SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(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, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM ___________ TO ______________
Commission File Number: 1-11675
TRITON ENERGY LIMITED
(Exact name of registrant as specified in its charter)
CAYMAN ISLANDS NONE
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
CALEDONIAN HOUSE
MARY STREET, P.O. BOX 1043
GEORGE TOWN
GRAND CAYMAN, CAYMAN ISLANDS NONE
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 345-949-0050
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
Ordinary Shares, $.01 par value 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.
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF
THE REGISTRANT AT MARCH 7, 1997 (FOR SUCH PURPOSES ONLY, ALL DIRECTORS AND
EXECUTIVE OFFICERS ARE PRESUMED TO BE AFFILIATES) WAS APPROXIMATELY $1.5
BILLION, BASED ON THE CLOSING SALES PRICE OF $ 41 7/8 ON THE NEW YORK STOCK
EXCHANGE.
AS OF MARCH 7, 1997, 36,381,884 ORDINARY SHARES OF THE REGISTRANT
WERE OUTSTANDING.
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE PROXY STATEMENT PERTAINING TO THE 1997 ANNUAL MEETING OF
SHAREHOLDERS OF TRITON ENERGY LIMITED ARE INCORPORATED BY REFERENCE INTO PART
III HEREOF.
TRITON ENERGY LIMITED
TABLE OF CONTENTS
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Form 10-K Item Page
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PART I
ITEMS 1. and 2. Business and Properties 1
ITEM 3. Legal Proceedings 19
ITEM 4. Submission of Matters to a Vote of Security Holders 20
PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters 21
ITEM 6. Selected Financial Data 23
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 24
ITEM 8. Financial Statements and Supplementary Data 32
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 32
PART III
ITEM 10. Directors and Executive Officers of the Registrant 33
ITEM 11. Executive Compensation 33
ITEM 12. Security Ownership of Certain Beneficial Owners and Management 33
ITEM 13. Certain Relationships and Related Transactions 33
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 34
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<PAGE>
PART I
ITEMS 1. AND 2. BUSINESS AND PROPERTIES
GENERAL
Triton Energy Limited is an international oil and gas exploration
company primarily engaged in exploration and production through subsidiaries
and affiliates. The Company's principal properties, operations and oil and gas
reserves are located in Colombia and Malaysia-Thailand. The Company also has
oil and gas interests in other Latin American, Asian and European countries.
Triton Energy Limited was incorporated in the Cayman Islands in 1995
to become the parent holding company of Triton Energy Corporation ("TEC"), a
corporation formed in Texas in 1962 and reincorporated in Delaware in 1995.
The Company's principal executive offices are located at Caledonian House,
Mary Street, George Town, Grand Cayman, Cayman Islands, and its telephone
number is (345) 949-0050. The terms "Company" and "Triton" when used herein
mean Triton Energy Limited and its subsidiaries and other affiliates through
which Triton conducts its business, unless the context otherwise implies.
OIL AND GAS OPERATIONS
General
The Company's oil and gas exploration and development activities
are, or have been, conducted through the Company's wholly owned subsidiaries,
except as noted in this paragraph. In Malaysia-Thailand, the Company's
activities are conducted by the Company's wholly owned subsidiaries, Triton
Oil Company of Thailand and Triton Oil Company of Thailand (JDA) Limited
(collectively, "Triton Thailand"), and Triton Thailand's 50% owned affiliate,
Carigali - Triton Operating Company Sdn. Bhd. ("CTOC"). In Europe, its
activities were conducted by its wholly owned (but until March 1994, 59.5%
owned) subsidiary, Triton Europe Limited ("Triton Europe"). In Indonesia, its
activities are or were conducted by its wholly owned subsidiaries, Triton
Indonesia, Inc., Triton Indonesia Resources, Inc. and TriBlora Indonesia B.V.
(collectively, "Triton Indonesia") and its 33.7% owned (but until August 1994,
63.7% owned) affiliate, New Zealand Petroleum Company Limited ("New Zealand
Petroleum"). In the United States, its activities were conducted by its wholly
owned subsidiary, Triton Oil & Gas Corp. ("Triton Oil"), and Crusader Limited
("Crusader"), a 49.9% owned affiliate until the Company's sale of its interest
in 1996. In New Zealand, its activities are or were conducted by New Zealand
Petroleum and Crusader. In Canada its activities were conducted by Crusader,
until June 1995, and by Triton Canada Resources Ltd. ("Triton Canada") until
August 1993, and in Australia its activities were conducted by Crusader.
<PAGE>
Production and Sales
The following table sets forth the net quantities of oil and gas
produced by the Company for the years ended December 31, 1996 and 1995, the
seven months ended December 31, 1994, and the year ended May 31, 1994,
including production attributable to the Company's 49.9% ownership interest in
Crusader through the date of its sale (which included the minority interests
in Crusader's consolidated subsidiaries). The production and sales information
relating to properties or subsidiary or affiliate ownership interests acquired
or disposed of is reflected in the table only since or up to the effective
dates of their respective acquisitions or sales, as the case may be.
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OIL PRODUCTION (1) GAS PRODUCTION
------------------------------------------------------------------ ---------------
SEVEN MOS. YEAR
YEAR ENDED ENDED ENDED YEAR ENDED
DECEMBER 31, DEC. 31, MAY 31, DECEMBER 31,
------------------------- ------------
1996 1995 1994 1994 1996 1995
------------ ----- ---------- ------- ------------ -----
(IN MBBLS) (IN MMCF)
Colombia(2) 5,738 5,089 435 467 298 158
Argentina --- --- --- 18 --- ---
France(3) --- 498 514 1,053 --- ---
Indonesia(4) 95 255 186 441 --- ---
United States(5) 20 121 66 156 475 1,207
Canada(5) --- --- --- 102 --- ---
Crusader(6):
Australia 134 287 180 404 1,744 3,884
Canada --- 53 99 213 --- 63
United States --- --- 8 32 --- ---
------------ ----- ---------- ------- ------------ -----
Total 5,987 6,303 1,488 2,886 2,517 5,312
------------ ----- ---------- ------- ------------ -----
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GAS PRODUCTION
---------------
SEVEN MOS. YEAR
ENDED ENDED
DEC. 31, MAY 31,
1994 1994
---------- -------
Colombia(2) --- ---
Argentina --- ---
France(3) --- ---
Indonesia(4) --- ---
United States(5) 618 1,150
Canada(5) --- 3,521
Crusader(6):
Australia 2,707 4,202
Canada 96 150
United States 6 55
---------- -------
Total 3,427 9,078
---------- -------
</TABLE>
____________________
(1) Includes natural gas liquids and condensate.
(2) Includes Ecopetrol reimbursement and excludes .7 million and .4
million barrels of oil produced and delivered for the years ended
December 31, 1996 and 1995, respectively, in connection with the
Company's forward sale of oil in May 1995. See Item 7,
"Management's Discussion and Analysis of Financial Condition
and Results of Operations - Results of Operations" and
note 3 of Notes to Consolidated Financial Statements.
(3) In August 1995, Triton Europe sold its interest in its subsidiary,
Triton France S.A.
(4) In May 1996, the Company sold substantially all of the assets of
Triton Indonesia, Inc.
(5) In March 1996, Triton Oil sold substantially all of its domestic
royalty and mineral interests. During the fiscal year ended
May 31, 1994, Triton Oil sold substantially all its working
interests in oil and gas reserves in the United States and its
common equity interest in Triton Canada. See note 2 of Notes
to Consolidated Financial Statements.
(6) In 1996, the Company sold all of its interest in Crusader. In June
1995, Crusader sold all of its interest in Ausquacan Energy
Limited and in September 1994, Crusader sold all of its oil and
gas interests in the United States.
<PAGE>
The following tables summarize for the years ended December 31, 1996
and 1995, the seven months ended December 31, 1994, and the year ended May 31,
1994: (i) the average sales price per barrel of oil and Mcf of natural gas;
(ii) the average sales price per equivalent barrel of production; (iii) the
depletion cost per equivalent barrel of production; and (iv) the production
cost per equivalent barrel of production:
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AVERAGE SALES PRICE AVERAGE SALES PRICE
PER BARREL OF OIL (1) PER MCF OF GAS
------------------------------ --------------------------
SEVEN MOS. YEAR SEVEN MOS. YEAR
YEAR ENDED ENDED ENDED YEAR ENDED ENDED ENDED
DECEMBER 31, DEC. 31, MAY 31, DECEMBER 31, DEC. 31, MAY 31,
------------------------------ ---------------------------
1996 1995 1994 1994 1996 1995 1994 1994
---------------------- ------ ----------- -------- -------------------- ----- ----------- --------
Colombia $ 19.62 $16.29 $ 14.37 $ 12.66 $ 2.56 $1.96 $ --- $ ---
Argentina --- --- --- 9.22 --- --- --- ---
France --- 18.11 17.64 16.38 --- --- --- ---
Indonesia 19.54 17.77 17.06 16.29 --- --- --- ---
United States 16.00 13.62 15.65 14.19 1.15 1.49 1.55 2.23
Canada --- --- --- 16.43 --- --- --- 1.11
Crusader:
Australia 19.95 20.38 18.39 15.33 1.69 1.69 1.43 1.50
Canada --- 15.42 14.62 12.43 --- 0.99 1.01 1.11
United States --- --- 17.75 15.23 --- --- 1.25 1.53
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PER EQUIVALENT BARREL (2)
------------------------------------------------------------------------------------------------------------------
AVERAGE SALES PRICE DEPLETION(3)
------------------------------------------------------- ------------
SEVEN MOS. YEAR SEVEN MOS.
YEAR ENDED ENDED ENDED YEAR ENDED ENDED
DECEMBER 31, DEC. 31, MAY 31, DECEMBER 31, DEC. 31,
-------------------- ----------------
1996 1995 1994 1994 1996 1995 1994
-------------------- ------ ---------------- -------- ----------- ----- ----------
Colombia $ 19.58 $16.26 $ 14.37 $ 12.66 $ 2.83 $2.67 $ 2.57
Argentina --- --- --- 9.22 --- --- ---
France --- 18.11 17.64 16.38 --- 3.14 4.15
Indonesia 19.54 17.77 17.06 16.29 0.52 0.95 1.60
United States 8.75 10.68 11.77 13.75 5.59 6.05 7.04
Canada --- --- --- 8.13 --- --- ---
Crusader:
Australia 13.23 13.29 9.53 11.31 3.47 3.35 3.99
Canada --- 13.87 13.43 11.83 --- 2.35 2.31
United States --- --- 16.56 13.88 --- --- 5.22
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DEPLETION(3) PRODUCTION COST
------------ -----------------------------------
YEAR SEVEN MOS. YEAR
ENDED YEAR ENDED ENDED ENDED
MAY 31, DECEMBER 31, DEC. 31, MAY 31,
------------------------
1994 1996 1995 1994 1994
----------- ---------------- ------ ----------- --------
Colombia $ 1.96 $ 5.66 $ 5.52 $ 9.87 $ 9.06
Argentina --- --- --- --- 13.83
France 8.97 --- 10.96 11.25 9.83
Indonesia 3.09 15.89 17.34 11.04 14.54
United States 6.58 3.25 1.03 0.85 7.00
Canada 3.60 --- --- --- 4.24
Crusader:
Australia 3.33 4.10 4.77 4.01 3.97
Canada 2.97 --- 7.52 7.96 7.44
United States 13.82 --- --- 6.00 7.77
</TABLE>
____________________
(1) Includes natural gas liquids and condensate.
(2) Natural gas has been converted into equivalent barrels based on six
Mcf of natural gas per barrel.
(3) Includes depreciation calculated on the unit of production method for
support equipment and facilities.
<PAGE>
Competition
The Company encounters strong competition from major oil companies
(including government-owned companies), independent operators and other
companies for favorable oil and gas concessions, licenses, production sharing
contracts and leases, drilling rights and markets. Additionally, the
governments of certain countries in which the Company operates may from time
to time give preferential treatment to their nationals. The oil and gas
industry as a whole also competes with other industries in supplying the
energy and fuel requirements of industrial, commercial and individual
consumers. The principal means of competition in the sale of oil and gas are
product availability, price and quality. While it is not possible for the
Company to state precisely its competitive position in the oil and gas
industry, the Company believes that it represents a minor competitive factor.
Markets
Crude oil, natural gas, condensate and other oil and gas products
generally are sold to other oil and gas companies, government agencies and
other industries. The Company does not believe that the loss of any single
customer or contract pursuant to which oil and gas is sold would have a
long-term material, adverse effect on the revenues from the Company's oil and
gas operations.
In Colombia, crude oil is exported through the Caribbean port of
Covenas where it is sold at prices based on United States prices, adjusted for
quality and transportation. The oil produced from the Cusiana Field is
transported to the export terminal through pipelines owned by the Colombian
national oil company or joint stock companies partially owned by the Company.
This pipeline system is in the process of being upgraded to accommodate
additional production from the Cusiana and Cupiagua fields. See "Oil and Gas
Properties - Colombia" and Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
For a discussion of certain factors regarding the Company's markets
and potential markets that could affect future operations, see note 20 of
Notes to Consolidated Financial Statements.
OIL AND GAS PROPERTIES
Colombia
Through the Company's wholly owned subsidiaries, Triton Colombia,
Inc. and Triton Resources Colombia, Inc. (collectively, "Triton Colombia"),
the Company has varying participation interests in seven licenses in Colombia.
Cusiana and Cupiagua Fields
Contract Terms. In the foothills of the Llanos Basin area in
eastern Colombia, Triton Colombia holds a 12% interest in the SDLA, Tauramena
and Rio Chitamena contract areas, covering approximately 66,000, 36,300 and
6,700 acres, respectively, where an active appraisal and development program
is being carried out in the Cusiana and Cupiagua fields. Triton's partners in
these areas are Empresa Colombiana De Petroleos ("Ecopetrol"), the Colombian
national oil company, with a 50% interest, BP Exploration Company (Colombia)
Limited ("BP"), the operator, with a 19% interest, and TOTAL Exploratie en
Produktie Maatschippij B.V. ("TOTAL"), also with a 19% interest. In 1993,
Ecopetrol declared the Cusiana and Cupiagua fields to be commercial and
exercised its right to acquire a 50% interest. Triton's net revenue interest
is approximately 9.6% after governmental royalties. Triton's net revenue is
reduced by up to 0.36% pursuant to an agreement with an original co-investor,
subject to Triton being reimbursed for a proportionate share of expenditures
relating thereto.
The Company and its private partners have secured the right to
produce oil and gas from the SDLA and Tauramena contract areas through the
years 2010 and 2016, respectively, and from the Rio Chitamena contract area
through 2015 or 2019, depending on contract interpretation. In July 1994,
Triton Colombia, BP, TOTAL and Ecopetrol entered into an Integral Plan for the
Unified Exploitation of the Cusiana Oil Structure in the SDLA, Tauramena and
Rio Chitamena Association Contract Areas. Under the plan, the parties have
agreed to develop the Cusiana oil structure in a technically efficient and
cooperative manner during three consecutive periods of time. During the
initial period (ending with the expiration of the SDLA association contract in
2010), petroleum produced from the unified area will be owned by the parties
according to their respective undivided interests in each contract area.
Within the first quarter of 2005, an independent determination of
the original barrels of oil equivalent ("BOE") of petroleum in place under the
unified area and under each association contract will be made, as a result of
which a "tract factor" will be calculated for each association contract. Each
tract factor will be the amount of original BOEs of petroleum in place under
the particular association contract as a percentage of the total original BOEs
under the unified area. Each party's unified area interest during the second
period (commencing from the expiration of the SDLA association contract in
2010) and during the final period (commencing from the termination of the
second association contract to termination) will be the aggregate of that
party's interest in each remaining association contract multiplied by the
tract factor for each such contract.
Recent Drilling Results. In the Cusiana Field, Triton Colombia
and its working interest partners have completed and have in service 24
producing wells and six gas injection wells. The injection wells recycle to
the reservoir most of the gas that is associated with the oil production to
increase the oil recoverable over the life of the field. There are currently
five drilling rigs operating in the Cusiana Field, and it is expected that 18
oil production and gas injection wells will be completed during 1997.
Development drilling is proceeding on a schedule which is intended to have
sufficient well capacity at all times to meet production capacities of field
facilities and export pipelines from the area.
In the Cupiagua Field during 1996, Triton Colombia and its working
interest partners completed an additional six wells, bringing the yearend
total completions to 10 wells, which are awaiting startup of production
facilities in 1997. There are currently six drilling rigs operating in the
Cupiagua Field, and it is expected that 15 additional wells will be completed
during 1997. Development wells drilled during 1996 more fully defined the
areal extent of the field and defined hydrocarbon/water contacts in the
fields.
<PAGE>
The Cupiagua-5 well was completed in late 1995 and was tested in
1996. The well penetrated the Mirador, Barco and Guadalupe reservoirs, and the
lower extension of the well discovered a lower thrust of the Mirador Formation
which underlies the main body of the Cupiagua Field. The lower thrust of the
Mirador was confirmed in the Cupiagua-7 and Cupiagua-10 development wells. The
well data and the 3D seismic results are being analyzed to determine the
optimum development plan for this underlying Mirador reservoir. In 1997,
Triton Colombia and its working interest partners plan to drill additional
wells dedicated to exploring the lower thrust.
Tests of the Cupiagua-5 well, which were conducted in early 1996,
indicated the well has a productive capacity of about 75 MMcf of gas and
22,000 barrels of condensate per day through 7" tubing. The well was tied in
to the Cusiana central processing facility in August 1996 and put on
production at rates over 16,000 barrels of condensate per day. Additional
Cupiagua wells will be placed on production in 1997 and tied in to the Cusiana
central processing facility for early production prior to the completion of
the Cupiagua central processing facility in 1997.
Production Facilities and Pipelines. The four initial production
units of the Cusiana Field central processing facility are designed to handle
approximately 180,000 barrels of daily production throughput. Construction is
under way to increase production capacity from the Cusiana and Cupiagua fields
to at least 500,000 barrels per day by yearend 1997. Additional pipeline
capacity is required to meet the transportation needs associated with
development of these fields. To that end, in April 1995, Triton Pipeline
Colombia, Inc., a wholly owned subsidiary of the Company, along with
Ecopetrol, BP Colombia Pipelines Ltd., Total Pipeline Colombie, S.A., IPL
Enterprises (Colombia) Inc. and TCPL International Investments Inc., completed
the formation of a company, Oleoducto Central S.A. ("OCENSA"), to own and
finance pipeline and port facilities to be constructed and operated for the
transport of crude oil from the Cusiana and Cupiagua fields to the Caribbean
port of Covenas. Triton's equity participation in OCENSA is 9.6%.
This pipeline project consists of a 793-kilometer (495-mile)
pipeline system from the Cusiana and Cupiagua fields to the port of Covenas.
It loops and generally follows the route of the two existing pipelines: the
Central Llanos pipeline from El Porvenir to Vasconia and the Oleoducto de
Colombia pipeline from Vasconia to Covenas. A portion of the Central Llanos
pipeline and pump station upgrades at El Porvenir and Miraflores were acquired
by OCENSA during 1995. Expansion of the pipeline system is under way and
scheduled for completion in 1997. The current plan is to increase pipeline
capacity to transport at least 500,000 barrels of oil per day from the Fields
by yearend 1997.
Other Areas in Colombia
Triton owns rights to four additional licenses in Colombia. In the
Middle Magdalena Valley basin and adjacent foothills, Triton owns a 50%
interest (before certain royalties and government participation) in the El
Pinal contract area, which covers approximately 71,000 acres (after
contractually required relinquishment in 1996) approximately 330 kilometers
(205 miles) north of Bogota. In the southern part of El Pinal, Triton
discovered and confirmed the Liebre Field with two wells (the Liebre-1 and
- -2). In 1995, Ecopetrol approved Triton's application to declare the Liebre
Field commercial, and production from the field began in January 1997 at an
initial rate of 1,200 barrels of oil per day from the two wells.
The Yumeca-1 exploratory well, located in the northern part of El
Pinal, was drilled to a total depth of 13,675 feet and tested in 1995. It was
intended that the well test a new play concept in the foothills of the Middle
Magdalena Valley. The well encountered hydrocarbon shows at various intervals
but was plugged and abandoned after four zones were tested.
The Yumeca-2 exploratory well, completed in 1997, was drilled to a
total depth of 13,500 feet and plugged and abandoned after electronic logs
failed to confirm the presence of commercial quantities of oil or gas.
In June 1995, the Company was awarded the Guayabo A and B and Las
Amelias association contracts covering a contiguous area of approximately 1.8
million acres. The area is located approximately 150 kilometers (93 miles)
north of Bogota and 140 kilometers (87 miles) northwest of the Cusiana and
Cupiagua fields, and is contiguous with the El Pinal contract area to the
north. The terms of these association contracts are less favorable than the
terms of the Cusiana and Cupiagua association contracts. Triton is acquiring
seismic data in a program totaling 142 kilometers (85 miles) over the Guayabo
A block, 36 kilometers (22 miles) over the Guayabo B block, and 250 kilometers
(150 miles) over the Las Amelias block.
In March 1996, the Company executed an agreement with Deminex
Colombia Petroleum GmbH ("Deminex") providing Deminex the right to earn a 50%
interest in the El Pinal, Guayabo A and B and Las Amelias contract areas. The
Ministry of Mines and Energy of Colombia formally approved this assignment in
August 1996.
Triton Colombia sold its 22.5% and 20% interests (before certain
royalties), respectively, in the 32,834-acre Tolima-B and 32,240-acre San Luis
contract areas in December 1996.
Malaysia-Thailand
Contract Terms
In April 1994, Triton Thailand became a party to a production
sharing contract covering an area located offshore, designated as Block A-18
of the Malaysia-Thailand Joint Development Area. The contract area, which
encompasses approximately 731,000 acres, had been the subject of overlapping
claims between Malaysia and Thailand. The other parties to the production
sharing contract are the Malaysia-Thailand Joint Authority (the "MTJA"), which
has been established by treaty to administer the Joint Development Area, and
Petronas Carigali (JDA) Sdn. Bhd. ("Carigali"), a subsidiary of the Malaysian
national oil company. The treaty provides for the development of the Joint
Development Area that includes Block A-18. Triton Thailand previously held a
license from Thailand that covered part of the Joint Development Area.
The term of the contract is 35 years, subject to possible
relinquishment of certain areas and subject to the treaty between Malaysia and
Thailand creating the MTJA remaining in effect. Triton and Carigali have the
right to explore for oil and gas for the first five years of the contract. The
contract provides that if there is a discovery of natural gas (not associated
with crude oil) and the MTJA agrees, the contractors will be able to hold that
gas field without production for an additional five-year period, provided the
contractors submit to the MTJA an acceptable development plan for the field.
The contractors then have a five-year period from the MTJA's acceptance of the
development plan to develop the field, and have the right to produce gas from
the field for 20 years plus a number of years equal to the number of years, if
any, prior to the end of the holding period that gas production commenced (or
until the termination of the contract, if earlier). The contract grants to the
operators the right to produce oil from an oil field for 25 years plus a
number of years equal to the number of years, if any, prior to the fifth
anniversary of the contract that oil production commenced (or until the
termination of the contract, if earlier). Any areas not developed and
producing within the periods provided will be relinquished.
As oil and gas are produced, the MTJA is entitled to a 10% royalty.
Up to 50% of each unit of production is considered "cost oil" or "cost gas"
and will be allocated to the contractors to the extent of their recoverable
costs, with the balance considered "profit oil" or "profit gas" to be divided
50% to the MTJA and 50% to the contractors (i.e., 25% to Carigali and 25% to
Triton). Triton's share of production is subject to an additional royalty
equal to 0.75% of Block A-18 production. Tax rates imposed by the MTJA on
behalf of the governments of Malaysia and Thailand are 0% for the first eight
years of production, 10% for the next seven years of production and 20% for
any remaining production.
Simultaneously with the execution of the production sharing
contract, the parties executed a joint operating agreement governing Block
A-18 operations. The operating agreement designated as operator CTOC, a
company owned equally by Triton Thailand and Carigali.
Negotiations for a Gas-Sales Agreement
In May 1996, the MTJA, Triton and Carigali signed a Memorandum of
Understanding on the sale and purchase of natural gas with Petronas and PTT,
the national oil companies of Malaysia and Thailand, respectively. The
Memorandum of Understanding provides a basis for negotiation of a gas-sales
agreement for natural gas to be produced from Block A-18. The parties
currently are negotiating a heads of agreement intended to include agreement
in principle on the key gas-sales agreement terms. The Company expects that
negotiation and execution of a definitive gas-sales agreement reflecting the
heads of agreement will follow execution of the heads of agreement.
Recent Drilling Results
The initial phase of Block A-18 operations included a 2D seismic
survey covering approximately 5,700 kilometers (3,542 miles), a 3D seismic
survey conducted in 1995 covering approximately 620 square kilometers (239
square miles) over the Cakerawala Field, data analysis and the drilling of
three exploratory wells.
In August 1995, the first of the three wells, the Cakerawala-1A, was
tested at a combined flow rate of 58 MMcf of gas and 945 barrels of condensate
and oil per day. The well was drilled in approximately 200 feet of water to a
total depth of 7,878 feet. A second well, Suriya-1, was tested at a combined
flow rate of 58 MMcf of gas and 351 barrels of condensate per day. The
Suriya-1 well was drilled in approximately 180 feet of water to a total depth
of 7,273 feet and is located on a separate structure. The Suriya-1 well is
located approximately 11 kilometers (7 miles) east-southeast of the
Cakerawala-1A well.
A third well, Cakerawala East-1, was drilled in approximately 180
feet of water to a total depth of 11,808 feet. Cakerawala East-1 tested at 22
MMcf of gas and 138 barrels of condensate per day from the two shallow
sequences that constitute the principal producing zones for phase one field
development. The well confirmed anticipated fault separations from the
structure on which the Cakerawala-1A well and the Pilong well (drilled by
Exxon in 1971) were drilled, and found comparable sand thickness, flow rates
and gas-water contacts and lesser CO2 content than the same sequences in the
Cakerawala-1A and Pilong wells. Intermediate sequences were wet and were not
tested. The well also confirmed the presence of deeper, overpressure sandstone
sequences, but the deeper zones tested wet or inconclusively due to mechanical
difficulties. The deeper zones remain an exploratory prospect for future
drilling.
During 1996, petroleum operations in Block A-18 included the
drilling of six wells and the acquisition of a second 3D seismic survey that
covered 534 square kilometers (206 square miles).
In March 1996, two appraisal wells, Cakerawala-2 and Cakerawala-3,
were drilled to delineate the Cakerawala Field. The Cakerawala-2 well was
tested at a combined rate of 31 MMcf of gas and 645 barrels of condensate per
day. The well was drilled in approximately 190 feet of water to a total depth
of 9,650 feet, approximately seven kilometers (four miles) north of the
Cakerawala-1A well. The Cakerawala-3 well was tested at a combined rate of 47
MMcf of gas, 225 barrels of condensate and 3,002 barrels of oil per day. The
well was drilled in approximately 180 feet of water to a total depth of 9,814
feet, approximately three kilometers (two miles) southwest of Cakerawala-1A.
The two appraisal wells confirmed the gas pools proven in the earlier wells
drilled in the field and also discovered oil in relatively shallow zones,
which require further delineation.
Following delineation of the Cakerawala Field, two exploratory wells
were drilled to test other prospects in Block A-18. The Bulan-1 well tested
at a combined rate of 36 MMcf of gas and 123 barrels of condensate per day.
The well was drilled in approximately 180 feet of water to a total depth of
7,140 feet, approximately seven kilometers (four miles) west-northwest of
Cakerawala-1A. The well proved a third commercial field in the block on a
separate structure immediately west of the Cakerawala Field. The Bumi-1 well
tested at a combined rate of 73 MMcf of gas and 305 barrels of condensate per
day. The well was drilled in approximately 180 feet of water to a total depth
of 9,279 feet, approximately four kilometers (three miles) east of the
Suriya-1 well. The well proved a fourth commercial field on the block on a
separate structure immediately east of the Suriya Field.
Two other wells were drilled in 1996 to appraise the Suriya and
Bulan fields. The Suriya-2 well confirmed the discovery made by Suriya-1. The
well tested at a combined rate of 56 MMcf of gas and 268 barrels of condensate
per day. The well was drilled in approximately 180 feet of water to a total
depth of 8,315 feet, approximately five kilometers (three miles) south of
Suriya-1. The Bulan-2 well confirmed the discovery made by Bulan-1. The well
tested at a combined rate of 30 MMcf of gas and 185 barrels of condensate per
day. The well was drilled in approximately 176 feet of water to a total depth
of 9,160 feet approximately five kilometers (three miles) south of the Bulan-1
well.
A field development plan for the Cakerawala Field was submitted to
the MTJA for approval in October 1996. Development of the field is expected to
commence following execution of the heads of agreement and to take
approximately 30 to 36 months to complete.
Argentina
Through the Company's subsidiaries, Triton Argentina, Inc. and
Triton Resources Argentina, Inc., the Company holds a 100% working interest in
the approximately 47,000-acre Sierra Azul Sur license in the oil and gas
producing Neuquen Basin in western Argentina.
In September 1996, Triton assigned its interests in the Loma
Cortaderal and Cerro Dona Juana blocks to Cordex Petroleums Argentina Ltd. In
consideration of the assigned interest, Cordex agreed to undertake certain
work obligations and to grant Triton an overriding royalty interest of 8% on
any future hydrocarbon production from the areas covered by these blocks. The
assignment of these two areas is subject to government approval. Triton
relinquished its interest in the Malargue Sur license in March 1996.
In January 1997, the Company announced that, after a review of
certain technical information, it had determined that its interest in the
Sierra Azul Sur license, although commercially prospective, did not meet its
exploration objectives. Accordingly, the Company recorded a charge against its
results of operations for the year ended December 31, 1996. See Item 7.,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Ecuador
Through the Company's subsidiary, Triton Ecuador, Inc. LLC, the
Company holds an interest in Block 19, which covers approximately 494,000
acres located in the Ecuadorian foothills of the eastern side of the Andes
Mountains in the Oriente Basin. Triton's partners in the block are Vintage
Petroleum Ecuador, Inc., with a 30% interest, and Ranger Oil Limited, with a
15% interest, subject to certain government approvals. The partners' work
program commitments for Block 19 consist of the acquisition of 400 kilometers
(250 miles) of new seismic data and the drilling of two exploratory wells
during a four-year exploration period. A total of 442 kilometers (275 miles)
of new seismic data was acquired during 1996. The first exploratory well is
expected to be drilled in 1997.
Guatemala
Through the Company's subsidiary, Triton Guatemala S.A., the Company
has acquired an interest in two contiguous blocks. The blocks cover a total of
approximately 608,000 acres located on the border with Mexico in an extension
of the Chiapas Fold Belt province. During 1996, Triton processed and
interpreted seismic and gravity data acquired in 1995 and conducted other
preparatory operations for the planned drilling of the Piedras Blancas #1 well
to test the extension of the Chiapas Fold Belt. Drilling is expected to begin
in 1997.
<PAGE>
China
The Company's subsidiary, Triton China, Inc. LLC, has signed
production sharing contracts with the China National Offshore Oil Company
("CNOOC"), which give the Company the right to explore and develop two
contiguous offshore contract areas, Blocks 16/03 and 16/22. The blocks are
located approximately 175 kilometers (110 miles) offshore from Hong Kong in
water depths ranging from 300 to 650 feet. Block 16/22 (791,000 acres) and
Block 16/03 (2.2 million acres) are located in the Huizhou Sub-basin of the
Pearl River Mouth Basin. Block 16/22 has a primary three-year exploration
term with a commitment of reprocessing 500 kilometers (310 miles) of existing
seismic and the drilling of an exploratory well for a total expenditure of not
less than $7.5 million. Block 16/03 has a primary one-and-one-half-year
exploration term with a commitment of reprocessing 1,000 kilometers (621
miles) of existing seismic and the drilling of an exploratory well for a total
expenditure of not less than $3 million. Seismic reprocessing on both blocks
of an aggregate of approximately 8,800 kilometers (5,500 miles), was completed
in 1995 and 1996.
In April 1996, Triton executed an agreement with Mobil Exploration &
Production China Inc. ("Mobil") providing Mobil the right to earn a 50%
interest in both blocks. Subsequently, the HZ 23-2-1 exploratory well was
drilled on Block 16/22 to a total depth of 14,830 feet in water depths of 390
feet. The well was plugged and abandoned after encountering hydrocarbon shows,
although in noncommercial quantities. The remaining obligatory well for Block
16/03 is expected to be drilled in 1997.
Effective January 1997, Triton signed two one-year offshore Joint
Study Agreements with CNOOC. JSA 24/05 covers approximately 1.5 million acres
in water depths ranging from 50 to 200 feet in the Liedong area of the South
China Sea. This study area has a commitment of 3,500 kilometers (2,175 miles)
of existing seismic to be reprocessed. JSA 24/10 covers approximately 3.7
million acres in water depths ranging from 30 to 295 feet in the South Yellow
Sea. This study area has a commitment of 4,000 kilometers (2,500 miles) of
existing seismic to be reprocessed.
Italy
The Company has a 40% interest in each of the contiguous DR71 and
DR72 licenses operated by Enterprise Oil, plc, in the Adriatic Sea, and a 50%
interest in three onshore licenses, operated by Triton, in the southern
Apennines Mountains. Triton has applied for two new licenses onshore in the
southern Apennines and one new license offshore in the Adriatic.
The DR71 and DR72 licenses lie 45 kilometers (28 miles) offshore
from the city of Brindisi and cover approximately 493,000 acres. One well,
Medusa-1, was drilled on DR72 in 1996 to a total depth of 4,725 feet. The well
proved the presence of oil and gas in a new play but in noncommercial
quantities and was not tested. Additional drilling is expected in late 1997 or
early 1998.
The contiguous Southern Apennines licenses - Fosso del Lupo,
Valsinni and Masseria di Sole - cover approximately 101,000 acres in the
Matera province. The licenses were awarded in August 1996. Triton intends
to purchase and acquire seismic data over the licenses in 1997.
<PAGE>
Oman
The Company's subsidiary, Triton Oman, Inc., was awarded a 100%
interest in a production sharing contract covering Block 22, Masirah Bay, by
the Sultanate of Oman in June 1996. The offshore block covers approximately
two million acres in water depths ranging from 50 to 200 feet. The minimum
contractual obligation during the initial three-year exploration period
requires the reprocessing and reinterpretation of existing seismic data, 1,000
kilometers (625 miles) of seismic acquisition and one exploratory well
contingent on the results of the seismic program.
Indonesia
In February 1997, the Company's subsidiary, TriBlora Indonesia B.V.,
signed, subject to government approval, an agreement with Eurafrep B.V. to
acquire a 30% interest in the Blora production sharing contract covering a
block of approximately 1.4 million acres located within Central Java. Triton's
partners are Eurafrep B.V., the operator, with a 40% interest, and YPF
International Ltd. with a 30% interest.
The work program calls for an unspecified amount of seismic
reprocessing, as well as the acquisition of 150 kilometers (95 miles) of 2D
seismic and the drilling of a well within the three-year initial exploration
period for a total expenditure of not less than $4.5 million. Reprocessing of
seismic began in January 1997 with acquisition of new seismic to be undertaken
in the third quarter of 1997. Exploratory drilling is planned to begin in
1998.
In 1996, the Company sold its interest in the Enim project in
Indonesia.
RESERVES
The following table sets forth a summary of the estimated oil and
gas reserves of the Company at December 31, 1996, and is based on separate
estimates of the Company's net proved reserves, prepared by the independent
petroleum engineers, DeGolyer and MacNaughton, with respect to all proved
reserves in the Cusiana and Cupiagua fields in Colombia, and by the Company's
own petroleum engineers with respect to all proved reserves in
Malaysia-Thailand and the Liebre Field in Colombia. This table sets forth the
estimated net quantities of proved developed and undeveloped oil and gas
reserves and total proved oil and gas reserves owned by the Company and its
consolidated subsidiaries. At December 31, 1996, the Company had no proved
developed or proved undeveloped reserves in Argentina, Ecuador, Guatemala,
China, Italy, Oman or Indonesia. For additional information regarding the
Company's reserves, including the standardized measure of future net cash
flows, see note 25 of Notes to Consolidated Financial Statements. Oil
reserves data include natural gas liquids and condensate.
<PAGE>
Net Proved Reserves at December 31, 1996:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PROVED PROVED TOTAL
DEVELOPED UNDEVELOPED PROVED
---------- ------------ --------
OIL GAS OIL GAS OIL GAS
(MBBLS) (MMCF) (MBBLS) (MMCF) (MBBLS) (MMCF)
---------- ------- ------------ -------- -------- --------
Colombia(1) 67,193 11,146 68,117 3,505 135,310 14,651
Malaysia-Thailand(2) --- --- 24,700 871,100 24,700 871,100
---------- ------- ------------ -------- -------- --------
Total 67,193 11,146 92,817 874,605 160,010 885,751
---------- ------- ------------ -------- -------- --------
</TABLE>
____________________
(1) Includes liquids to be recovered from Ecopetrol as reimbursement for
precommerciality expenditures.
(2) As of December 31, 1996, the Company did not have a contract for the
sale of gas to be produced from its interest in the Malaysia-Thailand
Joint Development Area. In estimating its reserves attributable to
such interest, the Company assumed that production from the interest
would be sold at prices for natural gas derived from what the
Company believed to be the most comparable market price at
December 31, 1996. There can be no assurance that the price to be
provided in any gas contract will be equal to the price used
in the Company's calculations.
Reserve estimates are approximate and may be expected to change as
additional information becomes available. Furthermore, estimates of oil and
gas reserves, of necessity, are projections based on engineering data, and
there are uncertainties inherent in the interpretation of such data, as well
as the projection of future rates of production and the timing of development
expenditures. Reservoir engineering is a subjective process of estimating
underground accumulations of oil and gas that cannot be measured in an exact
way, and the accuracy of any reserve estimate is a function of the quality of
available data and of engineering and geological interpretation and judgment.
Accordingly, there can be no assurance that the reserves set forth herein will
ultimately be produced nor can there be assurance that the proved undeveloped
reserves will be developed within the periods anticipated.
No estimates of total proved net oil or gas reserves have been filed
by the Company with, or included in any report to, any United States authority
or agency pertaining to the Company's individual reserves since the beginning
of the Company's last fiscal year.
ACREAGE
The following table shows the total gross and net developed and
undeveloped oil and gas acreage held by Triton at December 31, 1996. "Gross"
refers to the total number of acres in an area in which the Company holds an
interest without adjustment to reflect the actual percentage interest held
therein by the Company. "Net" refers to the gross acreage as adjusted for
working interests owned by parties other than the Company.
<PAGE>
"Developed" acreage is acreage spaced or assignable to productive
wells. "Undeveloped" acreage is acreage on which wells have not been drilled
or completed to a point that would permit the production of commercial
quantities of oil and gas, regardless of whether such acreage contains proved
reserves.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
DEVELOPED UNDEVELOPED
ACREAGE ACREAGE(1)
------------------------- -------------------
GROSS NET GROSS NET
--------- -------------- ------------ -----
(In thousands)
Colombia 30 4 1,940 939
Malaysia-Thailand --- --- 731 366
Argentina --- --- 47 47
Ecuador --- --- 494 272
Guatemala --- --- 608 608
China(2) --- --- 2,990 1,495
Italy --- --- 594 248
Oman --- --- 2,044 2,044
--------- -------------- ------------ -----
Total 30 4 9,448 6,019
--------- -------------- ------------ -----
</TABLE>
____________________
(1) Triton's interests in certain of this acreage may expire if not
developed at various times in the future pursuant to the terms and
provisions of the leases, licenses, concessions, contracts,
permits or other agreements under which it was acquired.
(2) Does not include acreage attributable to the two Joint Study
Agreements signed with CNOOC in January 1997.
PRODUCTIVE WELLS AND DRILLING ACTIVITY
In this section, "gross" wells refers to the total number of wells
drilled in an area in which the Company holds any interest without adjustment
to reflect the actual ownership interest held. "Net" refers to the gross
number of wells drilled adjusted for working interests owned by parties other
than the Company.
At December 31, 1996, Triton held gross and net working interests
in 33 and 4.22 productive wells, respectively, in Colombia.
<PAGE>
The following tables set forth the results of the oil and gas well
drilling activity on a gross basis for wells in which the Company held an
interest for the years ended December 31, 1996 and 1995, the seven months
ended December 31, 1994, and for the year ended May 31, 1994.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GROSS EXPLORATORY WELLS
PRODUCTIVE (1) DRY
-------------- ------------
SEVEN MOS. YEAR
YEAR ENDED ENDED ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, MAY 31, DECEMBER 31,
---------------------------
1996 1995 1994 1994 1996
------------ ------------ ---------- ------- ------------
Colombia 3 2 1 3 ---
Malaysia-Thailand 7 2 --- --- ---
Argentina --- --- --- --- 2
Italy --- --- --- --- 1
China --- --- --- --- 1
New Zealand --- --- --- 1 ---
Crusader(1):
Argentina --- 1 1 --- ---
Australia 14 23 9 5 4
Canada --- --- --- --- ---
United States --- --- --- 2 ---
Philippines --- --- --- --- ---
------------ ------------ ---------- ------- ------------
Total 24 28 11 11 8
------------ ------------ ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GROSS EXPLORATORY WELLS
DRY TOTAL
------------------------------- -----------------------------------
SEVEN MOS. YEAR SEVEN MOS. YEAR
YEAR ENDED ENDED ENDED YEAR ENDED ENDED ENDED
DECEMBER 31, DEC. 31, MAY 31, DECEMBER 31, DEC. 31, MAY 31,
----------------
1995 1994 1994 1996 1995 1994 1994
---- ---------- ------- ---- ---- ---------- -------
Colombia 2 --- --- 3 4 1 3
Malaysia-Thailand --- --- --- 7 2 --- ---
Argentina 2 --- --- 2 2 --- ---
Italy --- --- 1 1 --- --- 1
China --- --- --- 1 --- --- ---
New Zealand --- --- --- --- --- --- 1
Crusader(1):
Argentina 2 --- --- --- 3 1 ---
Australia 11 3 2 18 34 12 7
Canada --- --- 1 --- --- --- 1
United States --- 2 1 --- --- 2 3
Philippines --- 1 --- --- --- 1 ---
---- ---------- ------- ---- ---- ---------- -------
Total 17 6 5 32 45 17 16
---- ---------- ------- ---- ---- ---------- -------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GROSS DEVELOPMENT WELLS
PRODUCTIVE (1) DRY
------------------------------------------------------ --------------------------------------------
SEVEN MOS. YEAR SEVEN MOS. YEAR
YEAR ENDED ENDED ENDED YEAR ENDED ENDED ENDED
DECEMBER 31, DEC. 31, MAY 31, DECEMBER 31, DEC. 31, MAY 31,
------------ ------------
1996 1995 1994 1994 1996 1995 1994 1994
------------ ---- ---------- ------- ------------ ---- ---------- -------
Colombia 15 8 3 --- --- --- --- ---
Malaysia-Thailand --- --- --- --- --- --- --- ---
Indonesia --- --- --- 3 --- --- --- 1
Crusader(1):
Australia 2 5 8 13 --- 1 1 1
Canada --- --- --- 9 --- --- --- ---
United States --- --- 1 --- --- --- --- 1
------------ ---- ---------- ------- ------------ ---- ---------- -------
Total 17 13 12 25 --- 1 1 3
------------ ---- ---------- ------- ------------ ---- ---------- -------
<S> <C> <C> <C> <C> <C>
GROSS DEVELOPMENT WELLS
TOTAL
----------------------------------------------
SEVEN MOS. YEAR
YEAR ENDED ENDED ENDED
DECEMBER 31, DEC. 31, MAY 31,
------------
1996 1995 1994 1994
------------ ---- ---------- -------
Colombia 15 8 3 ---
Malaysia-Thailand --- --- --- ---
Indonesia --- --- --- 4
Crusader(1):
Australia 2 6 9 14
Canada --- --- --- 9
United States --- --- 1 1
------------ ---- ---------- -------
Total 17 14 13 28
------------ ---- ---------- -------
</TABLE>
____________________
(1) In 1996, the Company sold all of its interest in Crusader and in the
Enim project in Indonesia. In 1995, Crusader sold its interests in
Argentina and Canada.
The following tables set forth the results of drilling activity on a
net basis for wells in which the Company held an interest for the years ended
December 31, 1996 and 1995, the seven months ended December 31, 1994 and for
the year ended May 31, 1994 (those wells acquired or disposed of since May 31,
1993 are reflected in the following tables only since or up to the effective
dates of their respective acquisitions or sales, as the case may be):
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET EXPLORATORY WELLS
PRODUCTIVE (1) DRY
----------------------------------------------- ---------------------------------------------
SEVEN MOS. YEAR SEVEN MOS. YEAR
YEAR ENDED ENDED ENDED YEAR ENDED ENDED ENDED
DECEMBER 31, DEC. 31, MAY 31, DECEMBER 31, DEC. 31, MAY 31,
-------------------------- ------------
1996 1995 1994 1994 1996 1995 1994 1994
-------------- ---- ---------- ------- ------------ ---- ---------- -------
Colombia(2) 0.12 0.12 0.12 1.24 0.50 2.00 --- ---
Malaysia-Thailand 3.50 1.00 --- --- --- --- --- ---
Argentina --- --- --- --- 2.00 2.00 --- ---
Italy --- --- --- --- 0.40 --- --- 0.10
China --- --- --- --- 0.50 --- --- ---
New Zealand --- --- --- 0.20 --- --- --- ---
Crusader(3):
Argentina --- 0.06 0.12 --- --- 0.12 --- ---
Australia 0.34 0.35 0.15 0.10 0.10 0.29 0.63 0.02
Canada --- --- --- --- --- --- --- 0.50
United States --- --- --- 0.20 --- --- 0.40 0.10
Philippines --- --- --- --- --- --- 0.20 ---
---- ---- ---------- ------- ---- ---- ---------- -------
Total 3.96 1.53 0.39 1.74 3.50 4.41 1.23 0.72
---- ---- ---------- ------- ---- ---- ---------- -------
<S> <C> <C> <C> <C> <C>
NET EXPLORATORY WELLS
TOTAL
--------------------------------------
SEVEN MOS. YEAR
YEAR ENDED ENDED ENDED
DECEMBER 31, DEC. 31, MAY 31,
------------------
1996 1995 1994 1994
------------ ---- ---------- -------
Colombia(2) 0.62 2.12 0.12 1.24
Malaysia-Thailand 3.50 1.00 --- ---
Argentina 2.00 2.00 --- ---
Italy 0.40 --- --- 0.10
China 0.50 --- --- ---
New Zealand --- --- --- 0.20
Crusader(3):
Argentina --- 0.18 0.12 ---
Australia 0.44 0.64 0.78 0.12
Canada --- --- --- 0.50
United States --- --- 0.40 0.30
Philippines --- --- 0.20 ---
---- ---- ---------- -------
Total 7.46 5.94 1.62 2.46
---- ---- ---------- -------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET DEVELOPMENT WELLS
PRODUCTIVE (1) DRY
----------------------------------------- ---------------------------------------
SEVEN MOS. YEAR SEVEN MOS. YEAR
YEAR ENDED ENDED ENDED YEAR ENDED ENDED ENDED
DECEMBER 31, DEC. 31, MAY 31, DECEMBER 31, DEC. 31, MAY 31,
-------------------- ------------------
1996 1995 1994 1994 1996 1995 1994 1994
-------------- ---- ---------- ------- ------------ ---- ---------- -------
Colombia (2) 1.80 0.96 0.36 --- --- --- --- ---
Malaysia-Thailand --- --- --- --- --- --- --- ---
Indonesia --- --- --- 3.00 --- --- --- 1.00
Crusader(3):
Australia 0.05 1.10 0.17 0.40 --- 0.02 0.01 0.02
Canada --- --- --- 2.00 --- --- --- ---
United States --- --- 0.20 --- --- --- --- 0.20
---- ---- ---------- ------- ---- ---- ---------- -------
Total 1.85 1.06 0.73 5.40 --- 0.02 0.01 1.22
---- ---- ---------- ------- ---- ---- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
NET DEVELOPMENT WELLS
TOTAL
------------
SEVEN MOS. YEAR
YEAR ENDED ENDED ENDED
DECEMBER 31, DEC. 31, MAY 31,
------------------
1996 1995 1994 1994
------------ ---- ---------- -------
Colombia (2) 1.80 0.96 0.36 ---
Malaysia-Thailand --- --- --- ---
Indonesia --- --- --- 4.00
Crusader(3):
Australia 0.05 0.12 0.18 0.42
Canada --- --- --- 2.00
United States --- --- 0.20 0.20
---- ---- ---------- -------
Total 1.85 1.08 0.74 6.62
---- ---- ---------- -------
</TABLE>
____________________
(1) A productive well is producing or capable of producing oil and/or gas
in commercial quantities. Multiple completions have been counted as
one well. Any well in which one of the multiple completions is
an oil completion is classified as an oil well.
(2) Adjusted to reflect the national oil company participation at
commerciality for the Cusiana and Cupiagua fields.
(3) Adjusted to reflect the Company's 49.9% interest in Crusader, which
was sold in 1996.
OTHER PROPERTIES
The Company owns or has interests in oil and gas production
facilities relating to its oil and gas production operations throughout the
world. In addition, the Company leases or owns office space and other
properties for its various operations in various parts of the world.
For additional information on the Company's leases, including its
office leases, see note 21 of Notes to Consolidated Financial Statements.
FORWARD-LOOKING INFORMATION
Certain statements in this Annual Report on Form 10-K, including
statements of the Company's and management's expectations, intentions, plans
and beliefs, including those contained in or implied by Items 1 and 2,
"Business and Properties", and Item 7, "Management's Discussion and Analysis
of Financial Condition and Results of Operations," are forward-looking
statements, as defined in Section 21D of the Securities Exchange Act of 1934,
that are dependent on certain events, risks and uncertainties that may be
outside of the Company's control. These forward-looking statements include
statements of management's plans and objectives for future operation and
statements of future economic performance; information regarding drilling
schedules, expected or planned production or transportation capacity, the
future construction or upgrades or upgrades of pipelines (including costs),
when the Cusiana and Cupiagua fields might become self-financing, future
production of the Cusiana and Cupiagua fields, the negotiation of a gas sales
contract and commencement of production in Malaysia-Thailand, the Company's
capital budget and future capital requirements, the Company's meeting its
future capital needs, the amount by which production from the Cusiana and
Cupiagua fields may increase or when such increased production may commence,
the Company's realization of its deferred tax asset, the level of future
expenditures for environmental costs and the outcome of regulatory
and litigation matters, and proven oil and gas reserves and discounted future
net cash flows therefrom; and the assumptions described in this report
underlying such forward-looking statements. Actual results and developments
could differ materially from those expressed in or implied by such statements
due to a number of factors, including those described in the context of such
forward-looking statements and in notes 20 and 21 of Notes to Consolidated
Financial Statements.
EMPLOYEES
At March 7, 1997, the Company employed approximately 270 full-time
employees.
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information regarding the
executive officers of the Company at March 7, 1997:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SERVED WITH
-----------
THE COMPANY
-----------
NAME AGE POSITION WITH THE COMPANY SINCE
- ---------------------- --- ---------------------------------------------------- -----------
Thomas G. Finck 50 Chairman of the Board and Chief
Executive Officer 1992
Nick De'Ath 48 Senior Vice President, Exploration 1993
Robert B. Holland, III 44 Senior Vice President, General Counsel and Secretary 1993
Peter Rugg 49 Senior Vice President and Chief Financial Officer 1993
A.E. Turner, III 48 Senior Vice President, Operations 1994
</TABLE>
In August 1992, Mr. Finck was elected Director, President and Chief
Operating Officer of the Company. Effective January 1993, Mr. Finck was
elected Chief Executive Officer and effective May 1995 he assumed the
additional position of Chairman of the Board. From July 1991 to August 1992,
Mr. Finck served as President and Chief Executive Officer of American Energy
Group, an independent oil and natural gas exploration and production company.
From May 1984 until June 1991, Mr. Finck served as President and Chief
Executive Officer of Ensign Oil & Gas, Inc., a private domestic oil and gas
exploration company.
Mr. De'Ath was elected Senior Vice President, Exploration in 1993.
From 1992 to 1993, Mr. De'Ath served as President and owner of Pinnacle Ltd.,
a management consulting firm providing services to multinational companies in
Colombia, and from 1971 to 1991 served in various positions with subsidiaries
of British Petroleum Company, p.l.c., including general manager of exploration
for BP International Limited in Mexico from 1991 to 1992 and general manager
of BP's Colombian operation from 1986 to 1991.
Mr. Holland was elected Senior Vice President, General Counsel and
Secretary of the Company in January 1993. For more than five years prior to
joining the Company, Mr. Holland was a partner of the law firm of Jackson &
Walker, L.L.P., Dallas, Texas.
Mr. Rugg was elected Senior Vice President and Chief Financial
Officer in April 1993. From September 1992 to April 1993, Mr. Rugg served as
Vice President of J.P. Morgan & Co., Incorporated ("J.P. Morgan"), a financial
services firm, and for more than the five years prior to September 1992, Mr.
Rugg served as Vice President of Morgan Guaranty Trust Company of New York, an
international bank owned by J.P. Morgan.
Mr. Turner was elected Senior Vice President, Operations in March
1994. From 1988 to February 1994, Mr. Turner served in various positions with
British Gas Exploration & Production, Inc., including Vice President and
General Manager of operations in Africa and the Western Hemisphere from
October 1993.
All executive officers of the Company are elected annually by the
Board of Directors of the Company to serve in such capacities until removed or
their successors are duly elected and qualified. There are no family
relationships among the executive officers of the Company.
ITEM 3. LEGAL PROCEEDINGS
LITIGATION
The Company and subsidiaries or former subsidiaries of the Company,
including Triton Oil, are among numerous defendants in three related lawsuits
brought in the Superior Court of the State of California, County of Los
Angeles, by (i) National Union Fire Insurance Company ("National Union") and
The Restaurant Enterprises Group, (ii) Travelers Indemnity Company
("Travelers") and (iii) the City of Redondo Beach. All three lawsuits arise
out of a 1988 tidal wave at King Harbor in Redondo Beach, California. The
lawsuits allege, among other things, that the defendants' negligence
contributed to the collapse of a hotel and the flooding of a restaurant in the
tidal wave. In the case of Triton Oil, the alleged negligence was Triton
Oil's drilling of nearby oil wells and alleged resulting ground subsidence
which purportedly lowered the height of the King Harbor breakwater. The
Travelers lawsuit asserts damages in excess of $14.6 million, although in a
separate lawsuit against the Army Corps of Engineers, the court found damages
to be approximately $6.7 million. Of that $6.7 million, Travelers recovered $4
million from the City of Redondo Beach. The National Union lawsuit asserts
damages in excess of $4.75 million, although in a separate lawsuit against the
Army Corps of Engineers, the court found damages to be approximately $3.7
million. Of that $3.7 million, Travelers recovered $1 million from the City of
Redondo Beach. The City of Redondo Beach lawsuit asserts damages in excess of
$13.2 million, including indemnity for amounts it paid to settle the foregoing
lawsuits and other claims arising out of the flooding. The three lawsuits have
been consolidated for trial, which has been set for October 1997. The Company
believes that it and its subsidiaries have meritorious defenses and intend to
defend the suits vigorously.
During the quarter ending September 30, 1995, the United States
Environmental Protection Agency and Justice Department advised the Company
that one of its domestic oil and gas subsidiaries, as a potentially
responsible party for the clean-up of the Monterey Park, California Superfund
site operated by Operating Industries, Inc., could agree to contribute
approximately $2.8 million to settle its alleged liability for certain
remedial tasks at the site. The offer did not address responsibility for any
groundwater remediation. The subsidiary was advised that if it did not accept
the settlement offer, it, together with other potentially responsible parties,
may be ordered to perform or pay for various remedial tasks. After
considering the cost of possible remedial tasks, its legal position relative
to potentially responsible parties and insurers, possible legal defenses and
other factors, the subsidiary declined to accept the offer.
<PAGE>
In June 1994, the Company and numerous other defendants were served
by the State of Nevada, Division of Environmental Protection (the "NDEP") in a
state court proceeding in Clark County, Nevada. The action seeks to hold the
defendants responsible for remediation of certain underground water
contamination at the McCarran International Airport and seeks civil penalties
of up to $25,000 per day. The Company has been advised by the NDEP that the
action was filed to toll the running of the statute of limitations on certain
potential causes of action. The Company denies responsibility for the
contamination at issue and does not believe that the action will have a
material adverse affect on its consolidated financial position.
The Company is also subject to litigation that is incidental to its
business.
REGULATORY MATTER
In February 1997, the Company and the Securities and Exchange
Commission ("SEC") concluded a settlement of the SEC's investigation of
possible violations of the Foreign Corrupt Practices Act in connection with
Triton Indonesia, Inc.'s former operations in Indonesia. The investigation was
settled on a "consent decree" basis in which the Company neither admitted nor
denied charges made by the SEC that the Company violated the Securities
Exchange Act of 1934 when Triton Indonesia, Inc. made certain payments in 1989
and 1990 to a consultant advising Triton Indonesia, Inc. on its relations with
the Indonesian state oil company and tax authority, misbooked the payments and
failed to maintain adequate internal controls. Under the terms of the
settlement, the Company's subsidiary, TEC, was permanently enjoined from
future violations of the books and records and internal controls provisions of
the Securities Exchange Act of 1934 and paid a civil monetary penalty of
$300,000. In 1996, the Company was advised that the Department of Justice had
concluded a parallel inquiry without taking any action.
CERTAIN FACTORS
None of the legal matters described above is expected to have a
material adverse effect on the Company's consolidated financial position.
However, this statement of the Company's expectation is a forward-looking
statement that is dependent on certain events and uncertainties that may be
outside of the Company's control. Actual results and developments could differ
materially from the Company's expectation, for example, due to such
uncertainties as jury verdicts, the application of laws to various factual
situations, the actions that may or may not be taken by other parties and the
availability of insurance. In addition, in certain situations, such as
environmental claims, one defendant may be responsible for the liabilities of
other parties. Moreover, circumstances could arise under which the Company may
elect to settle claims at amounts that exceed the Company's expected liability
for such claims in an attempt to avoid costly litigation. Judgments or
settlements could, therefore, exceed any reserves.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted by the Company during the fourth quarter of
the year ended December 31, 1996 to security holders, through the solicitation
of proxies or otherwise.
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Triton's ordinary shares are listed on the New York Stock Exchange
and are traded under the symbol OIL. Set forth below are the high and low
closing sales prices of Triton's ordinary shares as reported on the New York
Stock Exchange Composite Tape for the periods indicated:
<TABLE>
<CAPTION>
<S> <C> <C>
CALENDAR PERIODS HIGH LOW
- ---------------- ------ ------
1994:
First Quarter 32 26 3/4
Second Quarter 35 7/8 25 1/8
Third Quarter 36 30
Fourth Quarter 37 1/4 31
1995:
First Quarter 38 1/4 31
Second Quarter 48 1/2 37 1/8
Third Quarter 55 44 1/4
Fourth Quarter 57 3/8 44
1996:
First Quarter 59 3/4 46 3/4
Second Quarter 57 1/8 45 3/4
Third Quarter 49 3/8 40 1/2
Fourth Quarter 50 5/8 42 1/2
1997:
First Quarter* 52 1/2 41
</TABLE>
______________________
*Through March 7, 1997.
Triton has not declared any cash dividends on its ordinary shares
since fiscal 1990. The Company's current intent is to retain earnings for use
in the Company's business and the financing of its capital requirements. The
payment of any future cash dividends is necessarily dependent upon the
earnings and financial needs of the Company, along with applicable legal and
contractual restrictions.
The payment of dividends on the Company's capital stock is
restricted pursuant to the Company's revolving credit facility and the
indentures under which its publicly traded notes were issued.
Under applicable corporate law, the Company may pay dividends or
make other distributions to its shareholders in such amounts as appear to the
directors to be justified by the profits of the Company or out of the
Company's share premium account if the Company has the ability to pay its
debts as they come due.
As of March 7, 1996, the Company had outstanding 247,469 shares of
its 5% Convertible Preference Shares ("5% Preference Shares"). Each 5%
Preference Share may be converted into one ordinary share of Triton and bears
a cash dividend, which has priority over dividends on Triton's ordinary
shares, equal to 5% per annum on the redemption price of $34.41 per share,
payable semi-annually on March 30 and September 30 of each year. The 5%
Preference Shares have priority over Triton ordinary shares upon liquidation,
and may be redeemed at Triton's option at any time on or after March 30, 1998
(or such earlier date as there are fewer than 133,005 5% Preference Shares
outstanding) for cash equal to the redemption price. Any shares of 5%
Preference Shares that remain outstanding on March 30, 2004, must be redeemed
at the redemption price either for cash or, at the Company's option, for
Triton ordinary shares. See notes 4 and 14 of Notes to Consolidated Financial
Statements.
The Company has adopted a Shareholder Rights Plan pursuant to which
preference share rights attach to all ordinary shares at the rate of one right
for each ordinary share. Each right entitles the registered holder to purchase
from the Company one one-thousandth of a Series A Junior Participating
Preference Share, par value $.01 per share ("Junior Preference Shares"), of
the Company at a price of $120 per one one-thousandth of a share of such
Junior Preference Shares, subject to adjustment. Generally, the rights only
become distributable 10 days following public announcement that a person has
acquired beneficial ownership of 15% or more of Triton's ordinary shares or 10
business days following commencement of a tender offer or exchange offer for
15% or more of the outstanding ordinary shares; provided that, pursuant to the
terms of the plan, Oppenheimer Group, Inc. ("Oppenheimer") may increase its
level of beneficial ownership to 19.9% without triggering a distribution of
the rights. If, among other events, any person becomes the beneficial owner of
15% or more of Triton's ordinary shares (except as provided with respect to
Oppenheimer), each right not owned by such person generally becomes the right
to purchase such number of ordinary shares of the Company equal to the number
obtained by dividing the right's exercise price (currently $120) by 50% of the
market price of the ordinary shares on the date of the first occurrence. In
addition, if the Company is subsequently merged or certain other extraordinary
business transactions are consummated, each right generally becomes a right to
purchase such number of shares of common stock of the acquiring person equal
to the number obtained by dividing the right's exercise price by 50% of the
market price of the common stock on the date of the first occurrence.
Under certain circumstances, the Company's directors may determine
that a tender offer or merger is fair to all shareholders and prevent the
rights from being exercised. At any time after a person or group acquires 15%
or more of the ordinary shares outstanding (other than with respect to
Oppenheimer) and prior to the acquisition by such person or group of 50% or
more of the outstanding ordinary shares or the occurrence of an event
described in the prior paragraph, the Board of Directors of the Company may
exchange the rights (other than rights owned by such person or group which
will become void), in whole or in part, at an exchange ratio of one ordinary
share, or one one-thousandth of a Junior Preference Share, per right (subject
to adjustment).
The rights will expire on May 22, 2005, unless such expiration date
is extended or unless the rights are earlier redeemed or exchanged by the
Company. At any time prior to a person acquiring beneficial ownership of 15%
or more of Triton's ordinary shares, the Company may redeem the rights in
whole, but not in part, at a price of $.01 per right. For so long as the
rights are redeemable, the Company may, except with respect to the redemption
price, amend the rights in any manner.
At March 7, 1997, there were 4,459 record holders of the Company's
ordinary shares.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
AS OF OR
FOR SEVEN
AS OF OR FOR YEAR ENDED MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------------------------ ------------
1996 1995 1994 1994
------------ -------- ------------ --------------
(unaudited)
OPERATING DATA (IN THOUSANDS, EXCEPT PER SHARE DATA):
Sales and other operating revenues (1) $ 133,977 $107,472 $ 32,952 $ 20,736
Earnings (loss) from continuing operations (1) (2) 23,805 6,541 (49,610) (26,630)
Earnings (loss) before extraordinary
items and cumulative effect of
accounting change 23,805 2,720 (52,701) (27,708)
Net earnings (loss) (2) 22,609 2,720 (52,701) (27,708)
Average ordinary and equivalent
shares outstanding 36,919 35,147 34,916 34,944
Earnings (loss) per ordinary share:
Continuing operations (1) (2) $ 0.62 $ 0.16 $ (1.43) $ (0.78)
Before extraordinary item and
cumulative effect of accounting change 0.62 0.05 (1.52) (0.81)
Net earnings (loss) 0.59 0.05 (1.52) (0.81)
BALANCE SHEET DATA (IN THOUSANDS):
Net property and equipment $ 676,833 $524,381 $ 399,658 $ 399,658
Total assets 914,524 824,167 619,201 619,201
Long-term debt(3) 217,078 401,190 315,258 315,258
Redeemable preference shares of
subsidiaries --- --- --- ---
Shareholders' equity 300,644 246,025 237,195 237,195
CERTAIN OIL AND GAS DATA (4):
Production
Oil (Mbbls) (5) 5,987 6,303 2,534 1,488
Gas (MMcf) 2,517 5,312 5,516 3,427
Average sales price
Oil (per bbl) $ 19.61 $ 16.60 $ 15.26 $ 16.41
Gas (per Mcf) $ 1.69 $ 1.64 $ 1.51 $ 1.44
<S> <C> <C> <C>
AS OF OR FOR YEAR ENDED MAY 31,
----------------------------------
1994 1993 1992
------------ --------- ---------
OPERATING DATA (IN THOUSANDS, EXCEPT PER SHARE DATA):
Sales and other operating revenues (1) $ 43,208 $ 84,414 $ 90,724
Earnings (loss) from continuing operations (1) (2) (4,597) (76,509) (81,333)
Earnings (loss) before extraordinary
items and cumulative effect of
accounting change (9,341) (93,552) (94,037)
Net earnings (loss) (2) (9,341) (89,535) (94,037)
Average ordinary and equivalent
shares outstanding 34,775 34,241 29,898
Earnings (loss) per ordinary share:
Continuing operations (1) (2) $ (0.13) $ (2.23) $ (2.77)
Before extraordinary item and
cumulative effect of accounting change (0.27) (2.73) (3.19)
Net earnings (loss) (0.27) (2.61) (3.19)
BALANCE SHEET DATA (IN THOUSANDS):
Net property and equipment $ 308,498 $330,151 $385,979
Total assets 616,101 561,931 571,169
Long-term debt(3) 294,441 159,147 27,587
Redeemable preference shares of
subsidiaries --- 11,399 12,972
Shareholders' equity 263,422 255,432 336,013
CERTAIN OIL AND GAS DATA (4):
Production
Oil (Mbbls) (5) 2,886 3,691 3,777
Gas (MMcf) 9,078 21,958 24,366
Average sales price
Oil (per bbl) $ 15.15 $ 18.67 $ 19.26
Gas (per Mcf) $ 1.44 $ 1.27 $ 1.21
</TABLE>
____________________
(1) Operating data for the year ended December 31, 1994 (unaudited), the
seven months ended December 31, 1994 and the years ended May 31,
1994, 1993 and 1992 are restated to reflect the aviation sales and
services segment and the wholesale fuel products segment as
discontinued operations in 1995 and 1993, respectively.
(2) Gives effect to the writedown of assets and loss provisions of $46.2
million, $1.1 million, $14.7 million, $1.0 million, $45.8
million, $99.9 million and $48.8 million for the years ended
December 31, 1996, 1995 and 1994 (unaudited), the seven months ended
December 31, 1994 and the years ended May 31, 1994, 1993 and 1992,
respectively.
(3) Long-term debt does not include current maturities totaling $199.6
million, $1.3 million, $.3 million, $.3 million, $3.4 million and
$8.5 million at December 31, 1996, 1995 and 1994 and May 31, 1994,
1993 and 1992, respectively.
(4) Information presented includes the 49.9% equity investment in Crusader
Limited, which was sold in 1996.
(5) Includes natural gas liquids and condensate. Production excludes .7
million and .4 million barrels of oil produced and delivered under a
forward oil sale entered into in May 1995 for the years ended
December 31, 1996 and 1995, respectively.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Requirements
Cash, cash equivalents and marketable securities totaled $14.9
million and $95.5 million at December 31, 1996 and 1995, respectively, while
the unused portion of available credit facilities was $111.8 million and $58.6
million at December 31, 1996 and 1995, respectively. Working capital
(deficit) was ($182.2 million) at December 31, 1996, compared with $85.6
million at December 31, 1995. The decline in working capital primarily
resulted from the classification of the Company's 12 1/2% Senior Subordinated
Discount Notes ("1997 Notes") due November 1997 ($189.9 million) as a current
liability and use of cash and marketable securities to fund the 1996 capital
spending program.
The Company's capital expenditures and other capital investments
were $252.7 million, $178.2 million, $89.9 million and $86.8 million during
the years ended December 31, 1996 and 1995, the seven months ended December
31, 1994, and the year ended May 31, 1994, respectively, primarily for
exploration and development of the Cusiana and Cupiagua fields (the "Fields")
in Colombia, and for exploration in Block A-18 of the Malaysia-Thailand Joint
Development Area in the Gulf of Thailand and in other areas. The 1996 capital
spending program and repayment of debt were funded with cash, cash flow from
operations ($80.7 million), and proceeds from sales of marketable securities
($38.5 million) and other assets ($108.1 million). At December 31, 1996, the
Company had outstanding borrowings of $40.6 million under a term credit
facility supported by a guarantee issued by the Export-Import Bank of the
United States. In 1996, the Company signed a $125 million unsecured bank
revolving credit facility. The facility matures in August 1998. The Company
had outstanding borrowings of $11 million under the facility as of December
31, 1996. Also during 1996, the Company purchased in the open market $30
million face value of its 1997 Notes and realized an extraordinary after-tax
expense of $1.2 million. At December 31, 1996, $210 million face value of the
1997 Notes remained outstanding.
The 1995 capital spending program was funded with cash flow from
operations (including a forward sale of Cusiana crude oil), cash, proceeds
from marketable securities, sales of assets ($20.9 million) and net borrowings
($36.3 million). In May 1995, the Company sold 10.4 million barrels of oil in
a forward oil sale. Under the terms of the sale, the Company received
approximately $87 million of the approximately $124 million net proceeds and
is entitled to receive substantially all of the remaining proceeds (now held
in various interest-bearing reserve accounts) when the Company's Cusiana and
Cupiagua fields project in Colombia becomes self-financing, which is expected
in 1997, and when certain other conditions are met. During 1995, the Company
repaid $25 million of short-term debt and borrowed $48.6 million under a $65
million long-term revolving credit facility. This facility was paid off in
1996 and was terminated.
Capital expenditures incurred during the seven months ended December
31, 1994, were funded by cash, net proceeds from marketable securities ($30.8
million) and borrowings ($17.2 million). The principal sources for funds for
the year ended May 31, 1994, used to support operations, capital expenditures
and debt repayment were $100 million in proceeds from the sale of assets and
approximately $124 million from the issuance of $170 million principal amount
of 9 3/4% Senior Subordinated Discount Notes ("9 3/4% Notes") due December
2000.
Development of the Fields, including drilling and construction of
additional production facilities, will require further capital outlays.
Further exploration and development activities on Block A-18, as well as
exploratory drilling in other countries, also will require substantial capital
outlays. The Company's capital budget for the year ending December 31, 1997,
is approximately $310 million, excluding capitalized interest, of which
approximately $150 million relates to the Fields and capital contributions to
Oleoducto Central S.A. ("OCENSA"), $95 million relates to Block A-18, and $65
million relates to the Company's exploration and drilling program in other
parts of the world. The Company assisted OCENSA in raising one tranche of
debt totaling $65 million in 1996 and may assist OCENSA in raising up to $25
million of additional debt in 1997. Capital requirements for exploration and
development relating to Block A-18 are expected to increase significantly into
1998.
The Company has filed a shelf registration statement with the
Securities and Exchange Commission that provides for the issuance of up to
$600 million of securities, of which up to $200 million may be equity
securities.
The Company expects to meet capital needs, including raising funds
to repay the 1997 Notes, in the future with a combination of some or all of
the following: the Company's revolving credit facility, cash flow from its
Colombian operations (including additional proceeds from the 1995 forward oil
sale), cash and marketable securities, asset sales, and the issuance of debt
and equity securities. The Company's indentures permit the Company to incur
total indebtedness (excluding certain permitted indebtedness) of up to 25% of
the sum of its indebtedness and market capitalization of its capital stock.
As of yearend 1996, the revolving credit facility permitted the Company to
incur total indebtedness of up to approximately $630 million. Availability
under the credit facility may be more in the future under certain
circumstances.
Results of Operations
The Company changed its fiscal yearend from May 31 to December 31
beginning in 1995. The Consolidated Statements of Operations report the
Company's results of operations for the years ended December 31, 1996 and
1995, the seven months ended December 31, 1994, and the year ended May 31,
1994; however, Management's Discussion and Analysis compares the calendar
years ended December 31, 1996, 1995 and 1994. The results of operations for
the year ended December 31, 1994, for which the Company would have reported a
net loss after preferred dividends of $53.2 million, have not been audited.
Year Ended December 31, 1996, Compared with Year Ended December 31, 1995
Revenues
Sales and other operating revenues were $134 million and $107.5
million in 1996 and 1995, respectively. Revenue in Colombia increased by
$37.2 million in 1996 due to higher production ($15.7 million) and higher oil
prices ($21.5 million) resulting from more favorable market conditions and
batching of Cusiana crude that began in mid-1995. Revenue barrels in
Colombia, including barrels delivered under the forward oil sale, increased
from 5.5 million barrels in 1995 to 6.5 million barrels in 1996, even
though the Company received .7 million fewer barrels in 1996 as
reimbursement of pre-commerciality costs related to the Cusiana Field. Oil
and gas sales from properties sold in late 1995 and early 1996 aggregated
$17 million in 1995, compared with $2.7 million in 1996.
Based on the operator's current projections, the Company expects
gross production capacity from the Fields to reach 320,000 barrels per day
during summer 1997 and at least 500,000 barrels per day by the end of 1997.
Beginning in April 1997, the Company's delivery requirement under the forward
oil sale will increase from 58,425 barrels per month to 254,136 barrels per
month, which will have an adverse effect on the Company's earnings and cash
flows on a per barrel basis. The Company expects that the adverse effect on
the Company's results of operations and cash flows will be mitigated by
increased production from the Fields. There can be no assurance, however, as
to the timing of any such increase in production or that any such increase
would occur in the same accounting period as the increase in the Company's
forward oil sale delivery requirement.
Other operating revenues in 1996 included a gain of $4.1 million
resulting from the sale of the Company's royalty interests in U.S. properties
for $23.8 million based on an effective date of January 1, 1996.
Costs and Expenses
Operating expenses increased $1.4 million in 1996, and depreciation,
depletion and amortization increased $2.4 million. The Company's operating
costs per equivalent barrel were $5.77 and $6.28 in 1996 and 1995,
respectively. Higher production in Colombia increased operating expenses by
$9.9 million and depreciation and depletion by $3.6 million. Operating
expenses from properties sold in late 1995 and early 1996 were $1.8 million
and $10.2 million in 1996 and 1995, respectively.
During 1997, the Company expects that aggregate pipeline tariff
costs from OCENSA will increase. When the pipeline expansion project is
completed and shipments through the pipeline upgrade commence, and each year
thereafter, OCENSA will assess to the Cusiana and Cupiagua fields shippers
(the "Initial Shippers") a tariff estimated to recoup the total cost of the
project over a period of 15 years, its operating expenses, which include all
Colombian taxes, interest expense, and the dividend to be paid by OCENSA to
its shareholders. Shippers of crude oil which are not Initial Shippers ("Third
Party Shippers") will be assessed a tariff on a per barrel basis and OCENSA
will use revenues from such tariffs to reduce the Initial Shippers' tariff.
The Company cannot predict with any certainty the impact of the increased
tariff on a per barrel basis due to the uncertainty as to the volumes of the
Third Party Shippers' production to be transported by OCENSA and when the
increases in production from the Cusiana and Cupiagua fields may occur.
General and administrative expenses before capitalization increased
$3.8 million in 1996 to $50.5 million, primarily due to greater exploration
activities. Capitalized general and administrative costs were $24.6 million
and $21.1 million in 1996 and 1995, respectively.
In 1996, the Company's oil and gas properties and other assets in
Argentina were written down $43 million following a review of technical
information that indicated the acreage portfolio did not meet the Company's
exploration objectives.
Other Income and Expenses
Interest expense before capitalization increased $2.7 million in
1996 to $43 million. Capitalized interest increased from $16.2 million in
1995 to $27.1 million in 1996 due to construction of support equipment and
facilities in the Fields and greater exploration activities throughout the
world.
Other income, net in 1996 included a $10.4 million gain on the sale
of the Company's shareholdings in Crusader, a $7.6 million benefit for
settlement of a lawsuit in which the Company was plaintiff and an $11 million
unrealized gain representing the change in fair market value of the West Texas
Intermediate ("WTI") benchmark call options purchased in 1995. These gains
were offset by $3.2 million in loss provisions for various legal matters.
Other income, net in 1995 included $7.2 million received from legal
settlements, a $3.5 million gain on the sale of Triton France and $2.9 million
received from the early redemption of the Crusader convertible notes. These
gains were offset by a $4.2 million unrealized expense representing the change
in fair market value of the WTI benchmark call options.
Income Taxes
Statement of Financial Accounting Standards No. 109 ("SFAS 109"),
"Accounting for Income Taxes," requires that the Company make projections
about the timing and scope of certain future business transactions in order to
estimate recoverability of deferred tax assets primarily resulting from the
expected utilization of net operating loss carryforwards ("NOLs"). Changes in
the timing or nature of actual or anticipated business transactions,
projections, organizational changes, and income tax laws can give rise to
significant adjustments to the Company's deferred tax expense or benefit that
may be reported from time to time. For these and other reasons, compliance
with SFAS 109 may result in significant differences between tax expense for
income statement purposes and taxes actually paid.
The income tax provision for 1996 represented current and deferred
taxes in Colombia, deferred taxes on exploration projects throughout the
world, and a deferred tax benefit in the United States related to anticipated
future utilization of NOLs. Subject to the factors described above, the
Company currently expects that its foreign deferred tax provision will
substantially exceed its current tax provision (i.e., actual taxes paid)
resulting in an effective tax for income statement purposes that will exceed
statutory tax rates, at least until the Cusiana and Cupiagua fields project
reaches peak production. The primary reason for the expected difference is
the nondeductibility for Colombian tax purposes of certain capital expenses
and the treatment of reimbursements for pre-commerciality costs as a return of
capital under Colombian tax laws. Conversely, Colombian tax law permits the
Company to adjust the tax basis of certain assets based on the Colombian
inflation rate and to include any resulting increases in tax depreciation of
the underlying asset based on rates of production and other factors. The
Company's deferred tax liability has not been reduced to reflect the impact of
this inflation adjustment.
At December 31, 1996, the Company had NOLs of approximately $230.7
million, and certain subsidiaries had separate return limitation years
("SRLY") operating loss carryforwards of approximately $50.9 million. The
NOLs expire from 1998 to 2012, and the SRLY operating loss carryforwards
expire from 1997 to 2002. See note 12 of Notes to Consolidated Financial
Statements.
The Company recorded a deferred tax asset of $71.4 million, net of a
valuation allowance of $30.7 million at December 31, 1996. The valuation
allowance is primarily attributable to SRLY operating losses that are
currently not realizable due to the lack of potential future income in the
applicable subsidiaries, and the expectation that other tax credits will
expire without being utilized. The minimum amount of future taxable income
necessary to realize the deferred tax asset is approximately $204 million.
Although there can be no assurance the Company will achieve such levels of
income, management believes the deferred tax asset will be realized through
increasing income from its operations.
The income tax provision for 1996 decreased primarily due to the
recognition of a deferred tax benefit in the United States totaling $23.5
million related to anticipated future utilization of NOLs, compared with a
similar benefit of $12.8 million in 1995. The 1996 benefit reflects the
improvement in the Company's anticipated operating results. Foreign current
tax expense of $5.4 million in 1996 increased $1.4 million from 1995, mainly
due to increased profitability from the Company's Colombian operations.
Foreign deferred tax expense of $15.4 million in 1996 decreased $2.9 million
from 1995, primarily due to the writedown of the Company's Argentina assets,
which lowered taxes by $3.7 million in 1996 compared with 1995.
Year Ended December 31, 1995, Compared with Year Ended December 31, 1994
Revenues
Sales and other operating revenues were $107.5 million and $33
million in 1995 and 1994, respectively. Revenues in Colombia increased by
$81.6 million in 1995 primarily due to greater production capacity from the
installation in late 1994 and early 1995 of four production units in the
Cusiana central processing facility and higher oil prices in Colombia ($16.29
per barrel in 1995, compared with $13.16 per barrel in 1994) resulting from
more favorable market conditions and batching of Cusiana crude beginning in
mid-1995. The 1995 results also included revenues of $14.5 million relating
to the reimbursement of pre-commerciality costs for the Cusiana Field. Oil
sales in France were $5.8 million higher in 1994 than in 1995, primarily
because of the sale of Triton France in August 1995.
Costs and Expenses
Operating expenses increased $14.1 million to $35.3 million in 1995,
while depreciation, depletion and amortization increased $9.5 million to $23.2
million in 1995. Higher production in Colombia increased operating expenses
by $19.1 million and depreciation, depletion and amortization by $13.4
million. The Company's operating costs per equivalent barrel were $6.28 and
$10.75 in 1995 and 1994, respectively. The sale of Triton France reduced
operating expenses and depletion in 1995 by $3.6 million and $3.7 million,
respectively. The 1994 results included an accrual of $1.1 million for
environmental clean-up costs in the United States.
General and administrative expenses decreased from $29.1 million in
1994 to $25.7 million in 1995, primarily due to increased capitalization of
general and administrative expenses from $14.9 million in 1994 to $21.1
million in 1995 resulting from increased exploration and development
activities.
Writedown of assets in 1994 totaling $14.7 million was primarily
related to oil properties in France under application of the Securities and
Exchange Commission full cost ceiling limitation.
Other Income and Expenses
Interest income was $8 million and $8.1 million in 1995 and 1994,
respectively. Interest expense increased by $12 million in 1995 due to higher
debt outstanding and lower capitalized interest. Capitalized interest was
$16.2 million and $20.6 million in 1995 and 1994, respectively.
Equity in loss of affiliates, net was $2.2 million in 1995, compared
with $2.9 million in 1994. Equity in loss of Crusader for 1995 included a net
gain of $3.8 million on the sale of Saracen Minerals Limited, a $2.7 million
loss related to the early redemption of Crusader's Convertible Notes and
writedowns of $2.9 million on unproved oil and gas properties and a coal
mining property.
Other income, net was $11.6 million in 1995, compared with $2.8
million in 1994. Other income during 1995 included $7.2 million received from
legal settlements, a $3.5 million gain on the sale of Triton France and $2.9
million received from the early redemption of Crusader's Convertible Notes.
These gains were offset by a $4.2 million noncash charge representing the
change in fair market value of WTI benchmark call options purchased in 1995.
Income Taxes
Income tax expense of $10 million in 1995 increased $8.5 million
from 1994, mainly due to increased profitability from the Company's Colombian
operations and the absence of tax refunds of $2 million received in 1994. The
income tax provisions for 1995 and 1994 included deferred tax benefits in the
United States of $12.8 million and $10.1 million, respectively, related to
anticipated future utilization of NOLs.
Discontinued Operations
The results of operations for the aviation sales and services
segment and wholesale fuel products segment have been reported as discontinued
operations. In June 1995, the Company sold the assets of its subsidiary, Jet
East, Inc., for $2.9 million in cash and a note, and realized a loss of $1.4
million on the sale. The Company accrued $.6 million for costs associated
with final disposal of the segment, which occurred in August 1995. The 1994
losses of the wholesale fuel products segment, which was discontinued in 1993,
were offset against a loss provision of $16.1 million, net of tax, at May 31,
1993. An additional accrual of $.7 million, net of tax, was recorded at May
31, 1994, for estimated operating losses associated with the final disposition
of this segment.
Minority Interest in Losses of Subsidiaries
The Company ceased to record minority interest related to Triton
Europe following the purchase of shares held by the minority interest owners
on March 31, 1994.
<PAGE>
Petroleum Price Risk Management
Oil and natural gas sold by the Company are normally priced
with reference to a defined benchmark, such as light sweet crude oil traded
on the New York Mercantile Exchange. Actual prices received vary from the
benchmark depending on quality and location differentials. It is the
Company's policy to use financial market transactions with credit-worthy
counterparties from time to time primarily to reduce risk associated with
the pricing of a portion of the oil and natural gas that it sells.
The policy is structured to underpin the Company's planned revenues
and results of operations. The Company may also enter into financial
market transactions to benefit from its assessment of the future prices of
its production relative to other benchmark prices. There can be no
assurance that the use of financial market transactions will not
result in losses.
With respect to the sale of oil to be produced by the Company, the
Company has used a combination of swaps, options and collars to establish a
minimum weighted average WTI benchmark price of $19.58 per barrel for an
aggregate of 1.5 million barrels of production during the period from January
through June 1997. As a result, to the extent WTI prices exceed the minimum
WTI benchmark price during each month within the period, the Company will be
able to sell its production at the higher market price, and to the extent that
WTI prices are below the minimum WTI benchmark price, the Company will be able
to realize prices related to the minimum WTI benchmark price on its hedged
production.
In anticipation of entering into a forward oil sale, the Company
purchased WTI benchmark call options to retain the ability to benefit from
future WTI price increases above a weighted average price of $20.42 per
barrel. The volumes and expiration dates on the call options coincide with
the volumes and delivery dates of the forward oil sale, which has delivery
terms of 58,425 barrels per month through March 1997 and 254,136 barrels per
month from April 1997 through March 2000. During the years ended December 31,
1996 and 1995, the Company recorded an unrealized gain of $11 million and an
unrealized loss of $4.2 million, respectively, in other income, net related to
the change in the fair market value of the call options. Future fluctuations
in the fair market value of the call options will continue to affect other
income as noncash adjustments.
During the year ended December 31, 1996, markets provided the
Company the opportunity to realize WTI benchmark oil prices on average $4.68
per barrel above the WTI benchmark oil price the Company set as part of its
1996 annual plan. As a result of financial and commodity market transactions
settled during the year ended December 31, 1996, the Company's risk management
program resulted in an average net realization of approximately $1.21 per
barrel lower than if the Company had not entered into such transactions.
International Operations
The Company derives substantially all of its consolidated revenues
from international operations. A risk inherent in international operations is
the possibility of realizing economic currency-exchange losses when
transactions are completed in currencies other than U.S. dollars. The
Company's risk of realizing currency-exchange losses currently is largely
mitigated because the Company receives U.S. dollars for sales of its petroleum
products in Colombia.
Exploration Operations
Costs related to acquisition, holding and initial exploration of
licenses in countries with no proved reserves are initially capitalized,
including internal costs directly identified with acquisition, exploration and
development activities. The Company's exploration licenses are periodically
assessed for impairment on a country-by-country basis. If the Company's
investment in exploration licenses within a country where no proved reserves
are assigned is deemed to be impaired, the licenses are written down to
estimated recoverable value. If the Company abandons all exploration efforts
in a country where no proved reserves are assigned, all exploration costs
associated with the country are expensed. Due to the unpredictable nature of
exploration drilling activities, the amount and timing of impairment expense
are difficult to predict with any certainty.
Environmental Matters
The Company is subject to extensive environmental laws and
regulations. These laws regulate the discharge of oil, gas or other materials
into the environment and may require the Company to remove or mitigate the
environmental effects of the disposal or release of such materials at various
sites. Also, the Company remains liable for certain environmental matters
that may arise from formerly owned fuel businesses that were involved in the
storage, handling and sale of hazardous materials, including fuel storage in
underground tanks. The Company believes that the level of future expenditures
for environmental matters, including clean-up obligations, is impractical to
determine with a precise and reliable degree of accuracy. Management believes
that such costs, when finally determined, will not have a material, adverse
effect on the Company's operations or consolidated financial condition.
Certain Factors that Could Affect Future Operations
Certain statements in this report, including statements of the
Company's and management's expectations, intentions, plans and beliefs, are
forward-looking statements, as defined in Section 21D of the Securities
Exchange Act of 1934, that are dependent on certain events, risks and
uncertainties that may be outside of the Company's control. These
forward-looking statements include statements of management's plans and
objectives for the Company's future operations and statements of future
economic performance; information regarding drilling schedules, expected or
planned production or transportation capacity, the future construction or
upgrades of pipelines (including costs), when the Cusiana and Cupiagua fields
might become self-financing, future production of the Cusiana and Cupiagua
fields, the negotiation of a gas-sales contract and commencement of
production in Malaysia-Thailand, the Company's capital budget and future
capital requirements, the Company's meeting its future capital needs, the
amount by which production from the Cusiana and Cupiagua fields may increase
or when such increased production may commence, the Company's realization of
its deferred tax asset, the level of future expenditures for environmental
costs, the outcome of regulatory and litigation matters, and proven oil
and gas reserves and discounted future net cash flows therefrom; and the
assumptions described in this report underlying such forward-looking
statements. Actual results and developments could differ materially from
those expressed in or implied by such statements due to a number of factors,
including those described in the context of such forward-looking statements
and in notes 20 and 21 of Notes to Consolidated Financial Statements.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by this item begin at page F-1
hereof.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information relating to the Company's Directors and nominees for
election as Directors of the Company is incorporated herein by reference from
the Proxy Statement for the 1997 Annual Meeting of Shareholders of the Company
(the "Proxy Statement"), specifically the discussion under the heading
"Election of Directors." It is currently anticipated that the Proxy Statement
will be publicly available and mailed in April 1997. Certain information as
to executive officers is included herein under Items 1 and 2, "Business and
Properties - Executive Officers." The discussion under "Section 16(a)
Beneficial Ownership Reporting Compliance" in the Proxy Statement is
incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The discussion under "Management Compensation" in the Proxy
Statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The discussion under "Voting and Principal Shareholders" in the
Proxy Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The discussion under "Management Compensation" in the Proxy
Statement is incorporated herein by reference.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Annual Report
on Form 10-K:
1. Financial Statements: The financial statements filed as part of
this report are listed in the "Index to Financial Statements and Schedules" on
page F-1 hereof.
2. Financial Statement Schedules: The financial statement schedules
filed as part of this report are listed in the "Index to Financial Statements
and Schedules" on page F-1 hereof.
3. Exhibits required to be filed by Item 601 of Regulation S-K.
(Where the amount of securities authorized to be issued under any of Triton
Energy Limited's and any of its subsidiaries' long-term debt agreements does
not exceed 10% of the Company's assets, pursuant to paragraph (b)(4) of Item
601 of Regulation S-K, in lieu of filing such as exhibits, the Company hereby
agrees to furnish to the Commission upon request a copy of any agreement with
respect to such long-term debt.)
3.1 Memorandum of Association.(1)
3.2 Articles of Association.(1)
4.1 Specimen Share Certificate of Ordinary Shares, $.01 par value, of the
Company.(2)
4.2 Rights Agreement dated as of March 25, 1996, between Triton and
Chemical Bank, as Rights Agent, including, as Exhibit A thereto,
Resolutions establishing the Junior Preference Shares.(1)
4.3 Resolutions Authorizing the Company's 5% Convertible Preference
Shares.(3)
4.4 Amendment No. 1 to Rights Agreement dated as of August 2, 1996,
between Triton and Chemical Bank, as Rights Agent.(4)
10.1 Amended and Restated Retirement Income Plan.(5)(21)
10.2 Amended and Restated Supplemental Executive Retirement Income
Plan.(6)(21)
10.3 1981 Employee Non-Qualified Stock Option Plan.(7)(21)
10.4 Amendment No. 1 to the 1981 Employee Non-Qualified Stock Option
Plan.(8)(21)
10.5 Amendment No. 2 to the 1981 Employee Non-Qualified Stock Option
Plan.(7)(21)
10.6 Amendment No. 3 to the 1981 Employee Non-Qualified Stock Option
Plan.(5)(21)
10.7 1985 Stock Option Plan.(9)(21)
10.8 Amendment No. 1 to the 1985 Stock Option Plan.(7)(21)
10.9 Amendment No. 2 to the 1985 Stock Option Plan.(5)(21)
10.10 Amended and Restated 1986 Convertible Debenture Plan.(5)(21)
10.11 1988 Stock Appreciation Rights Plan.(10)(21)
10.12 1989 Stock Option Plan.(11)(21)
10.13 Amendment No. 1 to 1989 Stock Option Plan.(7)(21)
10.14 Amendment No. 2 to 1989 Stock Option Plan.(5)(21)
10.15 Second Amended and Restated 1992 Stock Option Plan.(13)(21)
10.16 Form of Amended and Restated Employment Agreement with Triton Energy
Limited and its executive officers.(21)(22)
10.17 Form of Amended and Restated Employment Agreement with Triton Energy
Limited and certain officers.(21)(22)
10.18 Amended and Restated 1985 Restricted Stock Plan.(5)(21)
10.19 First Amendment to Amended and Restated 1985 Restricted Stock
Plan.(12)(21)
10.20 Second Amendment to Amended and Restated 1985 Restricted Stock
Plan.(13)(21)
10.21 Executive Life Insurance Plan.(14)(21)
10.22 Long Term Disability Income Plan.(14)(21)
10.23 Amended and Restated Retirement Plan for Directors.(9)(21)
10.24 Amended and Restated Indenture dated as of March 25, 1996 between
Triton and Chemical Bank, with respect to the issuance of Senior
Subordinated Discount Notes due 1997.(13)
10.25 Amended and Restated Senior Subordinated Indenture by and between
the Company and United States Trust Company of New York, dated as
of March 25, 1996.(13)
10.26 Contract for Exploration and Exploitation for Santiago de Atalayas I
with an effective date of July 1, 1982, between Triton Colombia,
Inc., and Empresa Colombiana De Petroleos.(9)
10.27 Contract for Exploration and Exploitation for Tauramena with an
effective date of July 4, 1988, between Triton Colombia, Inc.,
and Empresa Colombiana De Petroleos.(10)
10.28 Summary of Assignment legalized by Public Instrument No. 1255 dated
September 15, 1987 (Assignment is in Spanish language).(10)
10.29 Summary of Assignment legalized by Public Instrument No. 1602 dated
June 11, 1990 (Assignment is in Spanish language).(10)
10.30 Summary of Assignment legalized by Public Instrument No. 2586 dated
September 9, 1992 (Assignment is in Spanish language).(10)
10.31 401(K) Savings Plan.(5)(21)
10.32 Contract between Malaysia-Thailand and Joint Authority and Petronas
Carigali SDN.BHD. and Triton Oil Company of Thailand relating to
Exploration and Production of Petroleum for Malaysia-Thailand Joint
Development Area Block A-18.(15)
10.33 Triton Crude Purchase Agreement between Triton Colombia, Inc. and
Oil Co., LTD. dated May 25, 1995.(16)
10.34 Credit Agreement among Triton Colombia, Inc., Triton Energy
Corporation, NationsBank, N.A. (Carolinas) and Export-Import
Bank of the United States.(12)
10.35 Amendment No. 1 to Credit Agreement among Triton Colombia, Inc.,
Triton Energy Corporation, NationsBank, N.A. (Carolinas) and
Export-Import Bank of the United States.(12)
10.36 Amendment No. 2 to Credit Agreement among Triton Colombia, Inc.,
Triton Energy Corporation, NationsBank, N.A. (Carolinas) and
Export-Import Bank of the United States.(13)
10.37 Agreement and Plan of Merger among Triton Energy Corporation, Triton
Energy Limited and TEL Merger Corp.(12)
10.38 Credit Agreement among Triton Energy Limited and Triton Energy
Corporation, as Borrowers, and NationsBank of Texas, N.A., Barclays
Bank PLC, Meespierson N.V., The Chase Manhattan Bank and Societe
Generale, Southwest Agency dated August 30, 1996. (17)
10.39 Credit Agreement between Triton Energy Corporation and Banque
Paribas Houston Agency dated as of May 28, 1995, together with related
form of revolving credit note.(18)
10.40 First Amendment to Credit Agreement between Triton Energy
Corporation and Banque Paribas Houston Agency darted May 16,
1995.(19)
10.41 Security Agreement between Triton Energy Corporation and Banque
Paribas Houston Agency.(18)
10.42 Second Amendment to Credit Agreement and First Amendment to Security
Agreement between Triton Energy Corporation and Banque Paribas Houston
Agency dated August 11, 1995.(6)
10.43 Third Amendment to Credit Agreement between Triton Energy
Corporation and Banque Paribas Houston Agency dated September 29,
1995.(6)
10.44 Consent, Waiver and Guaranty among Triton Energy Limited, Triton
Energy Corporation and Paribas Houston Agency dated as of March 25,
1996. (13)
10.45 Form of Indemnity Agreement entered into with each director and
officer of the Company. (17)
10.46 Restated Employment Agreement between John Tatum and the Company.
(21)(22)
10.47 Description of Performance Goals for Executive Bonus Compensation.
(21)(22)
10.48 Demand Promissory Note - Grid executed by Triton Energy Limited and
Triton Energy Corporation in favor of Banque Paribas dated as of
February 6, 1997.(22)
11.1 Computation of Earnings per Share. (22)
12.1 Computation of Ratio of Earnings to Fixed Charges. (22)
12.2 Computation of Ratio of Earnings to Combined Fixed Charges and
Preference Dividends. (22)
21.1 Subsidiaries of the Company.(22)
23.1 Consent of Price Waterhouse LLP.(22)
23.2 Consent of DeGolyer and MacNaughton.(22)
24.1 The power of attorney of officers and directors of the Company (set
forth on the signature page hereof).(22)
27.1 Financial Data Schedule.(22)
99.1 Rio Chitamena Association Contract.(20)
99.2 Rio Chitamena Purchase and Sale Agreement.(20)
99.3 Integral Plan - Cusiana Oil Structure.(20)
99.4 Letter Agreements with co-investor in Colombia.(20)
99.5 Colombia Pipeline Memorandum of Understanding.(20)
99.6 Amended and Restated Oleoducto Central S.A. Agreement dated as of
March 31, 1995.(19)
- ----------------------------
(1) Previously filed as an exhibit to the Company's Registration Statement
on Form S-3 (No. 333-08005) and incorporated herein by
reference.
(2) Previously filed as an exhibit to the Company's Registration Statement
on Form 8-A dated March 25, 1996 and incorporated herein by
reference.
(3) Previously filed as an exhibit to the Company's and Triton Energy
Corporation's Registration Statement on Form S-4 (No. 333-923)
and incorporated herein by reference.
(4) Previously filed as an exhibit to the Company's Registration Statement
on Form 8-A/A (Amendment No. 1) dated August 14, 1996 and incorporated
herein by reference.
(5) Previously filed as an exhibit to Triton Energy Corporation's
Quarterly Report on Form 10-Q for the quarter ended November 30,
1993 and incorporated by reference herein.
(6) Previously filed as an exhibit to Triton Energy Corporation's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1995 and incorporated herein by reference.
(7) Previously filed as an exhibit to Triton Energy Corporation's Annual
Report on Form 10-K for the fiscal year ended May 31, 1992 and
incorporated herein by reference.
(8) Previously filed as an exhibit to Triton Energy Corporation's Annual
Report on Form 10-K for the fiscal year ended May 31, 1989 and
incorporated by reference herein.
(9) Previously filed as an exhibit to Triton Energy Corporation's Annual
Report on Form 10-K for the fiscal year ended May 31, 1990 and
incorporated herein by reference.
(10)Previously filed as an exhibit to Triton Energy Corporation's Annual
Report on Form 10-K for the fiscal year ended May 31, 1993 and
incorporated by reference herein.
(11)Previously filed as an exhibit to Triton Energy Corporation's
Quarterly Report on Form 10-Q for the quarter ended November 30,
1988 and incorporated herein by reference.
(12)Previously filed as an exhibit to Triton Energy Corporation's Annual
Report on Form 10-K for the fiscal year ended December 31,
1995 and incorporated herein by reference.
(13)Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1996 and incorporated
herein by reference.
(14)Previously filed as an exhibit to Triton Energy Corporation's Annual
Report on Form 10-K for the fiscal year ended May 31, 1991 and
incorporated herein by reference.
(15)Previously filed as an exhibit to Triton Energy Corporation's current
report on Form 8-K dated April 21, 1994 and incorporated by reference
herein.
(16)Previously filed as an exhibit to Triton Energy Corporation's Current
Report on Form 8-K dated May 26, 1995 and incorporated herein by
reference.
(17)Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1996 and incorporated
herein by reference.
(18)Previously filed as an exhibit to Triton Energy Corporation's
Quarterly Report on Form 10-Q for the quarter ended March 31,
1995 and incorporated herein by reference.
(19)Previously filed as an exhibit to Triton Energy Corporation's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1995 and incorporated herein by reference.
(20)Previously filed as an exhibit to Triton Energy Corporation's current
report on Form 8-K/A dated July 15, 1994 and incorporated by reference
herein.
(21)Management contract or compensatory plan or arrangement.
(22)Filed herewith.
(b) Reports on Form 8-K.
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual Report on
Form 10-K to be signed by the undersigned thereunto duly authorized on the 18
day of March, 1997.
TRITON ENERGY LIMITED
By: /s/Thomas G. Finck
Thomas G. Finck
Chairman of the Board and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and
directors of Triton Energy Limited (the "Company") hereby constitutes and
appoints Thomas G. Finck, Robert B. Holland, III, and Peter Rugg, or any of
them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution, for him and on
his behalf and in his name, place and stead, in any and all capacities, to
sign, execute, and file any and all documents relating to the Company's Annual
Report on Form 10-K for the year ended December 31, 1996, including any and
all amendments and supplements thereto, with any regulatory authority,
granting unto said attorneys, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as he himself might or could do if personally present, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to
be done.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Annual Report on Form 10-K has been signed below by the following persons on
behalf of the Registrant and in the capacities indicated on the 18 day of
March, 1997.
Signatures Title
/s/Thomas G. Finck Chairman of the Board and Chief Financial
Thomas G. Finck Officer
/s/Peter Rugg Senior Vice President and
Peter Rugg Chief Financial Officer
(Principal Accounting and Financial
Officer)
/s/John P. Lewis Director March 18, 1997
John P. Lewis
/s/Michael E. McMahon Director March 18, 1997
Michael E. McMahon
/s/Ernest E. Cook Director March 18, 1997
Ernest E. Cook
/s/Sheldon R. Erikson Director March 18, 1997
Sheldon R. Erikson
/s/Ray H. Eubank Director March 18, 1997
Ray H. Eubank
/s/Jesse E. Hendricks Director March 18, 1997
Jesse E. Hendricks
/s/Fitzgerald S. Hudson Director March 18, 1997
Fitzgerald S. Hudson
/s/John R. Huff Director March 18, 1997
John R. Huff
/s/Wellslake D. Morse, Jr. Director March 18, 1997
Wellslake D. Morse, Jr.
/s/Edwin D. Williamson Director March 18, 1997
Edwin D. Williamson
TRITON ENERGY LIMITED AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
<TABLE>
<CAPTION>
<S> <C>
PAGE
----
TRITON ENERGY LIMITED AND SUBSIDIARIES:
Report of Independent Accountants F-2
Consolidated Statements of Operations - Years ended December 31, 1996 and 1995,
seven months ended December 31, 1994 and year ended May 31, 1994 F-3
Consolidated Balance Sheets - December 31, 1996 and 1995 F-4
Consolidated Statements of Cash Flows - Years ended December 31, 1996 and 1995,
seven months ended December 31, 1994 and year ended May 31, 1994 F-5
Consolidated Statements of Shareholders' Equity - Years ended December 31, 1996 and
1995, seven months ended December 31, 1994 and year ended May 31, 1994 F-6
Notes to Consolidated Financial Statements F-7
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SCHEDULE:
II - Valuation and Qualifying Accounts - Years ended December 31, 1996 and
1995, seven months ended December 31, 1994 and year ended
May 31, 1994 F-53
</TABLE>
All other schedules are omitted as the required information is inapplicable or
presented in the consolidated financial statements or related notes
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Triton Energy Limited
In our opinion, the consolidated financial statements as of and for the years
ended December 31, 1996 and 1995, for the seven months ended December 31,
1994, and for the year ended May 31, 1994 listed in the accompanying index
present fairly, in all material respects, the financial position of Triton
Energy Limited and its subsidiaries at December 31, 1996 and 1995, and the
results of their operations and their cash flows for the years ended December
31, 1996 and 1995, the seven months ended December 31, 1994 and the year ended
May 31, 1994, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
Price Waterhouse LLP
Dallas, Texas
February 4, 1997
TRITON ENERGY LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SEVEN
MONTHS ENDED YEAR ENDED
YEAR ENDED DECEMBER 31, DECEMBER 31, MAY 31,
-------------------------
1996 1995 1994 1994
-------------- --------- -------------- --------
SALES AND OTHER OPERATING REVENUES:
Oil and gas sales $ 129,795 $106,844 $ 20,477 40,894
Other operating revenues 4,182 628 259 2,314
-------------- --------- -------------- --------
133,977 107,472 20,736 43,208
-------------- --------- -------------- --------
COSTS AND EXPENSES:
Operating 36,654 35,276 12,362 27,887
General and administrative 25,945 25,672 15,997 30,429
Depreciation, depletion and amortization 25,640 23,208 7,339 19,821
Writedown of assets 42,960 --- 984 45,754
-------------- --------- -------------- --------
131,199 84,156 36,682 123,891
-------------- --------- -------------- --------
OPERATING INCOME (LOSS) 2,778 23,316 (15,946) (80,683)
Gain on sale of Triton Canada stock --- --- --- 47,865
Interest income 6,703 7,954 4,144 6,542
Interest expense (15,897) (24,055) (7,754) (7,504)
Other income (expense), net 27,361 9,385 (3,278) 10,676
-------------- --------- -------------- --------
18,167 (6,716) (6,888) 57,579
-------------- --------- -------------- --------
EARNINGS (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES, MINORITY INTEREST AND
EXTRAORDINARY ITEM 20,945 16,600 (22,834) (23,104)
Income tax expense (benefit) (2,860) 10,059 3,796 (6,536)
-------------- --------- -------------- --------
23,805 6,541 (26,630) (16,568)
Minority interest in loss of subsidiaries --- --- --- 11,971
-------------- --------- -------------- --------
EARNINGS (LOSS) FROM CONTINUING OPERATIONS
BEFORE EXTRAORDINARY ITEM 23,805 6,541 (26,630) (4,597)
DISCONTINUED OPERATIONS:
Loss from operations --- (1,858) (1,078) (4,094)
Loss on disposal --- (1,963) --- (650)
-------------- --------- -------------- --------
EARNINGS (LOSS) BEFORE EXTRAORDINARY ITEM 23,805 2,720 (27,708) (9,341)
Extraordinary item - extinguishment of debt (1,196) --- --- ---
-------------- --------- -------------- --------
NET EARNINGS (LOSS) 22,609 2,720 (27,708) (9,341)
DIVIDENDS ON PREFERENCE SHARES 985 802 449 ---
-------------- --------- -------------- --------
EARNINGS (LOSS) APPLICABLE TO ORDINARY SHARES $ 21,624 $ 1,918 $ (28,157) (9,341)
-------------- --------- -------------- --------
Average ordinary and equivalent shares outstanding 36,919 35,147 34,944 34,775
-------------- --------- -------------- --------
EARNINGS (LOSS) PER ORDINARY SHARE:
Continuing operations $ 0.62 $ 0.16 $ (0.78) (0.13)
Discontinued operations --- (0.11) (0.03) (0.14)
Extraordinary item (0.03) --- --- ---
-------------- --------- -------------- --------
NET EARNINGS (LOSS) $ 0.59 $ 0.05 $ (0.81) (0.27)
-------------- --------- -------------- --------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
TRITON ENERGY LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS DECEMBER 31,
----------------------
1996 1995
---------- ----------
CURRENT ASSETS:
Cash and equivalents $ 11,048 $ 49,050
Short-term marketable securities 3,866 42,419
Trade receivables, net 11,526 6,504
Other receivables 49,000 16,683
Inventories, prepaid expenses and other 8,920 4,128
---------- ----------
TOTAL CURRENT ASSETS 84,360 118,784
Long-term marketable securities --- 3,985
Property and equipment, at cost, net 676,833 524,381
Deferred income taxes 71,416 47,283
Investments and other assets 81,915 129,734
---------- ----------
$ 914,524 $ 824,167
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 199,552 $ 1,313
Accounts payable and accrued liabilities 38,545 23,794
Deferred income 28,466 8,079
---------- ----------
TOTAL CURRENT LIABILITIES 266,563 33,186
Long-term debt, excluding current maturities 217,078 401,190
Deferred income taxes 45,431 29,897
Deferred income and other 84,808 113,869
Convertible debentures due to employees --- ---
SHAREHOLDERS' EQUITY:
Preference shares, par value $.01 for 1996 and without par value for 1995;
authorized 5,000,000 shares; issued 247,469 and 410,017 shares at
December 31, 1996 and 1995, respectively; stated value $34.41 8,515 14,109
Ordinary shares, par value $.01 and $1.00 for 1996 and 1995, respectively;
authorized 200,000,000 shares; issued 36,342,181 and 35,927,279
shares at December 31, 1996 and 1995, respectively 363 35,927
Additional paid-in capital 582,581 516,326
Accumulated deficit (288,685) (311,294)
Other (2,128) (8,705)
---------- ----------
300,646 246,363
Less cost of ordinary shares in treasury 2 338
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 300,644 246,025
---------- ----------
Commitments and contingencies (note 21)
$ 914,524 $ 824,167
---------- ----------
</TABLE>
The Company uses the full cost method to account for its oil- and gas-producing
activities.
See accompanying notes to consolidated financial statements.
TRITON ENERGY LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SEVEN
MONTHS ENDED
YEAR ENDED DECEMBER 31, DECEMBER 31,
-------------------------
1996 1995 1994
----------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ 22,609 $ 2,720 $ (27,708)
Adjustments to reconcile net earnings (loss) to net cash provided
(used) by operating activities:
Depreciation, depletion and amortization 25,640 23,467 7,587
Amortization of debt discount 15,897 23,928 7,939
Proceeds from forward oil sale --- 86,610 ---
Amortization of unearned revenue (8,105) (4,725) ---
(Gain) loss on sale of assets, net (15,831) (2,938) 201
Gain on sale of Triton Canada stock --- --- ---
Writedowns, loss provisions and discontinued operations 45,753 7,192 984
Deferred income taxes (8,759) 5,444 4,569
Minority interest in undistributed loss of subsidiaries --- --- ---
Other, net (5,815) (536) 5,198
Changes in working capital:
Marketable debt securities - trading 4,149 8,074 10,429
Receivables (5,048) (1,677) (3,064)
Inventories, prepaid expenses and other (787) (790) (4,408)
Accounts payable and accrued liabilities 10,732 2,367 2,657
Income taxes 270 (42) (6,398)
----------- ---------- ----------
Net cash provided (used) by operating activities 80,705 149,094 (2,014)
----------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures and investments (252,684) (178,161) (89,895)
Purchases of investments and marketable securities --- (45,281) (5,879)
Proceeds from sale of investments and marketable securities 38,507 42,050 36,664
Proceeds from sale of shareholdings in Crusader 69,583 --- ---
Sales of property and equipment and other assets 38,505 20,866 539
Proceeds from sale of Triton Canada stock --- --- ---
Proceeds from sale of discontinued operations --- 2,100 1,737
Other 571 (1,368) (3,509)
----------- ---------- ----------
Net cash used by investing activities (105,518) (159,794) (60,343)
----------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 53,911 85,627 1,701
Proceeds from short-term borrowings with
maturities greater than three months --- --- 7,671
Short-term borrowings, net --- (10,000) 8,040
Payments on long-term debt (70,884) (39,366) (212)
Payments on debt associated with discontinued operations --- (2,004) (1,883)
Issuance of ordinary shares 5,874 8,398 639
Other (1,879) (3,752) (707)
----------- ---------- ----------
Net cash provided (used) by financing activities (12,978) 38,903 15,249
----------- ---------- ----------
Effects of exchange rate changes on cash and equivalents (211) (1,494) 444
----------- ---------- ----------
Net increase (decrease) in cash and equivalents (38,002) 26,709 (46,664)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 49,050 22,341 69,005
----------- ---------- ----------
CASH AND EQUIVALENTS AT END OF PERIOD $ 11,048 $ 49,050 $ 22,341
------------- ---------- ----------
<S> <C>
YEAR ENDED
MAY 31,
1994
------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ (9,341)
Adjustments to reconcile net earnings (loss) to net cash provided
(used) by operating activities:
Depreciation, depletion and amortization 20,490
Amortization of debt discount 7,852
Proceeds from forward oil sale ---
Amortization of unearned revenue ---
(Gain) loss on sale of assets, net (8,328)
Gain on sale of Triton Canada stock (47,865)
Writedowns, loss provisions and discontinued operations 46,404
Deferred income taxes (10,224)
Minority interest in undistributed loss of subsidiaries (11,971)
Other, net 2,090
Changes in working capital:
Marketable debt securities - trading ---
Receivables (1,797)
Inventories, prepaid expenses and other (6,310)
Accounts payable and accrued liabilities (12,126)
Income taxes 6,162
------------
Net cash provided (used) by operating activities (24,964)
------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures and investments (86,819)
Purchases of investments and marketable securities (190,025)
Proceeds from sale of investments and marketable securities 119,905
Proceeds from sale of shareholdings in Crusader ---
Sales of property and equipment and other assets 22,816
Proceeds from sale of Triton Canada stock 59,029
Proceeds from sale of discontinued operations 18,450
Other (4,370)
------------
Net cash used by investing activities (61,014)
------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 123,408
Proceeds from short-term borrowings with
maturities greater than three months ---
Short-term borrowings, net (1,640)
Payments on long-term debt (3,150)
Payments on debt associated with discontinued operations (18,959)
Issuance of ordinary shares 3,164
Other (1,054)
------------
Net cash provided (used) by financing activities 101,769
------------
Effects of exchange rate changes on cash and equivalents 275
------------
Net increase (decrease) in cash and equivalents 16,066
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 52,939
------------
CASH AND EQUIVALENTS AT END OF PERIOD $ 69,005
------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
TRITON ENERGY LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SEVEN
MONTHS ENDED YEAR ENDED
YEAR ENDED DECEMBER 31, DECEMBER 31, MAY 31,
-------------------------
1996 1995 1994 1994
----------- ---------- -------------- ------------
PREFERENCE SHARES:
Balance at beginning of period $ 14,109 $ 17,976 $ 17,978 $ ---
Purchase of minority interest in Triton Europe --- --- --- 17,978
Conversion of 5% preference shares (5,594) (3,867) (2) ---
----------- ---------- -------------- ------------
Balance at end of period 8,515 14,109 17,976 17,978
----------- ---------- -------------- ------------
ORDINARY SHARES:
Balance at beginning of period 35,927 35,577 35,519 35,231
Exercise of employee stock options and debentures 81 238 58 288
Conversion of 5% preference shares 153 112 --- ---
Reduction in par value (35,783) --- --- ---
Other, net (15) --- --- ---
----------- ---------- -------------- ------------
Balance at end of period 363 35,927 35,577 35,519
----------- ---------- -------------- ------------
ADDITIONAL PAID-IN CAPITAL:
Balance at beginning of period 516,326 505,256 505,122 502,217
Cash dividends, 5% preference shares (985) (802) (449) ---
Exercise of employee stock options and debentures 7,974 8,160 464 2,876
Conversion of 5% preference shares 5,441 3,755 --- ---
Reduction in par value 35,783 --- --- ---
Sale of shareholdings in Crusader 20,413 --- --- ---
Other, net (2,371) (43) 119 29
----------- ---------- -------------- ------------
Balance at end of period 582,581 516,326 505,256 505,122
----------- ---------- -------------- ------------
ACCUMULATED DEFICIT:
Balance at beginning of period (311,294) (314,014) (286,306) (276,965)
Net earnings (loss) 22,609 2,720 (27,708) (9,341)
----------- ---------- -------------- ------------
Balance at end of period (288,685) (311,294) (314,014) (286,306)
----------- ---------- -------------- ------------
FOREIGN CURRENCY TRANSLATION ADJUSTMENT:
Balance at beginning of period (8,616) (5,639) (7,163) (4,087)
Sale of foreign operations --- (3,268) --- (3,341)
Sale of shareholdings in Crusader 4,890 --- --- ---
Translation rate changes 1,600 291 1,524 265
----------- ---------- -------------- ------------
Balance at end of period (2,126) (8,616) (5,639) (7,163)
----------- ---------- -------------- ------------
OTHER, NET:
Balance at beginning of period (89) (1,384) (1,046) (246)
Valuation reserve on marketable securities 87 1,295 (429) (955)
Adjustment for minimum pension liability --- --- 91 155
----------- ---------- -------------- ------------
Balance at end of period (2) (89) (1,384) (1,046)
----------- ---------- -------------- ------------
TREASURY SHARES:
Balance at beginning of period (338) (577) (682) (718)
Purchase of treasury shares (5) (4) (3) (5)
Transfer of shares to employee benefit plans 137 243 108 41
Retirement of treasury shares 204 --- --- ---
----------- ---------- -------------- ------------
Balance at end of period (2) (338) (577) (682)
----------- ---------- -------------- ------------
TOTAL SHAREHOLDERS' EQUITY $ 300,644 $ 246,025 $ 237,195 $ 263,422
----------- ---------- -------------- ------------
</TABLE>
See accompanying notes to consolidated financial statements.
TRITON ENERGY LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN TABLES IN THOUSANDS, EXCEPT FOR SHARE DATA)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
Triton Energy Limited ("Triton") is an international oil and gas exploration
company primarily engaged in exploration and production through subsidiaries
and affiliates. The term "Company" when used herein means Triton and its
subsidiaries and other affiliates through which the Company conducts its
business. The Company's principal properties, operations and oil and gas
reserves are located in Colombia and Malaysia-Thailand. All sales are
currently derived from oil and gas production in Colombia. The Company also
has oil and gas interests in other Latin American, Asian and European
countries.
Triton, a Cayman Islands company, was incorporated in August 1995 to become
the parent holding company of Triton Energy Corporation, a Delaware
corporation ("TEC"). On March 25, 1996, the stockholders of TEC approved the
merger of a wholly owned subsidiary of Triton with and into TEC (the
"Reorganization"). Pursuant to the Reorganization, Triton became the parent
holding company of TEC and each share of common stock, par value $1.00, and 5%
preferred stock of TEC outstanding on March 25, 1996, was converted into one
ordinary share, par value $.01, and one 5% preference share, respectively, of
Triton. The Reorganization has been accounted for as a combination of
entities under common control.
CHANGE IN FISCAL YEAREND
Effective January 1, 1995, the Company changed its fiscal yearend from May 31
to December 31. These financial statements include the Company's transition
period for the seven months ended December 31, 1994.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Triton and its
majority-owned subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation. Investments in
20%-to-50%-owned affiliates in which the Company exercises significant
influence over operating and financial policies are accounted for using the
equity method. Investments in less than 20%-owned affiliates are accounted
for using the cost method.
<PAGE>
CASH EQUIVALENTS AND MARKETABLE SECURITIES
Cash equivalents are highly liquid investments purchased with an original
maturity of three months or less.
Investments in marketable debt securities are reported at fair value except
for those investments that management has the positive intent and the ability
to hold to maturity. Investments available-for-sale are classified based on
the stated maturity of the securities and changes in fair value are reported
as a separate component of shareholders' equity. Trading investments are
classified as current regardless of the stated maturity of the underlying
securities and changes in fair value are reported in other income, net.
Investments that will be held-to-maturity are classified based on the stated
maturity of the securities.
PROPERTY AND EQUIPMENT
The Company follows the full cost method of accounting for exploration and
development of oil and gas reserves, whereby all acquisition, exploration and
development costs are capitalized. Individual countries are designated as
separate cost centers. All capitalized costs plus the undiscounted future
development costs of proved reserves are depleted using the unit of production
method based on total proved reserves applicable to each country. A gain or
loss is recognized on sales of oil and gas properties only when the sale
involves significant reserves.
Costs related to acquisition, holding and initial exploration of licenses in
countries with no proved reserves are initially capitalized, including
internal costs directly identified with acquisition, exploration and
development activities. Costs related to production, general overhead or
similar activities are expensed. The Company's exploration licenses are
periodically assessed for impairment on a country-by-country basis. If the
Company's investment in exploration licenses within a country where no proved
reserves are assigned is deemed to be impaired, the licenses are written down
to estimated recoverable value. If the Company abandons all exploration
efforts in a country where no proved reserves are assigned, all acquisition
and exploration costs associated with the country are expensed. Due to the
unpredictable nature of exploration drilling activities, the amount and timing
of impairment expense are difficult to predict with any certainty.
The net capitalized costs of oil and gas properties for each cost center, less
related deferred income taxes, cannot exceed the sum of (i) the estimated
future net revenues from the properties, discounted at 10%; (ii) unevaluated
costs not being amortized; and (iii) the lower of cost or estimated fair value
of unproved properties being amortized; less (iv) income tax effects related
to differences between the financial statement basis and tax basis of oil and
gas properties.
The estimated costs, net of salvage value, of dismantling facilities or
projects with limited lives or facilities that are required to be dismantled
by contract, regulation or law and the estimated costs of restoration and
reclamation associated with oil and gas operations are included in estimated
future development costs as part of the amortizable base.
Support equipment and facilities are depreciated using the unit of production
method based on total reserves of the field related to the support equipment
and facilities. Other property and equipment, which includes furniture and
fixtures, vehicles, aircraft and leasehold improvements, are depreciated
principally on a straight-line basis over estimated useful lives ranging from
3 to 30 years.
Repairs and maintenance are expensed as incurred, and renewals and
improvements are capitalized.
ENVIRONMENTAL MATTERS
Environmental costs are expensed or capitalized depending on their future
economic benefit. Costs that relate to an existing condition caused by past
operations and have no future economic benefit are expensed. Liabilities for
future expenditures of a noncapital nature are recorded when future
environmental expenditures and/or remediation is deemed probable, and the
costs can be reasonably estimated.
INCOME TAXES
Deferred tax liabilities or assets are recognized for the anticipated future
tax effects of temporary differences between the financial statement basis and
the tax basis of the Company's assets and liabilities using the enacted tax
rates in effect at yearend. A valuation allowance for deferred tax assets is
recorded when it is more likely than not that the benefit from the deferred
tax asset will not be realized.
REVENUE RECOGNITION
Oil and gas revenues are recognized at the point of first measurement after
production which is generally upon delivery into field storage tank/processing
facilities or pipelines. Cost reimbursements arising from carried interests
granted by the Company are revenues to the extent the reimbursements are
contingent upon and derived from production. Obligations arising from net
profit interest conveyances are recorded as operating expenses when the
obligation is incurred.
<PAGE>
FOREIGN CURRENCY TRANSLATION
The U.S. dollar is the designated functional currency for all of the Company's
foreign operations, except for foreign operations of certain affiliates where
the local currencies are used as the functional currency. The cumulative
translation effects from translating balance sheet accounts from the
functional currency into U.S. dollars at current exchange rates are included
as a separate component of shareholders' equity.
RISK MANAGEMENT
Oil and natural gas sold by the Company are normally priced with reference to
a defined benchmark, such as light sweet crude oil traded on the New
York Merchantile Exchange (West Texas Intermediate or "WTI"). Actual
prices received vary from the benchmark depending on quality and
location differentials. It is the Company's policy to use financial market
transactions with credit-worthy counterparties from time to time primarily
to reduce risk associated with the pricing of a portion of the oil and
natural gas that it sells. The Company may also enter into financial
market transactions to benefit from its assessment of the future prices of
its production relative to other benchmark prices.
Gains or losses on financial market transactions that qualify for hedge
accounting are recognized in oil and gas sales at the time of settlement of
the underlying hedged transactions. Premiums paid for financial market
contracts are capitalized and amortized as operating expenses over the
contract period. Changes in the fair market value of financial market
transactions that do not qualify for hedge accounting are reflected as noncash
adjustments to other income, net in the period the change occurs. Realized
gains or losses on financial market transactions that do not qualify for hedge
accounting are recorded in oil and gas sales.
The Company occasionally enters into foreign exchange contracts to reduce risk
of unfavorable exchange-rate movements. The gains or losses arising from
currency exchange contracts offset foreign exchange gains or losses on the
underlying assets or liabilities or are deferred and offset against the
carrying value of the firm commitment.
DISCONTINUED OPERATIONS AND RECLASSIFICATIONS
The Company discontinued its aviation sales and services segment in June 1995.
The Consolidated Statements of Operations for the seven months ended December
31, 1994, and the year ended May 31, 1994, have been restated to reflect the
aviation sales and services segment as discontinued operations.
Certain other previously reported financial information has been reclassified
to conform to the current period's presentation.
<PAGE>
EARNINGS (LOSS) PER ORDINARY SHARE
Primary earnings (loss) per ordinary share amounts were computed by dividing
net earnings (loss) after deduction of dividends on preference shares by the
weighted average number of ordinary and dilutive equivalent shares
outstanding. Ordinary share equivalents were not material or were
antidilutive for the year ended December 31, 1995, the seven months ended
December 31, 1994, and the year ended May 31, 1994. Prior to the Company's
sale of its investment in Crusader Limited ("Crusader") in July 1996, the
Company's proportionate shares owned by Crusader were not considered
outstanding for purposes of determining weighted average number of shares
outstanding. Fully diluted earnings (loss) per ordinary share is not
presented due to the antidilutive effect of including all potentially dilutive
securities.
STOCK-BASED COMPENSATION
Statement of Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting
for Stock-Based Compensation," encourages, but does not require, the adoption
of a fair value-based method of accounting for employee stock-based
compensation transactions. The Company has elected to continue to apply the
provisions of Accounting Principles Board Opinion No. 25 ("Opinion 25"),
"Accounting for Stock Issued to Employees," and related interpretations, in
accounting for its stock-based compensation plans. Under Opinion 25,
compensation cost is measured as the excess, if any, of the quoted market
price of the Company's stock at the date of the grant above the amount an
employee must pay to acquire the stock.
THE USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reporting period.
2. DIVESTITURES AND DISCONTINUED OPERATIONS
In June and July 1996, the Company sold its 49.9% shareholdings in Crusader
for total cash proceeds of $69.6 million to an unrelated third party in
conjunction with a May 1996 take-over bid by the same party for the
outstanding shares of Crusader. The Company recorded a total gain of $10.4
million in other income, net and an increase to additional paid-in capital of
$20.4 million, representing the Company's proportion of Triton ordinary shares
owned by Crusader that were previously treated as owned by Triton.
In March 1996, the Company sold its royalty interests in U.S. properties for
$23.8 million based on an effective date of January 1, 1996. The Company
recorded the resulting gain of $4.1 million in other operating revenues.
In August 1995, the Company sold Triton France S.A. to an unrelated third
party. The Company received net proceeds, including repayment of intercompany
debt, of approximately $16 million and recorded a net gain of $3.5 million and
a reduction in shareholder equity of approximately $3.3 million for the
foreign currency translation adjustment.
In June 1995, the Company sold the assets of its subsidiary, Jet East, Inc.,
for $2.9 million in cash and a note, and realized a loss of $1.4 million on
the sale. The Company accrued $.6 million for costs associated with final
disposal of the segment, which occurred in August 1995.
Summarized information for the aviation sales and services segment portion of
discontinued operations follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR ENDED SEVEN YEAR ENDED
DECEMBER 31, MONTHS ENDED MAY 31,
1995 DEC. 31, 1994 1994
-------------- --------------- ------------
Revenues $ 4,694 $ 6,117 $ 12,885
-------------- --------------- ------------
Loss before income taxes $ (2,022) $ (1,078) $ (4,094)
Income tax expense (benefit) --- --- ---
-------------- --------------- ------------
Net loss $ (2,022) $ (1,078) $ (4,094)
-------------- --------------- ------------
</TABLE>
In the first quarter of fiscal 1994, the Company completed the sale of its 76%
interest in the common stock of Triton Canada Resources Ltd. The Company
received net proceeds of $59 million and recorded a gain of $47.9 million.
In August and October 1993, the Company sold its working interest in U.S.
properties for net proceeds of $19.5 million, resulting in a gain of $7
million. The properties that were sold accounted for approximately 55.7% of
discounted future net revenues associated with U.S. proved properties
at May 31, 1993.
In fiscal 1993, the Company initiated a plan to discontinue its remaining
operations in the wholesale fuel products segment. An accrual of $16.1
million was recorded at May 31, 1993, as an estimate of the results of
operations for discontinued operations during fiscal 1994 and the anticipated
loss on disposal of the segment. An additional accrual of $.7 million was
recorded at May 31, 1994, for estimated operating losses caused by closing the
sales of several operating divisions later than originally anticipated. All
operations have been sold.
Summarized information for the wholesale fuel products segment portion of
discontinued operations follows:
<TABLE>
<CAPTION>
<S> <C> <C>
SEVEN YEAR ENDED
MONTHS ENDED MAY 31,
DEC. 31, 1994 1994
--------------- ------------
Revenues $ 8,820 $ 81,383
--------------- ------------
Loss before income taxes $ (2,070) $ (14,422)
Income tax expense 5 7
--------------- ------------
Net loss $ (2,075) $ (14,429)
--------------- ------------
</TABLE>
3. FORWARD SALE OF COLOMBIAN OIL PRODUCTION
In May 1995, the Company sold 10.4 million barrels of oil in a forward oil
sale. Under the terms of the sale, the Company received approximately $87
million of the approximately $124 million net proceeds and is entitled to
receive substantially all of the remaining proceeds (now held in various
interest-bearing reserve accounts) when the Company's Cusiana and Cupiagua
fields project in Colombia becomes self-financing, which is expected in 1997,
and when certain other conditions are met. At December 31, 1996, proceeds held
in interest-bearing reserve accounts of $30 million and $5.6 million have been
recorded as current and long-term receivables, respectively. The Company has
recorded the net proceeds as deferred income and will recognize such revenue
when the barrels of oil are delivered during a five-year period that began in
June 1995. The Company is required to deliver to the buyer 58,425 barrels per
month through March 1997 and 254,136 barrels per month from April 1997 to
March 2000.
4. PURCHASE OF THE TRITON EUROPE MINORITY INTEREST
On March 31, 1994, the Company acquired all of the outstanding shares not
owned by the Company, representing the minority shareholders' 40.5% interest
in Triton Europe plc ("Triton Europe"), in exchange for 522,460 shares of the
Company's 5% Convertible Preferred Stock ("5% preferred stock"), with a value
of $18 million, and $2.6 million in cash, including transaction costs. The
transaction was recorded as a purchase, and accordingly, 100% of Triton
Europe's operating results have been included in the Company's results of
operations since March 31, 1994. The excess of the purchase price over the
carrying value of the minority interest in Triton Europe of $3.5 million was
allocated to the full cost pools within Triton Europe.
<PAGE>
5. INVESTMENTS IN MARKETABLE SECURITIES
The carrying values of marketable securities are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31,
----------------
1996 1995
------- -------
Short-term marketable securities:
Held-to-maturity $ --- $18,861
Available-for-sale 1,998 17,519
Trading 1,868 6,039
------- -------
Total short-term marketable securities $ 3,866 $42,419
------- -------
Long-term available-for-sale $ --- $ 3,985
------- -------
</TABLE>
Proceeds from the sale of available-for-sale securities were $19.5 million and
$7.7 million in the years ended December 31, 1996 and 1995, respectively.
6. OTHER RECEIVABLES
Other receivables consisted of the following:
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31,
-----------------
1996 1995
-------- -------
Receivable from the forward oil sale $ 30,000 $ ---
Central Llanos pipeline receivable 6,380 9,930
Receivable from partners 5,371 3,171
Other 7,249 3,582
-------- -------
$ 49,000 $16,683
-------- -------
</TABLE>
Triton Colombia, Inc. ("Triton Colombia"), along with its joint venture
partners in the Cusiana and Cupiagua fields in Colombia, advanced 50% of the
cost to upgrade the capacity of the Central Llanos pipeline that was formerly
owned by Empresa Colombiana de Petroleos ("Ecopetrol"). In November 1995,
Oleoducto Central S.A. ("OCENSA") acquired the Central Llanos pipeline from
Ecopetrol. The Company will recover the remaining outstanding receivable
based on the production from the Cusiana and Cupiagua fields transported
through the pipeline. The outstanding balance of the receivable bears
interest at the London Interbank Offered Rate ("LIBOR") plus 1%.
<PAGE>
7. PROPERTY AND EQUIPMENT
Property and equipment, at cost, are summarized as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31,
-------------------
1996 1995
--------- --------
Oil and gas properties, full cost method:
Evaluated $ 398,446 $506,405
Unevaluated 149,648 173,061
Support equipment and facilities 194,116 87,289
Other 31,044 22,422
--------- --------
773,254 789,177
Less accumulated depreciation and depletion 96,421 264,796
--------- --------
$ 676,833 $524,381
--------- --------
</TABLE>
The Company capitalizes interest on qualifying assets, principally unevaluated
oil and gas properties, major development projects in progress and support
equipment and facilities under construction. Capitalized interest amounted to
$27.1 million and $16.2 million in the years ended December 31, 1996 and 1995,
respectively, $11.8 million in the seven months ended December 31, 1994, and
$16.9 million in the year ended May 31, 1994. The Company capitalized general
and administrative expenses related to exploration and development activities
of $24.6 million and $21.1 million in the years ended December 31, 1996 and
1995, respectively, $9.5 million in the seven months ended December 31, 1994,
and $11.2 million in the year ended May 31, 1994.
Evaluated oil and gas properties and accumulated depreciation and depletion
decreased by $246.9 million and $228.3 million, respectively, in 1996 due to
the sales of the Company's royalty interests in U.S. properties and the assets
of Triton Indonesia, Inc. and $265.5 million and $247 million, respectively,
in 1995 due to the sale of Triton France S.A.
<PAGE>
8. INVESTMENTS AND OTHER ASSETS
Investments and other assets consisted of the following:
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31,
------------------
1996 1995
-------- --------
Investment in OCENSA $ 34,311 $ 15,789
Investment in ODC 11,108 11,108
Investment in Crusader --- 31,530
WTI benchmark call options 11,048 4,580
Unamortized debt issue costs 6,878 9,349
Receivable from the forward oil sale 5,613 35,613
Other 12,957 21,765
-------- --------
$ 81,915 $129,734
-------- --------
</TABLE>
The Company's wholly owned subsidiary Triton Pipeline Colombia, Inc. ("Triton
Pipeline") owns the Company's 9.6% interest in OCENSA. Triton Colombia, owns
approximately 6.6% in Oleoducto de Colombia S.A. ("ODC").
The Company amortizes debt issue costs over the life of the borrowing using
the interest method. Amortization related to the Company's debt issue costs
was $3.6 million and $2.3 million in the years ended December 31, 1996 and
1995, respectively, $1.3 million in the seven months ended December 31, 1994,
and $1.5 million in the year ended May 31, 1994.
<PAGE>
9. CRUSADER
Crusader, a 49.9% owned affiliate until the Company's sale of its
shareholdings in June and July 1996, is an Australian company engaged in oil
and gas exploration and production and coal mining in Australia.
Summarized financial information for Crusader follows:
<TABLE>
<CAPTION>
<S> <C>
DECEMBER 31,
1995
-------------
ASSETS
Current assets $ 44,190
Noncurrent assets 103,387
-------------
$ 147,577
-------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 7,002
Noncurrent liabilities 56,114
Minority interest in subsidiaries 8,884
Shareholders' equity 75,577
-------------
$ 147,577
-------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SEVEN YEAR ENDED
YEAR ENDED MONTHS ENDED MAY 31,
DEC. 31, 1995 DEC. 31, 1994 1994
------------- --------------- ------------
Revenues $ 46,867 $ 22,535 $ 40,193
Costs and expenses (52,990) (25,145) (40,574)
Income tax (expense) benefit (1,757) (6,934) 476
Minority interest 2,927 1,052 716
----------- ------------ ------------
Net earnings (loss) $ (4,953) $ (8,492) $ 811
----------- ------------ ------------
Company's equity in earnings (loss) $ (2,249) $ (4,102) $ 554
----------- ------------ ------------
Company's share of dividends $ --- $ --- $ 620
----------- ------------ ------------
</TABLE>
In March 1995, Crusader completed the sale of Saracen Minerals Limited for
proceeds of $14.3 million. This sale resulted in a net gain to the Company of
approximately $3.8 million. In June 1995, Crusader recorded a $5.3 million
loss (the Company's share - $2.7 million) due to a payment to holders of its
12% Convertible Subordinated Unsecured Notes to effect early redemption of
these Notes to shares of Crusader common stock. The Company received
approximately $2.9 million from its exchange of such notes and recorded the
proceeds as other income. Also in 1995, Crusader contributed its Irish coal
briquetting operations to Phoenix Coal Limited ("Phoenix"), a corporate joint
venture, in exchange for preference shares and 49% of Phoenix's common
shares outstanding. Crusader recorded its investment in Phoenix at historical
book value.
At December 31, 1995, Crusader owned approximately 3% of the Company's
ordinary shares. Crusader's investment in the Company, using the cost method
of accounting, was $12.2 million at December 31, 1995. The Company's
investment in Crusader and additional paid-in capital were reduced to
eliminate the Company's proportionate share of its ordinary shares owned by
Crusader.
The Company charged Crusader $.2 million and $.6 million for the years ended
December 31, 1996 and 1995, respectively, $.3 million for the seven months
ended December 31, 1994, and $.6 million for the year ended May 31, 1994, for
administrative services. Also during fiscal 1994, the Company was paid $1.2
million by Crusader for acting as agent in issuing its 6% Notes and recorded
$.6 million as other income.
10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities are summarized as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31,
-----------------
1996 1995
-------- -------
Accrued exploration and development $ 21,082 $ 8,112
Accounts payable, principally trade 2,697 8,004
Litigation and environmental matters 3,282 1,836
Employee compensation and benefits 2,315 2,405
Other 9,169 3,437
-------- -------
$ 38,545 $23,794
-------- -------
</TABLE>
<PAGE>
11. LONG-TERM DEBT
A summary of long-term debt follows:
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31,
--------------------
1996 1995
---------- --------
Senior Subordinated Discount Notes due 1997 $ 189,869 $192,220
Senior Subordinated Discount Notes due 2000 170,000 155,203
Term credit facility maturing 2001 40,622 ---
Revolving credit facility maturing 1998 11,000 ---
Revolving credit facility --- 48,628
Other notes and capitalized leases 5,139 6,452
---------- --------
416,630 402,503
Less current maturities 199,552 1,313
---------- --------
$ 217,078 $401,190
---------- --------
</TABLE>
On November 13, 1992, the Company completed the sale of $240 million in
principal amount of Senior Subordinated Discount Notes ("1997 Notes") due
November 1, 1997, providing net proceeds to the Company of approximately $126
million. The original issue price was 54.76% of par, representing a yield to
maturity of 12 1/2% per annum compounded on a semi-annual basis without
periodic payments of interest. The Indenture, as amended, for the 1997 Notes
contains financial covenants including certain limitations on indebtedness,
dividends, certain investments, transactions with affiliates, and engaging in
mergers and consolidations. Additional provisions include optional and
mandatory redemptions, and requirements associated with changes in control.
During 1996, the Company purchased in the open market $30 million face value
of its 1997 Notes and realized an extraordinary expense of $1.2 million, net
of a $.6 million tax benefit. At December 31, 1996, $210 million face value
of the 1997 Notes remained outstanding. The Company believes that it will be
able to extinguish or refinance the 1997 Notes at maturity with a combination
of some or all of the following: the Company's revolving credit facility,
cash flow from its Colombian operations, cash and marketable securities, asset
sales, and the issuance of debt and equity securities.
On December 15, 1993, the Company completed the sale of $170 million in
principal amount of 9 3/4% Senior Subordinated Discount Notes ("9 3/4% Notes")
due December 15, 2000, providing net proceeds to the Company of approximately
$124 million. The original issue price was 75.1% of par, representing a yield
to maturity of 9 3/4%. No interest was payable on the 9 3/4% Notes during the
first three years of issue. Commencing December 15, 1996, interest on the 9
3/4% Notes began to accrue at the rate of 9 3/4% per annum and will be payable
semi-annually on June 15 and December 15, beginning on June 15, 1997. The
Indenture, as amended, for the 9 3/4% Notes contains financial covenants that
include certain limitations on indebtedness, dividends, certain investments,
transactions with affiliates, and engaging in mergers and consolidations.
Additional provisions include optional and mandatory redemptions, and
requirements associated with changes in control. The indentures for
the 1997 Notes and the 9 3/4% Notes permit the Company to incur total
indebtedness (excluding certain permitted indebtedness) of up to 25% of the
sum of its indebtedness and market capitalization of its capital stock.
In November 1995, the Company signed an unsecured term credit facility with a
bank supported by a guarantee issued by the Export-Import Bank of the United
States ("EXIM") for $45 million, which matures in January 2001. Principal and
interest payments are due semi-annually on January 15 and July 15 beginning on
July 15, 1996 and borrowings bear interest at LIBOR (5.5% at December 31,
1996) plus .25%, adjusted on a semi-annual basis. At December 31, 1996, the
Company had outstanding borrowings of $40.6 million under the facility.
In 1996, the Company signed a $125 million unsecured bank revolving credit
facility that matures in August 1998. Borrowings bear interest at various
spreads over either prime or LIBOR. At December 31, 1996, the Company had
outstanding borrowings of $11 million and letters of credit for $2.3 million
under the facility. The revolving credit facility contains financial
covenants that include certain limitations on dividends, investments,
prepayments of debt, transactions with affiliates, and mergers and
acquisitions, and include certain mandatory pay-down requirements. As of
December 31, 1996, the revolving credit facility permitted the Company to
incur total indebtedness of up to approximately $630 million. Availability
under the credit facility may be greater in the future under certain
circumstances.
At December 31, 1995, the Company had outstanding borrowings of $48.6 million
under a $65 million revolving credit facility with a bank. The facility was
secured by the Company's marketable securities portfolio and the Company's
ownership in Crusader shareholdings. The facility was paid in full in 1996
and was terminated.
The aggregate maturities of long-term debt for the five years in the period
ending December 31, 2001, are as follows: 1997 -- $199.6 million; 1998 --
$20.7 million; 1999 -- $9.7 million; 2000 -- $179.7 million; and 2001 -- $5.2
million. The 1997 amount excludes future accretion of interest on the 1997
Notes.
<PAGE>
12. INCOME TAXES
The components of earnings (loss) from continuing operations before income
taxes, minority interest, and extraordinary item were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SEVEN YEAR ENDED
YEAR ENDED DECEMBER 31, MONTHS ENDED MAY 31,
------------------------
1996 1995 DEC. 31, 1994 1994
------------- --------- --------------- ------------
Cayman Islands $ (446) $ --- $ --- $ ---
United States 3,006 (21,412) (23,197) 33,869
Foreign - other 18,385 38,012 363 (56,973)
------------- --------- --------------- ------------
$ 20,945 $ 16,600 $ (22,834) $ (23,104)
------------- --------- --------------- ------------
</TABLE>
Pursuant to the Reorganization in March 1996, Triton, a Cayman Islands
company, became the parent holding company of TEC, a Delaware Corporation. As
a result, the Company's corporate domicile became the Cayman Islands.
The components of the provision for income taxes on continuing operations were
as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SEVEN YEAR ENDED
YEAR ENDED DECEMBER 31, MONTHS ENDED MAY 31,
----------------------
1996 1995 DEC. 31, 1994 1994
----------- --------- --------------- ------------
Current:
Cayman Islands $ --- $ --- $ --- $ ---
United States (172) 627 71 (8)
Foreign - other 5,427 3,988 (844) 3,696
----------- --------- --------------- ------------
Total current 5,255 4,615 (773) 3,688
----------- --------- --------------- ------------
Deferred:
Cayman Islands --- --- --- ---
United States (23,489) (12,797) (61) (9,426)
Foreign - other 15,374 18,241 4,630 (798)
----------- --------- --------------- ------------
Total deferred (8,115) 5,444 4,569 (10,224)
----------- --------- --------------- ------------
Total $ (2,860) $ 10,059 $ 3,796 $ (6,536)
----------- --------- --------------- ------------
<PAGE>
</TABLE>
A reconciliation of the differences between the Company's applicable statutory
tax rate and the Company's effective income tax rate follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, SEVEN YEAR ENDED
--------------------- MONTHS ENDED MAY 31,
1996 1995 DEC. 31, 1994 1994
------- ------- ------------- ----------
Tax provision at statutory tax rate 0.0 % 35.0 % 35.0 % 35.0 %
Increase (decrease) resulting from:
Net change in valuation allowance (111.6) % (201.6) % (103.8) % (4.4) %
Recognition of outside basis adjustments (20.3) % (107.6) % 84.2 % --- %
Foreign items without tax benefit 25.8 % 23.9 % (10.7) % (18.8) %
Income tax rate changes --- % 16.9 % --- % 12.0 %
Income subject to tax in excess of statutory rate 58.4 % --- % --- % --- %
Branch loss recapture/Subpart F --- % 97.1 % --- % --- %
Current year change in NOL/credit carryforwards (59.2) % 51.2 % (15.6) % --- %
Temporary differences:
Oil and gas basis adjustments 80.6 % 116.4 % (14.2) % --- %
Reimbursement of pre-commerciality costs 10.9 % 30.5 % --- % --- %
Other 1.8 % (1.2) % 8.5 % 4.5 %
------ -- ------- -- ------- -- ------- --
(13.6) % 60.6 % (16.6) % 28.3 %
------ -- ------- -- ------- -- ------- --
</TABLE>
The components of the net deferred tax asset and liability are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1996 DECEMBER 31, 1995
--------------------------------- ----------------------------------
OTHER OTHER
U.S. COLOMBIA FOREIGN U.S. COLOMBIA FOREIGN
---------- ---------- --------- ----------- --------- ----------
Deferred tax asset:
Net operating loss carryforwards $ 98,555 $ 9,540 $ 2,347 $ 88,426 $ 4,631 $ 3,619
Depreciable/depletable property 1,558 --- --- 5,523 --- ---
Credit carryforwards 2,054 --- --- 3,046 --- ---
Reserves 1,259 --- --- 1,664 --- ---
Other 792 --- --- 2,670 --- 28
---------- ---------- --------- ----------- --------- ----------
Gross deferred tax asset 104,218 9,540 2,347 101,329 4,631 3,647
Valuation allowances (30,657) --- --- (54,046) --- ---
---------- ---------- --------- ----------- --------- ----------
Net deferred tax asset 73,561 9,540 2,347 47,283 4,631 3,647
---------- ---------- --------- ----------- --------- ----------
Deferred tax liability:
Depreciable/depletable property --- (50,874) (6,444) --- (30,069) (8,106)
WTI benchmark call options (2,145) --- --- --- --- ---
---------- ---------- --------- ----------- --------- ----------
Net deferred tax asset (liability) 71,416 (41,334) (4,097) 47,283 (25,438 (4,459)
Less current deferred tax asset (liability) --- --- --- --- --- ---
---------- ---------- --------- ----------- --------- ----------
Noncurrent deferred tax asset (liability) $ 71,416 $ (41,334) $ (4,097) $ 47,283 $ (25,438) $ (4,459)
---------- ---------- --------- ----------- --------- ----------
</TABLE>
At December 31, 1996, the Company had net operating loss ("NOL") and depletion
carryforwards for U.S. tax purposes of $230.7 million and $6.8 million,
respectively. In addition, at December 31, 1996, certain subsidiaries had
separate return limitation year ("SRLY") operating loss and depletion
carryforwards of $50.9 million and $13.5 million, respectively, which are
available to offset only the future taxable income of those subsidiaries. The
depletion carryforwards are available indefinitely. The NOL and SRLY operating
loss carryforwards expire from 1997 through 2012 as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
NOLS SRLYS
EXPIRING EXPIRING
BY YEAR BY YEAR
--------- ---------
May 1997 $ --- $ 10,740
May 1998 10,939 8,964
May 1999 8,809 8,437
May 2000 7,315 13,066
May 2001 20,713 9,675
May 2002 22,670 32
May 2003 - May 2012 160,226 ---
--------- ---------
$ 230,672 $ 50,914
--------- ---------
</TABLE>
The deferred tax valuation allowance was reduced by $23.4 million in 1996 due
to changes in expectations of future U.S. taxable income resulting from
improvements in anticipated operating results. The remaining valuation
allowance is primarily attributable to SRLY operating losses that are
currently not realizable due to the lack of potential future income in the
applicable subsidiaries, and the expectation that other tax credits will
expire without being utilized. Furthermore, changes in the timing or nature
of actual or anticipated business transactions, projections, organizational
changes, and income tax laws may give rise to significant adjustments to the
Company's deferred tax expense or benefit that may be reported in the future.
If certain changes in the Company's ownership should occur, there would be an
annual limitation on the amount of NOL carryforwards that can be utilized. To
the extent a change in ownership does occur, the limitation is not expected to
materially impact the utilization of such carryforwards.
<PAGE>
13. EMPLOYEE BENEFITS
PENSION PLANS
The Company has a defined benefit pension plan covering substantially all
employees in the United States. The benefits are based on years of service
and the employee's final average monthly compensation. Contributions are
intended to provide for benefits attributed to past and future services. The
Company also has a Supplemental Executive Retirement Plan ("SERP") that is
unfunded and provides supplemental pension benefits to a select group of
management and key employees.
The funding status of the plans follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
DECEMBER 31, 1996 DECEMBER 31, 1995
------------------- --------------------
DEFINED DEFINED
BENEFIT SERP BENEFIT SERP
PLAN PLAN PLAN PLAN
--------- -------- ---------- --------
Actuarial present value of benefit obligations:
Vested benefit obligations $ 3,748 $ 4,079 $ 3,632 $ 3,849
--------- -------- ---------- --------
Accumulated benefit obligations $ 4,037 $ 4,079 $ 3,844 $ 3,849
--------- -------- ---------- --------
Projected benefit obligations $ 4,849 $ 5,288 $ 4,513 $ 4,966
Plan assets at fair value, primarily listed stocks
and United States government securities 4,790 --- 4,326 ---
--------- -------- ---------- --------
Unfunded projected benefit obligations 59 5,288 187 4,966
Unrecognized net gain (loss) 2 (46) (54) (283)
Prior service cost not yet recognized in net periodic
pension cost (653) (144) (709) (155)
Unrecognized net asset (liability) at adoption 11 (1,456) 13 (1,624)
Adjustment required to recognize minimum liability --- 437 --- 945
--------- -------- ---------- --------
Accrued (prepaid) pension cost $ (581) $ 4,079 $ (563) $ 3,849
--------- -------- ---------- --------
<PAGE>
</TABLE>
A summary of the components of pension expense follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SEVEN YEAR ENDED
YEAR ENDED DECEMBER 31, MONTHS ENDED MAY 31,
-------------------------
1996 1995 DEC. 31, 1994 1994
--------- ------- --------------- ------------
Service cost - benefits earned
during the period $ 767 $ 780 $ 454 $ 733
Interest cost on projected benefit obligation 736 653 344 553
Actual return on plan assets (387) (849) 219 111
Net amortization and deferral 244 793 (256) (173)
--------- ------- --------------- ------------
$ 1,360 $1,377 $ 761 $ 1,224
--------- ------- --------------- ------------
</TABLE>
The projected benefit obligations at December 31, 1996 and 1995, assume a
discount rate of 8% and a rate of increase in compensation expense of 5%. The
expected long-term rate of return on assets is 9% for the defined benefit
plan.
EMPLOYEE STOCK OWNERSHIP PLAN
Effective January 1, 1994, the Company amended and restated the employee stock
ownership plan to form a 401(k) plan (the "plan"). The Company recognizes
expense relating to the plan based on actual amounts contributed since the
inception of the plan. The Company used the shares allocated method prior to
the January 1, 1994 amendment.
14. SHAREHOLDERS' EQUITY
PREFERENCE SHARES
In connection with the acquisition of the minority interest in Triton Europe,
the Company designated a series of 550,000 preferred shares (522,460 shares
issued) as 5% preferred stock, no par value, with a stated value of $34.41 per
share. Pursuant to the Reorganization, Triton converted each share of 5%
preferred stock into one 5% preference share, par value $.01. Each share of
the Company's 5% preference shares is convertible into one ordinary share,
subject to adjustment in certain events. The 5% preference shares are
convertible any time on or after October 1, 1994, and bear a fixed cumulative
cash dividend of 5% per annum payable semi-annually on March 30 and September
30, commencing September 30, 1994. The Company may, at its option, redeem the
preference shares, in whole or in part, at any time on or after March 30,
1998, or at any time there are fewer than 133,005 preference shares
outstanding. If not converted or redeemed earlier, each 5% preference share
will be redeemed on March 30, 2004, either for cash, or at the option of the
Company, for the Company's ordinary shares. At December 31, 1996 and 1995,
247,469 and 410,017 preference shares were outstanding, respectively.
ORDINARY SHARES
Changes in issued ordinary shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SEVEN
MONTHS ENDED YEAR ENDED
YEAR ENDED DECEMBER 31, DEC. 31, MAY 31,
-------------------------
1996 1995 1994 1994
------------- ---------- ------------ ----------
Balance at beginning of period 35,927,279 35,577,009 35,519,103 35,231,142
Exercise of employee stock options
and debentures 258,333 237,875 57,858 287,961
Conversion of 5% preference shares 162,548 112,395 48 ---
Other, net (5,979) --- --- ---
------------- ---------- ------------ ----------
Balance at end of period 36,342,181 35,927,279 35,577,009 35,519,103
------------- ---------- ------------ ----------
</TABLE>
Changes in ordinary shares held in treasury were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SEVEN
MONTHS ENDED YEAR ENDED
YEAR ENDED DECEMBER 31, DEC. 31, MAY 31,
------------------------
1996 1995 1994 1994
----------- -------- ------------- -------
Balance at beginning of period 26,635 45,837 54,354 57,483
Purchase of treasury shares 91 89 98 149
Transfer of shares to employee benefit plans (10,797) (19,291) (8,615) (3,278)
Retirement of treasury shares (15,889) --- --- ---
----------- -------- ------------- -------
Balance at end of period 40 26,635 45,837 54,354
----------- -------- ------------- -------
</TABLE>
15. STOCK COMPENSATION PLANS
STOCK OPTION PLANS
Options to purchase ordinary shares of the Company may be granted to officers
and employees under various stock option plans. The exercise price of each
option equals the market price of the Company's ordinary shares on the date of
grant. Grants generally become exercisable in 25% cumulative annual increments
beginning one year from the date of issuance and expire during a period
between 5 to 10 years after the date of grant, depending on terms of the
grant. Pursuant to the 1992 stock option plan, each non-employee director
receives an option to purchase 15,000 shares each year. These grants become
exercisable in 33% cumulative annual increments beginning one year from the
date of issuance and expire at the end of 10 years. At December 31, 1996 and
1995, shares available for grant were 731,090 and 624,165, respectively.
<PAGE>
A summary of the status of the Company's stock option plans is presented
below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
DECEMBER 31,1996 DECEMBER 31, 1995
------------------------- -----------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
EXERCISE EXERCISE
SHARES PRICE SHARES PRICE
------------- --------- ------------- ---------
Outstanding at beginning of year 3,177,304 $ 35.49 3,074,854 $ 33.80
Granted 971,000 47.97 373,500 49.33
Exercised (216,333) 30.40 (237,875) 35.30
Canceled (77,925) 40.74 (33,175) 35.62
------------- -------------
Outstanding at end of year 3,854,046 38.81 3,177,304 35.49
------------- -------------
Options exercisable at yearend 2,042,492 1,449,424
Weighted average fair value per share
of options granted during the year $ 19.89 $ 20.75
<S> <C> <C> <C> <C> <C>
DECEMBER 31, 1994 MAY 31, 1994
---------------------- ---------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
EXERCISE EXERCISE
SHARES PRICE SHARES PRICE
---------- --------- ---------- ---------
Outstanding at beginning of year 2,666,545 $ 33.52 1,721,406 $ 34.48
Granted 544,500 34.11 1,414,800 31.95
Exercised (48,691) 9.22 (133,411) 9.98
Canceled (87,500) 41.08 (336,250) 41.16
---------- ----------
Outstanding at end of year 3,074,854 33.80 2,666,545 33.52
---------- ----------
Options exercisable at yearend 873,551 563,741
Weighted average fair value per share
of options granted during the year
</TABLE>
The following table summarizes information about stock options outstanding at
December 31, 1996:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------------- -------------------------
WEIGHTED
RANGE AVERAGE WEIGHTED WEIGHTED
OF NUMBER REMAINING AVERAGE NUMBER AVERAGE
EXERCISE OUTSTANDING AT CONTRACTUAL EXERCISE EXERCISABLE AT EXERCISE
PRICES DEC. 31, 1996 LIFE PRICE DEC. 31, 1996 PRICE
- -------------- -------------- ----------- --------- --------------- ---------
8.38 - 19.88 68,156 3.7 years $ 11.00 68,156 $ 11.00
28.50 - 39.63 2,107,440 6.9 years 33.11 1,495,586 33.36
40.00 - 48.38 899,250 6.6 years 42.47 374,750 41.88
50.20 - 57.38 779,200 9.0 years 52.44 104,000 51.55
----------- ------------
3,854,046 2,042,492
----------- ------------
</TABLE>
CONVERTIBLE DEBENTURE PLAN
The Company has a convertible debenture plan under which key management
personnel and others may purchase debentures that are convertible into
ordinary shares of the Company. The aggregate number of ordinary shares
issuable upon conversion of the debentures cannot exceed 1,000,000 shares,
subject to adjustment in certain events. Each debenture represents an
unsecured, subordinated obligation due in 10 years and may be redeemed after
three years at a redemption price of 120% of the principal amounts. The
debentures outstanding at December 31, 1996, bear interest at the prime rate.
The participants in the plan purchased debentures by delivery of promissory
notes to the Company. The promissory notes are secured by the debentures that
are held as security by the Company, are due on the earlier of 10 years from
the date of issue or termination of employment and require annual interest
payments equal to prime plus 1/8%. The debentures are reflected as a
noncurrent liability, net of the related promissory notes, in the Consolidated
Balance Sheets as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31,
---------------------
1996 1995
---------- ---------
Convertible debentures due employees $ 15,491 $ 16,969
Promissory notes (15,491) (16,969)
---------- ---------
$ --- $ ---
---------- ---------
</TABLE>
A summary of the status of the Company's convertible debenture plan is
presented below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994
---------------------- --------------------- ------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
----------- --------- ---------- --------- -------- ---------
Outstanding at beginning of year 500,000 $ 33.94 250,000 $ 25.13 259,167 $ 24.52
Granted --- --- 250,000 42.75 --- ---
Exercised (42,000) 35.20 --- --- (9,167) 8.00
------------ ---------- --------
Outstanding at yearend 458,000 33.82 500,000 33.94 250,000 25.13
------------ ---------- --------
Options exercisable at yearend 458,000 250,000 ---
Weighted average fair value per share
of options granted during the year --- $ 19.45
<PAGE>
<S> <C> <C>
MAY 31, 1994
--------------------
WEIGHTED
AVERAGE
EXERCISE
SHARES PRICE
--------- ---------
Outstanding at beginning of year 163,717 $ 11.64
Granted 250,000 25.13
Exercised (154,550) 11.86
---------
Outstanding at yearend 259,167 24.52
---------
Options exercisable at yearend 9,167
Weighted average fair value per share
of options granted during the year
<PAGE>
</TABLE>
The following table summarizes information about convertible debentures
outstanding at December 31, 1996:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------------- --------------------------
WEIGHTED
RANGE AVERAGE WEIGHTED WEIGHTED
OF NUMBER REMAINING AVERAGE NUMBER AVERAGE
EXERCISE OUTSTANDING AT CONTRACTUAL EXERCISE EXERCISABLE AT EXERCISE
PRICES DEC. 31, 1996 LIFE PRICE DEC. 31, 1996 PRICE
- --------- --------------- ----------- --------- --------------- ---------
25.13 232,000 7.3 years $ 25.13 232,000 $ 25.13
42.75 226,000 8.3 years 42.75 226,000 42.75
</TABLE>
EMPLOYEE STOCK PURCHASE PLAN
The Company has an employee stock purchase plan that provides for the award of
up to 100,000 ordinary shares to key officers and employees. At December 31,
1996 and 1995, shares available for grant were 49,417 and 20,124,
respectively. Under the terms of the plan, employees can choose each
semi-annual period to have up to 15% of their annual gross or base
compensation withheld to purchase the Company's ordinary shares. The purchase
price of the stock is 85% of the lower of its beginning of period or end of
period market price. Under the plan, the Company sold 22,633 shares and 21,314
shares to employees for the years ended December 31, 1996 and 1995,
respectively.
The Company applies Opinion 25 in accounting for its plans. Accordingly, no
compensation cost has been recognized for its fixed stock option plans,
convertible debenture plan, and its stock purchase plan. Had the Company
elected to recognize compensation expense consistent with the fair value-based
methodology in SFAS 123, the Company's net income and earnings per share would
have been reduced by $4.2 million or $0.09 per share in 1996, and $2.6 million
or $0.05 per share in 1995.
The fair value of each option or debenture granted was estimated on the date
of grant using the Black-Scholes option-pricing model with the following
weighted average assumptions used for grants in 1996 and 1995: dividend yield
of 0%; expected volatility of 26.9% and 27.8%, respectively; risk-free
interest rate of approximately 6%; and expected life of five to seven years.
SHAREHOLDER RIGHTS PLAN
The Company has adopted a Shareholder Rights Plan pursuant to which preference
share rights attach to all ordinary shares at the rate of one right for each
ordinary share. Generally, the rights become exercisable only if a person
acquires beneficial ownership of 15% or more of the Company's ordinary shares
or announces a tender offer for 15% or more of the ordinary shares. If, among
other events, any such person becomes the beneficial owner of 15% or more of
the Company's ordinary shares, each right not owned by such person generally
becomes the right to purchase such number of ordinary shares of the Company,
equal to the number obtained by dividing the right's exercise price (currently
$120) by 50% of the market price of the ordinary shares on the date of the
first occurrence. In addition, if the Company is subsequently merged or
certain other extraordinary business transactions are consummated, each right
generally becomes a right to purchase such number of shares of common stock of
the acquiring person, which is equal to the amount obtained by dividing the
right's exercise price by 50% of the market price of the common stock on the
date of the first occurrence. The rights will expire on May 22, 2005, unless
such expiration date is extended or unless the rights are earlier redeemed or
exchanged by the Company. At any time prior to a person acquiring beneficial
ownership of 15% or more of the Company's ordinary shares, the Company may
redeem the rights in whole, but not in part, at a price of $.01 per right.
STOCK APPRECIATION RIGHTS PLAN
The Company has a stock appreciation rights ("SARs") plan which authorizes the
granting of SARs to non-employee directors of the Company. Upon exercise,
SARs allow the holder to receive the difference between the SARs' exercise
price and the fair market value of the ordinary shares covered by SARs on the
exercise date and expire at the earlier of 10 years or a date based on the
termination of the holder's membership on the board of directors. At December
31, 1996, SARs covering 25,000 ordinary shares, with an exercise price of $8
per share, were outstanding.
<PAGE>
16. FAIR VALUE OF FINANCIAL INSTRUMENTS, RISK MANAGEMENT
AND CREDIT RISK CONCENTRATIONS
FAIR VALUE OF FINANCIAL INSTRUMENTS
At December 31, 1996 and 1995, the Company's financial instruments included
cash, cash equivalents, short-term receivables, marketable securities,
long-term receivables, short-term and long-term debt and financial market
transactions. The fair value of cash, cash equivalents, short-term
receivables and short-term debt approximated carrying values because of the
short maturities of these instruments. The fair values of the Company's
marketable securities, long-term receivables and financial market
transactions, based on broker quotes, quoted market prices and discounted cash
flows approximated the carrying values. The estimated fair value of long-term
debt, based on quoted market prices and market data for similar instruments,
was $433 million and $396 million at December 31, 1996 and 1995, respectively.
RISK MANAGEMENT
Oil and natural gas sold by the Company are normally priced with reference to
a defined benchmark, such as light sweet crude oil traded on the New
York Mercantile Exchange. Actual prices received vary from the benchmark
depending on quality and location differentials. It is the Company's
policy to use financial market transactions with credit-worthy
counterparties from time to time primarily to reduce risk associated with
the pricing of a portion of the oil and natural gas that it sells. The
policy is structured to underpin the Company's planned revenues and
results of operations. The Company may also enter into financial market
transactions to benefit from its assessment of the future prices of its
production relative to other benchmark prices. There can be no assurance
that the use of financial market transactions will not result in losses.
With respect to the sale of oil to be produced by the Company, the Company has
used a combination of swaps, options and collars to establish a minimum
weighted average WTI benchmark price of $19.58 per barrel for an aggregate of
1.5 million barrels of production during the period from January through June
1997. As a result, to the extent WTI prices exceed the minimum WTI benchmark
price during each month within the period, the Company will be able to sell
its production at the higher market price, and to the extent that WTI prices
are below the minimum WTI benchmark price, the Company will be able to realize
prices related to the minimum WTI benchmark price on its hedged production.
In anticipation of entering into a forward oil sale, the Company purchased
WTI benchmark call options to retain the ability to benefit from future WTI
price increases above a weighted average price of $20.42 per barrel. The
volumes and expiration dates on the call options coincide with the volumes and
delivery dates of the forward oil sale, which has delivery terms of 58,425
barrels per month through March 1997 and 254,136 barrels per month from April
1997 through March 2000. During the years ended December 31, 1996 and 1995,
the Company recorded an unrealized gain of $11 million and an unrealized loss
of $4.2 million, respectively, in other income, net related to the change in
the fair market value of the call options. Future fluctuations in the fair
market value of the call options will continue to affect other income as
noncash adjustments.
During the year ended December 31, 1996, markets provided the Company the
opportunity to realize WTI benchmark oil prices on average $4.68 per barrel
above the WTI benchmark oil price the Company set as part of its 1996 annual
plan. As a result of financial and commodity market transactions settled
during the year ended December 31, 1996, the Company's risk management program
resulted in an average net realization of approximately $1.21 per barrel lower
than if the Company had not entered into such transactions.
CONCENTRATION OF CREDIT RISK
Financial instruments that are potentially subject to concentrations of credit
risk consist of cash equivalents, marketable securities, receivables and
financial market transactions. The Company places its cash equivalents,
marketable securities and financial market transactions with high
credit-quality financial institutions. The Company believes the risk of
incurring losses related to credit risk is remote.
Triton Colombia sells its crude oil production from the Cusiana and Cupiagua
fields through an agreement with a third party to approximately 10 to 15
refineries located primarily in the United States. The Company does not
believe that the loss of any single customer or a termination of the agreement
with the third party would have a long-term material, adverse effect on its
operations.
<PAGE>
17. OTHER INCOME (EXPENSE), NET
Other income (expense), net is summarized as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SEVEN YEAR ENDED
YEAR ENDED DECEMBER 31, MONTHS ENDED MAY 31,
-----------------------
1996 1995 DEC. 31, 1994 1994
-------- -------- --------------- -----------
Change in fair market value of WTI
benchmark call options $ 10,987 $(4,171) $ --- $ ---
Gain on sale of shareholdings in Crusader 10,417 --- --- ---
Proceeds from legal settlements 7,624 7,222 --- ---
Loss provisions (3,193) (1,058) --- ---
Gain on the sale of Triton France --- 3,496 --- ---
Gain on early redemption of Crusader's
convertible notes --- 2,899 --- ---
Gain on sale of U.S.
working interest properties --- --- --- 7,028
Gain on sale of Aero Services International
Inc.'s common stock --- --- --- 1,500
Foreign exchange gain (loss) (561) 1,874 383 252
Equity in earnings (loss) of affiliates, net 118 (2,249) (4,102) 645
Other 1,969 1,372 441 1,251
--------- -------- ---------- -----------
$ 27,361 $ 9,385 $ (3,278) $ 10,676
--------- -------- ---------- -----------
</TABLE>
18. WRITEDOWN OF ASSETS
Writedown of assets are summarized as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SEVEN YEAR ENDED
YEAR ENDED DECEMBER 31, MONTHS ENDED MAY 31,
-----------------------
1996 1995 DEC. 31, 1994 1994
-------- --------- -------------- -----------
Evaluated oil and gas properties $ --- $ --- $ 984 $ 44,123
Unevaluated oil and gas properties 39,963 --- --- 251
Inventory --- --- --- 1,064
Investments and other assets 2,997 --- --- 316
-------- -------- -------------- -----------
$ 42,960 $ --- $ 984 $ 45,754
-------- -------- -------------- -----------
</TABLE>
In 1996, the Company's oil and gas properties and other assets in Argentina
were written down $43 million following a review of technical information that
indicated the acreage portfolio did not meet the Company's exploration
objectives.
During fiscal 1994, the carrying amounts of the Company's evaluated oil
properties in France were written down by $43.2 million through application of
the ceiling limitation prescribed by the Securities and Exchange Commission
principally as a result of a temporary drop in oil prices and a downward
revision in estimated reserves.
19. STATEMENTS OF CASH FLOWS
Supplemental disclosures of cash payments and noncash investing and financing
activities follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SEVEN YEAR ENDED
YEAR ENDED DECEMBER 31, MONTHS ENDED MAY 31,
------------------------
1996 1995 DEC. 31, 1994 1994
------------ ------ -------------- -----------
Cash paid during the year for:
Interest (net of amount capitalized) $ --- $ --- $ --- $ ---
Income taxes 200 920 5,557 222
Noncash investing and financing
activities:
Preferred stock issued for purchase of
Triton Europe minority interest --- --- --- 17,978
Conversion of preferred stock into
common stock 5,594 3,867 --- ---
Property and equipment exchanged for
a long-term note receivable --- 650 --- 1,980
</TABLE>
20. CERTAIN FACTORS THAT COULD AFFECT FUTURE OPERATIONS
Certain statements in this report, including statements of the Company's and
management's expectations, intentions, plans and beliefs, including those
contained in or implied by "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and these Notes to Consolidated Financial
Statements, are forward-looking statements, as defined in Section 21D of the
Securities Exchange Act of 1934, that are dependent on certain events, risks
and uncertainties that may be outside the Company's control. These
forward-looking statements include statements of management's plans and
objectives for the Company's future operations and statements of future
economic performance; information regarding drilling schedules, expected or
planned production or transportation capacity, the future construction or
upgrades of pipelines (including costs), when the Cusiana and Cupiagua fields
might become self-financing, future production of the Cusiana and Cupiagua
fields, the negotiation of a gas-sales contract and commencement of production
in Malaysia-Thailand, the Company's capital budget and future capital
requirements, the Company's meeting its future capital needs, the amount by
which production from the Cusiana and Cupiagua fields may increase or when
such increased production may commence, the Company's realization of its
deferred tax asset, the level of future expenditures for environmental
costs, the outcome of regulatory and litigation matters and proven oil and
gas reserves and discontinued future net cash flows therefrom; and the
assumptions described in this report underlying such forward-looking
statements. Actual results and developments could differ materially from
those expressed in or implied by such statements due to a number of
factors, including those described in the context of such forward-looking
statements, as well as those presented below.
CERTAIN FACTORS RELATING TO THE OIL AND GAS INDUSTRY
The Company's strategy is to focus its exploration activities on what the
Company believes are relatively high-potential prospects. No assurance can be
given that these prospects contain significant oil and gas reserves or that
the Company will be successful in its exploration activities thereon. The
Company follows the full cost method of accounting for exploration and
development of oil and gas reserves whereby all acquisition, exploration and
development costs are capitalized. Costs related to acquisition, holding and
initial exploration of licenses in countries with no proved reserves are
initially capitalized, including internal costs directly identified with
acquisition, exploration and development activities. The Company's
exploration licenses are periodically assessed for impairment on a
country-by-country basis. If the Company's investment in exploration licenses
within a country where no proved reserves are assigned is deemed to be
impaired, the licenses are written down to estimated recoverable value. If
the Company abandons all exploration efforts in a country where no proved
reserves are assigned, all exploration costs associated with the country are
expensed. The Company's assessments of whether its investment within a
country is impaired and whether exploration activities within a country will
be abandoned are made from time to time based on its review and assessment of
drilling results, seismic data and other information it deems relevant. Due
to the unpredictable nature of exploration drilling activities, the amount and
timing of impairment expense are difficult to predict with any certainty.
The markets for oil and natural gas historically have been volatile and are
likely to continue to be volatile in the future. Oil and natural-gas prices
have been subject to significant fluctuations during the past several decades
in response to relatively minor changes in the supply of and demand for oil
and natural gas, market uncertainty and a variety of additional factors that
are beyond the control of the Company. These factors include the level of
consumer product demand, weather conditions, domestic and foreign government
regulations, political conditions in the Middle East and other production
areas, the foreign supply of oil and natural gas, the price and availability
of alternative fuels, and overall economic conditions. It is impossible to
predict future oil and gas price movements with any certainty.
The Company's oil and gas business is also subject to all of the operating
risks normally associated with the exploration for and production of oil and
gas, including, without limitation, blowouts, cratering, pollution,
earthquakes, labor disruptions and fires, each of which could result in
substantial losses to the Company due to injury or loss of life and damage to
or destruction of oil and gas wells, formations, production facilities or
other properties. In accordance with customary industry practices, the
Company maintains insurance coverage limiting financial loss resulting from
certain of these operating hazards. Losses and liabilities arising from
uninsured or underinsured events would reduce revenues and increase costs to
the Company. There can be no assurance that any insurance will be adequate to
cover losses or liabilities. The Company cannot predict the continued
availability of insurance, or its availability at premium levels that justify
its purchase.
The Company's oil and gas business is also subject to laws, rules and
regulations in the countries in which it operates, which generally pertain to
production control, taxation, environmental and pricing concerns, and other
matters relating to the petroleum industry. Many jurisdictions have at
various times imposed limitations on the production of natural gas and oil by
restricting the rate of flow for oil and natural-gas wells below their actual
capacity. There can be no assurance that present or future regulation will
not adversely affect the operations of the Company.
The Company is subject to extensive environmental laws and regulations. These
laws regulate the discharge of oil, gas or other materials into the
environment and may require the Company to remove or mitigate the
environmental effects of the disposal or release of such materials at various
sites. The Company does not believe that its environmental risks are
materially different from those of comparable companies in the oil and gas
industry. Nevertheless, no assurance can be given that environmental laws and
regulations will not, in the future, adversely affect the Company's
consolidated results of operations, cash flows or financial position.
Pollution and similar environmental risks generally are not fully insurable.
CERTAIN FACTORS RELATING TO INTERNATIONAL OPERATIONS
The Company derives substantially all of its consolidated revenues from
international operations. Risks inherent in international operations include
loss of revenue, property and equipment from such hazards as expropriation,
nationalization, war, insurrection and other political risks; trade protection
measures; risks of increases in taxes and governmental royalties; and
renegotiation of contracts with governmental entities; as well as changes in
laws and policies governing operations of other companies. Other risks
inherent in international operations are the possibility of realizing economic
currency-exchange losses when transactions are completed in currencies other
than U.S. dollars and the Company's ability to freely repatriate its earnings
under existing exchange control laws. To date, the Company's international
operations have not been materially affected by these risks.
<PAGE>
COMPETITION
The Company encounters strong competition from major oil companies (including
government-owned companies), independent operators and other companies for
favorable oil and gas concessions, licenses, production-sharing contracts and
leases, drilling rights and markets. Additionally, the governments of certain
countries in which the Company operates may from time to time give
preferential treatment to their nationals. The oil and gas industry as a
whole also competes with other industries in supplying the energy and fuel
requirements of industrial, commercial and individual consumers.
MARKETS
Crude oil, natural gas, condensate, and other oil and gas products generally
are sold to other oil and gas companies, government agencies and other
industries. The availability of ready markets for oil and gas that might be
discovered by the Company and the prices obtained for such oil and gas depend
on many factors beyond the Company's control, including the extent of local
production and imports of oil and gas, the proximity and capacity of pipelines
and other transportation facilities, fluctuating demands for oil and gas, the
marketing of competitive fuels, and the effects of governmental regulation of
oil and gas production and sales. Pipeline facilities do not exist in certain
areas of exploration and, therefore, any actual sales of discovered oil or gas
might be delayed for extended periods until such facilities are constructed.
CERTAIN FACTORS RELATING TO COLOMBIA
The Company is a participant in significant oil and gas discoveries located in
the Llanos Basin in the foothills of the Andes Mountains, approximately 160
kilometers (100 miles) northeast of Bogota, Colombia. The Company owns
interests in three contiguous areas known as the Santiago de las Atalayas
("SDLA"), Tauramena and Rio Chitamena contract areas. Well results to date
indicate that significant oil and gas deposits lie across the Cusiana and
Cupiagua fields.
Development of reserves in the Cusiana and Cupiagua fields will take more than
one year and require additional drilling and extensive production facilities,
which in turn will require significant additional capital expenditures, the
ultimate amount of which cannot be predicted. Pipelines connect the major
producing fields in Colombia to export facilities and to refineries. These
pipelines are in the process of being upgraded and expanded to accommodate
production from the Cusiana and Cupiagua fields.
Guerrilla activity in Colombia has from time to time disrupted the operation
of oil and gas projects and increased costs. Although the Colombian
government, the Company and its partners have taken steps to improve security
and improve relations with the local population, there can be no assurance
that attempts to reduce or prevent guerrilla activity will be successful or
that such activity will not disrupt operations in the future.
Colombia is among several nations whose progress in stemming the production
and transit of illegal drugs is subject to annual certification by the
President of the United States. In 1997, the President of the United States
announced that Colombia would neither be certified nor granted a national
interest waiver. The consequences of the failure to receive certification
generally include the following: all bilateral aid, except anti-narcotics and
humanitarian aid, has been or will be suspended; the Export-Import Bank of the
United States and the Overseas Private Investment Corporation will not approve
financing for new projects in Colombia; U.S. representatives at multilateral
lending institutions will be required to vote against all loan requests from
Colombia, although such votes will not constitute vetoes; and the President of
the United States and Congress retain the right to apply future trade
sanctions. Each of these consequences of the failure to receive such
certification could result in adverse economic consequences in Colombia and
could further heighten the political and economic risks associated with the
Company's operations in Colombia. Any changes in the holders of significant
government offices could have adverse consequences on the Company's
relationship with the Colombian national oil company and the Colombian
government's ability to control guerrilla activities and could exacerbate the
factors relating to foreign operations discussed above.
CERTAIN FACTORS RELATING TO MALAYSIA-THAILAND
The Company is a partner in a significant gas exploration project located in
the upper Malay Basin in the Gulf of Thailand approximately 450 kilometers
northeast of Kuala Lumpur and 750 kilometers south of Bangkok. The Company is
a contractor under a production-sharing contract covering Block A-18 of the
Malaysia-Thailand Joint Development Area. Well results to date indicate that
significant gas deposits lie across four fields within the block.
Development of gas production is in the early planning stages but is expected
to take several years and require the drilling of additional wells and the
installation of production facilities, which will require significant
additional capital expenditures, the ultimate amount of which cannot be
predicted. Pipelines also will be required to be connected between Block A-18
and ultimate markets. The terms on which any gas produced from the Company's
contract area in Malaysia-Thailand may be sold may be affected adversely by
the present monopoly gas-purchase and transportation conditions in both
Thailand and Malaysia, including the Thai national oil company's monopoly in
transportation within Thailand and its territorial waters.
<PAGE>
LITIGATION
The outcome of litigation and its impact on the Company are difficult to
predict due to many uncertainties, such as jury verdicts, the application of
laws to various factual situations, the actions that may or may not be taken
by other parties and the availability of insurance. In addition, in certain
situations, such as environmental claims, one defendant may be responsible, or
potentially responsible, for the liabilities of other parties. Moreover,
circumstances could arise under which the Company may elect to settle claims
at amounts that exceed the Company's expected liability for such claims in
order to avoid costly litigation. Judgments or settlements could, therefore,
exceed any reserves.
21. COMMITMENTS AND CONTINGENCIES
Development of the Cusiana and Cupiagua fields ("the Fields"), including
drilling and construction of additional production facilities, will require
further capital outlays. Further exploration and development activities on
Block A-18, as well as exploratory drilling in other countries, also will
require substantial capital outlays. The Company's capital budget for the
year ending December 31, 1997, is approximately $310 million, excluding
capitalized interest, of which approximately $150 million relates to the
Fields and capital contributions to OCENSA, $95 million relates to Block A-18,
and $65 million relates to the Company's exploration and drilling program in
other parts of the world. The Company assisted OCENSA in raising one tranche
of debt totaling $65 million in 1996 and may assist OCENSA in raising up to
$25 million of additional debt in 1997. Capital requirements for exploration
and development relating to Block A-18 are expected to increase significantly
into 1998.
The Company expects to meet capital needs in the future with a combination of
some or all of the following: the Company's revolving credit facility, cash
flow from its Colombian operations (including additional proceeds from the
1995 forward oil sale), cash and marketable securities, asset sales, and the
issuance of debt and equity securities. The Company's indentures permit the
Company to incur total indebtedness (excluding certain permitted indebtedness)
of up to 25% of the sum of its indebtedness and market capitalization of its
capital stock. As of yearend 1996, the revolving credit facility permitted
the Company to incur total indebtedness of up to approximately $630 million.
Availability under the credit facility may be more in the future under certain
circumstances.
During the normal course of business, the Company is subject to the terms of
various operating agreements and capital commitments associated with the
exploration and development of its oil and gas properties. It is management's
belief that such commitments, including the capital requirements in Colombia
and Malaysia-Thailand discussed above, will be met without any material,
adverse effect on the Company's operations or consolidated financial
condition.
The Company leases office space, other facilities and equipment under various
operating leases expiring through 2011. Total rental expense was $2 million
and $1.9 million for the years ended December 31, 1996 and 1995, respectively,
$1.3 million for the seven months ended December 31, 1994, and $2.6 million
for the year ended May 31, 1994. At December 31, 1996, the minimum payments
required over the next five years are as follows: 1997 -- $2.5 million; 1998
- -- $2.3 million; 1999 -- $1.8 million; 2000 -- $.9 million; 2001 -- $.2
million; and thereafter -- $1.2 million.
GUARANTEES
At December 31, 1996, the Company had guaranteed loans of approximately $4.5
million of a Colombian pipeline company in which the Company has an ownership
interest and guaranteed performance of $4.1 million in future exploration
expenditures in various countries. These commitments are backed primarily by
unsecured letters of credit and bank guarantees.
ENVIRONMENTAL MATTERS
The Company is subject to extensive environmental laws and regulations. These
laws regulate the discharge of oil, gas or other materials into the
environment and may require the Company to remove or mitigate the
environmental effects of the disposal or release of such materials at various
sites. Also, the Company remains liable for certain environmental matters
that may arise from formerly owned fuel businesses that were involved in the
storage, handling and sale of hazardous materials, including fuel storage in
underground tanks. The Company believes that the level of future expenditures
for environmental matters, including clean-up obligations, is impracticable to
determine with a precise and reliable degree of accuracy. Management believes
that such costs, when finally determined, will not have a material adverse
effect on the Company's operations or consolidated financial condition.
LITIGATION
The Company and subsidiaries or former subsidiaries of the Company, including
Triton Oil and Gas Corportaion ("Triton Oil"), are among numerous defendants
in three related lawsuits brought in the Superior Court of the State of
California, County of Los Angeles, by (i) National Union Fire Insurance
Company ("National Union") and The Restaurant Enterprises Group, (ii)
Travelers Indemnity Company ("Travelers") and (iii) the City of Redondo
Beach. All three lawsuits arise out of a 1988 tidal wave at King Harbor in
Redondo Beach, California. The lawsuits allege, among other things, that the
defendants' negligence contributed to the collapse of a hotel and the
flooding of a restaurant in the tidal wave. In the case of Triton Oil,
the alleged negligence was Triton Oil's drilling of nearby oil wells and
alleged resulting ground subsidence, which purportedly lowered the height of
the King Harbor breakwater. The Travelers lawsuit asserts damages in excess of
$14.6 million, although in a separate lawsuit against the Army Corps of
Engineers, the court found damages to be approximately $6.7 million. Of that
$6.7 million, Travelers recovered $4 million from the City of Redondo Beach.
The National Union lawsuit asserts damages in excess of $4.75 million,
although in a separate lawsuit against the Army Corps of Engineers, the court
found damages to be approximately $3.7 million. Of that $3.7 million,
Travelers recovered $1 million from the City of Redondo Beach. The City of
Redondo Beach lawsuit asserts damages in excess of $13.2 million, including
indemnity for amounts it paid to settle the foregoing lawsuits and other
claims arising out of the flooding. The three lawsuits have been consolidated
for trial, which has been set for October 1997. The Company believes that it
and its subsidiaries have meritorious defenses and intend to defend the suits
vigorously.
The Company is also subject to other various litigation matters, none of which
is expected to have a material adverse effect on the Company's operations or
consolidated financial condition.
22. TRITON ENERGY CORPORATION FINANCIAL INFORMATION
Following the Reorganization, TEC ceased filing periodic reports with the
Securities and Exchange Commission ("SEC"). TEC's 9 3/4% Notes and 1997 Notes
remain outstanding and are fully guaranteed by Triton. The following table
sets forth certain summarized financial information of TEC and its
subsidiaries:
<TABLE>
<CAPTION>
<S> <C>
DECEMBER 31,
1996
-------------
Current assets $ 69,783
Noncurrent assets 946,592
-------------
$ 1,016,375
-------------
Current liabilities $ 247,811
Noncurrent liabilities 379,294
Stockholders' equity 389,270
-------------
$ 1,016,375
-------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
YEAR ENDED
DECEMBER 31,
1996
--------------
Sales and other operating revenues $ 132,629
Costs and expenses 69,154
--------------
Operating income 63,475
Other income, net 10,889
--------------
Earnings before income taxes
and extraordinary item 74,364
Income tax expense 1,518
--------------
Earnings before extraordinary item 72,846
Extraordinary item - extinguishment of debt (1,196)
--------------
Net earnings $ 71,650
--------------
</TABLE>
Summarized financial information of TEC and its subsidiaries as of and for the
year ended December 31, 1995, for the seven months ended December 31, 1994,
and for the year ended May 31, 1994, is not presented herewith because such
summarized financial information would be identical to the Consolidated
Balance Sheet at December 31, 1995 and the Consolidated Statements of
Operations for the year ended December 31, 1995, for the seven months ended
December 31, 1994 and for the year ended May 31, 1994.
23. GEOGRAPHIC DATA
Information about the Company's operations by geographic area follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
MALAYSIA- UNITED
COLOMBIA THAILAND FRANCE INDONESIA STATES OTHER CORPORATE
---------- ----------- --------- ----------- -------- --------- -----------
YEAR ENDED DECEMBER 31, 1996:
Sales and other operating revenues $ 127,071 $ --- $ --- $ 1,856 $ 5,050 $ --- $ ---
Operating profit (loss) 70,874 (509) --- (340) 3,400 (47,158) (23,489)
Trade and other receivables 56,647 494 --- 53 --- 3,212 120
Identifiable assets 629,978 113,364 --- 2,592 --- 55,257 113,333
YEAR ENDED DECEMBER 31, 1995:
Sales and other operating revenues $ 89,851 $ --- $ 9,206 $ 4,531 $ 3,884 $ --- $ ---
Operating profit (loss) 49,086 (239) 1,123 (858) (230) (2,669) (22,897)
Trade and other receivables 19,823 366 --- 785 717 730 766
Identifiable assets 487,472 50,867 --- 1,744 23,261 63,159 197,664
SEVEN MONTHS ENDED DECEMBER 31, 1994:
Sales and other operating revenues $ 6,249 $ --- $ 9,179 $ 3,174 $ 2,134 $ --- $ ---
Operating profit (loss) (192) --- 722 (75) (919) (2,258) (13,224)
Trade and other receivables 11,759 --- 3,866 1,257 1,332 667 1,360
Identifiable assets 335,474 21,372 27,038 2,553 32,232 33,477 167,055
YEAR ENDED MAY 31, 1994:
Sales and other operating revenues $ 5,911 $ --- $ 17,494 $ 7,186 $ 5,629 $ 6,988 $ ---
Operating loss (503) --- (49,734) (4,582) (1,269) (3,332) (21,263)
Trade and other receivables 5,508 --- 3,431 1,303 1,336 1,110 1,891
Identifiable assets 237,397 15,764 28,954 3,978 37,091 36,205 256,712
<S> <C>
TOTAL
---------
YEAR ENDED DECEMBER 31, 1996:
Sales and other operating revenues $133,977
Operating profit (loss) 2,778
Trade and other receivables 60,526
Identifiable assets 914,524
YEAR ENDED DECEMBER 31, 1995:
Sales and other operating revenues $107,472
Operating profit (loss) 23,316
Trade and other receivables 23,187
Identifiable assets 824,167
SEVEN MONTHS ENDED DECEMBER 31, 1994:
Sales and other operating revenues $ 20,736
Operating profit (loss) (15,946)
Trade and other receivables 20,241
Identifiable assets 619,201
YEAR ENDED MAY 31, 1994:
Sales and other operating revenues $ 43,208
Operating loss (80,683)
Trade and other receivables 14,579
Identifiable assets 616,101
</TABLE>
Corporate assets were principally cash and cash equivalents, marketable
securities, the U.S. deferred tax asset and other fixed assets. Other
identifiable assets primarily represented capitalized costs related to the
Company's exploration activities in other areas of the world, no one country
of which is material.
24. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
QUARTER
----------------------------------------------------------------
FIRST SECOND THIRD FOURTH
--------------- -------------- -------------- ---------------
YEAR ENDED DECEMBER 31, 1996:
Sales and other operating revenues $ 35,781 $ 31,170 $ 30,780 $ 36,246
Gross profit (loss) 19,839 15,885 15,936 (22,937)
Net earnings (loss) before extraordinary item 11,351 12,696 19,549 (19,791)
Net earnings (loss) 11,351 12,262 18,787 (19,791)
Earnings (loss) per ordinary share:
Before extraordinary item 0.29 0.34 0.52 (0.53)
Net earnings (loss) 0.29 0.33 0.50 (0.53)
YEAR ENDED DECEMBER 31, 1995:
Sales and other operating revenues $ 19,751 $ 28,504 $ 32,586 $ 26,631
Gross profit 7,013 13,670 15,351 12,954
Net earnings (loss) (1,555) 2,388 1,279 608
Net earnings (loss) per ordinary share (0.06) 0.07 0.03 0.02
</TABLE>
Gross profit (loss) consists of sales and other operating revenues less
operating expenses, depreciation, depletion and amortization, and writedowns
pertaining to operating assets.
In the fourth quarter of 1996, the Company recorded a writedown of $43 million
related to oil and gas properties and other assets in Argentina.
In the fourth quarter of 1995, the Company recorded a loss provision of $1.1
million related to property available for sale, and Crusader recorded a
writedown of $3 million (the Company's share - $1.5 million) related to a coal
property of its majority-owned affiliate. Also, the Company recorded a charge
to deferred tax expense of $2.8 million due to a change in income tax rates in
Colombia and a benefit of $8.5 million based on a reduction in the valuation
allowance on its deferred U.S. tax asset.
25. OIL AND GAS DATA (UNAUDITED)
The following tables provide additional information about the Company's oil
and gas exploration and production activities. Equity affiliate amounts
reflect only the Company's proportionate interest in Crusader, which was sold
in 1996.
<PAGE>
RESULTS OF OPERATIONS
The results of operations for oil- and gas-producing activities, considering
direct costs only, follow:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
UNITED TOTAL
COLOMBIA FRANCE INDONESIA STATES OTHER WORLDWIDE
---------- --------- ----------- -------------- --------- -----------
YEAR ENDED DECEMBER 31, 1996:
Revenues $ 127,071 $ --- $ 1,856 $ 5,050 $ --- $ 133,977
Costs:
Production costs 34,822 --- 1,510 322 --- 36,654
General operating expenses 1,909 --- 553 774 --- 3,236
Depletion 18,515 --- 49 554 --- 19,118
Writedown of assets --- --- --- --- 42,960 42,960
Income taxes 25,766 --- --- --- --- 25,766
---------- --------- ----------- -------------- --------- -----------
Results of operations $ 46,059 $ --- $ (256) $ 3,400 $(42,960) $ 6,243
---------- --------- ----------- -------------- --------- -----------
YEAR ENDED DECEMBER 31, 1995:
Revenues $ 89,851 $ 9,206 $ 4,531 $ 3,884 $ --- $ 107,472
Costs:
Production costs 24,942 5,460 4,422 452 --- 35,276
General operating expenses 740 1,061 726 1,030 --- 3,557
Depletion 14,776 1,562 241 1,950 --- 18,529
Writedown of assets --- --- --- --- --- ---
Income taxes 17,395 374 --- --- --- 17,769
---------- --------- ----------- -------------- --------- -----------
Results of operations $ 31,998 $ 749 $ (858) $ 452 $ --- $ 32,341
---------- --------- ----------- -------------- --------- -----------
SEVEN MONTHS ENDED DECEMBER 31, 1994:
Revenues $ 6,249 $ 9,179 $ 3,174 $ 1,919 $ --- $ 20,521
Costs:
Production costs 4,290 5,784 2,054 144 --- 12,272
General operating expenses 997 541 897 502 --- 2,937
Depletion 1,184 2,132 298 1,189 --- 4,803
Writedown of assets --- --- --- 984 --- 984
Income taxes 82 318 --- --- --- 400
---------- --------- ----------- -------------- --------- -----------
Results of operations $ (304) $ 404 $ (75) $ (900) $ --- $ (875)
---------- --------- ----------- -------------- --------- -----------
YEAR ENDED MAY 31, 1994:
Revenues $ 5,911 $ 17,252 $ 7,186 $ 4,700 $ 6,190 $ 41,239
Costs:
Production costs 4,230 10,347 6,413 2,436 3,200 26,626
General operating expenses 1,267 4,237 3,070 1,044 614 10,232
Depletion 917 9,443 1,363 2,290 2,482 16,495
Writedown of assets --- 43,201 922 --- 251 44,374
Income taxes 8 --- --- --- 195 203
---------- --------- ----------- -------------- --------- -----------
Results of operations $ (511) $(49,976) $ (4,582) $ (1,070) $ (552) $ (56,691)
---------- --------- ----------- -------------- --------- -----------
</TABLE>
Depletion includes depreciation on support equipment and facilities calculated
on the unit of production method.
The Company's equity share of Crusader's results of operations for oil- and
gas-producing activities follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
UNITED
AUSTRALIA CANADA STATES OTHER TOTAL
---------- ------- -------- -------- -------
December 31, 1996 $ 1,243 $ --- $ --- $ --- $1,243
---------- ------- -------- -------- -------
December 31, 1995 $ 2,998 $ 269 $ --- $(1,401) $1,866
---------- ------- -------- -------- -------
December 31, 1994 $ 1,339 $ 243 $ 36 $(1,662) $ (44)
---------- ------- -------- -------- -------
May 31, 1994 $ 2,904 $ 712 $(1,270) $ --- $2,346
---------- ------- -------- -------- -------
</TABLE>
COSTS INCURRED AND CAPITALIZED COSTS
The costs incurred in oil and gas acquisition, exploration and
development activities and related capitalized costs follow:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
MALAYSIA- UNITED TOTAL
COLOMBIA THAILAND FRANCE INDONESIA STATES OTHER WORLDWIDE
--------- ---------- ------- ---------- ------------- ------- ----------
DECEMBER 31, 1996:
Costs incurred:
Property acquisition $ --- $ --- $ --- $ --- $ --- $ 600 $ 600
Exploration 18,875 60,955 --- --- --- 33,103 112,933
Development 39,902 470 --- --- --- --- 40,372
Depletion per equivalent
barrel of production 2.83 --- --- 0.52 5.59 --- 2.84
Cost of properties at period-end:
Unevaluated $ 2,487 $ 97,151 $ --- $ --- $ --- $50,010 $ 149,648
--------- ---------- ------- ---------- ------------- ------- ----------
Evaluated $ 338,955 $ 10,861 $ --- $ --- $ --- $48,630 $ 398,446
--------- ---------- ------- ---------- ------------- ------- ----------
Support equipment and
facilities $ 194,116 $ --- $ --- $ --- $ --- $ --- $ 194,116
--------- ---------- ------- ---------- ------------- ------- ----------
Accumulated depletion and
depreciation at period-end $ 35,723 $ --- $ --- $ --- $ --- $48,630 $ 84,353
--------- ---------- ------- ---------- ------------- ------- ----------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
MALAYSIA- UNITED TOTAL
COLOMBIA THAILAND FRANCE INDONESIA STATES OTHER WORLDWIDE
--------- ---------- -------- ---------- ------------- ------- ----------
DECEMBER 31, 1995:
Costs incurred:
Property acquisition $ 1,101 $ --- $ --- $ --- $ --- $ 250 $ 1,351
Exploration 45,961 25,948 --- --- --- 28,480 100,389
Development 48,419 --- --- 299 --- --- 48,718
Depletion per equivalent
barrel of production 2.67 --- 3.14 0.95 6.05 --- 2.81
Cost of properties at period-end:
Unevaluated $ 59,087 $ 46,282 $ --- $ --- $ 9,202 $58,490 $ 173,061
--------- ---------- -------- ---------- ------------- ------- ----------
Evaluated $ 260,058 $ --- $ --- $ 47,301 $ 190,379 $ 8,667 $ 506,405
--------- ---------- -------- ---------- ------------- ------- ----------
Support equipment and
facilities $ 87,289 $ --- $ --- $ --- $ --- $ --- $ 87,289
--------- ---------- -------- ---------- ------------- ------- ----------
Accumulated depletion and
depreciation at period-end $ 17,355 $ --- $ --- $ 47,153 $ 180,574 $ 8,667 $ 253,749
--------- ---------- -------- ---------- ------------- ------- ----------
DECEMBER 31, 1994:
Costs incurred:
Property acquisition $ 9,824 $ --- $ --- $ --- $ --- $ 1,058 $ 10,882
Exploration 21,691 5,151 79 --- --- 7,088 34,009
Development 31,892 --- 5 1 1 --- 31,899
Depletion per equivalent
barrel of production 2.57 --- 4.15 1.60 7.04 --- 3.63
Cost of properties at period-end:
Unevaluated $ 38,000 $ 20,334 $ 281 $ --- $ 9,202 $31,513 $ 99,330
--------- ---------- -------- ---------- ------------- ------- ----------
Evaluated $ 175,281 $ --- $265,284 $ 44,594 $ 190,396 $ 8,667 $ 684,222
--------- ---------- -------- ---------- ------------- ------- ----------
Support equipment and
facilities $ 78,601 $ --- $ --- $ --- $ --- $ --- $ 78,601
--------- ---------- -------- ---------- ------------- ------- ----------
Accumulated depletion
at period-end $ 2,645 $ --- $244,264 $ 44,097 $ 178,623 $ 8,667 $ 478,296
--------- ---------- -------- ---------- ------------- ------- ----------
MAY 31, 1994:
Costs incurred:
Property acquisition $ --- $ 750 $ --- $ --- $ --- $ 94 $ 844
Exploration 24,865 4,775 205 --- --- 12,626 42,471
Development 29,833 --- 3,575 1,050 300 2,022 36,780
Depletion per equivalent
barrel of production 1.96 --- 8.97 3.09 6.58 3.60 5.47
Cost of properties at period-end:
Unevaluated $ 47,833 $ 15,183 $ 212 $ --- $ 10,094 $23,847 $ 97,169
--------- ---------- -------- ---------- ------------- ------- ----------
Evaluated $ 118,215 $ --- $266,231 $ 47,677 $ 190,033 $ 7,715 $ 629,871
--------- ---------- -------- ---------- ------------- ------- ----------
Support equipment and
facilities $ 45,688 $ --- $ --- $ --- $ --- $ --- $ 45,688
--------- ---------- -------- ---------- ------------- ------- ----------
Accumulated depletion
at period-end $ 1,461 $ --- $243,084 $ 46,560 $ 176,450 $ 7,715 $ 475,270
--------- ---------- -------- ---------- ------------- ------- ----------
</TABLE>
A summary of costs excluded from depletion at December 31, 1996, by year
incurred follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
DECEMBER 31, MAY 31,
------------------------------
TOTAL 1996 1995 1994 1994
-------- ------------- ------- ------ --------
Property acquisition $ 1,536 $ 600 $ 250 $ --- $ 686
Exploration 130,625 80,018 38,173 7,662 4,772
Capitalized interest 17,487 10,992 3,981 1,222 1,292
-------- ------------- ------- ------ --------
Total worldwide $149,648 $ 91,610 $42,404 $8,884 $ 6,750
-------- ------------- ------- ------ --------
</TABLE>
The Company excludes from its depletion computation property acquisition and
exploration cost of unevaluated properties and major development projects in
progress. The excluded costs include $97.2 million for Block A-18 in the
Malaysia-Thailand Joint Development Area which will become depletable once
production begins, currently estimated for early 2000. At this time, the
Company is unable to predict either the timing of the inclusion of the
remaining costs and the related oil and gas reserves in its depletion
computation or their potential future impact on depletion rates. Drilling or
other exploration activities are being conducted in each of these cost
centers.
The Company's equity share of costs incurred by Crusader follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
UNITED
AUSTRALIA CANADA STATES OTHER TOTAL
---------- ------- ------- ------ -------
Cost of property acquisition,
exploration and development:
December 31, 1996 $ 2,105 $ --- $ --- $ --- $ 2,105
---------- ------- ------- ------ -------
December 31, 1995 $ 1,187 $ 507 $ --- $ 541 $ 2,235
---------- ------- ------- ------ -------
December 31, 1994 $ 3,557 $ 313 $ 26 $1,028 $ 4,924
---------- ------- ------- ------ -------
May 31, 1994 $ 2,955 $ 1,099 $ 1,687 $ --- $ 5,741
---------- ------- ------- ------ -------
Net capitalized costs:
December 31, 1995 $ 25,818 $ --- $ --- $ 299 $26,117
---------- ------- ------- ------ -------
December 31, 1994 $ 28,987 $ 3,889 $ --- $1,340 $34,216
---------- ------- ------- ------ -------
May 31, 1994 $ 27,001 $ 4,395 $ 3,750 $ --- $35,146
---------- ------- ------- ------ -------
</TABLE>
OIL AND GAS RESERVE DATA
The following tables present the Company's estimates of its proved oil and gas
reserves. These estimates were prepared by the Company's independent
petroleum engineers, DeGolyer and MacNaughton, with respect to all proved
reserves in the Cusiana and Cupiagua fields in Colombia and the Company's own
petroleum reservoir engineers with respect to all proved reserves in
Malaysia-Thailand and the Liebre Field in Colombia. The Company emphasizes
that reserve estimates are approximates and are expected to change as
additional information becomes available. Reservoir engineering is a
subjective process of estimating underground accumulations of oil and gas that
cannot be measured in an exact way, and the accuracy of any reserve estimate
is a function of the quality of available data and of engineering and
geological interpretation and judgment. Accordingly, there can be no
assurance that the reserves set forth herein will ultimately be produced nor
can there be assurance that the proved undeveloped reserves will be developed
within the periods anticipated. Oil reserves are stated in thousands of
barrels and gas reserves are stated in millions of cubic feet. As of
December 31, 1996, the Company did not have a contract for the sale of gas to
be produced from its interest in the Malaysia-Thailand Joint Development Area.
In estimating reserves attributable to such interest, the Company assumed
that production from the interest would be sold at prices for natural gas
derived from what the Company believed to be the most comparable market price
at December 31, 1996. There can be no assurance that the price to be provided
in any gas contract will be equal to the price used in the Company's
calculations.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COLOMBIA MALAYSIA-THAILAND FRANCE INDONESIA UNITED STATES
------------------ ----------------- ------- ---------- ------------------
OIL GAS OIL GAS OIL OIL OIL GAS
--------- ------- ------- ------- ------- ---------- --------- --------
Proved developed and
undeveloped reserves:
AS OF MAY 31, 1993 86,216 16,250 --- --- 8,189 951 1,952 21,549
Revisions 3,682 --- --- --- (2,177) 165 23 (1,644)
Sales --- --- --- --- (502) --- (1,171) (11,426)
Extensions and discoveries 3,173 --- --- --- --- --- --- ---
Production (467) --- --- --- (1,053) (441) (156) (1,150)
--------- ------- ------- ------- ------- ---------- ---------- --------
AS OF MAY 31, 1994 92,604 16,250 --- --- 4,457 675 648 7,329
Revisions 10,113 (1,529) --- --- 2,301 (87) 14 486
Purchases of minerals in place 2,111 --- --- --- --- --- --- ---
Production (435) --- --- --- (514) (186) (66) (618)
--------- ------- ------- ------- ------- ---------- ---------- --------
AS OF DECEMBER 31, 1994 104,393 14,721 --- --- 6,244 402 596 7,197
Revisions --- --- --- --- --- 23 119 967
Sales (10,434) --- --- --- (5,746) --- --- ---
Extensions and discoveries 32,556 1,127 --- --- --- --- --- ---
Production (5,089) (158) --- --- (498) (255) (121) (1,207)
--------- ------- ------- ------- ------- ---------- ---------- --------
AS OF DECEMBER 31, 1995 121,426 15,690 --- --- --- 170 594 6,957
Revisions 270 (403) --- --- --- --- --- ---
Sales (548) (338) --- --- --- (75) (574) (6,482)
Extensions and discoveries 19,900 --- 24,700 871,100 --- --- --- ---
Production (5,738) (298) --- --- --- (95) (20) (475)
--------- ------- ------- ------- ------- ---------- ---------- --------
AS OF DECEMBER 31, 1996 135,310 14,651 24,700 871,100 --- --- --- ---
--------- ------- ------- ------- ------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
CANADA OTHER TOTAL WORLDWIDE
----------------- ------ ------------------
OIL GAS OIL OIL GAS
------- -------- ------ -------- --------
Proved developed and
undeveloped reserves:
AS OF MAY 31, 1993 2,686 78,449 --- 99,994 116,248
Revisions --- --- 18 1,711 (1,644)
Sales (2,584) (74,928) --- (4,257) (86,354)
Extensions and discoveries --- --- --- 3,173 ---
Production (102) (3,521) (18) (2,237) (4,671)
------- -------- ------ --------- --------
AS OF MAY 31, 1994 --- --- --- 98,384 23,579
Revisions --- --- --- 12,341 (1,043)
Purchases of minerals in place --- --- --- 2,111 ---
Production --- --- --- (1,201) (618)
------- -------- ------ --------- --------
AS OF DECEMBER 31, 1994 --- --- --- 111,635 21,918
Revisions --- --- --- 142 967
Sales --- --- --- (16,180) ---
Extensions and discoveries --- --- --- 32,556 1,127
Production --- --- --- (5,963) (1,365)
------- -------- ------ --------- --------
AS OF DECEMBER 31, 1995 --- --- --- 122,190 22,647
Revisions --- --- --- 270 (403)
Sales --- --- --- (1,197) (6,820)
Extensions and discoveries --- --- --- 44,600 871,100
Production --- --- --- (5,853) (773)
------- -------- ------ --------- --------
AS OF DECEMBER 31, 1996 --- --- --- 160,010 885,751
------- -------- ------ --------- --------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COLOMBIA MALAYSIA-THAILAND FRANCE INDONESIA UNITED STATES TOTAL WORLDWIDE
---------------- ----------------- ------ --------- --------------- ---------------
OIL GAS OIL GAS OIL OIL OIL GAS OIL
-------- ------ ---- --- ------ --------- -------- ----- ---------------
Proved developed reserves at:
May 31, 1994 1,237 --- --- --- 4,457 675 648 7,329 7,017
-------- ------ ---- ----- ------ --------- -------- ----- ---------------
December 31, 1994 47,789 14,721 --- --- 6,244 402 596 7,197 55,031
-------- ------ ---- ----- ------ --------- -------- ----- ---------------
December 31, 1995 65,856 10,515 --- --- --- 170 594 6,957 66,620
-------- ------ ---- ----- ------ --------- -------- ----- ---------------
December 31, 1996 67,193 11,146 --- --- --- --- --- --- 67,193
-------- ------ ---- ----- ------ --------- -------- ----- ---------------
<S> <C>
GAS
------
Proved developed reserves at:
May 31, 1994 7,329
------
December 31, 1994 21,918
------
December 31, 1995 17,472
------
December 31, 1996 11,146
------
</TABLE>
The Company's proportional equity interest in Crusader's estimated proved
developed and undeveloped oil and gas reserves was as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AUSTRALIA CANADA UNITED STATES TOTAL
--------- ------ ------------- -----
OIL GAS OIL GAS OIL GAS OIL GAS
--------- ------ ------ ----- ------------- --- ----- ------
May 31, 1994 2,574 40,174 963 2,790 48 122 3,585 43,086
--------- ------ ------ ----- ------------- --- ----- ------
December 31, 1994 3,163 59,115 823 1,836 --- --- 3,986 60,951
--------- ------ ------ ----- ------------- --- ----- ------
December 31, 1995 3,319 60,915 --- --- --- --- 3,319 60,915
--------- ------ ------ ----- ------------- --- ----- ------
</TABLE>
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH INFLOWS AND CHANGES
THEREIN
The following table presents for the net quantities of proved oil and gas
reserves a standardized measure of discounted future net cash inflows
discounted at an annual rate of 10%. The future net cash inflows were
calculated in accordance with Securities and Exchange Commission guidelines.
Future cash inflows were computed by applying yearend prices of oil and gas
relating to the Company's proved reserves to the estimated yearend quantities
of those reserves. As of December 31, 1996, the Company did not have a
contract for the sale of gas to be produced from its interest in the
Malaysia-Thailand Joint Development Area. In estimating discounted future net
cash inflows attributable to such interest, the Company assumed that
production from the interest would be sold at prices for natural gas derived
from what the Company believed to be the most comparable market price at
December 31, 1996. Future price changes were considered only to the extent
provided by contractual agreements in existence at yearend. Future production
and development costs were computed by estimating those expenditures expected
to occur in developing and producing the proved oil and gas reserves at the
end of the year, based on yearend costs. The Company emphasizes that the
future net cash inflows should not be construed as representative of the fair
market value of the Company's proved reserves. The meaningfulness of the
estimates is highly dependent upon the accuracy of the assumptions upon which
they were used. Actual future cash inflows may vary considerably.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
MALAYSIA- UNITED TOTAL
COLOMBIA THAILAND FRANCE INDONESIA STATES WORLDWIDE
-------- ---------- ------- ---------- ------- ----------
DECEMBER 31, 1996:
Future cash inflows $3,519,893 $2,530,702 $ --- $ --- $ --- $6,050,595
Future production and
development costs 1,283,851 1,188,981 --- --- --- 2,472,832
---------- ---------- ------- ---------- ------- ----------
Future net cash inflows before
income taxes $2,236,042 $1,341,721 $ --- $ --- $ --- $3,577,763
---------- ---------- ------- ---------- ------- ----------
Future net cash inflows before
income taxes discounted at 10%
per annum $1,283,158 $ 320,900 $ --- $ --- $ --- $1,604,058
Future income taxes discounted at
10% per annum 290,763 21,100 --- --- --- 311,863
---------- ---------- ------- ---------- ------- ----------
Standardized measure of discounted
future net cash inflows $ 992,395 $ 299,800 $ --- $ --- $ --- $1,292,195
---------- ---------- ------- ---------- ------- ----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
MALAYSIA- UNITED TOTAL
COLOMBIA THAILAND FRANCE INDONESIA STATES WORLDWIDE
----------- ---------- -------- ---------- ------- ----------
DECEMBER 31, 1995:
Future cash inflows $ 2,321,424 $ --- $ --- $ 2,909 $19,076 $2,343,409
Future production and
development costs 730,139 --- --- 2,250 2,037 734,426
----------- ---------- -------- ---------- ------- ----------
Future net cash inflows before
income taxes $ 1,591,285 $ --- $ --- $ 659 $17,039 $1,608,983
----------- ---------- -------- ---------- ------- ----------
Future net cash inflows before
income taxes discounted at 10%
per annum $ 803,665 $ --- $ --- $ 626 $11,150 $ 815,441
Future income taxes discounted at
10% per annum 173,745 --- --- --- --- 173,745
----------- ---------- -------- ---------- ------- ----------
Standardized measure of discounted
future net cash inflows $ 629,920 $ --- $ --- $ 626 $11,150 $ 641,696
----------- ---------- -------- ---------- ------- ----------
DECEMBER 31, 1994:
Future cash inflows $ 1,764,939 $ --- $105,523 $ 6,677 $20,072 $1,897,211
Future production and
development costs 440,227 --- 59,558 5,645 1,845 507,275
----------- ---------- -------- ---------- ------- ----------
Future net cash inflows before
income taxes $ 1,324,712 $ --- $ 45,965 $ 1,032 $18,227 $1,389,936
----------- ---------- -------- ---------- ------- ----------
Future net cash inflows before
income taxes discounted at 10%
per annum $ 594,061 $ --- $ 25,759 $ 974 $11,824 $ 632,618
Future income taxes discounted at
10% per annum 132,948 --- --- --- --- 132,948
----------- ---------- -------- ---------- ------- ----------
Standardized measure of discounted
future net cash inflows $ 461,113 $ --- $ 25,759 $ 974 $11,824 $ 499,670
----------- ---------- -------- ---------- ------- ----------
MAY 31, 1994:
Future cash inflows $ 1,591,448 $ --- $ 76,755 $ 10,278 $23,562 $1,702,043
Future production and
development costs 474,382 --- 44,603 7,575 1,945 528,505
----------- ---------- -------- ---------- ------- ----------
Future net cash inflows before
income taxes $ 1,117,066 $ --- $ 32,152 $ 2,703 $21,617 $1,173,538
----------- ---------- -------- ---------- ------- ----------
Future net cash inflows before
income taxes discounted at 10%
per annum $ 506,022 $ --- $ 23,147 $ 2,570 $14,008 $ 545,747
Future income taxes discounted at
10% per annum 150,537 --- --- --- --- 150,537
----------- ---------- -------- ---------- ------- ----------
Standardized measure of discounted
future net cash inflows $ 355,485 $ --- $ 23,147 $ 2,570 $14,008 $ 395,210
----------- ---------- -------- ---------- ------- ----------
</TABLE>
<PAGE>
The Company's proportional equity interest in Crusader's standardized measure
of discounted future net cash inflows was as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
UNITED
AUSTRALIA CANADA STATES TOTAL
---------- ------- ------- -------
December 31, 1995 $ 30,382 $ --- $ --- $30,382
---------- ------- ------- -------
December 31, 1994 $ 32,492 $ 3,424 $ --- $35,916
---------- ------- ------- -------
May 31, 1994 $ 35,306 $ 3,997 $ 526 $39,829
---------- ------- ------- -------
</TABLE>
Changes in the standardized measure of discounted future net cash inflows
follow:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
DECEMBER 31, MAY 31,
------------------------------------
1996 1995 1994 1994
-------------- ---------- --------- ---------
Total worldwide, excluding equity share:
Beginning of period $ 641,696 $ 499,670 $395,210 $451,482
Sales, net of production costs (97,323) (67,471) (8,249) (14,613)
Sales of reserves (10,473) (144,361) --- (83,462)
Revisions of quantity estimates 2,617 2,348 43,816 879
Net change in prices and production costs 228,349 42,044 (14,746) (54,143)
Extensions, discoveries and improved recovery 1,125,733 339,413 --- 16,521
Change in future development costs (652,902) (102,323) 3,695 (57,459)
Purchases of reserves --- --- 9,573 ---
Development and facilities costs incurred 92,856 28,068 45,152 57,485
Accretion of discount 80,672 62,188 31,835 60,831
Changes in production rates and other 19,088 22,917 (24,205) 11,392
Net change in income taxes (138,118) (40,797) 17,589 6,297
-------------- ---------- --------- ---------
End of period $ 1,292,195 $ 641,696 $499,670 $395,210
-------------- ---------- --------- ---------
</TABLE>
SCHEDULE II
TRITON ENERGY LIMITED AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ADDITIONS
--------------------------------------
BALANCE AT CHARGED TO BALANCE
BEGINNING CHARGED TO OTHER AT CLOSE
CLASSIFICATIONS OF YEAR EARNINGS ACCOUNTS DEDUCTIONS OF YEAR
- ---------------------------- ----------- ------------ ----------- ------------ ---------
Year ended May 31, 1994:
Allowance for doubtful
receivables, excluding
discontinued operations $ 1,162 $ (149) $ 4 $ (144) $ 873
----------- ------------ ----------- ------------ ---------
Allowance for deferred
tax asset $ 62,789 $ 1,027 $ --- $ --- $ 63,816
----------- ------------ ----------- ------------ ---------
Period ended Dec. 31, 1994:
Allowance for doubtful
receivables $ 873 $ 19 $ 20 $ (15) $ 897
----------- ------------ ----------- ------------ ---------
Allowance for deferred
tax asset $ 63,816 $ 23,702 $ --- $ --- $ 87,518
----------- ------------ ----------- ------------ ---------
Year ended Dec. 31, 1995:
Allowance for doubtful
receivables $ 897 $ --- $ 41 $ (128) $ 810
----------- ------------ ----------- ------------ ---------
Allowance for deferred
tax asset $ 87,518 $ (33,472) $ --- $ --- $ 54,046
----------- ------------ ----------- ------------ ---------
Year ended Dec. 31, 1996:
Allowance for doubtful
receivables $ 810 $ 35 $ --- $ (769) $ 76
----------- ------------ ----------- ------------ ---------
Allowance for deferred
tax asset $ 54,046 $ (23,389) $ --- $ --- $ 30,657
----------- ------------ ----------- ------------ ---------
</TABLE>
___________________
Note -- Deductions for the allowance for doubtful receivables in the year
ended December 31, 1996, related primarily to disposal of other assets.
EXHIBIT 10.16
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), made and entered into as of the
1st day of January, 1997, by and among TRITON EXPLORATION SERVICES, INC. (the
"Employer"), having a business address at 6688 N. Central Expressway, Suite
1400, Dallas, Texas 75206, ________________ ("Employee"), having a mailing
address at ___________________, and Triton Energy Limited, a Cayman Islands
company (the "Company"), to the limited extent provided herein.
W I T N E S S E T H:
WHEREAS, the Employer is a direct or indirect wholly owned subsidiary of
the Company;
WHEREAS, the Employer and the Company consider the establishment and
maintenance of a sound and vital management to be essential to protecting and
enhancing their best interests and the best interests of their respective
shareholders;
WHEREAS, the Employer and the Company recognize that, because the Company
is a publicly held company and as is the case with many such companies, the
possibility of a change in control may exist and that such possibility, and
the uncertainty and questions which it may raise among management, may result
in the departure or distraction of management personnel to the detriment of
the Employer and the Company and their respective shareholders;
WHEREAS, the Boards of Directors of the Employer and the Company have
determined that appropriate steps should be taken to reinforce and encourage
the continued attention and dedication of members of the Employer's
management, including Employee, to their assigned duties without distraction
in the face of the potentially disturbing circumstances arising from the
possibility of a change in control of the Company;
WHEREAS, in order to induce Employee to remain in the employ of the
Employer, the Employer is willing to agree to provide certain severance
benefits to Employee in the event Employee's employment is terminated
subsequent to a "change in control of the Company" (as defined in Section 2
hereof) under the circumstances described below and the Company is willing to
guarantee the performance of the Employer's obligations hereunder;
NOW, THEREFORE, in consideration of the mutual premises and conditions
contained herein, the parties hereto agree as follows:
1. TERM
1.1 Contract Term. This Agreement shall commence on the date
hereof, and shall continue until January 1, 1998; provided, however, that
commencing January 1, 1998 and each January 1 thereafter the term of this
Agreement shall automatically be extended for an additional year unless (i)
there has been no change in control of the Company and (ii) no fewer than
thirty (30) days prior to such January 1st date, the Employer shall have given
notice that it does not wish to extend this Agreement.
1.2 Consideration by Employee. In consideration of the
Employer's entering into this Agreement, Employee hereby agrees that, for the
period commencing on the date hereof and extending through the termination
date of this Agreement, Employee will not voluntarily terminate employment
with the Employer, except in the event of (i) a change in control of the
Company as provided herein, (ii) a substantial change in Employee's position,
duties, compensation or benefits which would be deemed "Good Reason" for
Employee to terminate his employment in accordance with Section 3.3 if there
were a change in control of the Company, or (iii) the Employer's consenting to
such termination.
2. CHANGE IN CONTROL. No benefits shall be payable under this
Agreement unless there shall have been a change in control of the Company, as
set forth below, and (except as set forth in Section 4 hereof) Employee's
employment by the Employer (or any other direct or indirect subsidiary of the
Company) shall thereafter have been terminated within two (2) years of the
date of such change in control in accordance with Section 3 below. For
purposes of this Agreement, a "change in control of the Company" shall mean
the occurrence of any of the following events: (i) there shall be consummated
(x) any consolidation, amalgamation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which
shares of the Company's Ordinary Shares would be converted into cash,
securities or other property, other than a consolidation, amalgamation or
merger of the Company in which the holders of the Company's Ordinary Shares
immediately prior to the consolidation, amalgamation or merger have the same
proportionate ownership of ordinary shares or common stock of the surviving
corporation immediately after the consolidation, amalgamation or merger, or
(y) any sale, lease, exchange or other transfer (excluding transfer by way of
pledge or hypothecation), in one transaction or a series of related
transactions, of all, or substantially all, of the assets of the Company, (ii)
the shareholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company, (iii) any "person" (as such term is
defined in Section 3(a)(9) or Section 13(d)(3) under the Securities Exchange
Act of 1934, as amended (the "1934 Act)) or any "group" (as such term is used
in Rule 13d-5 promulgated under the 1934 Act), other than the Company or any
successor of the Company or any subsidiary of the Company or any employee
benefit plan of the Company or any subsidiary (including such plan's trustee),
becomes, without the prior approval of the Board of Directors of the Company
(the "Board"), a beneficial owner for purposes of Rule 13d-3 promulgated under
the 1934 Act, directly or indirectly, of securities of the Company
representing 25.0% or more of the Company's then outstanding securities having
the right to vote in the election of Directors of the Company, or (iv) during
any period of two consecutive years, individuals who, at the beginning of such
period constituted the entire Board, cease for any reason (other than death)
to constitute a majority of the Directors of the Company, unless the election,
or the nomination for election, by the Company's shareholders, of each new
Director of the Company was approved by a vote of at least two-thirds of the
Directors of the Company then still in office who were Directors of the
Company at the beginning of the period.
3. TERMINATION OF EMPLOYMENT FOLLOWING CHANGE IN CONTROL. If a
change in control of the Company shall have occurred, Employee shall be
entitled to the benefits provided in Section 4 hereof upon the subsequent
termination of his employment (except as set forth in Section 4.3-3), provided
that such termination (a) occurs within two (2) years following a change in
control of the Company and (b) is not (i) because of his death, "Disability"
or "Retirement" (as defined in Section 3.1 below), (ii) by the Employer for
"Cause" (as defined in Section 3.2 below), or (iii) by Employee other than for
"Good Reason" (as defined in Section 3.3 hereof).
3.1 Disability; Retirement
3.1-1 If, as a result of Employee's incapacity due to physical
or mental illness, Employee shall have been absent from his duties with the
Employer on a full-time basis for 120 consecutive business days, and within
thirty (30) days after written notice of termination is given Employee shall
not have returned to the full-time performance of his duties, the Employer may
terminate this Agreement for "Disability."
3.1-2 Termination by the Employer or Employee of his
employment based on "Retirement" shall mean termination in accordance with the
Employer's retirement policy, including early retirement, generally applicable
to its salaried employees or in accordance with any retirement arrangement
established with Employee's consent with respect to him.
3.2 Cause. The Employer may terminate Employee's employment
for "Cause." For the purposes of this Agreement, the Employer shall have
"Cause" to terminate Employee's employment hereunder upon (A) the willful and
continued failure by Employee to perform his duties with the Employer (other
than any such failure resulting from incapacity due to physical or mental
illness), after a demand for substantial performance is delivered to Employee
by the Board which specifically identifies the manner in which the Board
believes that he has not substantially performed his duties, or (B) the
willful engaging by Employee in gross misconduct materially and demonstrably
injurious to the Company. For purposes of this paragraph, an act, or failure
to act, on Employee's part shall not be considered "willful" if done, or
omitted to be done, by him (A) in good faith and (B) with reasonable belief
that his action or omission was not opposed to the best interests of the
Company. Notwithstanding the foregoing, Employee shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
him a copy of a resolution duly adopted by the affirmative vote of not less
than two-thirds (2/3d's) of the entire authorized membership of the Board at a
meeting of the Board called and held for the purpose (after reasonable notice
and an opportunity for Employee, together with counsel, to be heard before the
Board), finding that in the good faith opinion of the Board he was guilty of
conduct set forth above in clauses (A) or (B) of the second sentence of this
paragraph and specifying the particulars thereof in detail.
3.3 Good Reason. Employee may terminate his employment for
Good Reason. For purposes of this Agreement, "Good Reason" shall mean:
3.3-1 Without his express written consent, the assignment to
Employee of any duties inconsistent with his positions, duties,
responsibilities and status with the Employer and the Company immediately
prior to a change in control of the Company, or a change in his reporting
responsibilities, titles or offices with the Employer or the Company as in
effect immediately prior to a change in control of the Company, or any removal
of Employee from or any failure to re-elect Employee to any of such positions,
except in connection with the termination of his employment for Cause,
Disability or Retirement or as a result of his death or by Employee other than
for Good Reason;
3.3-2 A reduction by the Employer in Employee's base salary
as in effect on the date hereof or as the same may be increased from time to
time;
3.3-3 The Employer's requiring Employee to be based anywhere
other than the Employer's offices at which he was based immediately prior to a
change in control of the Company except for required travel on the Employer's
business to an extent substantially consistent with his present business
travel obligations, or, in the event Employee consents to any relocation, the
failure by the Employer to pay (or reimburse Employee) for all reasonable
moving expenses incurred by him relating to a change of his principal
residence in connection with such relocation and to indemnify Employee against
any loss (defined as the difference between the actual sale price of such
residence and the higher of (a) his aggregate investment in such residence or
(b) the fair market value of such residence as determined by a real estate
appraiser designated by Employee and reasonably satisfactory to the Employer)
realized on the sale of Employee's principal residence in connection with any
such change of residence;
3.3-4 The failure by the Employer or the Company to continue
in effect any benefit or compensation plan (including but not limited to any
stock option plans, convertible debenture plan, pension plan, life insurance
plan, health and accident plan or disability plan) in which Employee is
participating at the time of a change in control of the Company (or plans
providing substantially similar benefits), the taking of any action by the
Employer or the Company which would adversely affect Employee's participation
in or materially reduce his benefits under any of such plans or deprive him of
any material fringe benefit enjoyed by him at the time of the change in
control of the Company, or the failure by the Employer to provide Employee
with the number of paid vacation days to which he is then entitled on the
basis of years of service with the Employer in accordance with the Employer's
normal vacation policy in effect on the date hereof;
3.3-5 Any failure of the Employer or the Company to obtain the
assumption of and the agreement to perform this Agreement by any successor as
contemplated in Section 5 hereof; or
3.3-6 Any purported termination of Employee's employment
which is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 3.4 below (and, if applicable, Section 3.2 above); and
for purposes of this Agreement, no such purported termination shall be
effective.
3.4 Notice of Termination. Any termination by the Employer
pursuant to Sections 3.1 and 3.2 above or by Employee pursuant to Section 3.3
above shall be communicated by written Notice of Termination to the other
party hereto. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Employee's
employment under the provision so indicated. In the event that Employee
seeks to terminate his employment with the Employer pursuant to Section 3.3
above, he must communicate his written Notice of Termination to the Employer
within sixty (60) days of being notified of such action or actions by the
Employer or the Company which constitute Good Reason for termination.
3.5 Date of Termination. "Date of Termination" shall mean (i)
if this Agreement is terminated for Disability, thirty (30) days after Notice
of Termination is given (provided that Employee shall not have returned to the
performance of his duties on a full-time basis during such thirty (30) day
period); (ii) if Employee's employment is terminated for Cause, the date on
which a Notice of Termination is given or the date on which there shall have
been delivered to Employee the resolution specified in Section 3.2, whichever
is later; (iii) if Employee's employment is terminated pursuant to Section 3.3
above, the date that is specified in the Notice of Termination; and (iv) if
Employee's employment is terminated for any other reason, the date on which a
Notice of Termination is given; provided that, if within thirty (30) days
after any Notice of Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding and final arbitration award or by a final judgment, order or decree of
a court of competent jurisdiction (the time for appeal therefrom having
expired and no appeal having been perfected).
4. COMPENSATION UPON TERMINATION OR DURING DISABILITY. If a change
in control of the Company shall have occurred and (except as provided in
Section 4.3-3 hereof) the other conditions in the first paragraph of Section 3
are met, Employee shall be entitled to the following:
4.1 Disability. During any period that Employee fails to perform
his duties hereunder as a result of incapacity due to physical or mental
illness, he shall continue to receive his full base salary at the rate then in
effect and any installments of deferred portions of awards under any
applicable incentive, bonus or other plans paid during such period until this
Agreement is terminated pursuant to Section 3 hereof. Thereafter, Employee's
benefits in respect of his disability shall be determined in accordance with
the Employer's Long-Term Disability Income Insurance Plan, or a substitute
plan, and any other plans providing for the disability of a participant then
in effect.
4.2 Termination for Cause. If Employee's employment shall be
terminated for Cause, the Employer shall pay Employee his full base salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given and the Employer shall have no further obligations to
Employee to make any payments under this Agreement.
4.3 Termination Without Cause; Termination for Good Reason. If
the Employer shall terminate Employee's employment other than pursuant to
Sections 3.1 or 3.2 hereof or if Employee shall terminate his employment for
Good Reason, then the Employer shall pay to Employee as severance pay in a
lump sum in cash not later than the tenth (10th) day following the Date of
Termination, the following amounts:
4.3-1 Employee's full base salary through the Date of
Termination at the rate in effect at the time of Notice of Termination is
given;
4.3-2 In lieu of any further salary or bonus payments to
Employee for periods subsequent to the Date of Termination, an amount equal to
the product of (a) the sum of (i) the highest of Employee's annual base salary
in effect at any time from the three years prior to, through and including,
the Date of Termination plus (ii) the highest of the aggregate bonuses paid to
Employee during any fiscal year all or a part of which was included in the
foregoing three year period plus (iii) the highest of the aggregate
contributions made by the Employer on Employee's behalf in respect of
Employee's participation in any 401(k) plan or plans of the Employer during
any fiscal year all or a part of which was included in the foregoing three
year period multiplied by (b) the number three (3);
4.3-3 In lieu of ordinary shares of the Company ("Company
Shares") issuable upon exercise of options ("Options"), if any, granted to
Employee under the Company's stock option plans (which Options shall be
canceled upon the making of the payment referred to below), Employee shall
receive an amount in cash equal to the aggregate spread between the exercise
prices of all Options held by Employee whether or not then fully exercisable,
and the highest price per Company Share actually paid (including the fair
market value of any securities into which or for which a Company Share was
converted or exchangeable) in connection with any change in control of the
Company (such price being hereinafter referred to as "Termination Price") and
the Employer shall, if requested by Employee, purchase all Debentures (herein
so called) theretofore purchased by Employee under the Company's convertible
debenture plans, regardless of whether such Debentures are then convertible,
in cash in an amount equal to the aggregate spread between the conversion
price of the Debentures held by Employee and the Termination Price times the
number of Company Shares into which the Debentures are convertible (assuming
such Debentures were fully vested); provided that, notwithstanding the
foregoing, in the event of a change in control of the Company, Employee shall
have the right to require the Employer to make the payment in respect of such
Options in the amount, and purchase such Debentures for the purchase price,
described in this Section 4.3-3 notwithstanding Employee's continuing
employment with the Employer, which right shall be exercisable commencing
immediately prior to the change in control of the Company and shall terminate
190 days following the change in control of the Company, and any such payment
and purchase price shall be payable no later than the tenth (10th) day
following (i) the change in control of the Company or (ii) the date on which
Employee delivers notice of his exercise of such right, whichever comes later,
together with, if and to the extent triggered by the exercise of such right,
an amount set forth in Section 4.3-6; and
4.3-4 All relocation and indemnity payments as set forth in
Section 3.3-4 hereof, and all legal fees and expenses incurred by Employee as
a result of such termination (including all such fees and expenses, if any,
incurred in contesting or disputing any such termination or in seeking to
obtain or enforce any right or benefit provided by this Agreement).
4.3-5 An amount equal to the estimated cost to Employee and
Employee's beneficiaries of obtaining medical, dental, life and disability
insurance coverage comparable to that provided by the Employer to Employee and
Employee's beneficiaries immediately prior to the Date of Termination for a
period of twelve (12) consecutive months after the Date of Termination;
provided, that this subsection 4.3-5 is in addition to and not in lieu of any
continuation (COBRA) rights or conversion rights under any plan provided by
the Employer to Employee and Employee's beneficiaries; and
4.3-6 If as a result of any payment by the Employer or the
Company, Employee incurs an excise tax (the "Excise Tax") imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code") (or any
successor provision), on any "excess parachute payments" within the meaning of
Section 280G(b)(1) of the Code (or any successor provision), the Employer will
pay to Employee an additional amount (the "Gross-Up Payment") such that the
net amount retained by Employee, after reduction for the Excise Tax on the
excess parachute payments and the federal, state and local income tax and
Excise Tax on the Gross-Up Payment, will be equal to the sum of the amount of
the excess parachute payments and the Employee's "base amount" allocable
thereto within the meaning of Section 280G(b)(3) of the Code (or any successor
provision).
For purposes of determining the amount of the Gross-Up
Payment, Employee will be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation for the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the highest
marginal rates of taxation in the state and locality of Employee's residence
on the Date of Termination, net of the maximum reduction in federal income
taxes that could be obtained from deduction of such state and local taxes.
Employee and the Employer agree to reasonably cooperate in
the determination of the amount of the Gross-Up Payment. If Employee and the
Employer are unable to agree on the amount of the Gross-Up Payment, the amount
shall be determined based upon the opinion of tax counsel selected by
Employee, whose determination shall be final and binding on the parties.
Further, Employee and the Employer agree to make such adjustments to the
amount of the Gross-Up Payment as may be necessary to reflect amounts finally
determined by applicable tax authorities, which in the case of Employee will
refer to the refund of prior overpayments and in the case of the Employer will
refer to the makeup of prior underpayments.
4.4 Benefit Plans. Unless Employee is terminated for Cause,
the Employer shall maintain in full force and effect for the continued benefit
of Employee, for a two-year period after the Date of Termination, all employee
benefit plans and programs or arrangements in which Employee was entitled to
participate immediately prior to the Date of Termination provided that his
continued participation is possible under the general terms and provisions of
such plans and programs. In the event that Employee's participation in any
such plan or program is barred, the Employer shall arrange to provide Employee
with benefits substantially similar to those which he is entitled to receive
under such plans and programs. At the end of the period of coverage, Employee
shall have the option to have assigned to him at no cost and with no
appointment of prepaid premiums, any assignable insurance policy owned by the
Employer or the Company and relating specifically to him.
4.5 Additional Benefits. If the Employer shall terminate
Employee's employment other than pursuant to Section 3.1 or 3.2 hereof or if
Employee shall terminate his employment for Good Reason, then in addition to
the benefits to which Employee is entitled under the retirement plans or
programs in which Employee participates or any successor plans or programs in
effect on the date of termination of his employment hereunder, the Employer
shall pay Employee, not later than the tenth (10th) day following the Date of
Termination, in cash an amount equal to the difference between (a) the
present value of the most valuable retirement pension to which Employee would
have been entitled under the terms of the retirement plans or programs in
which Employee participates (or any successor plans or programs in effect on
the Date of Termination hereunder) without regard to "vesting" thereunder, if
he would have accumulated three (3) additional years of continuous credited
service after the Date of Termination under such retirement plans or programs
and (b) the present value of the most valuable retirement pension which he is
actually entitled to receive pursuant to the provisions of said retirement
plans and programs. For purposes of this Section 4.5, "present value" shall
be determined using the same methods and assumptions (including compensation
increase assumptions during such additional three year period) utilized under
the Employer's retirement plans and programs immediately prior to the change
in control of the Company.
4.6 Automobiles. Upon Employee's termination for any reason,
the Employer shall enable Employee to purchase the automobile, if any, which
the Employer or the Company was providing for Employee's use at the time
Notice of Termination was given at the wholesale value of such automobile at
such time.
4.7 Mitigation of Amounts Payable Hereunder. Employee shall
not be required to mitigate the amount of any payment provided for in this
Section 4 by seeking other employment or otherwise, nor shall the amount of
any payment provided for in this Section 4 be reduced by any compensation
earned by Employee as the result of employment by another employer after the
Date of Termination, or otherwise.
5. SUCCESSORS; BINDING AGREEMENT.
5.1 Successors of the Company. The Employer and the Company will
require any successor (whether direct or indirect, by purchase, amalgamation,
merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Employer and/or the Company, by agreement in
form and substance satisfactory to Employee, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Employer and the Company would be required to perform it if no such succession
had taken place. Failure of the Employer and the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle Employee to compensation from the Employer
in the same amount and on the same terms as Employee would be entitled
hereunder if Employee terminated his employment for Good Reason, except that
for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. As used
in this Agreement, the terms, "Employer" and "Company" shall include any
successor to the business and/or assets of the Employer and/or the Company as
aforesaid which executes and delivers the agreement provided for in this
Section 5 or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
5.2 Employee's Heirs, etc. This Agreement shall inure to the
benefit of and be enforceable by Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If Employee should die while any amounts would still be payable to
him hereunder as if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to his devisee, legatee, or other designee or, if there be no such
designee, to his estate.
6. NOTICE. For the purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, or by
overnight courier service, addressed to the respective addresses set forth on
the first page of this Agreement, provided that all notices to the Employer
shall be directed to the attention of the Chief Executive Officer of the
Employer with a copy to the Secretary of the Employer, and all notices to the
Company shall be directed to c/o Triton Exploration Services, Inc., 6688 N.
Central Expressway, Suite 1400, Dallas, Texas 75206 attention: President, or
to such other address as any party may hereafter specify in writing in
accordance herewith, except that notices of change of address shall be
effective only upon receipt.
7. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed
to in writing signed by Employee, the Employer and the Company (in whose case
such signatory shall be such officer as may be specifically designated by the
Board (which shall in any event include the Company's Chief Executive
Officer)). No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. This Agreement
constitutes the entire agreement of the parties regarding the subject matter
hereof, and supersedes all prior agreements and understandings, both written
and oral, among the parties, or any of them, with respect to the subject
matter hereof, including without limitation any prior agreement between
Employee and Triton Energy Corporation or the Company.
8. VALIDITY. The invalidity or unenforceability of any provisions
of this Agreement shall not effect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
10. GOVERNING LAW; JURISDICTION. This Agreement shall be governed
by and construed under the laws of the State of Texas. The Employer and the
Company hereby irrevocably submit to the jurisdiction of any Texas State or
Federal court sitting in the Northern District of Texas, and the jurisdiction
of any arbitration panel constituted pursuant to Section 11 hereof, over any
action, proceeding or arbitration arising out of or relating to this Agreement
and the Employer and the Company hereby irrevocably agree that all claims in
respect of such action or proceeding may be heard and determined in such Texas
State or Federal court or arbitration proceeding.
11. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Dallas, Texas (in accordance with the rules of the American Arbitration
Association then in effect). Notwithstanding the pendency of any such dispute
or controversy, the Employer will continue to pay Employee his full
compensation in effect when the notice giving rise to the dispute was given
(including, but not limited to, base salary and installments under incentive,
bonus or other plans) and continue Employee as a participant in all
compensation, benefit and insurance plans in which he was participating when
the notice giving rise to the dispute was given, until the dispute is finally
resolved in accordance with Section 3.5 hereof. Amounts paid under this
paragraph are in addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts due under this
Agreement. Judgment may be entered on the arbitrator's award in any court
having jurisdiction; provided, however, that Employee shall be entitled to
seek specific performance of his right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
12. CAPTIONS AND GENDER. The use of captions and Section headings
herein is for the purposes of convenience only and shall not effect the
interpretation or substance of any provisions contained herein. Similarly,
the use of the masculine gender with respect to pronouns in this Agreement is
for purposes of convenience and includes either sex who may be a signatory.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the date and year first above written.
TRITON EXPLORATION SERVICES, INC.
By: ___________________________________
___________________________________
The Company hereby joins in this Agreement for the purpose of
guaranteeing, and the Company does hereby guarantee, to Employee the
performance by the Employer (or its successors and assigns as provided herein)
of the Employer's obligations hereunder and covenanting, and the Company does
hereby covenant, with Employee to be bound by the agreements of the Company as
set forth herein. The agreements of the Company hereunder shall inure to the
benefit of and be enforceable by Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.
TRITON ENERGY LIMITED
By: ___________________________________
EXHIBIT 10.17
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), made and entered into as of the
1st day of January, 1997, by and among TRITON EXPLORATION SERVICES, INC. (the
"Employer"), having a business address at 6688 North Central Expressway, Suite
1400, Dallas, Texas 75206, ____________________ ("Employee"), having a mailing
address at ____________, and Triton Energy Limited, a Cayman Islands company
(the "Company"), to the limited extent provided herein.
W I T N E S S E T H:
WHEREAS, the Employer is a direct or indirect wholly owned subsidiary of
the Company;
WHEREAS, the Employer and the Company consider the establishment and
maintenance of a sound and vital management to be essential to protecting and
enhancing their best interests and the best interests of their respective
shareholders;
WHEREAS, the Employer and the Company recognize that, because the Company
is a publicly held company and as is the case with many such companies, the
possibility of a change in control may exist and that such possibility, and
the uncertainty and questions which it may raise among management, may result
in the departure or distraction of management personnel to the detriment of
the Employer and the Company and their respective shareholders;
WHEREAS, the Boards of Directors of the Employer and the Company have
determined that appropriate steps should be taken to reinforce and encourage
the continued attention and dedication of members of the Employer's
management, including Employee, to their assigned duties without distraction
in the face of the potentially disturbing circumstances arising from the
possibility of a change in control of the Company; and
WHEREAS, in order to induce Employee to remain in the employ of the
Employer, the Employer is willing to agree to provide certain severance
benefits to Employee in the event Employee's employment is terminated
subsequent to a "change in control of the Company" (as defined in Section 2
hereof) under the circumstances described below and the Company is willing to
guarantee the performance of the Employer's obligations hereunder;
NOW, THEREFORE, in consideration of the mutual premises and conditions
contained herein, the parties hereto agree as follows:
1. TERM
1.1 Contract Term. This Agreement shall commence on the date
hereof, and shall continue until January 1, 1998; provided, however, that
commencing January 1, 1998 and each January 1 thereafter the term of this
Agreement shall automatically be extended for an additional year unless (i)
there has been no change in control of the Company and (ii) no fewer than
thirty (30) days prior to such January 1st date, the Employer shall have given
notice that it does not wish to extend this Agreement.
1.2 Consideration by Employee. In consideration of the
Employer's entering into this Agreement, Employee hereby agrees that, for the
period commencing on the date hereof and extending through the termination
date of this Agreement, Employee will not voluntarily terminate employment
with the Employer, except in the event of (i) a change in control of the
Company as provided herein, (ii) a substantial change in Employee's position,
duties, compensation or benefits which would be deemed "Good Reason" for
Employee to terminate his employment in accordance with Section 3.3 if there
were a change in control of the Company, or (iii) the Employer's consenting to
such termination.
2. CHANGE IN CONTROL. No benefits shall be payable under this
Agreement unless there shall have been a change in control of the Company, as
set forth below, and Employee's employment by the Employer (or any other
direct or indirect subsidiary of the Company) shall thereafter have been
terminated within two (2) years of the date of such change in control in
accordance with Section 3 below. For purposes of this Agreement, a "change in
control of the Company" shall mean the occurrence of any of the following
events: (i) there shall be consummated (x) any consolidation, amalgamation or
merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which the Company's Ordinary Shares would be
converted into cash, securities or other property, other than a consolidation,
amalgamation or merger of the Company in which the holders of the Company's
Ordinary Shares immediately prior to the consolidation, amalgamation or merger
have the same proportionate ownership of common stock or ordinary shares of
the surviving corporation immediately after the consolidation, amalgamation or
merger, or (y) any sale, lease, exchange or other transfer (excluding transfer
by way of pledge or hypothecation), in one transaction or a series of related
transactions, of all, or substantially all, of the assets of the Company, (ii)
the shareholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company, (iii) any "person" (as such term is
defined in Section 3(a)(9) or Section 13(d)(3) under the Securities Exchange
Act of 1934, as amended (the "1934 Act)) or any "group" (as such term is used
in Rule 13d-5 promulgated under the 1934 Act), other than the Company or any
successor of the Company or any subsidiary of the Company or any employee
benefit plan of the Company or any subsidiary (including such plan's trustee),
becomes, without the prior approval of the Board of Directors of the Company
(the "Board"), a beneficial owner for purposes of Rule 13d-3 promulgated under
the 1934 Act, directly or indirectly, of securities of the Company
representing 25.0% or more of the Company's then outstanding securities having
the right to vote in the election of Directors of the Company, or (iv) during
any period of two consecutive years, individuals who, at the beginning of such
period constituted the entire Board, cease for any reason (other than death)
to constitute a majority of the Directors of the Company, unless the election,
or the nomination for election, by the Company's shareholders, of each new
Director of the Company was approved by a vote of at least two-thirds of the
Directors of the Company then still in office who were Directors of the
Company at the beginning of the period.
3. TERMINATION OF EMPLOYMENT FOLLOWING CHANGE IN CONTROL. If a
change in control of the Company shall have occurred, Employee shall be
entitled to the benefits provided in Section 4 hereof upon the subsequent
termination of his employment, provided that such termination (a) occurs
within two (2) years following a change in control of the Company and (b) is
not (i) because of his death, "Disability" or "Retirement" (as defined in
Section 3.1 below), (ii) by the Employer for "Cause" (as defined in Section
3.2 below), or (iii) by Employee other than for "Good Reason" (as defined in
Section 3.3 hereof).
3.1 Disability; Retirement
3.1-1 If, as a result of Employee's incapacity due to physical
or mental illness, Employee shall have been absent from his duties with the
Employer on a full-time basis for 120 consecutive business days, and within
thirty (30) days after written notice of termination is given Employee shall
not have returned to the full-time performance of his duties, the Employer may
terminate this Agreement for "Disability."
3.1-2 Termination by the Employer or Employee of his
employment based on "Retirement" shall mean termination in accordance with the
Employer's retirement policy, including early retirement, generally applicable
to its salaried employees or in accordance with any retirement arrangement
established with Employee's consent with respect to him.
3.2 Cause. The Employer may terminate Employee's employment
for "Cause." For the purposes of this Agreement, the Employer shall have
"Cause" to terminate Employee's employment hereunder upon (A) the willful and
continued failure by Employee to perform his duties with the Employer (other
than any such failure resulting from incapacity due to physical or mental
illness), after a demand for substantial performance is delivered to Employee
by the Board which specifically identifies the manner in which the Board
believes that he has not substantially performed his duties, or (B) the
willful engaging by Employee in gross misconduct materially and demonstrably
injurious to the Company. For purposes of this paragraph, an act, or failure
to act, on Employee's part shall not be considered "willful" if done, or
omitted to be done, by him (A) in good faith and (B) with reasonable belief
that his action or omission was not opposed to the best interests of the
Company. Notwithstanding the foregoing, Employee shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
him a copy of a resolution duly adopted by the affirmative vote of not less
than two-thirds (2/3d's) of the entire authorized membership of the Board at a
meeting of the Board called and held for the purpose (after reasonable notice
and an opportunity for Employee, together with counsel, to be heard before the
Board), finding that in the good faith opinion of the Board he was guilty of
conduct set forth above in clauses (A) or (B) of the second sentence of this
paragraph and specifying the particulars thereof in detail.
3.3 Good Reason. Employee may terminate his employment for
Good Reason. For purposes of this Agreement, "Good Reason" shall mean:
3.3-1 Without his express written consent, the assignment to
Employee of any duties inconsistent with his positions, duties,
responsibilities and status with the Employer and the Company immediately
prior to a change in control of the Company, or a change in his reporting
responsibilities, titles or offices with the Employer or the Company as in
effect immediately prior to a change in control of the Company, or any removal
of Employee from or any failure to re-elect Employee to any of such positions,
except in connection with the termination of his employment for Cause,
Disability or Retirement or as a result of his death or by Employee other than
for Good Reason;
3.3-2 A reduction by the Employer in Employee's base salary
as in effect on the date hereof or as the same may be increased from time to
time;
3.3-3 The Employer's requiring Employee to be based anywhere
other than the Employer's offices at which he was based immediately prior to a
change in control of the Company except for required travel on the Employer's
business to an extent substantially consistent with his present business
travel obligations, or, in the event Employee consents to any relocation, the
failure by the Employer to pay (or reimburse Employee) for all reasonable
moving expenses incurred by him relating to a change of his principal
residence in connection with such relocation and to indemnify Employee against
any loss (defined as the difference between the actual sale price of such
residence and the higher of (a) his aggregate investment in such residence or
(b) the fair market value of such residence as determined by a real estate
appraiser designated by Employee and reasonably satisfactory to the Employer)
realized on the sale of Employee's principal residence in connection with any
such change of residence;
3.3-4 The failure by the Employer or the Company to continue
in effect any benefit or compensation plan (including but not limited to any
stock option plans, convertible debenture plan, pension plan, life insurance
plan, health and accident plan or disability plan) in which Employee is
participating at the time of a change in control of the Company (or plans
providing substantially similar benefits), the taking of any action by the
Employer or the Company which would adversely affect Employee's participation
in or materially reduce his benefits under any of such plans or deprive him of
any material fringe benefit enjoyed by him at the time of the change in
control of the Company, or the failure by the Employer to provide Employee
with the number of paid vacation days to which he is then entitled on the
basis of years of service with the Employer in accordance with the Employer's
normal vacation policy in effect on the date hereof;
3.3-5 Any failure of the Employer or the Company to obtain the
assumption of and the agreement to perform this Agreement by any successor as
contemplated in Section 5 hereof; or
3.3-6 Any purported termination of Employee's employment
which is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 3.4 below (and, if applicable, Section 3.2 above); and
for purposes of this Agreement, no such purported termination shall be
effective.
3.4 Notice of Termination. Any termination by the Employer
pursuant to Sections 3.1 and 3.2 above or by Employee pursuant to Section 3.3
above shall be communicated by written Notice of Termination to the other
party hereto. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Employee's
employment under the provision so indicated. In the event that Employee
seeks to terminate his employment with the Employer pursuant to Section 3.3
above, he must communicate his written Notice of Termination to the Employer
within sixty (60) days of being notified of such action or actions by the
Employer or the Company which constitute Good Reason for termination.
3.5 Date of Termination. "Date of Termination" shall mean (i)
if this Agreement is terminated for Disability, thirty (30) days after Notice
of Termination is given (provided that Employee shall not have returned to the
performance of his duties on a full-time basis during such thirty (30) day
period); (ii) if Employee's employment is terminated for Cause, the date on
which a Notice of Termination is given or the date on which there shall have
been delivered to Employee the resolution specified in Section 3.2, whichever
is later; (iii) if Employee's employment is terminated pursuant to Section 3.3
above, the date that is specified in the Notice of Termination; and (iv) if
Employee's employment is terminated for any other reason, the date on which a
Notice of Termination is given; provided that, if within thirty (30) days
after any Notice of Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding and final arbitration award or by a final judgment, order or decree of
a court of competent jurisdiction (the time for appeal therefrom having
expired and no appeal having been perfected).
4. COMPENSATION UPON TERMINATION OR DURING DISABILITY. If a change
in control of the Company shall have occurred and the other conditions in the
first paragraph of Section 3 are met, Employee shall be entitled to the
following:
4.1 Disability. During any period that Employee fails to perform
his duties hereunder as a result of incapacity due to physical or mental
illness, he shall continue to receive his full base salary at the rate then in
effect and any installments of deferred portions of awards under any
applicable incentive, bonus or other plans paid during such period until this
Agreement is terminated pursuant to Section 3 hereof. Thereafter, Employee's
benefits in respect of his disability shall be determined in accordance with
the Employer's Long-Term Disability Income Insurance Plan, or a substitute
plan, and any other plans providing for the disability of a participant then
in effect.
4.2 Termination for Cause. If Employee's employment shall be
terminated for Cause, the Employer shall pay Employee his full base salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given and the Employer shall have no further obligations to
Employee to make any payments under this Agreement.
4.3 Termination Without Cause; Termination for Good Reason. If
the Employer shall terminate Employee's employment other than pursuant to
Sections 3.1 or 3.2 hereof or if Employee shall terminate his employment for
Good Reason, then the Employer shall pay to Employee as severance pay in a
lump sum in cash not later than the tenth (10th) day following the Date of
Termination, the following amounts:
4.3-1 Employee's full base salary through the Date of
Termination at the rate in effect at the time of Notice of Termination is
given;
4.3-2 In lieu of any further salary payments to Employee for
periods subsequent to the Date of Termination, an amount equal to the product
of (a) Employee's annual base salary at the rate in effect as of the Date of
Termination (without giving effect to any reduction thereof by Employer
without Employee's prior written consent) multiplied by (b) the number two
(2);
4.3-3 In lieu of ordinary shares of the Company ("Company
Shares") issuable upon exercise of options ("Options"), if any, granted to
Employee under the Company's stock option plans (which Options shall be
canceled upon the making of the payment referred to below), Employee shall
receive an amount in cash equal to the aggregate spread between the exercise
prices of all Options held by Employee whether or not then fully exercisable,
and the highest price per Company Share actually paid in connection with any
change in control of the Company (such price being hereinafter referred to as
"Termination Price") and the Employer shall, if requested by Employee,
purchase all Debentures (herein so called) theretofore purchased by Employee
under the Company's convertible debenture plans, regardless of whether such
Debentures are then convertible, in cash in an amount equal to the aggregate
spread between the conversion price of the Debentures held by Employee and the
Termination Price times the number of Company Shares into which the Debentures
are convertible (assuming such Debentures were fully vested); and
4.3-4 All relocation and indemnity payments as set forth in
Section 3.3-4 hereof, and all legal fees and expenses incurred by Employee as
a result of such termination (including all such fees and expenses, if any,
incurred in contesting or disputing any such termination or in seeking to
obtain or enforce any right or benefit provided by this Agreement).
4.3-5 If as a result of any payment by the Employer or the
Company, Employee incurs an excise tax (the "Excise Tax") imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code") (or any
successor provision), on any "excess parachute payments" within the meaning of
Section 280G(b)(1) of the Code (or any successor provision), the Employer will
pay to Employee an additional amount (the "Gross-Up Payment") such that the
net amount retained by Employee, after reduction for the Excise Tax on the
excess parachute payments and the federal, state and local income tax and
Excise Tax on the Gross-Up Payment, will be equal to the sum of the amount of
the excess parachute payments and the Employee's "base amount" allocable
thereto within the meaning of Section 280G(b)(3) of the Code (or any successor
provision).
For purposes of determining the amount of the Gross-Up
Payment, Employee will be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation for the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the highest
marginal rates of taxation in the state and locality of Employee's residence
on the Date of Termination, net of the maximum reduction in federal income
taxes that could be obtained from deduction of such state and local taxes.
Employee and the Employer agree to reasonably cooperate in
the determination of the amount of the Gross-Up Payment. If Employee and the
Employer are unable to agree on the amount of the Gross-Up Payment, the amount
shall be determined based upon the opinion of tax counsel selected by
Employee, whose determination shall be final and binding on the parties.
Further, Employee and the Employer agree to make such adjustments to the
amount of the Gross-Up Payment as may be necessary to reflect amounts finally
determined by applicable tax authorities, which in the case of Employee will
refer to the refund of prior overpayments and in the case of the Employer will
refer to the makeup of prior underpayments.
4.4 Benefit Plans. Unless Employee is terminated for Cause,
the Employer shall maintain in full force and effect for the continued benefit
of Employee, for a two-year period after the Date of Termination, all employee
benefit plans and programs or arrangements in which Employee was entitled to
participate immediately prior to the Date of Termination provided that his
continued participation is possible under the general terms and provisions of
such plans and programs. In the event that Employee's participation in any
such plan or program is barred, the Employer shall arrange to provide Employee
with benefits substantially similar to those which he is entitled to receive
under such plans and programs. At the end of the period of coverage, Employee
shall have the option to have assigned to him at no cost and with no
appointment of prepaid premiums, any assignable insurance policy owned by the
Employer or the Company and relating specifically to him.
4.5 Additional Benefits. If the Employer shall terminate
Employee's employment other than pursuant to Section 3.1 or 3.2 hereof or if
Employee shall terminate his employment for Good Reason, then in addition to
the benefits to which Employee is entitled under the retirement plans or
programs in which Employee participates or any successor plans or programs in
effect on the date of termination of his employment hereunder, the Employer
shall pay Employee, not later than the tenth (10th) day following the Date of
Termination, in cash an amount equal to the difference between (a) the
present value of the most valuable retirement pension to which Employee would
have been entitled under the terms of the retirement plans or programs in
which Employee participates (or any successor plans or programs in effect on
the Date of Termination hereunder) without regard to "vesting" thereunder, if
he would have accumulated three (3) additional years of continuous credited
service after the Date of Termination under such retirement plans or programs
and (b) the present value of the most valuable retirement pension which he is
actually entitled to receive pursuant to the provisions of said retirement
plans and programs. For purposes of this Section 4.5, "present value" shall
be determined using the same methods and assumptions (including compensation
increase assumptions during such additional three year period) utilized under
the Employer's retirement plans and programs immediately prior to the change
in control of the Company.
4.6 Automobiles. Upon Employee's termination for any reason,
the Employer shall enable Employee to purchase the automobile, if any, which
the Employer or the Company was providing for Employee's use at the time
Notice of Termination was given at the wholesale value of such automobile at
such time.
4.7 Mitigation of Amounts Payable Hereunder. Employee shall
not be required to mitigate the amount of any payment provided for in this
Section 4 by seeking other employment or otherwise, nor shall the amount of
any payment provided for in this Section 4 be reduced by any compensation
earned by Employee as the result of employment by another employer after the
Date of Termination, or otherwise.
5. SUCCESSORS; BINDING AGREEMENT.
5.1 Successors of the Company. The Employer and the Company
will require any successor (whether direct or indirect, by purchase,
amalgamation, merger, consolidation or otherwise) to all or substantially all
of the business and/or assets of the Employer and/or the Company, by agreement
in form and substance satisfactory to Employee, expressly to assume and agree
to perform this Agreement in the same manner and to the same extent that the
Employer and the Company would be required to perform it if no such succession
had taken place. Failure of the Employer and the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle Employee to compensation from the Employer
in the same amount and on the same terms as Employee would be entitled
hereunder if Employee terminated his employment for Good Reason, except that
for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. As used
in this Agreement, the terms, "Employer" and "the Company", shall include any
successor to the business and/or assets of the Employer and/or the Company as
aforesaid which executes and delivers the agreement provided for in this
Section 5 or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
5.2 Employee's Heirs, etc. This Agreement shall inure to the
benefit of and be enforceable by Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If Employee should die while any amounts would still be payable to
him hereunder as if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to his devisee, legatee, or other designee or, if there be no such
designee, to his estate.
6. NOTICE. For the purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, or by
overnight courier service, addressed to the respective addresses set forth on
the first page of this Agreement, provided that all notices to the Employer
shall be directed to the attention of the Chief Executive Officer of the
Employer with a copy to the Secretary of the Employer, and all notices to the
Company shall be directed to c/o Triton Exploration Services, Inc., 6688 N.
Central Expressway, Suite 1400, Dallas, Texas 75206 attention: President, or
to such other address as any party may hereafter specify in writing in
accordance herewith, except that notices of change of address shall be
effective only upon receipt.
7. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed
to in writing signed by Employee, the Employer and the Company (in whose case
such signatory shall be such officer as may be specifically designated by the
Board (which shall in any event include the Company's Chief Executive
Officer)). No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. This Agreement
constitutes the entire agreement of the parties regarding the subject matter
hereof, and supersedes all prior agreements and understandings, both written
and oral, among the parties, or any of them, with respect to the subject
matter hereof, including without limitation any prior agreement between
Employee and Triton Energy Corporation or the Company.
8. VALIDITY. The invalidity or unenforceability of any provisions
of this Agreement shall not effect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
10. GOVERNING LAW; JURISDICTION. This Agreement shall be
governed by and construed under the laws of the State of Texas. The Employer
and the Company hereby irrevocably submit to the jurisdiction of any Texas
State or Federal court sitting in the Northern District of Texas, and the
jurisdiction of any arbitration panel constituted pursuant to Section 11
hereof, over any action, proceeding or arbitration arising out of or relating
to this Agreement and the Employer and the Company hereby irrevocably agree
that all claims in respect of such action or proceeding may be heard and
determined in such Texas State or Federal court or arbitration proceeding.
11. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Dallas, Texas (in accordance with the rules of the American Arbitration
Association then in effect). Notwithstanding the pendency of any such dispute
or controversy, the Employer will continue to pay Employee his full
compensation in effect when the notice giving rise to the dispute was given
(including, but not limited to, base salary and installments under incentive,
bonus or other plans) and continue Employee as a participant in all
compensation, benefit and insurance plans in which he was participating when
the notice giving rise to the dispute was given, until the dispute is finally
resolved in accordance with Section 3.5 hereof. Amounts paid under this
paragraph are in addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts due under this
Agreement. Judgment may be entered on the arbitrator's award in any court
having jurisdiction; provided, however, that Employee shall be entitled to
seek specific performance of his right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
12. CAPTIONS AND GENDER. The use of captions and Section headings
herein is for the purposes of convenience only and shall not effect the
interpretation or substance of any provisions contained herein. Similarly,
the use of the masculine gender with respect to pronouns in this Agreement is
for purposes of convenience and includes either sex who may be a signatory.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the date and year first above written.
TRITON EXPLORATION SERVICES, INC.
By: ___________________________________
_________________________________________
The Company hereby joins in this Agreement for the purpose of
guaranteeing, and the Company does hereby guarantee, to Employee the
performance by the Employer (or its successors and assigns as provided herein)
of the Employer's obligations hereunder and covenanting, and the Company does
hereby covenant, with Employee to be bound by the agreements of the Company as
set forth herein. The agreements of the Company hereunder shall inure to the
benefit of and be enforceable by Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.
TRITON ENERGY LIMITED
By: ___________________________________
Page
EXHIBIT 10.46
RESTATED EMPLOYMENT AGREEMENT
This Restated Employment AGREEMENT (this "Agreement"), dated as of
November 6, 1996, is made and entered into by and among Triton Energy Limited,
a Cayman Islands company ("TEL"), Triton Exploration Services, Inc., a
Delaware corporation (the "Company"), and John P. Tatum ("Employee").
WITNESSETH:
WHEREAS, Employee is an officer of TEL and certain of its affiliated
companies, and TEL, the Company or certain of its affiliated companies have
employed Employee in various capacities; and
WHEREAS, the Company and Employee have reached agreement on the terms of
the continued employment of Employee; and
WHEREAS, the Company and Employee desire that this Agreement set forth
the provisions regarding Employee's employment;
NOW, THEREFORE, in consideration of the premises and mutual promises
contained herein, the Company and Employee agree as follows:
1. EMPLOYMENT. As of the date hereof, November 6, 1996 (sometimes
referred to as the "Effective Date"), Employee hereby resigns his offices and
directorships then held by him with TEL, the Company and any and all
subsidiaries or affiliates of TEL, but not his employment with the Company.
Employee's employment with the Company shall continue from the date hereof
through the close of business on April 12, 1999. Employee shall, at the
discretion of the Company, perform such lawful activities, at such times and
locations as may be reasonably requested by the Company during the term
hereof. In no event, however, shall Employee be obligated to render services
hereunder in amounts or at times or locations he deems inconvenient in his
sole discretion. Employee shall report to the Chief Executive Officer of the
Company or such other personnel of the Company as are designated by the Chief
Executive Officer of the Company from time to time. TEL, the Company and
Employee agree that, except as expressly agreed in writing, from the Effective
Date, this Agreement shall supersede any and all employment agreements, or
similar understandings or arrangements, written or oral, express or implied,
between or among TEL, the Company and any and all subsidiaries or affiliates
of TEL, on the one hand, and Employee on the other hand, and all such other
employment agreements, or similar understandings or arrangements, written or
oral, express or implied are, and all obligations of each party to the other
thereunder hereby are, terminated and of no further force or effect.
<PAGE>
2. COMPENSATION.
(a) The Company agrees that Employee shall continue to be an
employee of the Company from the date hereof through his 65th birthday, to be
compensated as follows:
(i) from and after the date hereof through December 31, 1996, employee shall
be compensated at the rate of compensation and in accordance with the payroll
practices of the Company in effect at the date hereof, subject to any
holdbacks or deductions required as a matter of law, and that Employee's
benefits as in effect on the date hereof shall be continued until such date.
(ii) for the period from January 1, 1997 through December 31, 1998, Employee's
salary shall be equal to $16,666.67 per month; and
(iii) for the period from January 1, 1999 through April 12, 1999, Employee's
salary shall be equal to $8,333.33 per month.
The Company agrees that Employee shall be treated as an employee for purposes
of the Company's employee health insurance plans.
(b) TEL and the Company agree that all options to purchase, and
debentures convertible into, ordinary shares of TEL held by Employee under
TEL's stock option and convertible debenture plans (which options and
debentures are as set forth on Exhibit A) shall become 100% vested at the
Effective Date and shall be exercisable in accordance with their terms until
April 12, 2000, except as provided in Section 5 below. TEL and the Company
agree to use their best efforts to cause the options issued to Employee under
TEL's Second Amended and Restated 1992 Stock Option Plan to be amended so as
to remove any restrictions on transferability.
(c) The Company acknowledges that Employee's participation under
the Company's Supplemental Executive Retirement Income Plan, as amended (the
"SERP"), will continue in accordance with its terms. The Company agrees that
the benefits to be payable to Employee under the SERP will be increased to an
amount that would have resulted under the Amended and Restated Retirement
Income Plan and the SERP, on an aggregate basis, if Employee had continued
until he reached the age of 65 to receive the same salary as in effect on the
date hereof, subject to Section 5 below.
(d) The Company agrees to pay the reasonable fees and
disbursements of legal counsel for Employee in connection with the negotiation
of this Agreement, up to a maximum of $10,000.00.
(e) The Company agrees that it shall not take any action that
would adversely affect Employee's right to indemnification for his actions as
an officer, director and employee of the Company and its subsidiaries as in
effect as of the date hereof, regardless of when any claim giving rise to such
indemnification shall be brought.
(f) Subject to the provisions of Section 5 below, in the event
there shall occur a Change in Control (as defined below) prior to April 12,
1999, the following shall apply:
(i) Employee shall be entitled to receive a lump sum payment equal to the
product of (A) the sum of (x) Employee's base salary in effect as of the date
hereof plus (y) $59,000.00 multiplied by (B) the number three (3).
(ii) If as a result of any payment by the Company or TEL upon or resulting
from a Change in Control , Employee incurs an excise tax (the "Excise Tax")
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code") (or any successor provision), on any "excess parachute payments"
within the meaning of Section 280G(b)(1) of the Code (or any successor
provision), the Company will pay to Employee an additional amount (the
"Gross-Up Payment") such that the net amount retained by Employee, after
reduction for the Excise Tax on the excess parachute payments and the federal,
state and local income tax and Excise Tax on the Gross-Up Payment, will be
equal to the sum of the amount of the excess parachute payments and the
Employee's "base amount" allocable thereto within the meaning of Section
280G(b)(3) of the Code (or any successor provision).
For purposes of determining the amount of the Gross-Up Payment,
Employee will be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation for the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the highest marginal
rates of taxation in the state and locality of Employee's residence on the
date hereof, net of the maximum reduction in federal income taxes that could
be obtained from deduction of such state and local taxes.
Employee and the Company agree to reasonably cooperate in the
determination of the amount of the Gross-Up Payment. If Employee and the
Company are unable to agree on the amount of the Gross-Up Payment, the amount
shall be determined based upon the opinion of tax counsel selected by
Employee, whose determination shall be final and binding on the parties.
Further, Employee and the Company agree to make such adjustments to the amount
of the Gross-Up Payment as may be necessary to reflect amounts finally
determined by applicable tax authorities, which in the case of Employee will
refer to the refund of prior overpayments and in the case of the Company will
refer to the makeup of prior underpayments.
(iii) For purposes of this Agreement, a "Change in Control" shall mean the
occurrence of any of the following events: (A) there shall be consummated (x)
any consolidation, amalgamation or merger of TEL in which TEL is not the
continuing or surviving corporation or pursuant to which ordinary shares of
TEL would be converted into cash, securities or other property, other than a
consolidation, amalgamation or merger of TEL in which the holders of TEL's
ordinary shares immediately prior to the consolidation, amalgamation or merger
have the same proportionate ownership of common stock of the surviving
corporation immediately after the consolidation, amalgamation or merger, or
(y) any sale, lease, exchange or other transfer (excluding transfer by way of
pledge or hypothecation), in one transaction or a series of related
transactions, of all, or substantially all, of the assets of TEL; (B) the
shareholders of TEL approve any plan or proposal for the liquidation or
dissolution of TEL; (C) any "person" (as such term is defined in Section
3(a)(9) or Section 13(d)(3) under the Securities Exchange Act of 1934, as
amended (the "1934 Act)) or any "group" (as such term is used in Rule 13d-5
promulgated under the 1934 Act), other than TEL or any successor of TEL or any
subsidiary of TEL or any employee benefit plan of TEL or any subsidiary
(including such plan's trustee), becomes, without the prior approval of the
Board of Directors of TEL (the "Board"), a beneficial owner for purposes of
Rule 13d-3 promulgated under the 1934 Act, directly or indirectly, of
securities of TEL representing 25.0% or more of TEL's then outstanding
securities having the right to vote in the election of directors of TEL ; or
(D) during any period of two consecutive years, individuals who, at the
beginning of such period constituted the entire Board, cease for any reason
(other than death) to constitute a majority of the directors of TEL, unless
the election, or the nomination for election, by TEL's shareholders, of each
new director of TEL was approved by a vote of at least two-thirds of the
directors of TEL then still in office who were directors of TEL at the
beginning of the period.
3. CONFIDENTIALITY. Employee represents that he has not removed, and
agrees that he will not (without the Company's prior written consent) remove,
from the Company's premises any documents or copies thereof that constitute or
contain any Confidential Information (as hereinafter defined). Without
limiting the generality of the foregoing, Employee agrees that he shall (a)
keep confidential all Confidential Information at any time known to him, (b)
not use any Confidential Information for his benefit or to the detriment of
TEL or the Company or any of its affiliates or disclose any Confidential
Information to any third persons (except pursuant to a validly issued subpoena
or court order, and then only if the Company shall have been promptly advised
thereof and consulted with regarding an appropriate response thereto), (c) not
make copies of documents embodying any Confidential Information, (d) exercise
reasonable care to prevent dissemination of Confidential Information to third
persons, and (e) return to the Company any documents which contain
Confidential Information and which are or come in his possession.
"Confidential Information" shall include any information concerning any
matters affecting or relating to the businesses, operations and financial
affairs of TEL or any of its subsidiaries or affiliates that are of a special
or unique nature or the disclosure of which could cause harm to TEL or its
subsidiaries or affiliates, and this Agreement (including its existence and
its contents) regardless of whether any such Confidential Information is
labeled or otherwise treated as confidential, material, or important. The term
"Confidential Information" shall not include any information that (i) at the
time of disclosure or thereafter is generally available to and known by the
public (other than as a result of a disclosure directly or indirectly by
Employee), (ii) was available to Employee on a nonconfidential basis from a
source other than TEL, the Company or its subsidiaries or affiliates, provided
that such source is not and was not bound by a confidentiality agreement with
TEL or its subsidiaries or affiliates or (iii) has been independently acquired
or developed by Employee while not in the employ of TEL or the Company and
without violating any of Employee's obligations under this Agreement.
<PAGE>
4. GENERAL RELEASES; CERTAIN COVENANTS.
(a) Employee hereby irrevocably and unconditionally releases,
acquits, and forever discharges TEL and its subsidiaries (including the
Company) and affiliates, and their respective directors, officers, employees,
shareholders, successors, assigns, agents, representatives, and attorneys, and
all persons acting by, through, under, or in concert with them, or any of them
(the "Company Releasees"), from any and all charges, complaints, claims,
liabilities, obligations, promises, controversies, damages, actions, suits,
rights, demands, costs, losses, debts and expenses (including attorneys' fees
and costs actually incurred), of any nature, known or unknown ("Claim" or
"Claims") and to the extent permitted by state and federal law, which Employee
has, owns, or holds, or claims to have, own or hold or which Employee at any
time hereafter may have, own or hold, or claim to have, own or hold, against
each or any of the Company Releasees based on any facts, circumstances,
actions or omissions existing or occurring on or before the Effective Date,
including but not limited to, any Claims involving securities or securities
transactions, any Claims involving contracts, agreements or obligations
related thereto (including, without limitation, any claims relating to any
employment agreement and any benefit plans of the Company), any Claims under
federal, state or local law, any Claims under federal, state or local law of
discrimination on the basis of age, sex, race, national origin, religion,
handicap or disability, such as Claims under the Age Discrimination in
Employment Act of 1967, the Employee Retirement Income Security Act, the
Americans With Disabilities Act, Title VII of the Civil Rights Act of 1964,
the Civil Rights Act of 1991, the Texas Workers' Compensation Act and the
Texas Commission on Human Rights Act, and any action related to Employee's
employment or affiliation with TEL, the Company and any of the Company
Releasees, and excepting only the obligations of TEL and the Company under
this Agreement and any claims based on a breach of this Agreement. Employee
represents and warrants to TEL and the Company that as of the date hereof he
is not aware of any facts or circumstances that have given rise to, or could
give rise to, any Claim against any of the Company Releasees. This release
shall be binding on Employee's heirs, dependents, successors and assigns.
(b) Each of TEL and the Company, on its own behalf and on behalf
of its subsidiaries and affiliates, hereby irrevocably and unconditionally
releases, acquits and forever discharges Employee, and his heirs, dependents,
successors and assigns, or any of them (the "Employee Releasees") from any
Claims which TEL and the Company have, own, or hold or claim to have, own or
hold or which TEL and the Company at any time hereafter may have, own or hold,
or claim to have, own or hold, or claim to have, own or hold, against each of
the Employee Releasees, excepting only any Claims based on a breach of the
terms of this Agreement, intentional injury to the property of TEL or the
Company or any of its parent companies, subsidiaries or affiliates, fraud,
theft, embezzlement or misappropriation of corporate assets.
(c) Employee acknowledges and agrees that each Company Releasee
other than the Company is expressly intended to be, and is hereby made, a
third party beneficiary of Employee's covenants and releases contained in this
Agreement. TEL and the Company acknowledge and agree that each Employee
Releasee other than Employee is expressly intended to be, and is hereby made,
a third party beneficiary of TEL's and the Company's covenants and releases
contained in this Agreement.
(d) Each of the above releasors agrees to indemnify the
releasees described herein for all loss, cost, damage and expense, including,
but not limited to, attorneys' fees, incurred by such releasees described
herein or any one of them, arising out of any breach of the provisions of the
releases as set forth in Sections 4(a), (b) and (c) above.
5. COVENANT NOT TO COMPETE.
(a) TEL, the Company and Employee acknowledge that Employee has
substantial financial resources, experience in the international oil and gas
exploration business and related industries and the ability to operate or
assist in the operation of a business or businesses that could compete with
TEL and its subsidiaries and affiliates throughout the world and that TEL
would suffer damages, including the loss of profits, if Employee, or any
person, corporation, partnership or other entity affiliated with Employee (an
"Affiliate") engaged, directly or indirectly, in a competing business with
TEL. Accordingly, during the period commencing on the Effective Date and
ending on the Termination Date (as defined below), Employee shall not, and
shall cause each Affiliate not to, directly or indirectly, for itself or
himself or on behalf of any other corporation, person, firm, partnership,
association, or any other entity (whether as an individual, agent, servant,
employee, employer, officer, director, shareholder, investor, principal,
consultant or in any other capacity) (i) engage or participate in the oil and
gas exploration and production business anywhere in Colombia, Malaysia or
Thailand or (ii) employ or otherwise use the services of, Richard L. Weaver,
Thomas N. Sherburne or Khun Pitak, or any entity controlled by any one or more
of them.
(b) The term "Termination Date" shall mean the earliest to occur
of (i) the date Employee elects by delivery of written notice to the Company,
if he does so elect, to terminate his covenant not to compete pursuant to this
Section 5, (ii) April 12, 1999 or (iii) Employee's death or disability.
(c) In the event Employee elects to terminate his covenant not
to compete pursuant to clause (i) of Section 5(b), (i) any obligations of TEL
or the Company to make any payments pursuant to Sections 2(a) (ii) and (iii)
hereunder shall terminate; (ii) on the 90th day following such termination,
any options or debentures that have not been exercised or converted shall be
canceled and cease to be exercisable or convertible, as applicable; (iii) the
agreement under Section 2(c) hereunder to increase the benefits to be payable
under the SERP shall be modified such that the benefits to be payable to
Employee under the SERP will be increased to an amount that would result if
Employee had continued to be employed by the Company until the Termination
Date at the same salary level as in effect on the date hereof; and (iv) the
Company's obligation to make the payments and provide the benefits set forth
in Section 2(f) shall terminate. In the event of Employee's death or
disability, (i) any obligations of TEL or the Company to make any payments
pursuant to Sections 2(a) (ii) and (iii) hereunder shall terminate; (ii) the
agreement under Section 2(c) hereunder to increase the benefits to be payable
under the SERP shall be modified such that the benefits to be payable to
Employee under the SERP will be increased to an amount that would result if
Employee had continued to be employed by the Company until the date of his
death or the date he is determined to be disabled at the same salary level as
in effect on the date hereof; and (iii) the Company's obligation to make the
payments and provide the benefits set forth in Section 2(f) shall terminate.
For purposes of this Agreement, "disability" shall be deemed to have occurred
whenever Employee is rendered unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can be
expected to last for a continuing period of not less than six months.
6. NO ADMISSION. This Agreement (or its offer and negotiation) is
not an admission by either the Company or Employee of any wrongdoing or
liability.
7. COOPERATION. Employee agrees that he will cooperate in good faith
with the Company in connection with any civil or criminal litigation or
governmental inquiry or investigation involving the Company or any of its
subsidiaries or affiliates, or its or their properties, assets or businesses,
or to which any of them may be a party or a subject. Employee shall not in
any way cooperate or lend assistance to any parties that are now, or may in
the future be, involved in legal proceedings adverse to the Company except as
may be required by applicable law.
8. NO DURESS. This Agreement has been entered into voluntarily and
not as a result of coercion, duress, or undue influence. Employee agrees that
he has read and fully understands the terms of this Agreement and has been
advised to consult with an attorney before executing this Agreement.
9. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its
severance herefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as part of this
Agreement a provision as similar in its terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and
enforceable. Specifically, it is the intent of each of the parties that the
covenant not to compete contained in Section 5 herein be enforced to the
fullest extent permitted by applicable law. Accordingly, should a court of
competent jurisdiction determine that the scope of the covenant is too broad
to be enforced as written, it is the intent of each of the parties that the
court should reform the covenant to such narrower scope as it determines
enforceable.
10. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas. This Agreement is
performable in Dallas County, Texas.
11. ENTIRE AGREEMENT. This Agreement, contains the entire
understanding and agreement among TEL, the Company and Employee with respect
to the subject matter herein, and supersedes all prior oral or written
agreements between the parties with respect to that subject matter.
12. AMENDMENT. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by Employee, TEL and
the Company.
13. NOTICE. Any notice or communication hereunder must be in writing
and given by depositing the same in the United States mail, addressed to the
party to be notified, postage prepaid and registered or certified with return
receipt requested, by transmitting the same by facsimile transmission followed
by United States mail as aforesaid, or by delivering the same by overnight
delivery service or in person. Notice shall be deemed received on the date on
which it is delivered or transmitted by facsimile, or on the third business
day following the date on which it is so mailed. For purposes of notice, the
addresses of the parties shall be:
If to the Company: c/o Triton Energy
6688 N. Central Expressway, Suite 1400
Dallas, Texas 75206
Fax No.: (214) 691-0198
Attention: Legal Department
If to Employee
14. PLEASE READ THIS AGREEMENT CAREFULLY. THIS AGREEMENT INCLUDES A
RELEASE OF ALL KNOWN OR UNKNOWN CLAIMS AGAINST THE COMPANY.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
__________________________________
John P. Tatum
TRITON ENERGY LIMITED
By: ____________________________
TRITON EXPLORATION SERVICES,
INC.
By: ____________________________
EXHIBIT 10.47
DESCRIPTION OF GUIDELINES FOR SENIOR EXECUTIVE
COMPENSATION BASED ON PERFORMANCE GOALS
The following is a description of certain policies and procedures adopted by
the Compensation Committee (the "Committee") of the Board of Directors of
Triton Energy Limited (the "Company") intended to establish guidelines for
determining annual bonuses for senior management of the Company as approved by
the shareholders of the Company at its 1996 Annual Meeting:
The Committee has established annual guidelines for senior executive
compensation giving greater weight to the Company's share price performance
compared to that of other companies in a peer group selected by the Committee
than to any other factor.
Under the policies and procedures adopted by the Committee, the Committee
(or a subcommittee consisting solely of two or more "outside directors" within
the meaning of Section 162(m) of the Internal Revenue Code) will, within 90
days after the commencement of each fiscal year, establish various performance
goals for the then current year utilizing the following criteria ("Operating
Criteria"):
- Actual to planned performance;
- Increases in proved and probable reserves and success in
achieving
significant new discoveries;
- Increases in operating cash flow;
- Improvements in capitalization and financing costs;
- Increases in production; and
- Successful implementation and operation of expense control
measures.
Within the same 90 day period the Committee (or an appropriate
subcommittee) will determine the relative weight to be given achievement of
various Operating Criteria and to the stock market performance of the
Company's Ordinary Shares compared to the average performance of the shares of
the companies in the selected peer group for the fiscal year in question. The
Operating Criteria and share price performance objectives will be considered
the "Performance Goals" for the year.
As soon as practicable after each year end the Committee (or an
appropriate subcommittee) will review the Company's and management's
performance in achieving the pre-determined Performance Goals for the then
ended fiscal year in determining senior management (i.e., the Chief Executive
Officer and the Senior and Executive Vice Presidents who directly report to
the Chief Executive Officer) annual bonuses and base salary adjustments. If
the maximum Performance Goals are achieved, which the Committee would consider
"outstanding", bonuses equal to 100% of the then ended fiscal year's base
salary will be awarded to the Chief Executive Officer and 75% of the then
ended fiscal year's base salary will be awarded to senior executives who
report to the Chief Executive Officer, provided that no bonus awarded to any
individual executive officer under these procedures will exceed $1 million.
The Committee would award smaller bonuses if the Performance Goals were
achieved to a lesser extent. The Committee retains the discretion to award
stock options to eligible recipients, including senior management.
EXHIBIT 10.48
DEMAND PROMISSORY NOTE - GRID
(Multiple Advances - U.S. Dollars)
US$ 20,000,000 Date: February 6, 1997
Place: New York, New York
For value received and in consideration of any advance or advances
(individually an "Advance" and collectively the "Advances") which Banque
Paribas or any of its branches or agencies (collectively the "Bank") may, in
its absolute and sole discretion elect to make to Triton Energy Limited, a
Cayman Islands Corporation ("TEL") having offices at Caledonian House, Mary
Street, P.O. Box 1043, George Town, Grand Cayman, Cayman Islands or Triton
Energy Corporation a Delaware Corporation ("TEC") having offices at 6688 North
Central Expressway , Dallas, Texas 75206 (hereafter collectively the
"Borrowers"), the Borrowers hereby jointly, and severally, unconditionally and
irrevocably promise to pay to the order of the Bank at the Bank's office in
New York, located at The Equitable Tower, 787 Seventh Avenue, New York, New
York 10019, or to such other place as the Bank may designate, the principal
amount of each such Advance on the earlier of DEMAND or the maturity date
(which shall be not more than 90 days after the date of the Advance) if any,
together with accrued interest thereon at the rate applicable to each such
Advance all as recorded and indicated on the Grid attached hereto and made a
part hereof. Interest as aforesaid shall be due and payable on the earlier of
DEMAND or at the maturity date, if any, of the Advance and shall be computed
from the date of the Advance until paid in full and shall be calculated on the
basis of a year of 360 days and actual days elapsed. Any overdue principal of
any Advance made hereunder, and to the extent permitted by applicable law, any
overdue interest, shall bear interest, payable upon demand, for each day from
the date payment thereof was due to the date of actual payment, at a rate per
annum equal to the sum of 2% plus the higher of (i) the rate set forth on the
Grid and (ii) the prime rate of The Chase Manhattan Bank, N.A. as publicly
announced by such bank from time to time to in New York, New York. Any
change in such prime rate shall be effective on the date of the public
announcement thereof. The Borrowers hereby authorize the Bank to enter on the
Grid all necessary information. All such entries shall be conclusive in the
absence of manifest error. The failure by the Bank to make any entry shall
not limit or otherwise affect the obligation of the Borrowers to repay all
Advances plus accrued interest thereon.
If the Bank makes a demand for repayment on or before 11:00 A.M. E.S.T.
on any business day, then the amounts demanded shall be due and payable on or
before 4:00 P.M. E.S.T. that day and if such demand is made after 11:00 A.M.
E.S.T. on any business day, then the amounts demanded shall be due on or
before 1 1: 00 A.M. E. S. T. the next business day.
Any Advance made hereunder shall conclusively be deemed to have been made
to or for the benefit of and at the request of the Borrowers notwithstanding
that such Advance was requested orally, in writing or by someone other than
the Borrowers.
The Borrowers hereby agree that if the Bank shall have determined that
the adoption of any applicable law, rule, regulation or treaty, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by the Bank with any request, policy, guideline or
directive (whether or not having the force of law) of any monetary, fiscal or
other authority shall impose, modify or deem applicable any reserve, special
deposit, compulsory loan, assessment or insurance fee or similar requirement
(including any such requirement imposed by the Federal Deposit Insurance
Corporation, the Office of the Comptroller of the Currency of the United
States of America (or any successor agency) or the Federal Reserve Board)
against assets of, deposits with or for the account of, or credit extended by,
the Bank or shall subject the Bank to any taxes with respect to this Note or
any Advance or change the basis of taxation of payments to the Bank or any
amount payable under this Note (other than taxes imposed on the overall net
income of the Bank), or shall impose on the Bank any other condition affecting
this Note or any Advance, and as a result of any of the foregoing there shall
be any increase in the cost to the Bank with respect to the making, finding or
maintaining of any Advance or in the amount of any payment in respect of any
Advance received or receivable by the Bank or the Bank shall suffer some other
loss or damage or shall forego any interest or other amount due hereunder, or
in respect of any Advance (an "Increased Cost Event"), the Bank shall give
prompt written notice of such Increased Cost Event and the Borrowers shall pay
to the Bank from time to time upon the Bank's demand, such additional amount
or amounts as the Bank reasonably determines to be necessary to compensate the
Bank for any increased cost, reduced amount, other loss or drainage or
foregone interest or other amount.
The Borrowers further agree that if the Bank shall have determined that
the adoption or implementation of any law, rule, regulation or guideline
regarding capital adequacy, capital maintenance or similar requirements or any
change therein or in the interpretation or application thereof or compliance
by the Bank or any corporation controlling the Bank with any request,
guideline, policy or directive regarding capital adequacy (whether or not
having the force of law) from any central bank or comparable entity or any
governmental authority does or would have the effect of reducing the rate of
return on the Bank or on the Bank's controlling corporation's capital as a
consequence of this Note or any Advance hereunder, to a level below that which
the Bank or the Bank's controlling corporation could have achieved but for
such adoption, implementation, change or compliance (taking into consideration
the Bank's and its controlling corporation's policies with respect to capital
adequacy) (a "Cost of Capital Event") then the Bank shall give prompt written
notice of such Cost of Capital Event and from time to time, upon the Bank's
demand, the Borrowers shall pay to the Bank such additional amount or amounts
as the Bank determines will compensate it for such reduction, the Bank's
determination to be conclusive.
If any taxes are imposed and required by law to be paid or withheld from
any amount payable to the Bank hereunder, then the Borrowers shall increase
the amount of such payment so that the Bank will receive a net amount (after
deduction for such taxes) equal to the amount due hereunder.
<PAGE>
The Borrowers agree to reimburse the Bank, upon demand, for any losses
which the Bank may sustain as a result of the Borrowers' failure to
borrow any Advance on the date requested by the Borrowers, the prepayment of
any Advance (whether by acceleration or otherwise) or the failure to repay
the same or any interest thereon on the maturity date thereof, including
but not limited to, any loss in liquidating or employing deposits from
third parties. Any prepayment of the principal amount of any Advance shall
be accompanied by the payment of the accrued interest thereon to the date of
such prepayment and the amount of the losses incurred by the Bank as a result
thereof. Notwithstanding anything in this Note to the contrary, in the
event of any Increased Cost Event or Cost of Capital Event, the Borrowers
may prepay any Advance affected thereby, in whole or in part,
without- premium or penalty or other obligation to reimburse losses.
If the effect of any applicable law, rule or regulation or in the
interpretation or administration thereof or compliance with any request or
directive of any governmental agency is to make it unlawful or impossible for
the Bank to make, maintain or fund any Advance, then the Borrowers shall, at
the Bank's option, pay on demand, the outstanding principal amount of such
Advance, together with accrued interest thereon and any additional amounts
contemplated hereby.
Notwithstanding the foregoing listing of events, nothing contained herein
shall be deemed to limit the ability of the Bank to demand payment of any or
all Advances and other amounts owing hereunder.
The Borrowers agree to indemnify the Bank and its directors, officers,
employees, agents and controlling persons against, and to hold the Bank and
such persons access from, any and all losses, claims, damages, liabilities,
costs and expenses (including reasonable attorneys' fees and expenses)
incurred by or asserted against the Bank or any such persons arising out of,
in any way connected with, or as a result of, the use of the proceeds of any
Advance by the Borrowers; provided however that this indemnity shall not, as
to the Bank or such other person, apply to any such losses, claims, damages,
liabilities, costs or expenses to the extent arising from the gross negligence
or the willful misconduct of the Bank or such other person. The provisions of
this paragraph and the other indemnity obligations of Borrowers under this
Note shall survive the repayment of any Advance and the payment of Borrowers'
other obligations under this Note.
Should (i) the Borrowers fail to pay any principal or interest on any
Advance or any other sum when due hereunder; or (ii) the Borrowers breach or
default under any agreement or instrument with, or ' in favor of, the Bank or
under any other agreement or instrument involving the borrowing of money or
the advance of credit between the Borrowers and any other party in excess of
$5,000,000; or (iii) a receiver, trustee or other similar official be
appointed over the Borrowers or any of its assets; or (iv) the Borrowers
become insolvent or be unable to pay its debts as they mature; or (v) the
Borrowers make a general assignment for the benefit of creditors; or (vi) the
Borrowers file a petition under any bankruptcy, insolvency or similar law
(domestic or foreign); or (vii) the Borrowers have an involuntary petition
under any bankruptcy, insolvency or any similar law (domestic or foreign)
filed against it; or (viii) the Borrowers suffer a material adverse change in
either of their respective consolidated financial condition, business,
prospects or operations; or (ix) any material levy, attachment, execution, tax
assessment or similar process be issued against the Borrowers or any of their
respective properties or assets; or (x) any of the matters covered in clauses
(ii) through and including (ix) above occur with respect to any guarantor of
any obligations of the Borrowers (including the obligations hereunder); or
(xi) any representation or warranty made by the Borrowers to the Bank prove to
have been incorrect or misleading when made or deemed made; or (xii) the
Borrowers breach any other covenant in any agreement with, or in favor of, the
Bank which continues uncured for a period of ten days following receipt of
notice thereof, or (xiii) any guarantee of any of the Borrowers' obligations
hereunder or under any other agreement with the Bank cease to be in full force
and effect, then, in the case of any of the events specified in clauses (iii),
(iv), (v), (vi) or (vii), the Advances and all of the Borrowers' obligations
under this Note shall become immediately due and payable without any action on
the part of the Bank, and in the case of any of the other events specified
above, the Bank may by notice to the Borrowers declare the principal amount of
all Advances hereunder together with accrued interest thereon and any other
amounts owing hereunder to be immediately due and payable, whereupon the same
shall become immediately due and payable. Notwithstanding the foregoing
listing of events, nothing contained herein shall be deemed to limit the
ability of the Bank to demand payment of any or all Advances and other amounts
owing hereunder at any time and whether or not any of said events has
occurred. The Borrowers and all other parties who, at any time, may be liable
on this Note in any capacity, waive demand, presentment, protest, notice of
protest, dishonor, notice of dishonor and notice of every other kind all of
which are hereby expressly waived by the Borrowers and such other party. The
Borrowers and each such other party further waive its rights to plead any
statute of limitations as a defense to any action hereunder.
The Borrowers agree to pay the reasonable legal fees which the Bank may
incur in connection with the enforcement of the Bank's rights hereunder and in
connection with any matter related hereto.
Nothing herein contained shall be, or be deemed to be, a commitment on
the part of the Bank to make any Advance or on the part of the Borrowers to
make any borrowings. The Borrowers agree that they shall not rely upon the
availability of any Advances under this Note.
All amounts due hereunder shall be paid in lawful currency of the United
States in immediately available funds and without offset deduction or
counterclaim.
Each of TEL and TEC agrees to be jointly and severally liable for
all borrowings hereunder regardless of whether either of TEC or TEL
actually receives or utilizes the Advance(s).
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK. THE BORROWERS HEREBY CONSENTS TO THE JURISDICTION
OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN NEW YORK CITY IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE AND AGREES THAT SERVICE
OF PROCESS MAY BE MADE UPON IT IN CONNECTION WITH ANY SUCH ACTION OR
PROCEEDING BY MAILING A COPY THEREOF TO ITS ADDRESS SET FORTH BELOW.
WAIVER OF JURY TRIAL. THE BORROWERS HEREBY WAIVES TRIAL BY JURY TO
THE FULLEST EXTENT PERMITTED BY LAW IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS NOTE.
TRITON ENERGY CORPORATION
Address: 6688 North Central Expressway
Dallas, Texas 75206
By: /s/
Title: Treasurer
TRITON ENERGY LIMITED
Address: Caledonian House
Mary Street
P O Box 1043
George Town
Grand Cayman
Cayman Islands
By: /s/
Title: Treasurer
EXHIBIT 11.1
TRITON ENERGY LIMITED AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER ORDINARY SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SEVEN MONTHS YEAR
YEARS ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, MAY 31,
------------------------
1996 1995 1994 1994
-------------- -------- -------------- ---------
PRIMARY COMPUTATION:
Earnings (loss) from continuing operations $ 23,805 $ 6,541 $ (26,630) $ (4,597)
Dividends on preference shares (985) (802) (449) ---
-------------- -------- -------------- ---------
Earnings (loss) from continuing operations
applicable to ordinary shares 22,820 5,739 (27,079) (4,597)
Loss from discontinued operations --- (3,821) (1,078) (4,744)
-------------- -------- -------------- ---------
Earnings (loss) before extraordinary item applicable to
ordinary shares 22,820 1,918 (28,157) (9,341)
Extraordinary item on extinguishment of debt (1,196) --- --- ---
-------------- -------- -------------- ---------
Net earnings (loss) applicable to ordinary shares $ 21,624 $ 1,918 $ (28,157) $ (9,341)
-------------- -------- -------------- ---------
Shares:
Average number of ordinary shares outstanding 35,929 35,147 34,944 34,775
Additional shares assuming conversion of
stock options and convertible debentures(1) 990 --- --- ---
-------------- -------- -------------- ---------
Average ordinary and equivalent shares outstanding 36,919 35,147 34,944 34,775
-------------- -------- -------------- ---------
PRIMARY EARNINGS (LOSS) PER ORDINARY SHARE:
Continuing operations $ 0.62 $ 0.16 $ (0.78) $ (0.13)
Discontinued operations --- (0.11) (0.03) (0.14)
Extraordinary item (0.03) --- --- ---
-------------- -------- -------------- ---------
Net earnings (loss) $ 0.59 $ 0.05 $ (0.81) $ (0.27)
-------------- -------- -------------- ---------
FULLY DILUTED COMPUTATION:(2)
Earnings (loss) from continuing operations $ 23,805 $ 6,541 $ (26,630) $ (4,597)
Net interest expense related to convertible debt --- 784 482 77
-------------- -------- -------------- ---------
Adjusted earnings (loss) from continuing operations
applicable to ordinary shares 23,805 7,325 (26,148) (4,520)
Loss from discontinued operations --- (3,821) (1,078) (4,744)
-------------- -------- -------------- ---------
Adjusted earnings (loss) before extraordinary item applicable
to ordinary shares 23,805 3,504 (27,226) (9,264)
Extraordinary item on extinguishment of debt (1,196) --- --- ---
-------------- -------- -------------- ---------
Net earnings (loss) applicable to ordinary shares as adjusted $ 22,609 $ 3,504 $ (27,226) $ (9,264)
-------------- -------- -------------- ---------
Shares:
Average number of ordinary shares outstanding 35,929 35,147 34,944 34,775
Additional shares assuming conversion of:
Stock options and convertible debentures 986 1,388 264 279
Preference shares 248 410 522 87
Convertible debt of affiliate --- 556 556 52
-------------- -------- -------------- ---------
Average ordinary and equivalent shares
outstanding as adjusted 37,163 37,501 36,286 35,193
-------------- -------- -------------- ---------
FULLY DILUTED EARNINGS (LOSS) PER ORDINARY SHARE:
Continuing operations $ 0.64 $ 0.19 $ (0.72) $ (0.13)
Discontinued operations --- (0.10) (0.03) (0.13)
Extraordinary item (0.03) --- --- ---
-------------- -------- -------------- ---------
Net earnings (loss) $ 0.61 $ 0.09 $ (0.75) $ (0.26)
-------------- -------- -------------- ---------
</TABLE>
(1) Computation of primary earnings per share for the year ended
December 31, 1995, the seven months ended December 31, 1994 and the year ended
May 31, 1994 excluded common stock equivalents as the inclusion of these
shares were not material or were anti-dilutive.
(2) This calculation is submitted in accordance with Regulation S-K
item 601(b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15
because it produces an anti-dilutive result.
EXHIBIT 12.1
TRITON ENERGY LIMITED AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS, EXCEPT RATIOS)
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SEVEN MONTHS
YEAR ENDED ENDED
DECEMBER 31, DEC. 31, YEAR ENDED MAY 31,
------------------------- --------------------------------
1996 1995 1994 1994 1993
-------------- --------- -------------- -------------------- ----------
Fixed charges, as defined (1):
Interest charges $ 43,884 $ 41,305 $ 20,285 $ 26,951 $ 16,336
Preferred dividend requirements of
subsidiaries adjusted to pre-tax basis --- --- --- 364 1,551
-------------- --------- -------------- -------------------- ----------
Total fixed charges $ 43,884 $ 41,305 $ 20,285 $ 27,315 $ 17,887
-------------- --------- -------------- -------------------- ----------
Earnings, as defined (1) (3):
Earnings (loss) from continuing operations
before income taxes, minority interest,
extraordinary item and cumulative effect of
accounting change $ 20,945 $ 16,600 $ (22,834) $ (23,104) $(147,445)
Fixed charges, above 43,884 41,305 20,285 27,315 17,887
Less interest capitalized (27,102) (16,211) (11,833) (16,863) (6,407)
Plus undistributed (earnings) loss of affiliates (118) 2,249 4,102 (645) 3,012
Less preferred dividend requirements of
subsidiaries adjusted to pre-tax basis --- --- --- (364) (1,551)
-------------- --------- -------------- -------------------- ----------
$ 37,609 $ 43,943 $ (10,280) $ (13,661) $(134,504)
-------------- --------- -------------- -------------------- ----------
RATIO OF EARNINGS TO FIXED CHARGES (2) (3) 0.9 1.1 --- --- ---
-------------- --------- -------------- -------------------- ----------
<S> <C>
YEAR ENDED
MAY 31,
---------
1992
---------
Fixed charges, as defined (1):
Interest charges $ 11,066
Preferred dividend requirements of
subsidiaries adjusted to pre-tax basis 1,780
---------
Total fixed charges $ 12,846
---------
Earnings, as defined (1) (3):
Earnings (loss) from continuing operations
before income taxes, minority interest,
extraordinary item and cumulative effect of
accounting change $(87,124)
Fixed charges, above 12,846
Less interest capitalized (6,529)
Plus undistributed (earnings) loss of affiliates 2,558
Less preferred dividend requirements of
subsidiaries adjusted to pre-tax basis (1,780)
---------
$(80,029)
---------
RATIO OF EARNINGS TO FIXED CHARGES (2) (3) ---
---------
</TABLE>
(1) Earnings include the Company's equity in the losses of an affiliate
whose debt was guaranteed by the Company. Related interest charges for the
year ended May 31, 1992 of $819,000 were excluded from fixed charges due to
the improbability that such guarantees would be honored.
(2) Earnings were inadequate to cover fixed charges for the year ended
December 31, 1996 by $6,275,000, for the seven months ended December 31, 1994
by $30,565,000, and for the years ended May 31, 1994, 1993 and 1992 by
$40,976,000, $152,391,000 and $92,875,000, respectively.
(3) Earnings reflect nonrecurring writedowns and loss provisions of
$46,153,000 and $1,058,000 for the years ended December 31, 1996 and 1995,
$984,000 for the seven months ended December 31, 1994, and $45,754,000,
$99,883,000 and $48,805,000 for the years ended May 31, 1994, 1993 and 1992,
respectively. Nonrecurring gains from the sale of assets and other gains
aggregated $22,189,000, $13,617,000 and $56,193,000 for the years
ended December 31, 1996 and 1995, and May 31, 1994, respectively. The ratio of
earnings to fixed charges if adjusted to remove nonrecurring items, would have
been 1.4 and 0.8 for the years ended December 31, 1996 and 1995, respectively.
Without nonrecurring items, earnings would have been inadequate to cover
fixed charges for the year ended December 31, 1995 by $9,921,000, for the
seven months ended December 31, 1994 by $29,581,000, and for the years ended
May 31, 1994, 1993 and 1992 by $51,415,000, $45,183,000 and $32,301,000,
respectively.
EXHIBIT 12.2
TRITON ENERGY LIMITED AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERENCE
DIVIDENDS
(IN THOUSANDS, EXCEPT RATIOS)
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SEVEN MONTHS
YEAR ENDED ENDED
DECEMBER 31, DEC. 31, YEAR ENDED MAY 31,
-------------------------
1996 1995 1994 1994
-------------- --------- -------------- --------------------
Fixed charges, as defined (1):
Interest charges $ 43,884 $ 41,305 $ 20,285 $ 26,951
Preference dividend requirements of the Company 985 802 449 ---
Preferred dividend requirements of subsidiaries
adjusted to pre-tax basis --- --- --- 364
-------------- --------- -------------- --------------------
Total fixed charges $ 44,869 $ 42,107 $ 20,734 $ 27,315
-------------- --------- -------------- --------------------
Earnings, as defined (1) (3):
Earnings (loss) from continuing operations
before income taxes, minority interest,
extraordinary item and cumulative effect of
accounting change $ 20,945 $ 16,600 $ (22,834) $ (23,104)
Fixed charges, above 44,869 42,107 20,734 27,315
Less interest capitalized (27,102) (16,211) (11,833) (16,863)
Plus undistributed (earnings) loss of affiliates (118) 2,249 4,102 (645)
Less preference dividend requirements of the
Company and its subsidiaries adjusted to pre-tax basis (985) (802) (449) (364)
-------------- --------- -------------- --------------------
$ 37,609 $ 43,943 $ (10,280) $ (13,661)
-------------- --------- -------------- --------------------
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERENCE DIVIDENDS (2) (3) 0.8 1.0 --- ---
-------------- --------- -------------- --------------------
<S> <C> <C>
YEAR ENDED MAY 31,
---------------------
1993 1992
---------- ---------
Fixed charges, as defined (1):
Interest charges $ 16,336 $ 11,066
Preference dividend requirements of the Company --- 1,386
Preferred dividend requirements of subsidiaries
adjusted to pre-tax basis 1,551 1,780
---------- ---------
Total fixed charges $ 17,887 $ 14,232
---------- ---------
Earnings, as defined (1) (3):
Earnings (loss) from continuing operations
before income taxes, minority interest,
extraordinary item and cumulative effect of
accounting change $(147,445) $(87,124)
Fixed charges, above 17,887 14,232
Less interest capitalized (6,407) (6,529)
Plus undistributed (earnings) loss of affiliates 3,012 2,558
Less preference dividend requirements of the
Company and its subsidiaries adjusted to pre-tax basis (1,551) (3,166)
---------- ---------
$(134,504) $(80,029)
---------- ---------
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERENCE DIVIDENDS (2) (3) --- ---
---------- ---------
</TABLE>
(1) Earnings include the Company's equity in the losses of an affiliate
whose debt was guaranteed by the Company. Related interest charges for the
year ended May 31, 1992 of $819,000 were excluded from fixed charges due to
the improbability that such guarantees would be honored.
(2) Earnings were inadequate to cover fixed charges and preference
dividends for the year ended December 31, 1996 by $7,260,000, for the seven
months ended December 31, 1994 by $31,014,000, and for the years ended May 31,
1994, 1993 and 1992 by $40,976,000, $152,391,000 and $94,261,000,
respectively.
(3) Earnings reflect nonrecurring writedowns and loss provisions of
$46,153,000 and $1,058,000 for the years ended December 31, 1996 and 1995,
$984,000 for the seven months ended December 31, 1994, and $45,754,000,
$99,883,000 and $48,805,000 for the years ended May 31, 1994, 1993 and 1992,
respectively. Nonrecurring gains from the sale of assets and other gains
aggregated $22,189,000, $13,617,000 and $56,193,000 for the years
ended December 31, 1996 and 1995 and May 31, 1994, respectively. The ratio of
combined earnings to fixed charges and preference dividends if adjusted to
remove nonrecurring items, would have been 1.4 and 0.7 for the years ended
December 31, 1996 and 1995, respectively. Without nonrecurring items, earnings
would have been inadequate to cover fixed charges and preference dividends for
the year ended December 31, 1995 by $10,723,000, for the seven months ended
December 31, 1994 by $30,030,000, and for the years ended May 31, 1994, 1993
and 1992 by $51,415,000, $45,183,000 and $33,687,000, respectively.
EXHIBIT 21.1
Subsidiaries of Triton Energy Limited
<TABLE>
<CAPTION>
<S> <C>
NAME JURISDICTION
OF ORGANIZATION
Triton Energy Corporation Delaware
Inlet Oil & Minerals (U.K.) Limited United Kingdom
Inlet North Sea Corporation Delaware
Triton Exploration (NZ) Limited New Zealand
Triton Air Holdings, Inc. Delaware
Central BLF, Inc. Texas
Servion, Inc. Delaware
Triton Development Corporation Delaware
Triton Exploration Services, Inc. (also d/b/a Triton Energy) Delaware
North Central Aviation, Inc. Delaware
WWS Viators Corporation Delaware
Triton Argentina, Inc. Cayman Islands
Triton Colombia, Inc. Cayman Islands
Triton Guatemala S.A British Virgin Islands
Triton Indonesia, Inc. Delaware
Triton Oil Company of Thailand Texas
Triton Oil Co. of Thailand (JDA) Limited Cayman Islands
Triton Oil & Gas Corp. Delaware
Triton Holdings (UK) Ltd. United Kingdom
Triton Oil (G.B.) Ltd. United Kingdom
Triton Resources (UK) Ltd. United Kingdom
Triton Resources Argentina, Inc. Cayman Islands
Triton International Oil Corporation Delaware
Triton Algeria, Inc. Cayman Islands
Triton Angola, Inc. Cayman Islands
Triton Cambodia, Inc. Cayman Islands
Triton China, Inc. LLC Cayman Islands
Triton China Resources, Inc. Cayman Islands
Triton Ecuador, Inc. LLC Cayman Islands
Triton Equatorial Guinea, Inc. Cayman Islands
Triton Indonesia Resources, Inc. Cayman Islands
Triton International Finance, Inc. Cayman Islands
Triton International Oil Corporation Cayman Islands
Triton Italy, Inc. Cayman Islands
Triton Oil Company of Malaysia, Inc. Cayman Islands
Triton Oman, Inc. Cayman Islands
Triton Pipeline Colombia, Inc. Cayman Islands
Triton Resources Colombia, Inc. Cayman Islands
Triton International Petroleum, Inc. Cayman Islands
Triton Oil (Holdings) Pty. Limited Australia
TEUR Ltd. United Kingdom
Triton Mediterranean Oil & Gas N.V. Netherlands
</TABLE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-3 (Nos. 33-11920,
33-15793, 33-17614, 33-21984, 33-23058, 33-25634, 33-31319, 33-45847,
33-69230, 33-55347, 33-46292, 33-59567, 333-11703 and 333-11703-01) and to the
incorporation by reference in the Registration Statements on Form S-8 (Nos.
2-80978, 33-4042, 33-27203, 33-29498, 33-46968, 33-51691, and 333-08005) of
our report dated February 4, 1997 appearing on page F-2 of Triton Energy
Limited's Annual Report on Form 10-K for the year ended December 31, 1996.
Price Waterhouse LLP
Dallas, Texas
March 18, 1997
EXHIBIT 23.2
March 18, 1997
Triton Energy Limited
Caledonian House
Mary Street
P.O. Box 1043
George Town
Grand Cayman, Cayman Islands
Gentlemen:
We hereby consent to (i) the use of information in our report dated
February 13, 1997, entitled "Appraisal Report as of December 31, 1996 on
Certain Properties in Colombia owned by Triton Colombia Incorporated" under
the caption "Business and Properties - Reserves" and in note 25 of the Notes
to the Consolidated Financial Statements under the caption "Oil and Gas
Reserve Data" in the Form 10-K of Triton Energy Limited for the year ended
December 31, 1996, and (ii) the references to our firm under such captions.
Our estimates of reserves, however, for the Cusiana and Cupiagua fields have
been aggregated in the Form 10-K with other Colombian reserves for which we
have not prepared estimates.
Very truly yours,
DeGOLYER and MacNAUGHTON
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
12/31/96 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 11,048
<SECURITIES> 3,866
<RECEIVABLES> 11,526
<ALLOWANCES> 76
<INVENTORY> 0
<CURRENT-ASSETS> 84,360
<PP&E> 773,254
<DEPRECIATION> 96,421
<TOTAL-ASSETS> 914,524
<CURRENT-LIABILITIES> 266,563
<BONDS> 217,078
0
8,515
<COMMON> 363
<OTHER-SE> 291,766
<TOTAL-LIABILITY-AND-EQUITY> 914,524
<SALES> 129,795
<TOTAL-REVENUES> 133,977
<CGS> 36,654
<TOTAL-COSTS> 36,654
<OTHER-EXPENSES> 68,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,897
<INCOME-PRETAX> 20,945
<INCOME-TAX> (2,860)
<INCOME-CONTINUING> 23,805
<DISCONTINUED> 0
<EXTRAORDINARY> (1,196)
<CHANGES> 0
<NET-INCOME> 22,609
<EPS-PRIMARY> 0.59
<EPS-DILUTED> 0.61
</TABLE>
