).
#*10.9 ENSTAR Natural Gas Company Profit by Service Plan for
Salaried Employees, as amended and restated (the
amended and restated plan is incorporated by
reference to Exhibit 10.9 to Annual Report on Form
10-K for the year ended December 31, 1992; the First
Amendment thereto is filed herewith).
#*10.10 ENSTAR Natural Gas Company Profit by Service Plan for
Classified Employees, as amended and restated (the
amended and restated plan is incorporated by
reference to Exhibit 10.10 to Annual Report on Form
10-K for the year ended December 31, 1992; the First
and Second Amendments thereto are filed herewith).
# 10.11 Seagull Energy Corporation Supplemental Benefit Plan,
as amended (the original plan is incorporated by
reference to Exhibit 10.11 to Annual Report on Form
10-K for the year ended December 31, 1990; the First
Amendment thereto is incorporated by reference to
Exhibit 10.9 to Annual Report on Form 10-K for the
year ended December 31, 1991).
10.12 Gas Purchase Agreement among Alaska Pipeline Company
and Marathon Oil Company dated as of May 1, 1988, as
amended (incorporated by reference to Exhibit 10.2
to Quarterly Report on Form 10-Q for the quarter
ended June 30, 1993).
10.13 Agreement to terminate Gas Purchase Contract among
Alaska Pipeline Company and Union Oil Company of
California (incorporated by reference to Exhibit 10.3
to Quarterly Report on Form 10-Q for the quarter
ended June 30, 1993).
# 10.14 Seagull Energy Corporation 1981 Stock Option Plan
(Restated), including forms of agreements, as amended
(incorporated by reference to Exhibit 10.6 to
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1993).
#*10.15 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
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46
amended form of Nonstatutory Stock Option Agreement
is filed herewith).
#*10.16 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 filed
herewith).
# 10.17 Seagull Employee Stock Ownership Plan (the "Plan") as
amended, including the First through Fourth
Amendments thereto (incorporated by reference to
Exhibit 10.9 to Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993).
10.18 Non-Recourse Promissory Note from the Plan to the
Company, dated
November 15, 1989 (incorporated by reference to
Exhibit 10.10 to Quarterly Report on Form 10-Q for
the quarter ended June 30, 1993).
10.19 Security (Pledge) Agreement dated November 15, 1989
by and between the Plan and the Company (incorporated
by reference to Exhibit 10.11 to Quarterly Report on
Form 10-Q for the quarter ended June 30, 1993).
10.20 Sale Agreement made and entered into as of November
19, 1993 between Novacor Petrochemicals Ltd. and
Seagull Energy Corporation (including Appendix J,
"Tax Provisions") (incorporated by reference to
Exhibit 2.1 to Current Report on Form 8-K filed
January 19, 1994).
10.21 Guarantee executed in connection with Sale Agreement
included as Exhibit 10.20 hereto (incorporated by
reference to Exhibit 2.2 to Current Report on Form
8-K filed January 19, 1994).
10.22 Purchase and Sale Agreement made and entered into
February 6, 1991 among Mesa Limited Partnership, Mesa
Operating Limited Partnership, Mesa Midcontinent
Limited Partnership and Seagull (without exhibits and
schedules), as amended (incorporated by reference to
Exhibits 2.3 and 2.4 to Amendment No. 1 dated March
5, 1991 to Current Report on Form 8-K dated December
7, 1990 and to Exhibits 2.3 and 2.4 to Current Report
on Form 8-K dated March 8, 1991).
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47
#*10.23 Seagull Energy Corporation 1990 Stock Option Plan,
including forms of agreements (the Plan is
incorporated by reference to Exhibit 10.42 to Annual
Report on Form 10-K for the year ended December 31,
1990; the amended form of Nonstatutory Stock Option
Agreement is filed herewith).
10.24 Gas Purchase Contract among Alaska Pipeline Company
and Shell Oil Company dated as of December 20, 1982,
as amended (incorporated by reference to Exhibit
10.29 to Annual Report on Form 10-K for the year
ended December 31, 1991).
# 10.25 Seagull Energy Corporation 1991 Executive Incentive
Plan (incorporated by reference to Exhibit 10.31 to
Annual Report on Form 10-K for the year ended
December 31, 1991).
# 10.26 Seagull Energy Corporation 1992 Executive Incentive
Plan (incorporated by reference to Exhibit 10.32 to
Annual Report on Form 10-K for the year ended
December 31, 1991).
# 10.27 Seagull Energy Corporation 1993 Executive Incentive
Plan (incorporated by reference to Exhibit 10.35 to
Annual Report on Form 10-K for the year ended
December 31, 1992).
10.28 Stock Purchase Agreement made and entered into as of
November 16, 1992 between Arkla, Inc. and Seagull
(not including disclosure schedules) (incorporated by
reference to Exhibit 2.1 to Current Report on Form
8-K dated December 4, 1992, as amended).
#*10.29 Seagull Energy Corporation 1993 Nonemployee
Directors' Stock Option Plan, including forms of
agreements (the Plan is incorporated by reference to
Exhibit 10.37 to Annual Report on Form 10-K for the
year ended December 31, 1992; the amended form of
Nonstatutory Stock Option Agreement is filed
herewith).
#*10.30 Seagull Energy Corporation 1993 Stock Option Plan,
including forms of agreements (the Plan is
incorporated by reference to Exhibit 10.38 to Annual
Report on Form 10-K for the year ended December 31,
1992; the amended form of Nonstatutory Stock Option
Agreement is filed herewith).
*21. Subsidiaries of Seagull Energy Corporation.
*23.1 Consent of KPMG Peat Marwick.
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48
*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.
*23.5 Consent of K&A Energy Consultants, Inc., independent
petroleum engineers.
23.6 Consent of R. A. Lenser & Associates, Inc.,
independent petroleum engineers (incorporated by
reference to Exhibit 24.6 to Annual Report on Form
10-K for the year ended December 31,1992).
*99.1 Portions of the Seagull Energy Corporation and
Subsidiaries Annual Report to Shareholders for the
year ended December 31, 1993 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, 1993.
____________________
* Filed herewith.
# Identifies management contracts and compensatory plans or arrangements.
47