UNITED STATES
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
FOR THE FISCAL YEAR ENDED: December 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
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 (SECTION 229.405 OF THIS CHAPTER) 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 16, 1998 (FOR SUCH PURPOSES ONLY, ALL DIRECTORS AND
EXECUTIVE OFFICERS ARE PRESUMED TO BE AFFILIATES) WAS APPROXIMATELY $1.2
BILLION, BASED ON THE CLOSING SALES PRICE OF $32 13/16 ON THE NEW YORK STOCK
EXCHANGE.
AS OF MARCH 16, 1998, 36,576,047 ORDINARY SHARES OF THE REGISTRANT
----------------
WERE OUTSTANDING.
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE PROXY STATEMENT PERTAINING TO THE 1998 ANNUAL MEETING OF
SHAREHOLDERS OF TRITON ENERGY LIMITED ARE INCORPORATED BY REFERENCE INTO PART
III HEREOF.
<PAGE>
TRITON ENERGY LIMITED
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
Form 10-K Item Page
- --------------
PART I
ITEMS 1. and 2. Business and Properties 2
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 7.A. Quantitative and Qualitative Disclosures about Market Risk 35
ITEM 8. Financial Statements and Supplementary Data 35
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 35
PART III
ITEM 10. Directors and Executive Officers of the Registrant 36
ITEM 11. Executive Compensation 36
ITEM 12. Security Ownership of Certain Beneficial Owners and Management 36
ITEM 13. Certain Relationships and Related Transactions 36
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 37
</TABLE>
<PAGE>
PART I
ITEMS 1. AND 2. BUSINESS AND PROPERTIES
GENERAL
Triton Energy Limited is an international oil and gas exploration
and production company. The Company's principal properties, operations, and
oil and gas reserves are located in Colombia and Malaysia-Thailand. The
Company is actively exploring for oil and gas in these areas, as well as in
southern Europe, Africa, Asia and the Middle East.
Triton Energy Limited was incorporated in the Cayman Islands in 1995
to become the parent holding company of Triton Energy Corporation, 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 in this
report mean Triton Energy Limited and its subsidiaries and other affiliates
through which Triton conducts its business, unless the context otherwise
implies.
RECENT DEVELOPMENT
On March 30, 1998, the Company announced that its Board of
Directors approved the retention of CIBC World Markets Lovegrove & Associates
and Lehman Brothers, Inc. as independent advisers to assist in studying
strategic alternatives for maximizing shareholder value. The strategic
alternatives under consideration may include the sale or farmout of a portion
or all of the Company's interest in Block A-18 of the Malaysia-Thailand Joint
Development Area in the Gulf of Thailand, the sale of a portion or all of the
Company's interest in the Cusiana and Cupiagua oil fields in Colombia, or
both. The Company can give no assurance that it will be successful in pursuing
any of these strategic alternatives or as to the terms upon which any such
transaction may ultimately be consummated.
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. Then 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 36 producing
wells, 10 gas injection wells and one water injection well. The gas injection
wells recycle to the reservoir most of the gas that is associated with the oil
production to increase the oil recoverable during the life of the field. The
water injection well is injecting the field's produced water into the Barco
and Guadalupe formations for disposal and pressure maintenance. There are
currently five drilling rigs operating in the Cusiana Field, and it is
expected that 13 oil-production and gas-injection wells will be completed
during 1998. Development drilling is proceeding on a schedule that is intended
to have sufficient well capacity at all times to meet production capacities of
field facilities and export pipelines from the area.
During 1997, Triton Colombia and its working interest partners
completed an additional seven wells in the Cupiagua Field, bringing the
yearend total completions to date to 17 wells, which are awaiting startup of
production facilities in 1998. There are currently five drilling rigs
operating in the Cupiagua Field, and it is expected that 13 additional wells
will be completed during 1998. Development wells drilled during 1997 more
fully defined the areal extent of the field and the oil/water contacts in the
fields.
In January 1998, the sidetrack of the suspended Cusiana 5 well,
referred to as the Cupiagua-EXP well, was completed as a discovery of the
Cupiagua South extension of the Cupiagua Field. The well penetrated the
Mirador and Barco formations and confirmed the upthrown block of the Cupiagua
lower plate. The logs and other data taken from the well confirmed that the
accumulation has a different oil/water contact than either the core of the
Cupiagua Field or the lower plate discovered in the Cupiagua K-5 well, drilled
in late 1995.
<PAGE>
Production Facilities and Pipelines. The four early production units of
------------------------------------
the Cusiana Field central processing facility are designed to handle
approximately 180,000 barrels of daily production throughput. In July and
August 1997, two 80,000 barrels of oil per day ("BOPD") Cusiana production
trains were commissioned, which brought the production capacity of the Cusiana
central processing facility to 320,000 BOPD. Startup of the two 100,000 BOPD
production trains at the Cupiagua central processing facility is expected in
1998. Upon completion of the Cupiagua facilities, the total production
capacity from the Cusiana/Cupiagua complex is expected to reach 500,000 BOPD.
In the third quarter of 1997, expansion of pipeline and port facilities
to transport and handle crude oil from the Cusiana and Cupiagua fields to the
Caribbean port of Covenas was completed. These pipeline and port facilities
are operated by Oleoducto Central S.A. ("OCENSA"), a company formed by Triton
Pipeline Colombia, Inc., a wholly owned subsidiary of the Company until its
sale in February 1998, Ecopetrol, BP Colombia Pipelines Ltd., Total Pipeline
Colombie, S.A., IPL Enterprises (Colombia) Inc. and TCPL International
Investments Inc.
The new pipeline segments complete a 793-kilometer (495-mile)
pipeline system from the Cusiana and Cupiagua fields to the port of Covenas.
It 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 in 1995.
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 al contract area, which covers approximately 71,000 acres
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. Production
from the field, which began in January 1997, is currently 370 BOPD from
the two wells.
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 has acquired
seismic data in a program totaling 178 kilometers (111 miles) over the Guayabo
A and B blocks, and 195 kilometers (122 miles) over the Las Amelias block, as
well as approximately 15,000 kilometers (9,375 miles) of aeromagnetic data.
Triton's partner in these areas is Deminex Colombia Petroleum GmbH with a 50%
interest.
<PAGE>
Malaysia-Thailand
-----------------
Through the Company's wholly owned subsidiaries, Triton Oil Company
of Thailand (JDA) Limited and Triton Oil Company of Thailand (collectively,
"Triton Thailand"), the Company has a participating interest in Block A-18 of
the Malaysia-Thailand Joint Development Area in the Gulf of Thailand. To date,
eight fields have been discovered on the block.
Contract Terms
In April 1994, Triton Thailand signed a production-sharing contract
covering the offshore area designated as Block A-18 of the Malaysia-Thailand
Joint Development Area. The contract area in the Gulf of Thailand, 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 if 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. In 1997, the MTJA agreed, subject to government approval, to extend the
five-year exploration period by three years, but the holding period for any
discovery in the additional three-year period would not extend beyond the
tenth anniversary of the contract. The 35-year term also was unaffected. 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
Carigali-Triton Operating Company Sdn. Bhd. ("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
During 1997, one appraisal well and four exploratory wells were
drilled on Block A-18.
In July 1997, the Bumi North-1 appraisal well was drilled to
delineate the Bumi Field. The well was tested at a combined rate of 42 MMcf of
gas and 362 barrels of condensate per day from selected intervals. The well
was drilled in approximately 183 feet of water to a total depth of 9,250 feet,
approximately 15 kilometers (9 miles) north-northeast of Bumi-1.
During 1997, exploratory drilling discovered four additional fields
in Block A-18. The Senja-1 well discovered both oil- and gas-bearing zones in
the Senja Field. On test, the well flowed at a combined rate of 2,725 barrels
of oil, 39 MMcf of gas and 368 barrels of condensate per day from selected
intervals. The well was drilled in approximately 179 feet of water to a total
depth of 7,600 feet. The Senja Field is located in the northwest portion of
the block. The Bumi East-1 well tested at a combined rate of 34 MMcf of gas
and 1,681 barrels of condensate per day from selected intervals in the Bumi
East Field. The well was drilled in approximately 188 feet of water to a total
depth of 9,100 feet, approximately 16 kilometers (10 miles) northeast of
Bumi-1. The Samudra-1 well tested at a combined rate of 49 MMcf of gas and 858
barrels of condensate per day from selected intervals. The well was drilled in
approximately 176 feet of water to a total depth of 12,000 feet. The Samudra
Field is located in the southwest portion of the block. The Wira-1 well
discovered the Wira Field, located in the central portion of the block. The
well was drilled in approximately 174 feet of water to a total depth of 10,000
feet. One production test was conducted to confirm results of electric logs
and hydrocarbon samples taken from the reservoir. The Wira-1 well flowed at a
maximum daily rate of 9.1 MMcf of gas and 137 barrels of condensate per day.
Development Plan
In December 1997, the MTJA approved the field development plan for
the Cakerawala Field. Initial development plans call for three wellhead
platforms, a production platform, a living quarters platform, a floating
storage and offloading vessel for oil and condensate and 35 development wells.
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.
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. 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. The
Huataracu-1 exploratory well, completed in May 1997, was plugged and abandoned
after tests failed to confirm the presence of commercial quantities of oil or
gas. An environmental impact study for a second exploratory well, Arapino-1,
was approved in December of 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. In May 1997, Triton executed an agreement
with Pioneer Natural Resources providing Pioneer the right to earn a 40%
interest in both blocks, subject to government approval. The Piedras Blancas-1
exploratory well was drilled in 1997, reaching a total depth of 10,188 feet,
and was plugged and abandoned after tests failed to confirm the presence of
commercial quantities of oil or gas. In 1998, Triton's request for extensions
of the seismic option periods for both blocks was approved. Triton is
reviewing the Blocks for future drilling opportunities.
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 cover a
total of 2.4 million acres located in the Huizhou Sub-Basin of the Pearl River
Mouth Basin approximately 175 kilometers (110 miles) offshore Hong Kong in
water depths ranging from 300 to 650 feet. Pursuant to extensions granted in
1998, the blocks have a primary exploration term expiring on March 31, 1999.
The obligation well for Block 16/03 was plugged and abandoned with no tests.
Mobil Exploration & Producing China Inc. has notified Triton of its intent to
withdraw from the blocks effective March 31, 1998.
Triton is also party to an offshore Joint Study Agreement with
CNOOC for Block JSA 24/05, which covers approximately 1.5 million acres in
water depths ranging from 50 to 200 feet in the Liedong area of the South
China Sea. In 1998, the Company determined that it would not convert the Joint
Study Agreement for Block JSA 24/10 into a production sharing contract.
Greece
------
The Company's subsidiary, Triton Hellas S.A., has signed two leases
with the national oil company of Greece, which give the Company the right to
explore and develop an area of approximately 1.5 million acres. The Gulf of
Patraikos contract area is located offshore between the coastline of the
western Greece's mainland and the offshore Ionian islands of Lefkas, Kefalonia
and Zakynthos in water depths of up to 1,700 feet. The lease provides a
primary four-year exploration term with a commitment of 2,000 kilometers of
seismic and the drilling of one exploratory well for a total expenditure of
not less than $13.5 million. The Aitoloakarnania contract area is located
onshore in the prefecture of Aitoloakarnania in western Greece. The lease
provides a primary two-year exploration term with a commitment of 200
kilometers of seismic and the drilling of two exploratory wells for a total
expenditure of not less than $13.25 million. Reprocessing of existing seismic
was completed in both areas during 1997.
Italy
-----
The Company has a 40% interest in each of the contiguous DR71 and
DR72 licenses operated by Enterprise Oil Italiana, S.p.A., in the Adriatic
Sea, and a 50% interest in three onshore licenses, operated by Triton Italy,
Inc., in the southern Apennine Mountains. Triton has applications pending for
additional licenses onshore and offshore.
The DR71 and DR72 licenses lie 45 kilometers (28 miles) offshore 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 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. In 1997, Triton
purchased and reprocessed 300 kilometers of seismic data over the licenses.
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.
During 1997, the Company reprocessed and interpreted approximately
1,100 kilometers (688 miles) of existing seismic data, and acquired
approximately 1,750 kilometers (1,094 miles) of 2D seismic and 24,000
kilometers (15,000 miles) of high resolution aeromagnetic and remote sensing
studies. The seismic acquisition fulfills Triton's seismic obligation on the
block.
Indonesia
---------
In February 1997, the Company's subsidiary, TriBlora Indonesia B.V.,
acquired from Eurafrep B.V. 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, YPF International Ltd. with a 16.7% interest and Warrior Jawa Inc.
with a 13.3% 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. In 1997,
reprocessing of approximately 1,600 kilometers (1,000 miles) of existing 2D
seismic was completed. Acquisition of 760 kilometers (475 miles) of new 2D
seismic data was completed in January 1998 and drilling is planned for late
1998.
Equatorial Guinea
------------------
The Company's subsidiary, Triton Equatorial Guinea, Inc., has signed
production-sharing contracts covering two contiguous blocks (Blocks F and G)
with the Republic of Equatorial Guinea. The contracts give the Company the
right to explore and develop an area covering approximately 1.3 million acres
located offshore and southwest of the town of Bata in water depths of up to
5,200 feet. They provide a primary two-year exploration term with a commitment
of 2,000 kilometers (1,250 miles) of seismic and the drilling of one
exploratory well for a total expenditure of not less than $5 million.
Madagascar
----------
The Company's subsidiary, Triton Madagascar, Inc., has signed
production-sharing contracts covering two blocks with the Office of National
Mines and Strategic Industries in Madagascar. The Ambilobe Block
(approximately 7.1 million acres) is located directly offshore from Ambilobe
in water depths of up to 11,500 feet and the Cap St. Marie Block
(approximately 6.8 million acres) is located directly offshore from Cap St.
Marie in water depths of up to 5,900 feet. The blocks have a primary one-year
exploration term involving geological and geophysical studies.
Tunisia
-------
In May 1997, the Company's subsidiary, Triton Tunisia, Inc., signed
an agreement with Carthago Oil Company Tunisia, the operator, to acquire a 50%
interest in the Medjerda production sharing contract covering a block of
approximately 1.1 million acres located in northern Tunisia. The first phase
of the contract has been extended to December 1998 with a commitment to
acquire 250 kilometers (156 miles) of 2D seismic and drill one exploratory
well. The Medjerda-1 well was spudded in January 1998 and is being drilled.
Argentina
---------
In 1997, the Company sold its Argentine subsidiary.
RESERVES
The following table sets forth a summary of the estimated oil and
gas reserves of the Company at December 31, 1997, 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
internal petroleum engineers with respect to all proved reserves in
Malaysia-Thailand on Block A-18 in the Gulf of 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, 1997, the Company had no proved developed or proved undeveloped reserves
in Ecuador, Guatemala, China, Greece, Italy, Oman, Indonesia, Equatorial
Guinea, Madagascar or Tunisia. For additional information regarding the
Company's reserves, including the standardized measure of future net cash
flows, see note 24 of Notes to Consolidated Financial Statements. Oil
reserves data include natural gas liquids and condensate.
Net proved reserves at December 31, 1997, were:
<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) 81,931 14,619 64,068 --- 145,999 14,619
Malaysia-Thailand (2) --- --- 29,800 1,223,800 29,800 1,223,800
---------- ------------ ------- ---------- -------- ----------
Total 81,931 14,619 93,868 1,223,800 175,799 1,238,419
---------- ------------ ------- ---------- -------- ----------
</TABLE>
____________________
(1) Includes liquids to be recovered from Ecopetrol as reimbursement for
precommerciality expenditures.
(2) As of December 31, 1997, 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
natural-gas prices derived from what the Company believed to be the most
comparable market price at December 31, 1997. 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, and there can be no 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.
OIL AND GAS OPERATIONS
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, 1997, 1996 and 1995.
The table includes production attributable to the Company's 49.9% ownership
interest in Crusader Limited ("Crusader") through the date of its sale in
1996, as well as 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
OIL PRODUCTION (1) GAS PRODUCTION
------------------------ -----------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------ -----------------------
1997 1996 1995 1997 1996 1995
---- ---- ---- ---- ---- ----
(MBBLS) (MMCF)
Colombia (2) 5,776 5,738 5,089 802 298 158
France (3) --- --- 498 --- --- ---
Indonesia (4) --- 95 255 --- --- ---
United States (5) --- 20 121 --- 475 1,207
Crusader (6):
Australia --- 134 287 --- 1,744 3,884
Canada --- --- 53 --- --- 63
------- ------- ----- ---- ----- -----
Total 5,776 5,987 6,303 802 2,517 5,312
------- ------- ----- ---- ----- -----
</TABLE>
____________________
(1) Includes natural gas liquids and condensate.
(2) Includes Ecopetrol reimbursement barrels and excludes 2.5 million, .7
million and .4 million barrels of oil produced and delivered for the years
ended December 31, 1997, 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 sold substantially all of its domestic royalty
and mineral interests.
(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.
The following tables summarize for the years ended December 31,
1997, 1996 and 1995: (i) the average sales price per barrel of oil and per 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:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
AVERAGE SALES PRICE AVERAGE SALES PRICE
PER BARREL OF OIL (1) PER MCF OF GAS
------------------------- ------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------- ------------------------
1997 1996 1995 1997 1996 1995
------ ------ ------ ----- ----- -----
Colombia $17.54 $19.62 $16.29 $1.15 $2.56 $1.96
France --- --- 18.11 --- --- ---
Indonesia --- 19.54 17.77 --- --- ---
United States --- 16.00 13.62 --- 1.15 1.49
Crusader:
Australia --- 19.95 20.38 --- 1.69 1.69
Canada --- --- 15.42 --- --- 0.99
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER EQUIVALENT BARREL (2)
-------------------------------------------------------------------------------
AVERAGE SALES PRICE DEPLETION (3) PRODUCTION COST
-------------------------- ------------------------- ------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
-------------------------- ------------------------- ------------------------
1997 1996 1995 1997 1996 1995 1997 1996 1995
------- ------- ------- ------- ------ ------ ----- ----- ------
Colombia $ 17.37 $ 19.58 $ 16.26 $ 3.67 $ 2.83 $ 2.67 $6.47 $ 5.66 $ 5.52
France --- --- 18.11 --- --- 3.14 --- --- 10.96
Indonesia --- 19.54 17.77 --- 0.52 0.95 --- 15.89 17.34
United States --- 8.75 10.68 --- 5.59 6.05 --- 3.25 1.03
Crusader:
Australia --- 13.23 13.29 --- 3.47 3.35 --- 4.10 4.77
Canada --- --- 13.87 --- --- 2.35 --- --- 7.52
</TABLE>
____________________
(1) Includes natural gas liquids and condensate.
(2) Natural gas has been converted into equivalent barrels of oil based on
six Mcf of natural gas per barrel of oil.
(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 and Cupiagua
fields is transported to the export terminal by pipeline.
For a discussion of certain factors regarding the Company's markets
and potential markets that could affect future operations, see note 19 of
Notes to Consolidated Financial Statements.
ACREAGE
The following table shows the total gross and net developed and
undeveloped oil and gas acreage held by Triton at December 31, 1997. "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.
"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.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
DEVELOPED UNDEVELOPED
ACREAGE ACREAGE (1)
----------------- --------------
GROSS NET GROSS NET
-------- ------- ------ ------
(In thousands)
Colombia 36 5 1,934 938
Malaysia-Thailand --- --- 731 366
Ecuador --- --- 494 272
Guatemala --- --- 608 365
China --- --- 3,978 2,761
Greece --- --- 1,475 1,298
Italy --- --- 594 248
Oman --- --- 2,044 2,044
Indonesia --- --- 1,413 424
Equatorial Guinea --- --- 1,306 1,306
Madagascar --- --- 13,914 13,914
Tunisia --- --- 1,102 551
------- ------ ------ ------
Total 36 5 29,593 24,487
------- ------ ------ ------
</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.
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, 1997, in Colombia, Triton held gross and net working
interests in 64 and 7.7 productive wells, respectively, which include 10 gross
(1.2 net) gas-injection wells and one gross (.12 net) water-injection well.
<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, 1997, 1996 and 1995.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
GROSS EXPLORATORY WELLS
PRODUCTIVE (1) DRY TOTAL
----------------------- ----------------------- -----------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
---------------------- ----------------------- ----------------------
1997 1996 1995 1997 1996 1995 1997 1996 1995
----- ----- ------ ----- ---- ----- ---- ----- -----
Colombia 1 3 2 1 --- 2 2 3 4
Malaysia-Thailand 5 7 2 --- --- --- 5 7 2
Argentina --- --- --- --- 2 2 --- 2 2
Italy --- --- --- --- 1 --- --- 1 ---
Guatemala --- --- --- 1 --- --- 1 --- ---
China --- --- --- --- 1 --- --- 1 ---
Ecuador --- --- --- 1 --- --- 1 --- ---
Crusader (2):
Argentina --- --- 1 --- --- 2 --- --- 3
Australia --- 14 23 --- 4 11 --- 18 34
---- ----- ------ ----- --- ---- ---- ----
Total 6 24 28 3 8 17 9 32 45
---- ----- ------ ----- --- ---- ---- ---- ----
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GROSS DEVELOPMENT WELLS
PRODUCTIVE (1) DRY TOTAL
------------------------ ----------------------- -----------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------ ----------------------- -----------------------
1997 1996 1995 1997 1996 1995 1997 1996 1995
----- ------ ------ ----- ---- ---- ---- ---- ----
Colombia 18 15 8 --- --- --- 18 15 8
Malaysia-Thailand --- --- --- --- --- --- --- --- ---
Crusader (2):
Australia --- 2 5 --- --- 1 --- 2 6
--- ------ ----- ---- ---- ---- ---- ---- ---
Total 18 17 13 --- --- 1 18 17 14
--- ------ ----- ---- ---- ---- ---- ---- ---
</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) In 1996, the Company sold all of its interest in Crusader. In 1995,
Crusader sold its interests in Argentina and Canada.
<PAGE>
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, 1997, 1996 and 1995 (those wells acquired or disposed of since
January 1, 1995 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>
NET EXPLORATORY WELLS
PRODUCTIVE (1) DRY TOTAL
------------------------ ----------------------- -----------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------ ----------------------- -----------------------
1997 1996 1995 1997 1996 1995 1997 1996 1995
----- ------ -------- ---- ---- ---- ---- ---- ----
Colombia (2) 0.12 0.12 0.12 0.50 0.50 2.00 0.62 0.62 2.12
Malaysia-Thailand 2.50 3.50 1.00 --- --- --- 2.50 3.50 1.00
Argentina --- --- --- --- 2.00 2.00 --- 2.00 2.00
Italy --- --- --- --- 0.40 --- --- 0.40 ---
Guatemala --- --- --- 0.60 --- --- 0.60 --- ---
China --- --- --- --- 0.50 --- --- 0.50 ---
Ecuador --- --- --- 0.55 --- --- 0.55 --- ---
Crusader (3):
Argentina --- --- 0.06 --- --- 0.12 --- --- 0.18
Australia --- 0.34 0.35 --- 0.10 0.29 --- 0.44 0.64
----- ------ -------- ---- ---- ---- ---- ---- ----
Total 2.62 3.96 1.53 1.65 3.50 4.41 4.27 7.46 5.94
----- ------ -------- ---- ---- ---- ---- ---- ----
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET DEVELOPMENT WELLS
PRODUCTIVE (1) DRY TOTAL
------------------------ ----------------------- -----------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------ ----------------------- -----------------------
1997 1996 1995 1997 1996 1995 1997 1996 1995
----- ------- ----- ----- ------ ---- ---- ---- ----
Colombia (2) 2.16 1.80 0.96 --- --- --- 2.16 1.80 0.96
Malaysia-Thailand --- --- --- --- --- --- --- --- ---
Crusader (3):
Australia --- 0.05 0.10 --- --- 0.02 --- 0.05 0.12
---- ------- ----- ---- ---- ---- ---- ---- ----
Total 2.16 1.85 1.06 --- --- 0.02 2.16 1.85 1.08
---- ------- ----- ---- ---- ---- ---- ---- ----
</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 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 20 of Notes to
Consolidated Financial Statements.
<PAGE>
FORWARD-LOOKING INFORMATION
Certain statements in this Annual Report on Form 10-K, including
expectations, intentions, plans and beliefs of the Company and management,
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 the
Company's control. These forward-looking statements include statements of
management's plans and objectives for future operations and statements of
future economic performance; information regarding drilling schedules and
schedules for the start-up of production facilities; expected or planned
production or transportation capacity; when the Fields might become
self-financing; future production of the Fields; the negotiation of a heads of
agreement to a gas-sales contract and 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 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, the impact of Year 2000 issues; 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 19 and 20 of Notes to Consolidated Financial Statements.
EMPLOYEES
At March 16, 1998, the Company employed approximately 295 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 16, 1998:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SERVED WITH
-----------
THE COMPANY
-----------
NAME AGE POSITION WITH THE COMPANY SINCE
- ----------------------------- ---- ---------------------------------------------------- -----
Thomas G. Finck 51 Chairman of the Board and Chief Executive Officer 1992
Nick De'Ath 49 Senior Vice President, Exploration 1993
Robert B. Holland, III 45 Senior Vice President, General Counsel and Secretary 1993
Peter Rugg 50 Senior Vice President and Chief Financial Officer 1993
A.E. Turner, III 49 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 1992 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.
<PAGE>
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
were among numerous defendants in a lawsuit brought in the Superior Court of
the State of California, County of Los Angeles, by Travelers Indemnity Company
arising out of a 1988 tidal wave at King Harbor in Redondo Beach, California.
The lawsuit alleged, among other things, that the defendants' negligence
contributed to the collapse of a hotel and the flooding of a restaurant in the
tidal wave. This lawsuit was settled in 1998.
During the quarter ending September 30, 1995, the United States
Environmental Protection Agency (the "EPA") 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.
In October 1997, the EPA advised the Company that the subsidiary
has a formal period of negotiation regarding performing the final remediation
design for the clean-up of the site, and demanded reimbursement for certain
unpaid costs that have been incurred. The government estimates the aggregate
amount being negotiated as $217 million to be allocated among the 280 known
operators. The subsidiary's share would be approximately $1 million based
upon a volumetric allocation. The Company has been advised that the
government expects that defendants such as the subsidiary will be given an
opportunity to settle some time in the second half of 1998. At that time, it
is expected that an allocation will be made as to such defendants, which may
be greater or less than the estimated volumetric allocation.
On August 22, 1997, the Company was sued in the Superior Court of
the State of California for the County of Los Angeles, by David A. Hite,
Nordell International Resources Ltd., and International Veronex Resources,
Ltd. The Company and the plaintiffs were adversaries in a 1990 arbitration
proceeding in which the interest of Nordell International Resources Ltd. in
the Enim oil field in Indonesia was awarded to the Company (subject to a 5%
net profits interest for Nordell) and Nordell was ordered to pay the Company
nearly $1 million. The arbitration award was followed by a series of legal
actions by the parties in which the validity of the award and its enforcement
were at issue. As a result of these proceedings, the award was ultimately
upheld and enforced.
The current suit alleges that the plaintiffs were damaged in amounts
aggregating $13 million primarily because of the Company's prosecution of
various claims against the plaintiffs as well as its alleged
misrepresentations, infliction of emotional distress, and improper accounting
practices. The suit seeks specific performance of the arbitration award,
damages for alleged fraud and misrepresentation in accounting for Enim field
operating results, an accounting for Nordell's 5% net profit interest, and
damages for emotional distress and various other alleged torts. The suit
seeks interest, punitive damages and attorneys fees in addition to the alleged
actual damages.
On September 26, 1997, the Company removed the action to the United
States District Court for the Central District of California. The Company
believes the suit is without merit and intends vigorously to defend it.
The Company is also subject to litigation that is incidental to its
business.
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, 1997 to security holders, through the solicitation
of proxies or otherwise.
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
- ---------------- -------- --------
1998:
First Quarter* 33 15/16 25 13/16
1997:
First Quarter 52 1/2 38 1/4
Second Quarter 45 13/16 32 3/8
Third Quarter 48 38 3/16
Fourth Quarter 44 7/8 27 5/8
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
</TABLE>
______________________
*Through March 16, 1998.
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 facilities.
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 16, 1998, the Company had outstanding 217,732 shares of
its 5% Convertible Preference Shares ("5% Preference Shares"). Each 5%
Preference Share may be converted into one Triton ordinary share 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 note 12 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 16, 1998, there were 4,244 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 YEAR ENDED
DECEMBER 31,
----------------------------------------------
1997 1996 1995 1994
---------- -------- --------- ---------
(unaudited)
OPERATING DATA (IN THOUSANDS, EXCEPT PER SHARE DATA):
Sales and other operating revenues (1) $ 149,496 $133,977 $ 107,472 $ 32,952
Earnings (loss) from continuing operations (1) (2) 5,595 23,805 6,541 (49,610)
Earnings (loss) before extraordinary
items and cumulative effect of
accounting change 5,595 23,805 2,720 (52,701)
Net earnings (loss) (2) (8,896) 22,609 2,720 (52,701)
Average ordinary shares outstanding 36,471 35,929 35,147 34,916
Basic earnings (loss) per ordinary share:
Continuing operations (1) (2) $ 0.14 $ 0.64 $ 0.16 $ (1.43)
Before extraordinary item and
cumulative effect of accounting change 0.14 0.64 0.05 (1.52)
Net earnings (loss) (0.26) 0.61 0.05 (1.52)
Diluted earnings (loss) per ordinary share:
Continuing operations (1) (2) $ 0.14 $ 0.62 $ 0.16 $ (1.43)
Before extraordinary item and
cumulative effect of accounting change 0.14 0.62 0.05 (1.52)
Net earnings (loss) (0.25) 0.59 0.05 (1.52)
BALANCE SHEET DATA (IN THOUSANDS):
Net property and equipment $ 835,506 $676,833 $ 524,381 $399,658
Total assets 1,098,039 914,524 824,167 619,201
Long-term debt (3) 443,312 217,078 401,190 315,258
Redeemable preference shares of
subsidiaries --- --- --- ---
Shareholders' equity 296,620 300,644 246,025 237,195
CERTAIN OIL AND GAS DATA (4) :
Production
Oil (Mbbls) (5) 5,776 5,987 6,303 2,534
Gas (MMcf) 802 2,517 5,312 5,516
Average sales price
Oil (per bbl) $ 17.54 $ 19.61 $ 16.60 $ 15.26
Gas (per Mcf) $ 1.15 $ 1.69 $ 1.64 $ 1.51
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AS OF OR
FOR SEVEN
MONTHS ENDED AS OF OR FOR YEAR ENDED
DECEMBER 31, MAY 31,
-----------------------
1994 1994 1993
--------- --------- ---------
OPERATING DATA (IN THOUSANDS, EXCEPT PER SHARE DATA):
Sales and other operating revenues (1) $ 20,736 $ 43,208 $ 84,414
Earnings (loss) from continuing operations (1) (2) (26,630) (4,597) (76,509)
Earnings (loss) before extraordinary
items and cumulative effect of
accounting change (27,708) (9,341) (93,552)
Net earnings (loss) (2) (27,708) (9,341) (89,535)
Average ordinary shares outstanding 34,944 34,775 34,241
Basic earnings (loss) per ordinary share:
Continuing operations (1) (2) $ (0.78) $ (0.13) $ (2.23)
Before extraordinary item and
cumulative effect of accounting change (0.81) (0.27) (2.73)
Net earnings (loss) (0.81) (0.27) (2.61)
Diluted earnings (loss) per ordinary share:
Continuing operations (1) (2) $ (0.78) $ (0.13) $ (2.23)
Before extraordinary item and
cumulative effect of accounting change (0.81) (0.27) (2.73)
Net earnings (loss) (0.81) (0.27) (2.61)
BALANCE SHEET DATA (IN THOUSANDS):
Net property and equipment $ 399,658 $ 308,498 $ 330,151
Total assets 619,201 616,101 561,931
Long-term debt (3) 315,258 294,441 159,147
Redeemable preference shares of
subsidiaries --- --- 11,399
Shareholders' equity 237,195 263,422 255,432
CERTAIN OIL AND GAS DATA (4) :
Production
Oil (Mbbls) (5) 1,488 2,886 3,691
Gas (MMcf) 3,427 9,078 21,958
Average sales price
Oil (per bbl) $ 16.41 $ 15.15 $ 18.67
Gas (per Mcf) $ 1.44 $ 1.44 $ 1.27
</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 and
1993, 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 and $99.9
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 and
1993, respectively.
(3) Long-term debt does not include current maturities totaling $130.4
million, $199.6 million, $1.3 million, $.3 million, $.3 million and $3.4
million at December 31, 1997, 1996, 1995 and 1994, and May 31, 1994 and 1993,
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 2.5
million, .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,
1997, 1996 and 1995, respectively.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL REQUIREMENTS
--------------------------------
Changes in Working Capital
-----------------------------
Cash, cash equivalents and marketable securities totaled $13.5
million and $14.9 million at December 31, 1997 and 1996, respectively.
Working capital deficit improved to $115.2 million at December 31, 1997,
compared with $182.2 million at December 31, 1996. At December 31, 1997,
borrowings of $164.9 million under the Company's bank credit facilities, which
mature during the period August through November 1998, were classified as a
current liability. Current liabilities included deferred income totaling
$35.3 million and $28.5 million at December 31, 1997 and 1996, respectively,
related to a forward oil sale consummated in 1995.
Refinancing of Debt
---------------------
In April 1997, the Company issued $400 million aggregate face value
of senior indebtedness to refinance other indebtedness. The senior
indebtedness consisted of $200 million face amount of 8 3/4% Senior Notes due
April 15, 2002 (the "2002 Notes"), at 99.942% of the principal amount
(resulting in $199.9 million aggregate net proceeds) and $200 million face
amount of 9 1/4% Senior Notes due April 15, 2005 (the "2005 Notes" and,
together with the 2002 Notes, the "Senior Notes"), at 100% of the principal
amount for total aggregate net proceeds of $399.9 million before deducting
transaction costs of approximately $1 million.
In May and June 1997, the Company offered to purchase all of its
outstanding Senior Subordinated Discount Notes due November 1, 1997 (the "1997
Notes"), and 9 3/4% Senior Subordinated Discount Notes due December 15, 2000
(the "9 3/4% Notes"), resulting in the retirement of the 1997 Notes and
substantially all of the 9 3/4% Notes and the removal of the financial
covenants in the remaining 9 3/4% Notes. At December 31, 1996, $189.9 million
principal amount of the 1997 Notes was classified as a current liability. The
Company's reported cash flows from operating activities for the year ended
December 31, 1997, were reduced by $124.8 million, which was attributable to
the interest accreted with respect to the 1997 Notes and the 9 3/4% Notes
through the dates of retirement.
In February 1998, the Company sold Triton Pipeline Colombia, Inc.
("TPC"), a wholly owned subsidiary that held the Company's 9.6% equity
interest in the Colombian pipeline company, Oleoducto Central S.A. ("OCENSA"),
to an unrelated third party for $100 million. Net proceeds were approximately
$97.7 million after $2.3 million of expenses. The sale resulted in an
aftertax gain of $50.2 million, which will be recorded in the first quarter of
1998. The Company used the proceeds from the sale of the TPC shares and
borrowings under other unsecured credit facilities to repay and terminate its
$125 million unsecured credit facility.
<PAGE>
Funding of Capital Expenditures
----------------------------------
The Company's capital expenditures and other capital investments
were $219.2 million, $252.7 million and $178.2 million during the years ended
December 31, 1997, 1996 and 1995, 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 1997 capital spending program
and repayment of debt were primarily funded with cash flow from operations
($27.4 million, excluding payment of accreted interest on extinguished debt),
issuance of the Senior Notes, and net borrowings under the Company's credit
facilities ($181 million).
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).
The 1995 capital spending program was funded with cash flow from operations
(including a forward sale of Cusiana crude oil - $86.6 million), cash,
proceeds from marketable securities ($42.1 million), sales of assets ($20.9
million) and net borrowings ($36.3 million). In May 1995, the Company sold
10.4 million barrels of oil from the Fields 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 becomes self-financing, which is expected in 1998, and when
certain other conditions are met.
Future Capital Needs
----------------------
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 in the
Malaysia-Thailand Joint Development Area in the Gulf of Thailand, 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, 1998,
is approximately $176 million, excluding capitalized interest, of which
approximately $103 million relates to the Fields, $23 million relates to Block
A-18, and $50 million relates to the Company's activities in other parts of
the world. The 1998 capital budget includes funding requirements for committed
activities only. Substantial capital requirements for Block A-18 are expected
prior to the first deliveries of gas, which are estimated to occur between
30-36 months after signing of a heads of agreement to a gas-sales contract.
The Company expects to fund capital expenditures and repay debt in
the future with a combination of some or all of the following: asset sales
(which may involve interests in material assets), cash flow from operations
(including additional proceeds of $30 million from the 1995 forward oil sale),
cash, credit facilities and additional facilities to be negotiated, and the
issuance of debt and equity securities. Under the most restrictive covenant
in the Company's existing credit facilities, the Company generally could not
permit total indebtedness (as defined in the various agreements) to exceed
$650 million. The limitation on total indebtedness will increase to $725
million once the Fields achieve a production level of 340,000 barrels per day.
At February 28, 1998, the Company had total indebtedness outstanding of
approximately $555 million and available borrowing capacity under unused
credit facilities totaling approximately $45 million. The Company is
currently in negotiations for additional committed bank credit facilities, a
portion of which may be needed to meet the Company's cash needs in 1998.
There can be no assurance that the Company will be able to successfully
negotiate additional credit facilities, and the Company may be required to
seek alternative sources of capital. To facilitate a possible future
securities issuance or issuances, the Company has on file with the Securities
and Exchange Commission a shelf registration statement under which the Company
could issue up to an aggregate of $200 million debt or equity securities.
RESULTS OF OPERATIONS
---------------------
YEAR ENDED DECEMBER 31, 1997,
COMPARED WITH YEAR ENDED DECEMBER 31, 1996
Sales and Other Operating Revenues
--------------------------------------
Sales and other operating revenues were $149.5 million and $134
million in 1997 and 1996, respectively. Revenues in Colombia increased $18.3
million in 1997 due to higher production ($35 million). Revenue barrels in
Colombia, including barrels delivered under the forward oil sale, increased
from 6.4 million barrels in 1996 to 8.2 million barrels in 1997. Volume
increases were partially offset by lower average realized oil prices ($16.8
million) reflecting the increased deliveries under the forward oil sale and a
decrease in the 1997 average West Texas Intermediate ("WTI") oil price,
compared with the prior year. Forward oil sale deliveries, scheduled in 1995
and recorded at $11.56 per barrel, were 29% of sales volumes in 1997, compared
with 10% of the Company's sales volumes in 1996. In April 1997, the Company's
delivery requirement under the forward oil sale increased from 58,425 barrels
per month to 254,136 barrels per month, which had an adverse effect on the
Company's earnings and cash flows on a per-barrel basis during 1997.
Based on the operator's current projections, the Company expects
gross production capacity from the Fields to reach 500,000 barrels per day in
1998. The Company expects that the adverse effect from the forward oil sale
deliveries 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, about the timing of any increase in production.
Subsequent to yearend, the price of oil declined significantly,
which will have a negative effect on earnings and cash flows in the
first-quarter of 1998.
Other operating revenues in 1997 included a gain of $4.1 million
from the sale of the Company's Argentine subsidiary. Other operating revenues
in 1996 included a gain of $4.1 million from the sale of the Company's royalty
interests in U.S. properties.
Costs and Expenses
--------------------
Operating expenses increased $14.7 million in 1997, and
depreciation, depletion and amortization increased $11.2 million, primarily
due to higher production volumes, including barrels delivered under the
forward oil sale. The Company pays lifting costs, production taxes and
transportation costs to the Colombian port of Covenas for barrels to be
delivered under the forward oil sale.
The Company's operating costs per oil equivalent-barrel were $6.47
and $5.77 in 1997 and 1996, respectively. Increased per-barrel costs resulted
from higher OCENSA pipeline tariffs. During 1997, construction of OCENSA's
pipeline system was completed, although its facilities were not utilized to
their capacity due to delays in escalating production in the Fields to 500,000
barrels per day. OCENSA imposes a tariff on shippers from the Fields (the
"Initial Shippers"), which is estimated to recoup: the total capital cost of
the project over a 15-year period; its operating expenses, which include all
Colombian taxes; interest expense; and the dividend to be paid by OCENSA to
its shareholders. Any shippers of crude oil who are not Initial Shippers
("Third Party Shippers") are assessed a tariff on a per-barrel basis, and
OCENSA will use revenues from such tariffs to reduce the Initial Shippers'
tariff.
During 1997 and 1996, the Company paid production taxes on
production from the Cusiana Field totaling $8.5 million, or $1.28 per barrel,
and $8.4 million, or $1.40 per barrel, respectively. Beginning January 1,
1998, no production taxes will be assessed on production from the Cusiana
Field.
General and administrative expenses before capitalization increased
$10.5 million to $61 million in 1997, primarily due to growth of the Company's
operations. Capitalized general and administrative costs were $32.4 million
and $24.6 million in 1997 and 1996, respectively. The increased capitalized
costs reflect the Company's increased exploration activities. At the end of
1997, the Company had licenses to explore for oil and gas on 28 blocks in 12
countries. During 1997, the Company acquired eight new exploration blocks in
five countries, and during 1996, the Company acquired six new exploration
blocks in four countries.
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 increased $8 million primarily due to higher
average debt outstanding during 1997. Capitalized interest totaled $25.8
million and $27.1 million in 1997 and 1996, respectively.
Other income in 1997 included a foreign exchange gain of $9.5
million primarily on deferred tax liabilities in Colombia, compared with a
foreign exchange loss of $.6 million in 1996. During 1997 and 1996, the
Company recorded an unrealized gain (loss) of ($9.7 million) and $11 million,
respectively, representing the change in the fair market value of call options
purchased in anticipation of a forward oil sale. Other income in 1996
included a $10.4 million gain on the sale of the Company's shareholdings in
Crusader Limited ("Crusader"), a $7.6 million benefit for settlement of a
lawsuit in which the Company was plaintiff, and a loss provision of $3.2
million for certain legal matters.
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 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 1997 and 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 Fields reach 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, 1997, the Company had U.S. NOLs of approximately
$406.8 million, and certain U.S. subsidiaries had separate return limitation
years ("SRLY") operating loss carryforwards of approximately $40.6 million,
compared with NOLs of approximately $230.7 million and SRLY operating loss
carryforwards of $50.9 million at December 31, 1996. During 1997, the Company
amended certain prior-year tax returns that increased the Company's unused
NOLs. The NOLs expire from 1998 to 2013, and the SRLY operating loss
carryforwards expire from 1998 to 2002. See note 10 of Notes to Consolidated
Financial Statements.
The Company recorded a deferred tax asset of $87.1 million, net of a
valuation allowance of $75.1 million at December 31, 1997. The valuation
allowance was primarily attributable to management's assessment of the
utilization of NOLs, 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 $249 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 1997 included foreign deferred taxes
totaling $16 million in 1997, primarily related to the Company's Colombian
operations, compared with foreign deferred taxes of $15.4 million in 1996.
Additionally, the income tax provision included a deferred tax benefit in the
United States totaling $7.9 million, compared with a benefit of $23.5 million
in 1996. Current taxes related to the Company's Colombian operations were
$3.4 million and $5.5 million in 1997 and 1996, respectively.
Extraordinary Item
-------------------
The Company's results of operations for the year ended December 31,
1997, included an extraordinary expense of $14.5 million, net of a $7.8
million tax benefit, associated with extinguishment of the 1997 Notes and the
9 3/4% Notes. During the year ended December 31, 1996, the Company recognized
an extraordinary expense of $1.2 million, net of a $.6 million tax benefit,
resulting from the purchase of $30 million face value of its 1997 Notes.
Subsequent Events
------------------
In February 1998, the Company sold TPC, a wholly owned subsidiary
that held the Company's 9.6% equity interest in the Colombian pipeline
company, OCENSA, to an unrelated third party (the "Purchaser") for $100
million. Net proceeds were approximately $97.7 million after $2.3 million of
expenses. The sale resulted in an aftertax gain of $50.2 million, which will
be recorded in the first quarter of 1998.
In conjunction with the sale of TPC, the Company entered into a
five-year equity swap with a creditworthy financial institution (the
"Counterparty"). The equity swap has a notional amount of $97 million and
requires the Company to make floating LIBOR-based payments on the notional
amount to the Counterparty. In exchange, the Counterparty is required to make
payments to the Company equivalent to 97% of the dividends TPC receives with
respect to its equity interest in OCENSA. Upon a sale by the Purchaser of the
TPC shares, the Company will receive from the Counterparty, or make a cash
payment to the Counterparty, an amount equal to the excess or deficiency, as
applicable, of the difference between 97% of the net proceeds from the
Purchaser's sale of the TPC shares and the notional amount. The equity swap
will be carried in the Company's financial statements at fair value during the
five-year term. Fluctuations in the fair value of the equity swap will affect
other income as noncash adjustments.
<PAGE>
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. Revenues 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 6.4 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.
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 oil 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.
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.
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 WTI
benchmark call options purchased in 1995. These gains were offset by $3.2
million in loss provisions for certain 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
-------------
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. 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 Argentine assets, which lowered taxes by
$3.7 million in 1996 compared with 1995.
Discontinued Operations
------------------------
The results of operations for the aviation sales and services
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.
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 (WTI). Actual prices received vary from the
benchmark depending on quality and location differentials. From time to time,
it is the Company's policy to use financial market transactions, including
swaps, collars and options, with creditworthy counterparties 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.
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. During the years
ended December 31, 1997, 1996 and 1995, the Company recorded an unrealized
gain (loss) of ($9.7 million), $11 million and ($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, 1997, markets provided the
Company the opportunity to realize WTI benchmark oil prices on average $2.35
per barrel above the WTI benchmark oil price the Company set as part of its
1997 annual plan. As a result of financial and commodity market transactions
settled during the year ended December 31, 1997, the Company's risk management
program resulted in an average net realization of approximately $.11 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. With respect to expenditures denominated in currencies
other than the U.S. dollar, the Company generally converts U.S. dollars to the
local currency near the applicable payment dates to minimize exposure to
losses caused by holding foreign currency deposits. During the three-year
period ended December 31, 1997, the Company did not realize any material
foreign exchange losses from its international operations.
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. Financial information concerning
the Company's assets, including capitalized costs by geographic area, is in
note 21 of Notes to Consolidated Financial Statements.
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 may remain liable for certain environmental matters
that may arise from formerly owned fuel businesses. 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.
<PAGE>
Recent Accounting and Disclosure Pronouncements
-----------------------------------------------
In January 1997, the Securities and Exchange Commission issued
"Disclosure of Accounting Policies for Derivative Financial Instruments and
Derivative Commodity Instruments and Disclosure of Quantitative and
Qualitative Information about Market Risk Inherent in Derivative Financial
Instruments, Other Financial Instruments, and Derivative Commodity
Instruments." The rule amends and expands existing disclosure requirements to
include quantitative and qualitative information about market risks inherent
in market-risk sensitive instruments, including derivative financial
instruments, other financial instruments and derivative commodity financial
instruments. The Company is required to adopt the disclosure requirements for
quantitative and qualitative information beginning with filings with the
Commission that include the Company's annual financial statements for the year
ended December 31, 1998. The required quantitative and qualitative
information must be disclosed outside the financial statements and related
notes thereto.
In 1997, the Financial Accounting Standards Board issued Statement
No. 128 ("SFAS 128"), "Earnings Per Share." This Statement is effective for
financial statements issued for periods ending after December 15, 1997. SFAS
128 requires the presentation of basic and diluted earnings per share for
entities with complex capital structures. Prior-year earnings per share
amounts have been restated to conform with SFAS 128.
In June 1997, the Financial Accounting Standards Board issued
Statement No. 130 ("SFAS 130"), "Reporting Comprehensive Income."
Comprehensive income includes net income and several other items that current
accounting standards require to be recognized outside of net income. This
standard established standards for reporting and display of comprehensive
income and its components, specifically net income and all other changes in
shareholders' equity except those resulting from investments by and
distributions to shareholders. SFAS 130 is effective for fiscal years
beginning after December 15, 1997, and the Company will adopt the standard for
its fiscal year beginning January 1, 1998. This statement will not have any
effect on the Company's results of operations or financial position.
In June 1997, the Financial Accounting Standards Board issued
Statement No. 131 ("SFAS 131"), "Disclosures about Segments of an Enterprise
and Related Information," replacing Statement No. 14 and its amendments. This
standard requires enterprises to report certain information about operating
segments in annual financial statements to shareholders. Additionally, it
requires that enterprises report selected information about operating segments
in interim financial reports issued to shareholders. The basis for
determining an enterprise's operating segments is the manner in which
financial information is used internally by the enterprise's chief operating
decision maker. SFAS 131 is effective for fiscal years beginning after
December 15, 1997, and the Company intends to adopt the standard in fiscal
year 1998. This statement will not have any effect on the Company's results
of operations or financial position.
Information Systems and the Year 2000
-------------------------------------
The Company has reviewed its operational, financial and other
information systems for potential conflicts with the Year 2000. The Company
believes that the Year 2000 will not cause any significant disruptions to its
information systems, and any costs to resolve Year 2000 issues will not be
material.
The Company has begun an investigation into the potential impact to
its operations caused by Year 2000 problems that may occur at third parties,
including its oil and gas partners, financial institutions, and vendors. The
Company has identified certain third parties that may encounter Year 2000
problems, but has not yet determined the potential impact to the Company's
operations or the costs to the Company, if any, associated with these issues.
The Company intends to engage a third-party Year 2000 consultant in 1998 to
validate the Company's assumptions and identify nonconformance.
Certain Factors that Could Affect Future Operations
-------------------------------------------------
Certain statements in this report, including expectations,
intentions, plans and beliefs of the Company and management, 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 and schedules
for the start-up of production facilities; expected or planned production or
transportation capacity; when the Fields might become self-financing; future
production of the Fields; the negotiation of a heads of agreement to a
gas-sales contract and 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 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; the impact of Year 2000 issues; 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 19 and 20 of Notes to Consolidated Financial Statements.
<PAGE>
ITEM 7. A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
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 1998 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 1998. 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.)
<TABLE>
<CAPTION>
<C> <S>
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)(23)
10.2 Amended and Restated Supplemental Executive Retirement Income Plan.(23)(24)
10.3 1981 Employee Non-Qualified Stock Option Plan.(6)(23)
10.4 Amendment No. 1 to the 1981 Employee Non-Qualified Stock Option Plan.(7)(23)
10.5 Amendment No. 2 to the 1981 Employee Non-Qualified Stock Option Plan.(6)(23)
10.6 Amendment No. 3 to the 1981 Employee Non-Qualified Stock Option Plan.(5)(23)
10.7 1985 Stock Option Plan.(8)(23)
10.8 Amendment No. 1 to the 1985 Stock Option Plan.(6)(23)
10.9 Amendment No. 2 to the 1985 Stock Option Plan.(5)(23)
10.10 Amended and Restated 1986 Convertible Debenture Plan.(5)(23)
10.11 1988 Stock Appreciation Rights Plan.(9)(23)
10.12 1989 Stock Option Plan.(10)(23)
10.13 Amendment No. 1 to 1989 Stock Option Plan.(6)(23)
10.14 Amendment No. 2 to 1989 Stock Option Plan.(5)(23)
10.15 Second Amended and Restated 1992 Stock Option Plan.(11)(23)
10.16 Form of Amended and Restated Employment Agreement with Triton Energy Limited
and its executive officers.(23)(24)
10.17 Form of Amended and Restated Employment Agreement with Triton Energy Limited
and certain officers.(23)(24)
10.18 Amended and Restated 1985 Restricted Stock Plan.(5)(23)
10.19 First Amendment to Amended and Restated 1985 Restricted Stock Plan.(13)(23)
10.20 Second Amendment to Amended and Restated 1985 Restricted Stock Plan.(11)(23)
10.21 Executive Life Insurance Plan.(14)(23)
10.22 Long Term Disability Income Plan.(14)(23)
10.23 Amended and Restated Retirement Plan for Directors.(8)(23)
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.(11)
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.(11)
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.(8)
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.(9)
10.28 Summary of Assignment legalized by Public Instrument No. 1255 dated September 15,
1987 (Assignment is in Spanish language).(9)
10.29 Summary of Assignment legalized by Public Instrument No. 1602 dated June 11, 1990
(Assignment is in Spanish language).(9)
10.30 Summary of Assignment legalized by Public Instrument No. 2586 dated September 9,
1992 (Assignment is in Spanish language).(9)
10.31 401(K) Savings Plan.(5)(23)
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.(13)
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.(13)
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.(11)
10.37 Amendment No. 3 to Credit Agreement among Triton Colombia, Inc., Triton Energy
Corporation, NationsBank, N.A. (Carolinas) and Export-Import Bank of the United
States.(24)
10.38 Agreement and Plan of Merger among Triton Energy Corporation, Triton Energy
Limited and TEL Merger Corp.(13)
10.39 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)
10.40 Form of Indemnity Agreement entered into with each director and officer of the
Company.(17)
10.41 Restated Employment Agreement between John Tatum and the Company. (12)(23)
10.42 Description of Performance Goals for Executive Bonus Compensation. (12)(23)
10.43 Stock Purchase Agreement dated September 2, 1997 between The Strategic
Transaction Company and Triton International Petroleum, Inc. ( 24)
10.44 Fourth Amendment to Stock Purchase Agreement dated February 2, 1998 between
The Strategic Transaction Company and Triton International Petroleum, Inc. (24 )
10.45 Supplemental Indenture dated April 17, 1997 among Triton Energy Corporation
Triton Energy Limited and The Chase Manhattan Bank (formerly known as
Chemical Bank) amending Amended and Restated Indenture dated as of March 25, 1996
relating to the Senior Subordinated Discount Notes due 1997. (18)
10.46 Supplemental Indenture dated April 17, 1997 among Triton Energy Corporation,
Triton Energy Limited and United States Trust Company of New York amending
Amended and Restated Senior Subordinated Indenture dated as of March 25,
1996 relating to the 9 3/4% Senior Subordinated Discount Notes due 2000. (18)
10.47 Senior Indenture dated April 10, 1997 among Triton Energy Limited and The
Chase Manhattan Bank. (18)
10.48 First Supplemental Indenture dated April 10, 1997 among Triton Energy Corporation,
Triton Energy Limited and The Chase Manhattan Bank amending Senior
Indenture dated as of April 10, 1997 relating to the 8 3/4% Senior
Notes due 2002. (18)
10.49 Second Supplemental Indenture dated April 10, 1997 among Triton Energy Corporation,
Triton Energy Limited and The Chase Manhattan Bank amending Senior
Indenture dated as of April 10, 1997 relating to the 9 1/4% Senior Notes
due 2005. (18)
10.50 First Amendment to Credit Agreement dated as of April 4, 1997 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. (18)
10.51 1997 Share Compensation Plan. (18)(23)
10.52 First Amendment to 1997 Share Compensation Plan. (23 )(24)
10.53 First Amendment to Amended and Restated Retirement Plan for Directors.(23)(24)
10.54 First Amendment to Second Amended and Restated 1992 Stock Option Plan. (18)(23)
10.55 Second Amendment to Second Amended and Restated 1992 Stock Option Plan. (23)(24)
10.56 Agreement to Release Triton Energy Corporation and Second Amendment
to Credit Agreement dated as of July 21, 1997 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. (19)
10.57 Amended and Restated Indenture dated July 25, 1997 between Triton Energy
Limited and The Chase Manhattan Bank. (19)
10.58 Amended and Restated First Supplemental Indenture dated July 25, 1997
between Triton Energy Limited and The Chase Manhattan Bank relating
to the 8 3/4% Senior Notes due 2002. (19)
10.59 Amended and Restated Second Supplemental Indenture dated July 25, 1997
between Triton Energy Limited and The Chase Manhattan Bank relating
to the 9 1/4% Senior Notes due 2005. (19)
10.60 Third Amendment to Credit Agreement dated as of September 30, 1997
among Triton Energy Limited, NationsBank of Texas, N.A., Barclays Bank PLC,
MeesPierson N.V., The Chase Manhattan Bank and Societe Generale,
Southwest Agency. (20)
12.1 Computation of Ratio of Earnings to Fixed Charges. (24)
12.2 Computation of Ratio of Earnings to Combined Fixed Charges and Preference
Dividends(24)
21.1 Subsidiaries of the Company.(24)
23.1 Consent of Price Waterhouse LLP.(24)
23.2 Consent of DeGolyer and MacNaughton.(24)
24.1 The power of attorney of officers and directors of the Company (set forth on the
signature page hereof).(24)
27.1 Financial Data Schedule.(24)
99.1 Rio Chitamena Association Contract.(21)
99.2 Rio Chitamena Purchase and Sale Agreement.(21)
99.3 Integral Plan - Cusiana Oil Structure.(21)
99.4 Letter Agreements with co-investor in Colombia.(21)
99.5 Colombia Pipeline Memorandum of Understanding.(21)
99.6 Amended and Restated Oleoducto Central S.A. Agreement dated as of March 31,
1995.(22)
</TABLE>
____________________
<TABLE>
<CAPTION>
<C> <S>
(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 Annual Report on Form
10-K for the fiscal year ended May 31, 1992 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, 1989 and incorporated by reference herein.
(8) 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.
(9) 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.
(10) 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.
(11) 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.
(12) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1996 and incorporated herein by
reference.
(13) 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.
(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 the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997 and incorporated herein by reference.
(19) Previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997 and incorporated herein by reference.
(20) Previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997 and incorporated herein by reference.
(21) 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.
(22) 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.
(23) Management contract or compensatory plan or arrangement.
(24) Filed herewith.
</TABLE>
(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 27
day of March, 1998.
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, 1997, 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 27 day of
March, 1998.
Signatures Title
---------- -----
/s/Thomas G. Finck Chairman of the Board and Chief
- ------------------------------------- Financial Officer
Thomas G. Finck
/s/Peter Rugg Senior Vice President and
- ------------------------------------- Chief Financial Officer
Peter Rugg (Principal Accounting and
Financial Officer)
/s/John P. Lewis Director March 17, 1998
- -------------------------------------
John P. Lewis
/s/Michael E. McMahon Director March 17, 1998
- -------------------------------------
Michael E. McMahon
/s/Ernest E. Cook Director March 17, 1998
- -------------------------------------
Ernest E. Cook
/s/Sheldon R. Erikson Director March 17, 1998
- -------------------------------------
Sheldon R. Erikson
/s/Jesse E. Hendricks Director March 17, 1998
- ---------------------------------------
Jesse E. Hendricks
/s/Fitzgerald S. Hudson Director March 17, 1998
- ---------------------------------------
Fitzgerald S. Hudson
/s/John R. Huff Director March 17, 1998
- ---------------------------------------
John R. Huff
/s/Thomas P. Kellogg, Jr. Director March 17, 1998
- ---------------------------------------
Thomas P. Kellogg, Jr.
/s/Edwin D. Williamson Director March 17, 1998
- ---------------------------------------
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, 1997, 1996
and 1995 F-3
Consolidated Balance Sheets - December 31, 1997 and 1996 F-4
Consolidated Statements of Cash Flows - Years ended December 31, 1997, 1996
and 1995 F-5
Consolidated Statements of Shareholders' Equity - Years ended December 31, 1997,
1996 and 1995 F-6
Notes to Consolidated Financial Statements F-7
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
SCHEDULE:
II - Valuation and Qualifying Accounts - Years ended December 31, 1997,
1996 and 1995 F-47
</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 listed in the
accompanying index present fairly, in all material respects, the financial
position of Triton Energy Limited and its subsidiaries at December 31, 1997
and 1996, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1997, 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 5, 1998
<PAGE>
TRITON ENERGY LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31,
--------------------------------
1997 1996 1995
---------- --------- ---------
SALES AND OTHER OPERATING REVENUES:
Oil and gas sales $ 145,419 $129,795 $106,844
Other operating revenues 4,077 4,182 628
---------- --------- ---------
149,496 133,977 107,472
---------- --------- ---------
COSTS AND EXPENSES:
Operating 51,357 36,654 35,276
General and administrative 28,607 25,945 25,672
Depreciation, depletion and amortization 36,828 25,640 23,208
Writedown of assets --- 42,960 ---
---------- --------- ---------
116,792 131,199 84,156
---------- --------- ---------
OPERATING INCOME 32,704 2,778 23,316
Interest income 5,178 6,703 7,954
Interest expense, net (23,858) (15,897) (24,055)
Other income, net 2,872 27,361 9,385
---------- --------- ---------
(15,808) 18,167 (6,716)
---------- --------- ---------
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES AND EXTRAORDINARY ITEM 16,896 20,945 16,600
Income tax expense (benefit) 11,301 (2,860) 10,059
---------- --------- ---------
5,595 23,805 6,541
DISCONTINUED OPERATIONS:
Loss from operations --- --- (1,858)
Loss on disposal --- --- (1,963)
---------- --------- ---------
EARNINGS BEFORE EXTRAORDINARY ITEM 5,595 23,805 2,720
Extraordinary item - extinguishment of debt (14,491) (1,196) ---
---------- --------- ---------
NET EARNINGS (LOSS) (8,896) 22,609 2,720
DIVIDENDS ON PREFERENCE SHARES 400 985 802
---------- --------- ---------
EARNINGS (LOSS) APPLICABLE TO ORDINARY SHARES $ (9,296) $ 21,624 $ 1,918
---------- --------- ---------
Average ordinary shares outstanding 36,471 35,929 35,147
---------- --------- ---------
BASIC EARNINGS (LOSS) PER ORDINARY SHARE:
Continuing operations $ 0.14 $ 0.64 $ 0.16
Discontinued operations --- --- (0.11)
Extraordinary item (0.40) (0.03) ---
---------- --------- ---------
NET EARNINGS (LOSS) $ (0.26) $ 0.61 $ 0.05
---------- --------- ---------
DILUTED EARNINGS (LOSS) PER ORDINARY SHARE:
Continuing operations $ 0.14 $ 0.62 $ 0.16
Discontinued operations --- --- (0.11)
Extraordinary item (0.39) (0.03) ---
---------- --------- ---------
NET EARNINGS (LOSS) $ (0.25) $ 0.59 $ 0.05
---------- --------- ---------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
TRITON ENERGY LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS DECEMBER 31,
------------------------
1997 1996
------------ ----------
CURRENT ASSETS:
Cash and equivalents $ 13,451 $ 11,048
Short-term marketable securities --- 3,866
Trade receivables, net 12,963 11,526
Other receivables 52,162 49,000
Inventories, prepaid expenses and other 5,219 8,920
Assets held for sale 58,178 ---
------------ ----------
TOTAL CURRENT ASSETS 141,973 84,360
Property and equipment, at cost, net 835,506 676,833
Deferred income taxes 87,148 71,416
Investments and other assets 33,412 81,915
------------ ----------
$ 1,098,039 $ 914,524
------------ ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 130,375 $ 199,552
Short-term borrowings 54,600 ---
Accounts payable and accrued liabilities 36,964 38,545
Deferred income 35,254 28,466
------------ ----------
TOTAL CURRENT LIABILITIES 257,193 266,563
Long-term debt, excluding current maturities 443,312 217,078
Deferred income taxes 50,968 45,431
Deferred income and other 49,946 84,808
Convertible debentures due to employees --- ---
SHAREHOLDERS' EQUITY:
Preference shares, par value $.01; authorized
20,000,000 shares; issued 218,285 and 247,469
shares at December 31, 1997 and 1996, respectively;
stated value $34.41 7,511 8,515
Ordinary shares, par value $.01; authorized
200,000,000 shares; issued 36,541,064 and
36,342,181 shares at December 31, 1997 and
1996, respectively 365 363
Additional paid-in capital 588,454 582,581
Accumulated deficit (297,581) (288,685)
Other (2,126) (2,128)
------------ ----------
296,623 300,646
Less cost of ordinary shares in treasury 3 2
------------ ----------
TOTAL SHAREHOLDERS' EQUITY 296,620 300,644
Commitments and contingencies (note 20) --- ---
------------ ----------
$ 1,098,039 $ 914,524
------------ ----------
</TABLE>
The Company uses the full cost method to account for its oil- and
gas-producing activities.
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
TRITON ENERGY LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31,
------------------------------------
1997 1996 1995
------------ ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ (8,896) $ 22,609 $ 2,720
Adjustments to reconcile net earnings to net cash provided
(used) by operating activities:
Depreciation, depletion and amortization 36,828 25,640 23,467
Amortization of debt discount 7,949 15,897 23,928
Proceeds from forward oil sale --- --- 86,610
Amortization of deferred income (28,467) (8,105) (4,725)
Gain on sale of assets, net (5,486) (15,831) (2,938)
Payment of accreted interest on extinguishment of debt (124,794) --- ---
Extraordinary loss on extinguishment of debt, net of tax 14,491 1,196 ---
Writedowns, loss provisions and discontinued operations --- 45,753 7,192
Deferred income taxes 8,078 (8,115) 5,444
Other, net 6,100 (7,655) (536)
Changes in working capital:
Marketable debt securities - trading 1,856 4,149 8,074
Receivables (2,408) (5,048) (1,677)
Inventories, prepaid expenses and other (62) (787) (790)
Accounts payable and accrued liabilities (2,605) 11,002 2,325
------------ ---------- ----------
Net cash provided (used) by operating activities (97,416) 80,705 149,094
------------ ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures and investments (219,216) (252,684) (178,161)
Purchases of investments and marketable securities --- --- (45,281)
Proceeds from sale of investments and marketable securities 2,000 38,507 42,050
Proceeds from sale of shareholdings in Crusader --- 69,583 ---
Sales of property and equipment and other assets 5,899 38,505 20,866
Other (1,383) 571 732
------------ ---------- ----------
Net cash used by investing activities (212,700) (105,518) (159,794)
------------ ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving lines of credit and long-term debt 620,413 53,911 85,627
Payments on revolving lines of credit and long-term debt (321,515) (70,884) (39,366)
Short-term notes payable, net 9,600 --- (10,000)
Issuance of ordinary shares 5,260 5,874 8,398
Other (390) (1,879) (5,756)
------------ ---------- ----------
Net cash provided (used) by financing activities 313,368 (12,978) 38,903
------------ ---------- ----------
Effects of exchange rate changes on cash and equivalents (849) (211) (1,494)
------------ ---------- ----------
Net increase (decrease) in cash and equivalents 2,403 (38,002) 26,709
CASH AND EQUIVALENTS AT BEGINNING OF YEAR 11,048 49,050 22,341
------------ ---------- ----------
CASH AND EQUIVALENTS AT END OF YEAR $ 13,451 $ 11,048 $ 49,050
------------ ---------- ----------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
TRITON ENERGY LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31,
-----------------------------------
1997 1996 1995
----------- ---------- ----------
PREFERENCE SHARES:
Balance at beginning of year $ 8,515 $ 14,109 $ 17,976
Conversion of 5% preference shares (1,004) (5,594) (3,867)
----------- ---------- ----------
Balance at end of year 7,511 8,515 14,109
----------- ---------- ----------
ORDINARY SHARES:
Balance at beginning of year 363 35,927 35,577
Exercise of employee stock options and debentures 2 81 238
Conversion of 5% preference shares --- 153 112
Reduction in par value --- (35,783) ---
Other, net --- (15) ---
----------- ---------- ----------
Balance at end of year 365 363 35,927
----------- ---------- ----------
ADDITIONAL PAID-IN CAPITAL:
Balance at beginning of year 582,581 516,326 505,256
Cash dividends, 5% preference shares (400) (985) (802)
Exercise of employee stock options and debentures 3,831 7,974 8,160
Issuances under stock plans 1,427 702 313
Conversion of 5% preference shares 1,004 5,441 3,755
Reduction in par value --- 35,783 ---
Sale of shareholdings in Crusader --- 20,413 ---
Other, net 11 (3,073) (356)
----------- ---------- ----------
Balance at end of year 588,454 582,581 516,326
----------- ---------- ----------
ACCUMULATED DEFICIT:
Balance at beginning of year (288,685) (311,294) (314,014)
Net earnings (loss) (8,896) 22,609 2,720
----------- ---------- ----------
Balance at end of year (297,581) (288,685) (311,294)
----------- ---------- ----------
FOREIGN CURRENCY TRANSLATION ADJUSTMENT:
Balance at beginning of year (2,126) (8,616) (5,639)
Sale of foreign operations --- --- (3,268)
Sale of shareholdings in Crusader --- 4,890 ---
Translation rate changes --- 1,600 291
----------- ---------- ----------
Balance at end of year (2,126) (2,126) (8,616)
----------- ---------- ----------
OTHER, NET:
Balance at beginning of year (2) (89) (1,384)
Valuation reserve on marketable securities 2 87 1,295
----------- ---------- ----------
Balance at end of year --- (2) (89)
----------- ---------- ----------
TREASURY SHARES:
Balance at beginning of year (2) (338) (577)
Purchase of treasury shares (1) (5) (4)
Transfer of shares to employee benefit plans --- 137 243
Retirement of treasury shares --- 204 ---
----------- ---------- ----------
Balance at end of year (3) (2) (338)
----------- ---------- ----------
TOTAL SHAREHOLDERS' EQUITY $ 296,620 $ 300,644 $ 246,025
----------- ---------- ----------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
TRITON ENERGY LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN TABLES IN THOUSANDS, EXCEPT FOR SHARE, PER SHARE AND PER BARREL
DATA)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
Triton Energy Limited ("Triton") is an international oil and gas exploration
and production company. 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. The Company is
actively exploring for oil and gas in these areas, as well as in southern
Europe, Africa, Asia and the Middle East. All sales are currently derived
from oil and gas production in Colombia.
Triton, a Cayman Islands company, was incorporated in 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 Triton ordinary
share, par value $.01, and one 5% Triton preference share, respectively. The
Reorganization has been accounted for as a combination of entities under
common control.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Triton and its
majority-owned subsidiaries. All 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.
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 estimated
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 20 years.
Repairs and maintenance are expensed as incurred, and renewals and
improvements are capitalized.
<PAGE>
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. Costs of future expenditures for
environmental remediation obligations are not discounted to their present
value.
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.
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. From time to time, it is the Company's policy to use financial
market transactions, including swaps, collars and options, with creditworthy
counterparties 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 results of operations for the Company's aviation sales and services
segment in 1995 have been reported as discontinued operations.
Certain other previously reported financial information has been reclassified
to conform to the current period's presentation.
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 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.
EARNINGS PER ORDINARY SHARE
In 1997, the Financial Accounting Standards Board issued Statement No. 128
("SFAS 128"), "Earnings Per Share." This Statement is effective for financial
statements issued for periods ending after December 15, 1997. SFAS 128
requires the presentation of basic and diluted earnings per share for entities
with complex capital structures. Prior-year earnings per share amounts have
been restated to conform with SFAS 128.
Basic 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 shares outstanding during the period.
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. Diluted earnings (loss) per ordinary share is calculated
to show earnings per share assuming the conversion of all securities that are
exercisable or convertible into ordinary shares that would dilute the basic
earnings per ordinary share during the period.
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 1997, the Company sold its Argentine subsidiary for cash proceeds of
$4.1 million and recognized a gain of $4.1 million in other operating
revenues.
In June and July 1996, the Company sold its 49.9% shareholdings in Crusader
for total cash proceeds of $69.6 million in conjunction with a May 1996
takeover bid 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 Triton owned.
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. 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
shareholders' 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. Revenues and net loss
for the aviation sales and services segment during the year ended December 31,
1995, were $4.7 million and $2 million, respectively.
3. FORWARD SALE OF COLOMBIAN OIL PRODUCTION
In May 1995, the Company sold 10.4 million barrels of oil from the Cusiana and
Cupiagua fields (the "Fields") in Colombia 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 becomes self-financing, which is expected in 1998, and when
certain other conditions are met. At December 31, 1997, proceeds held in
interest-bearing reserve accounts of $31.8 million and $3 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. Under the terms of the agreement, the Company must 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. OTHER RECEIVABLES
Other receivables consisted of the following:
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31,
----------------
1997 1996
------- -------
Receivable from the forward oil sale $31,770 $30,000
Receivable from partners 11,152 5,371
Central Llanos pipeline upgrade receivable --- 6,380
Other 9,240 7,249
------- -------
$52,162 $49,000
------- -------
</TABLE>
<PAGE>
5. ASSETS HELD FOR SALE
Assets held for sale consisted of the following:
<TABLE>
<CAPTION>
<S> <C>
DECEMBER 31,
1997
-------------
Investment in OCENSA $ 47,429
Corporate assets 10,749
-------------
$ 58,178
-------------
</TABLE>
The Company's wholly owned subsidiary, Triton Pipeline Colombia, Inc. ("TPC"),
owns the Company's 9.6% equity interest in Oleoducto Central S.A. ("OCENSA").
See note 22 - Subsequent Events.
6. PROPERTY AND EQUIPMENT
Property and equipment, at cost, are summarized as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31,
-----------------
1997 1996
-------- --------
Oil and gas properties, full cost method:
Evaluated $518,580 $465,097
Unevaluated 130,626 82,997
Support equipment and facilities 250,193 194,116
Other 25,121 31,044
-------- --------
924,520 773,254
Less accumulated depreciation and depletion 89,014 96,421
-------- --------
$835,506 $676,833
-------- --------
</TABLE>
The Company capitalizes interest on qualifying assets, principally unevaluated
oil and gas properties and major development projects in progress.
Capitalized interest amounted to $25.8 million, $27.1 million and $16.2
million in the years ended December 31, 1997, 1996 and 1995, respectively.
The Company capitalized general and administrative expenses related to
exploration and development activities of $32.4 million, $24.6 million and
$21.1 million in the years ended December 31, 1997, 1996 and 1995,
respectively.
Evaluated oil and gas properties and accumulated depreciation and depletion
were reduced by $40 million each in 1997 due to the Company's sale of Triton
Argentina, Inc. In 1996, evaluated oil and gas properties and accumulated
depreciation and depletion were reduced by $246.9 million and $228.3 million,
respectively, due to the sales of the Company's royalty interests in U.S.
properties and the assets of Triton Indonesia, Inc.
<PAGE>
7. INVESTMENTS AND OTHER ASSETS
Investments and other assets consisted of the following:
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31,
----------------
1997 1996
------- -------
Investment in OCENSA $ --- $34,311
Investment in ODC 11,108 11,108
WTI benchmark call options 2,678 11,048
Unamortized debt issue costs 2,538 6,878
Receivable from the forward oil sale 3,013 5,613
Other 14,075 12,957
------- -------
$33,412 $81,915
------- -------
</TABLE>
The Company owns approximately 6.6% of 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 $2 million, $3.6 million and $2.3 million in the years ended December 31,
1997, 1996 and 1995, respectively.
8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities are summarized as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31,
----------------
1997 1996
------- -------
Accrued exploration and development $12,903 $21,082
Accrued interest payable 9,449 2,046
Accounts payable, principally trade 5,819 2,697
Litigation and environmental matters 2,715 3,282
Other 6,078 9,438
------- -------
$36,964 $38,545
------- -------
</TABLE>
<PAGE>
9. DEBT
SHORT-TERM BORROWINGS
At December 31, 1997, the Company had outstanding borrowings of $9.6 million
under a $10 million unsecured demand promissory note with a bank that renews
monthly. Borrowings bear interest at LIBOR plus .75%.
At December 31, 1997, the Company had outstanding borrowings totaling $45
million under two unsecured revolving credit facilities with banks providing
for borrowings of up to $30 million and $25 million, respectively. Borrowings
bear interest at various spreads over the Eurodollar rate or, at the option of
the Company, at LIBOR or prime. The revolving credit facilities contain
certain covenants requiring certain levels of production and limiting the
incurrence of certain liens, sales/leaseback transactions, dividends on
ordinary shares, and mergers and consolidations.
The weighted average interest rates on short-term borrowings outstanding at
December 31, 1997, was 7.3%.
LONG-TERM DEBT
A summary of long-term debt follows:
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31,
------------------
1997 1996
-------- --------
Senior Notes due 2005 $200,000 $ ---
Senior Notes due 2002 199,900 ---
Revolving credit facility maturing 1998 119,900 11,000
Term credit facility maturing 2001 31,595 40,622
Revolving credit facility maturing 1999 17,500 ---
Senior Subordinated Discount Notes due 2000 854 170,000
Senior Subordinated Discount Notes due 1997 --- 189,869
Other notes and capitalized leases 3,938 5,139
-------- --------
573,687 416,630
Less current maturities 130,375 199,552
-------- --------
$443,312 $217,078
-------- --------
</TABLE>
<PAGE>
In April 1997, the Company issued $400 million aggregate face value of senior
indebtedness to refinance other indebtedness. The senior indebtedness
consisted of $200 million face amount of 8 3/4% Senior Notes due April 15,
2002 (the "2002 Notes"), at 99.942% of the principal amount (resulting in
$199.9 million aggregate net proceeds) and $200 million face amount of 9 1/4%
Senior Notes due April 15, 2005 (the "2005 Notes" and, together with the 2002
Notes, the "Senior Notes"), at 100% of the principal amount, for total
aggregate net proceeds of $399.9 million before deducting transaction costs of
approximately $1 million.
Interest on the Senior Notes is payable semi-annually on April 15 and October
15 commencing October 15, 1997. The Senior Notes are redeemable at any time
at the option of the Company, in whole or in part, and contain certain
covenants limiting the incurrence of certain liens, sale/leaseback
transactions, and mergers and consolidations.
In November 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.
In 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 is payable semi-annually
on June 15 and December 15, beginning on June 15, 1997.
In May and June 1997, the Company completed a tender offer and consent
solicitation with respect to the 1997 Notes and the 9 3/4% Notes that resulted
in the retirement of the 1997 Notes and substantially all of the 9 3/4% Notes.
The Company's results of operations included an extraordinary expense of
$14.5 million, net of a $7.8 million tax benefit, associated with the
extinguishment of the 1997 Notes and the 9 3/4% Notes. The Company's reported
cash flows from operating activities for the year ended December 31, 1997,
were reduced by $124.8 million, which was attributable to the interest
accreted with respect to the 1997 Notes and the 9 3/4% Notes through the dates
of retirement.
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.
During 1997, the Company signed two unsecured bank revolving credit facilities
providing for borrowings of up to $50 million and $25 million, respectively,
that mature in November and December 1999, respectively. Borrowings bear
interest at various spreads over the Eurodollar rate or, at the Company's
option, at LIBOR or prime. The revolving credit facilities contain certain
covenants requiring certain levels of production and limiting the incurrence
of certain liens, sales/leaseback transactions, dividends on ordinary shares,
and mergers and consolidations. Under the most restrictive covenant in the
Company's existing credit facilities, the Company generally could not permit
total indebtdness (as defined in the various agreements) to exceed $650
million. At December 31, 1997, the Company had outstanding borrowings of
$17.5 million under the $50 million 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. 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. At
December 31, 1997, the Company had outstanding borrowings of $119.9 million
and letters of credit for $4.5 million under the facility. See note 22 -
Subsequent Events.
In November 1995, a subsidiary 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 plus .25%, adjusted on a
semi-annual basis. At December 31, 1997, the Company had outstanding
borrowings of $31.6 million under the facility.
The aggregate maturities of long-term debt for the five years during the
period ending December 31, 2002, are as follows: 1998 -- $130.4 million; 1999
- -- $27.1 million; 2000 -- $9.6 million; 2001 -- $5.1 million; and 2002 --
$200.4 million.
10. INCOME TAXES
The components of earnings (loss) from continuing operations before income
taxes and extraordinary item were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31,
--------------------------------
1997 1996 1995
---------- --------- ---------
Cayman Islands $ (12,969) $ (452) $ ---
United States (31,694) (16,641) (21,412)
Foreign - other 61,559 38,038 38,012
---------- --------- ---------
$ 16,896 $ 20,945 $ 16,600
---------- --------- ---------
</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.
<PAGE>
The components of the provision for income taxes on continuing operations were
as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31,
-------------------------------
1997 1996 1995
--------- --------- ---------
Current:
Cayman Islands $ --- $ --- $ ---
United States (7) (172) 627
Foreign - other 3,230 5,427 3,988
--------- --------- ---------
Total current 3,223 5,255 4,615
--------- --------- ---------
Deferred:
Cayman Islands --- --- ---
United States (7,929) (23,489) (12,797)
Foreign - other 16,007 15,374 18,241
--------- --------- ---------
Total deferred 8,078 (8,115) 5,444
--------- --------- ---------
Total $ 11,301 $ (2,860) $ 10,059
--------- --------- ---------
</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>
YEAR ENDED DECEMBER 31,
------------------------
1997 1996 1995
-------- ------- ------
Tax provision at statutory tax rate 0.0 % 0.0 % 35.0 %
Increase (decrease) resulting from:
Net change in valuation allowance 263.0 % (111.6)% (201.6)%
Recognition of outside basis adjustments --- % (20.3)% (107.6)%
Foreign items without tax benefit 77.8 % 25.8 % 23.9 %
Income tax rate changes --- % --- % 16.9 %
Income subject to tax in excess of statutory rate 36.9 % 58.4 % --- %
Branch loss recapture/Subpart F --- % --- % 97.1 %
Current year change in NOL/credit carryforwards (356.7)% (59.2)% 51.2 %
Temporary differences:
Oil and gas basis adjustments 32.5 % 80.6 % 116.4 %
Reimbursement of pre-commerciality costs 13.2 % 10.9 % 30.5 %
Other 0.2 % 1.8 % (1.2) %
--------- ------- ------
66.9 % (13.6)% 60.6 %
--------- ------- ------
</TABLE>
<PAGE>
The components of the net deferred tax asset and liability were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1997 DECEMBER 31, 1996
--------------------------------- -------------------------------
OTHER OTHER
U.S. COLOMBIA FOREIGN U.S. COLOMBIA FOREIGN
--------- ---------- ---------- --------- --------- ---------
Deferred tax asset:
Net operating loss carryforwards $ 156,579 $ 10,088 $ 8,187 $ 98,555 $ 9,540 $ 2,347
Depreciable/depletable property 2,046 --- --- 1,558 --- ---
Credit carryforwards 1,726 3,986 --- 2,054 --- ---
Reserves 1,090 --- --- 1,259 --- ---
Other 799 --- --- 792 --- ---
--------- ---------- ---------- --------- --------- --------
Gross deferred tax asset 162,240 14,074 8,187 104,218 9,540 2,347
Valuation allowances (75,092) --- --- (30,657) --- ---
--------- ---------- ---------- --------- --------- --------
Net deferred tax asset 87,148 14,074 8,187 73,561 9,540 2,347
--------- ---------- ---------- --------- --------- --------
Deferred tax liability:
Depreciable/depletable property --- (58,143) (15,086) --- (50,874) (6,444)
WTI benchmark call options --- --- --- (2,145) --- ---
--------- ---------- ---------- --------- --------- --------
Net deferred tax asset (liability) 87,148 (44,069) (6,899) 71,416 (41,334) (4,097)
Less current deferred tax asset (liability) --- --- --- --- --- ---
--------- ---------- ---------- --------- --------- --------
Noncurrent deferred tax asset (liability) $ 87,148 $ (44,069) $ (6,899) $ 71,416 $(41,334) $(4,097)
--------- ---------- ---------- --------- --------- --------
</TABLE>
At December 31, 1997, the Company had net operating loss ("NOLs") and
depletion carryforwards for U.S. tax purposes of $406.8 million and $6.8
million, respectively. During 1997, the Company amended certain prior-year tax
returns that increased the Company's unused NOLs. In addition, at December
31, 1997, certain U.S. subsidiaries had separate return limitation year
("SRLY") operating loss and depletion carryforwards of $40.6 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 U.S. NOLs and SRLY operating loss carryforwards expire from
1998 through 2013 as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
NOLS SRLYS
EXPIRING EXPIRING
BY YEAR BY YEAR
--------- ---------
May 1998 $ 11,594 $ 8,964
May 1999 8,809 9,660
May 2000 7,315 12,256
May 2001 20,713 9,675
May 2002 22,670 32
May 2003 20,566 ---
May 2004 - May 2013 315,114 ---
--------- ---------
$ 406,781 $ 40,587
--------- ---------
</TABLE>
The deferred tax valuation allowance of $75.1 million at December 31, 1997, is
primarily attributable to management's assessment of the utilization of NOLs,
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 $249 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.
At December 31, 1997, the Company's Colombian operations and other foreign
operations had NOLs totaling $28.8 million and $28.7 million, respectively.
The NOLs expire from 1998 through 2007.
If certain changes in the Company's ownership should occur, there would be an
annual limitation on the amount of NOLs 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.
11.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.
<PAGE>
The funding status of the plans follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
DECEMBER 31,
--------------------------------------
1997 1996
------------------- -----------------
DEFINED DEFINED
BENEFIT SERP BENEFIT SERP
PLAN PLAN PLAN PLAN
-------- --------- ------- --------
Actuarial present value of benefit obligations:
Vested benefit obligations $ 4,218 $ 4,781 $3,748 $ 4,079
-------- --------- ------- --------
Accumulated benefit obligations $ 4,790 $ 4,781 $4,037 $ 4,079
-------- --------- ------- --------
Projected benefit obligations $ 6,008 $ 6,621 $4,849 $ 5,288
Plan assets at fair value, primarily listed stocks
and U. S. government securities 5,531 --- 4,790 ---
-------- --------- ------- --------
Unfunded projected benefit obligations 477 6,621 59 5,288
Unrecognized net gain (loss) (250) (745) 2 (46)
Prior service cost not yet recognized in net periodic
pension cost (598) (133) (653) (144)
Unrecognized net asset (liability) at adoption 10 (1,288) 11 (1,456)
Adjustment required to recognize minimum liability --- 326 --- 437
-------- --------- ------- --------
Accrued (prepaid) pension cost $ (361) $ 4,781 $ (581) $ 4,079
-------- --------- ------- --------
</TABLE>
A summary of the components of pension expense follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31,
---------------------------
1997 1996 1995
--------- ------- -------
Service cost - benefits earned
during the year $ 832 $ 767 $ 780
Interest cost on projected benefit obligation 783 736 653
Actual return on plan assets (921) (387) (849)
Net amortization and deferral 738 244 793
--------- ------- -------
$ 1,432 $1,360 $1,377
--------- ------- -------
</TABLE>
The projected benefit obligations at December 31, 1997 and 1996, assume a
discount rate of 7.5% and 8%, respectively, 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 based on actual amounts contributed to the plan.
<PAGE>
12. SHAREHOLDERS' EQUITY
PREFERENCE SHARES
In connection with the acquisition of the minority interest in Triton Europe
in 1994, 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 Triton
ordinary share 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 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. At December 31, 1997, 1996 and 1995, 218,285, 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>
YEAR ENDED DECEMBER 31,
-----------------------------------
1997 1996 1995
---------- ----------- ----------
Balance at beginning of year 36,342,181 35,927,279 35,577,009
Exercise of employee stock options
and debentures 133,736 258,333 237,875
Issuances under stock plans 35,961 9,910 ---
Conversion of 5% preference shares 29,184 162,548 112,395
Other, net 2 (15,889) ---
---------- ----------- ----------
Balance at end of year 36,541,064 36,342,181 35,927,279
---------- ----------- ----------
</TABLE>
Changes in ordinary shares held in treasury were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31,
----------------------------
1997 1996 1995
-------- -------- --------
Balance at beginning of year 40 26,635 45,837
Purchase of treasury shares 33 91 89
Transfer of shares to employee benefit plans --- (10,797) (19,291)
Retirement of treasury shares --- (15,889) ---
-------- -------- --------
Balance at end of year 73 40 26,635
-------- -------- --------
</TABLE>
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. Each right entitles the registered holder to purchase from
the Company one one-thousandth of a Series A Junior Participating Preference
Share of the Company at a price of $120 per one one-thousandth of a share.
Generally, the rights become distributable 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.
13. 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 from 5
to 10 years after the date of grant, depending on terms of the grant. In
addition, 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, 1997 and 1996, shares available for grant were
1,040,965 and 731,090, 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> <C>
DECEMBER 31, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995
--------------------------- ---------------------- ---------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
----------- --------- ----------- --------- --------- ---------
Outstanding at beginning of year 3,854,046 $38.81 3,177,304 $35.49 3,074,854 $33.80
Granted 744,250 39.99 971,000 47.97 373,500 49.33
Exercised (83,736) 30.76 (216,333) 30.40 (237,875) 35.30
Canceled (65,125) 46.09 (77,925) 40.74 (33,175) 35.62
---------- ----------- ----------
Outstanding at end of year 4,449,435 39.05 3,854,046 38.81 3,177,304 35.49
---------- ----------- ----------
Options exercisable at yearend 2,728,254 2,042,492 1,449,424
Weighted average fair value per share
of options granted during the year $ 16.37 $ 19.89 $ 20.75
</TABLE>
The following table summarizes information about stock options outstanding at
December 31, 1997:
<TABLE>
<CAPTION>
<C> <S> <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, 1997 LIFE PRICE DEC. 31, 1997 PRICE
- -------------- -------------- ----------- ---------- -------------- ----------
$ 8.38 - 19.88 58,343 2.9 years $ 10.83 58,343 $ 10.83
28.50 - 39.63 2,556,117 6.6 years 34.37 1,802,613 33.17
40.00 - 49.13 1,082,375 6.1 years 42.35 536,748 42.12
50.25 - 57.38 752,600 8.1 years 52.43 330,550 51.97
-------------- ---------
4,449,435 2,728,254
-------------- ---------
</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, 1997, 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,
--------------------
1997 1996
---------- --------
Convertible debentures due employees $ 14,234 $ 15,491
Promissory notes (14,234) (15,491)
---------- --------
$ --- $ ---
---------- --------
</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, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995
------------------------ ------------------- -------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
---------- ----------- -------- --------- --------- --------
Outstanding at beginning of year 458,000 $ 33.82 500,000 $ 33.94 250,000 $ 25.13
Granted --- --- --- --- 250,000 42.75
Exercised (50,000) 25.13 (42,000) 35.20 --- ---
---------- -------- ---------
Outstanding at yearend 408,000 34.89 458,000 33.82 500,000 33.94
---------- -------- ---------
Options exercisable at yearend 408,000 458,000 250,000
Weighted average fair value per share
of convertible debentures granted during
the year $ --- $ --- $ 19.45
</TABLE>
The following table summarizes information about convertible debentures
outstanding at December 31, 1997:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
DEBENTURES OUTSTANDING DEBENTURES EXERCISABLE
---------------------------------------- ------------------------
WEIGHTED
RANGE AVERAGE WEIGHTED WEIGHTED
OF NUMBER REMAINING AVERAGE NUMBER AVERAGE
EXERCISE OUTSTANDING AT CONTRACTUAL EXERCISE EXERCISABLE AT EXERCISE
PRICES DEC. 31, 1997 LIFE PRICE DEC. 31, 1997 PRICE
------- -------------- ----------- -------- -------------- --------
$ 25.13 182,000 6.3 years $ 25.13 182,000 $ 25.13
42.75 226,000 7.4 years 42.75 226,000 42.75
-------------- --------------
408,000 408,000
-------------- --------------
<PAGE>
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,
1997 and 1996, shares available for grant were 24,456 and 49,417,
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 24,961 shares and 20,707
shares to employees for the years ended December 31, 1997 and 1996,
respectively.
FAIR VALUE OF STOCK COMPENSATION
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 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 as follows:
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31,
---------------------------
1997 1996 1995
--------- ------- -------
Net earnings (loss) applicable to ordinary shares:
As reported $ (9,296) $21,624 $1,918
Pro forma (16,802) 17,414 (587)
Basic earnings (loss) per ordinary share:
As reported $ (0.26) $ 0.61 $ 0.05
Pro forma (0.46) 0.48 (0.02)
Diluted earnings (loss) per ordinary share:
As reported $ (0.25) $ 0.59 $ 0.05
Pro forma (0.46) 0.47 (0.02)
</TABLE>
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 1997, 1996 and 1995: dividend
yield of 0%; expected volatility of 26.1%, 26.9% and 27.8%, respectively;
risk-free interest rates of approximately 6%; and an expected life of five to
seven years.
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, 1997, SARs covering 25,000 ordinary shares, with an exercise price of $8
per share, were outstanding.
14. FAIR VALUE OF FINANCIAL INSTRUMENTS, RISK MANAGEMENT
AND CREDIT RISK CONCENTRATIONS
FAIR VALUE OF FINANCIAL INSTRUMENTS
At December 31, 1997 and 1996, 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 $596 million (carrying value - $574 million) and $433
million (carrying value - $417 million) at December 31, 1997 and 1996,
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 (WTI). Actual prices received vary from the benchmark
depending on quality and location differentials. From time to time, it is the
Company's policy to use financial market transactions, including swaps,
collars and options, with creditworthy counterparties 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.
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. During the years ended December 31,
1997, 1996 and 1995, the Company recorded an unrealized gain (loss) of ($9.7
million), $11 million and ($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, 1997, markets provided the Company the
opportunity to realize WTI benchmark oil prices on average $2.35 per barrel
above the WTI benchmark oil price the Company set as part of its 1997 annual
plan. As a result of financial and commodity market transactions settled
during the year ended December 31, 1997, the Company's risk management program
resulted in an average net realization of approximately $.11 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, receivables and financial market
transactions. The Company places its cash equivalents and financial market
transactions with high credit-quality financial institutions. The Company
believes the risk of incurring losses related to credit risk is remote.
The Company sells its crude oil production from the Fields through an
agreement with a third party to approximately 10 to 15 buyers 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.
15. OTHER INCOME, NET
Other income, net is summarized as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31,
----------------------------
1997 1996 1995
------- -------- --------
Change in fair market value of WTI
benchmark call options $(9,689) $ 10,987 $(4,171)
Foreign exchange gain (loss) 9,549 (561) 1,874
Gain on sale of corporate asset 1,414 --- ---
Proceeds from legal settlements 765 7,624 7,222
Gain on sale of shareholdings in Crusader --- 10,417 ---
Gain on the sale of Triton France --- --- 3,496
Gain on early redemption of Crusader's
convertible notes --- --- 2,899
Loss provisions --- (3,193) (1,058)
Equity in earnings (loss) of affiliates, net --- 118 (2,249)
Other 833 1,969 1,372
-------- -------- --------
$ 2,872 $ 27,361 $ 9,385
-------- -------- --------
</TABLE>
In 1997, the Company recognized a foreign exchange gain of $9.6 million,
primarily noncash adjustments to deferred tax liabilities in Colombia
associated with devaluation of the Colombian peso versus the U.S. dollar.
<PAGE>
16. WRITEDOWN OF ASSETS
In 1996, the Company's oil and gas properties and other assets in Argentina
were written down $40 million and $3 million, respectively, following a review
of technical information that indicated the acreage portfolio did not meet the
Company's exploration objectives.
17. EARNINGS PER ORDINARY SHARE
The following table reconciles the numerators and denominators of the basic
and diluted earnings per ordinary share computation for earnings from
continuing operations.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
------------- ------------- ----------
YEAR ENDED DECEMBER 31, 1997:
Earnings before extraordinary item $ 5,595
Less: Preference share dividends (400)
-------------
Earnings available to ordinary shareholders 5,195
Basic earnings per ordinary share 36,471 $ 0.14
----------
Effect of dilutive securities
Stock options --- 457
Convertible debentures --- 80
------------- -------------
Earnings available to ordinary shareholders and
assumed conversions $ 5,195
-------------
Diluted earnings per ordinary share 37,008 $ 0.14
------------- -----------
YEAR ENDED DECEMBER 31, 1996:
Earnings before extraordinary item $ 23,805
Less: Preference share dividends (985)
-------------
Earnings available to ordinary shareholders 22,820
Basic earnings per ordinary share 35,929 $ 0.64
----------
Effect of dilutive securities
Stock options --- 843
Convertible debentures --- 147
------------- -------------
Earnings available to ordinary shareholders and
assumed conversions $ 22,820
-------------
Diluted earnings per ordinary share 36,919 $ 0.62
------------- -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
------------- ------------- ----------
YEAR ENDED DECEMBER 31, 1995:
Earnings from continuing operations $ 6,541
Less: Preference share dividends (802)
--------------
Earnings available to ordinary shareholders 5,739
Basic earnings per ordinary share 35,147 $ 0.16
-----------
Effect of dilutive securities
Stock options --- 690
Convertible debentures --- 113
-------------- -------------
Earnings available to ordinary shareholders and
assumed conversions $ 5,739
--------------
Diluted earnings per ordinary share 35,950 $ 0.16
-------------- -----------
</TABLE>
At December 31, 1997, 218,285 shares of 5% preference shares were outstanding.
Each preference share is convertible any time into one ordinary share, subject
to adjustment in certain events. The preference shares were not included in
the computation of diluted earnings per ordinary share because the effect of
assuming conversion of preference shares was antidilutive.
At December 31, 1995, the Company's proportionate shares owned by Crusader
were not included in the computation of diluted earnings per ordinary share
because the effect of assuming conversion of these shares was antidilutive.
18. STATEMENTS OF CASH FLOWS
Supplemental disclosures of cash payments and noncash investing and financing
activities follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
------------------------
1997 1996 1995
------- ------ ------
Cash paid during the year for:
Interest (net of amount capitalized) $133,265 $ --- $ ---
Income taxes 4,666 200 920
Noncash financing acivities:
Conversion of preference shares into
ordinary shares $ 1,004 $5,594 $3,867
</TABLE>
Cash paid for interest in 1997 included $124.8 million of interest accreted
with respect to the 1997 Notes and the 9 3/4% Notes through the dates of
retirement.
Proceeds from the sale of available-for-sale securities were $2 million, $19.5
million and $7.7 million in the years ended December 31, 1997, 1996 and 1995,
respectively.
19. CERTAIN FACTORS THAT COULD AFFECT FUTURE OPERATIONS
Certain statements in this report, including expectations, intentions, plans
and beliefs of the Company and management, 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 and schedules
for the start-up of production facilities; expected or planned production or
transportation capacity; when the Fields might become self-financing; future
production of the Fields; the negotiation of a heads of agreement to a
gas-sales contract and 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 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; the impact of Year 2000 issues; 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,
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.
Financial information concerning the Company's assets at December 31, 1997,
including capitalized costs by geographic area, is set forth in note 21.
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. Subsequent to
yearend, the price of oil declined significantly which will have a negative
effect on earnings and cash flows in the first-quarter of 1998.
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 where 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.
CERTAIN FACTORS RELATING TO COLOMBIA
The Company is a participant in significant oil and gas discoveries in the
Fields, located approximately 160 kilometers (100 miles) northeast of Bogota,
Colombia. Development of reserves in the Fields is ongoing and will require
additional drilling and completion of the production facilities currently
under construction. The Company expects that the production facilities will
be completed in 1998. Pipelines connect the major producing fields in
Colombia to export facilities and to refineries.
From time to time, guerrilla activity in Colombia has disrupted the operation
of oil and gas projects causing increased costs. Such activity increased in
1997, causing delays in the development of the Cupiagua Field. Although the
Colombian government, the Company and its partners have taken steps to
maintain security and favorable relations with the local population, there can
be no assurance that attempts to reduce or prevent guerrilla activity will be
successful or that guerrilla 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 1998, the President of the United States
announced that Colombia would not be certified, but was granted a national
interest waiver. There can be no assurance that, in the future, Colombia will
receive certification or a waiver. The consequences of the failure to receive
certification or a national interest waiver generally include the following:
all bilateral aid, except anti-narcotics and humanitarian aid, would be
suspended; the Export-Import Bank of the United States and the Overseas
Private Investment Corporation would not approve financing for new projects in
Colombia; U.S. representatives at multilateral lending institutions would be
required to vote against all loan requests from Colombia, although such votes
would not constitute vetoes; and the President of the United States and
Congress would retain the right to apply future trade sanctions. Each of
these consequences 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 as a contractor
under a production-sharing contract covering Block A-18 of the
Malaysia-Thailand Joint Development Area. Test results to date indicate that
significant gas and oil deposits lie 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 under which any gas produced from the Company's contract area in
Malaysia-Thailand is 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 of transportation within
Thailand and its territorial waters.
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 where 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.
<PAGE>
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.
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.
20. COMMITMENTS AND CONTINGENCIES
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 in the Malaysia-Thailand
Joint Development Area in the Gulf of Thailand, 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, 1998, is
approximately $176 million, excluding capitalized interest, of which
approximately $103 million relates to the Fields, $23 million relates to Block
A-18, and $50 million relates to the Company's activities in other parts of
the world. The 1998 capital budget includes funding requirements for
committed activities only. Substantial capital requirements for Block A-18
are expected prior to the first deliveries of gas, which are estimated to
occur between 30-36 months after signing of a heads of agreement to a
gas-sales contract.
The Company expects to fund capital expenditures and repay debt in the future
with a combination of some or all of the following: asset sales (which may
involve interests in material assets), cash flow from operations (including
additional proceeds of $30 million from the 1995 forward oil sale), cash,
credit facilities and additional facilities to be negotiated, and the issuance
of debt and equity securities. See note 22 - Subsequent Events.
As of yearend 1997, under the most restrictive covenant in the Company's
existing credit facilities, the Company generally could not permit total
indebtedness (as defined in the various agreements) to exceed $650 million.
The limitation on total indebtedness will increase to $725 million once the
Fields achieve a production rate of 340,000 barrels per day.
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 Block A-18 in the Gulf of 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,
$2 million and $1.9 million for the years ended December 31, 1997, 1996 and
1995, respectively. At December 31, 1997, the minimum payments required over
the next five years are as follows: 1998 -- $2.4 million; 1999 -- $2.2
million; 2000 -- $1.2 million; 2001 -- $.3 million; 2002 --$.2 million; and
thereafter -- $1.1 million.
GUARANTEES
At December 31, 1997, the Company had guaranteed loans of approximately $3.7
million for a Colombian pipeline company in which the Company has an ownership
interest. The Company also guaranteed performance of $32.3 million in future
exploration expenditures in various countries. These commitments are backed
primarily by unsecured letters of credit.
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 may remain liable for certain environmental matters
that may arise from formerly owned fuel businesses. 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.
<PAGE>
LITIGATION
The Company and subsidiaries or former subsidiaries of the Company were among
numerous defendants in a lawsuit brought in the Superior Court of the State of
California, County of Los Angeles, by Travelers Indemnity Company arising out
of a 1988 tidal wave at King Harbor in Redondo Beach, California. The lawsuit
alleged, among other things, that the defendants' negligence contributed to
the collapse of a hotel and the flooding of a restaurant in the tidal wave.
This lawsuit was settled in 1998.
During the quarter ending September 30, 1995, the United States Environmental
Protection Agency ("EPA") 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.
In October 1997, the EPA advised the Company that the subsidiary has a formal
period of negotiation regarding performing the final remediation design for
the clean-up of the site, and demanded reimbursement for certain unpaid costs
that have been incurred. The government estimates the aggregate amount being
negotiated as $217 million to be allocated among the 280 known operators.
The subsidiary's share would be approximately $1 million based upon a
volumetric allocation. The Company has been advised that the government
expects defendants such as the subsidiary will be given an opportunity to
settle some time in the second half of 1998. At that time, it is expected
that an allocation will be made as to such defendants, which may be greater or
less than the estimated volumetric allocation.
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.
<PAGE>
21. GEOGRAPHIC DATA
Information about the Company's operations by geographic area follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MALAYSIA- UNITED
COLOMBIA THAILAND FRANCE INDONESIA STATES OTHER CORPORATE TOTAL
---------- ---------- ------- ----------- -------- --------- ----------- ----------
YEAR ENDED DECEMBER 31, 1997:
Sales and other operating revenues $ 145,419 $ --- $ --- $ --- $ --- $ 4,077 $ --- $ 149,496
Operating profit (loss) 59,719 (536) --- --- --- (6,312) (20,167) 32,704
Trade and other receivables 54,758 2,047 --- --- --- 7,665 655 65,125
Identifiable assets 712,512 148,780 --- --- --- 110,561 126,186 1,098,039
YEAR ENDED DECEMBER 31, 1996:
Sales and other operating revenues $ 127,071 $ --- $ --- $ 1,856 $ 5,050 $ --- $ --- $ 133,977
Operating profit (loss) 70,874 (509) --- (340) 3,400 (47,158) (23,489) 2,778
Trade and other receivables 56,647 494 --- 53 --- 3,212 120 60,526
Identifiable assets 629,978 113,364 --- 2,592 --- 55,257 113,333 914,524
YEAR ENDED DECEMBER 31, 1995:
Sales and other operating revenues $ 89,851 $ --- $ 9,206 $ 4,531 $ 3,884 $ --- $ --- $ 107,472
Operating profit (loss) 49,086 (239) 1,123 (858) (230) (2,669) (22,897) 23,316
Trade and other receivables 19,823 366 --- 785 717 730 766 23,187
Identifiable assets 487,472 50,867 --- 1,744 23,261 63,159 197,664 824,167
</TABLE>
At December 31, 1997, corporate assets were principally cash and cash
equivalents, the U.S. deferred tax asset and other fixed assets. Other
identifiable assets included $26.2 million, $21.4 million and $17.3 million of
capitalized costs relating to exploration activities in Guatemala, China and
Italy, respectively.
Other operating profit (loss) for the year ended December 31, 1996, included a
writedown of $43 million for the Company's oil and gas properties and other
assets in Argentina.
22. SUBSEQUENT EVENTS
In February 1998, the Company sold TPC, a wholly owned subsidiary that held
the Company's 9.6% equity interest in the Colombian pipeline company, OCENSA,
to an unrelated third party (the "Purchaser") for $100 million. Net proceeds
were approximately $97.7 million after $2.3 million of expenses. The sale
resulted in an aftertax gain of $50.2 million, which will be recorded in the
first quarter of 1998.
<PAGE>
In conjunction with the sale of TPC, the Company entered into a five-year
equity swap with a creditworthy financial institution (the "Counterparty").
The equity swap has a notional amount of $97 million and requires the Company
to make floating LIBOR-based payments on the notional amount to the
Counterparty. In exchange, the Counterparty is required to make payments to
the Company equivalent to 97% of the dividends TPC receives in respect of its
equity interest in OCENSA. Upon a sale by the Purchaser of the TPC shares,
the Company will receive from the Counterparty, or make a cash payment to the
Counterparty, an amount equal to the excess or deficiency, as applicable, of
the difference between 97% of the net proceeds from the Purchaser's sale of
the TPC shares and the notional amount. The equity swap will be carried in
the Company's financial statements at fair value during the five-year term.
Fluctuations in the fair value of the equity swap will affect other income as
noncash adjustments.
In February 1998, the Company used the proceeds from the sale of the TPC
shares and borrowings under other unsecured credit facilities to repay and
terminate its $125 million unsecured credit facility.
23. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
QUARTER
--------------------------------------
FIRST SECOND THIRD FOURTH
-------- -------- -------- --------
YEAR ENDED DECEMBER 31, 1997:
Sales and other operating revenues $ 33,759 $ 32,569 $ 36,993 $ 46,175
Gross profit 15,095 13,645 14,583 17,988
Net earnings (loss) before extraordinary item 3,486 (308) 6,201 (3,784)
Net earnings (loss) 3,486 (14,799) 6,201 (3,784)
Basic earnings (loss) per ordinary share:
Before extraordinary item 0.09 (0.01) 0.16 (0.10)
Net earnings (loss) 0.09 (0.41) 0.16 (0.10)
Diluted earnings (loss) per ordinary share:
Before extraordinary item 0.09 (0.01) 0.16 (0.10)
Net earnings (loss) 0.09 (0.41) 0.16 (0.10)
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)
Basic earnings (loss) per ordinary share:
Before extraordinary item 0.30 0.36 0.53 (0.54)
Net earnings (loss) 0.30 0.35 0.51 (0.54)
Diluted earnings (loss) per ordinary share:
Before extraordinary item 0.29 0.34 0.52 (0.54)
Net earnings (loss) 0.29 0.33 0.50 (0.54)
</TABLE>
Gross profit (loss) comprises of sales and other operating revenues less
operating expenses, depreciation, depletion and amortization, and writedowns
pertaining to operating assets.
In the second quarter of 1997, the Company incurred an extraordinary expense
of $14.5 million, net of a $7.8 million tax benefit, associated with the
extinguishment of the 1997 Notes and 9 3/4% Notes.
In the fourth quarter of 1996, the Company recorded a writedown of $43 million
($37.9 million net of tax) related to oil and gas properties and other assets
in Argentina.
24. 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.
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, 1997:
Revenues $ 145,419 $ --- $ --- $ --- $ --- $145,419
Costs:
Production costs 51,357 --- --- --- --- 51,357
General operating expenses 2,886 --- --- --- --- 2,886
Depletion 30,729 --- --- --- --- 30,729
Writedown of assets --- --- --- --- --- ---
Income taxes 22,167 --- --- --- --- 22,167
---------- ------- ----------- ------- --------- --------
Results of operations $ 38,280 $ --- $ --- $ --- $ --- $ 38,280
---------- ------- ----------- ------- --------- --------
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
---------- ------- ----------- ------- --------- --------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
UNITED TOTAL
COLOMBIA FRANCE INDONESIA STATES OTHER WORLDWIDE
---------- ------- ---------- ------- ------- --------
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
---------- ------- ----------- ------- ------- --------
</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>
AUSTRALIA CANADA OTHER TOTAL
---------- ------- -------- ------
December 31, 1996 $ 1,243 $ --- $ --- $1,243
---------- ------- -------- ------
December 31, 1995 $ 2,998 $ 269 $(1,401) $1,866
---------- ------- -------- ------
</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, 1997:
Costs incurred:
Property acquisition $ --- $ --- $ --- $ --- $ --- $ 3,128 $ 3,128
Exploration 7,583 36,373 --- --- --- 47,864 91,820
Development 62,251 187 --- --- --- --- 62,438
Depletion per equivalent
barrel of production 3.67 --- --- --- --- --- 3.67
Cost of properties at year-end:
Unevaluated $ 2,172 $ 30,327 $ --- $ --- $ --- $98,127 $130,626
---------- --------- ------- ---------- ------- ------- --------
Evaluated $ 396,774 $ 114,243 $ --- $ --- $ --- $ 7,563 $518,580
---------- --------- ------- ---------- ------- ------- --------
Support equipment and
facilities $ 250,193 $ --- $ --- $ --- $ --- $ --- $250,193
---------- --------- ------- ---------- ------- ------- --------
Accumulated depletion and
depreciation at year-end $ 66,250 $ --- $ --- $ --- $ --- $ 7,563 $ 73,813
---------- --------- ------- ---------- ------- ------- --------
</TABLE>
<PAGE>
<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 year-end:
Unevaluated $ 2,487 $ 30,500 $ --- $ --- $ --- $50,010 $ 82,997
--------- --------- ------- ---------- -------- ------- --------
Evaluated $ 338,955 $ 77,512 $ --- $ --- $ --- $48,630 $465,097
--------- --------- ------- ---------- -------- ------- --------
Support equipment and
facilities $ 194,116 $ --- $ --- $ --- $ --- $ --- $194,116
--------- --------- ------- ---------- -------- ------- --------
Accumulated depletion and
depreciation at year-end $ 35,723 $ --- $ --- $ --- $ --- $48,630 $ 84,353
--------- --------- ------- ---------- -------- ------- --------
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 year-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 year-end $ 17,355 $ --- $ --- $ 47,153 $180,574 $ 8,667 $253,749
--------- --------- ------- ---------- -------- ------- --------
</TABLE>
A summary of costs excluded from depletion at December 31, 1997, by year
incurred follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
DECEMBER 31,
--------------------------------------------------
TOTAL 1997 1996 1995 1994 AND PRIOR
------------- ------------ -------- --------- --------------
Property acquisition $ 5,292 $ 3,128 $ 600 $ 250 $ 1,314
Exploration 202,483 70,738 77,149 35,203 19,393
Capitalized interest 37,095 17,558 10,259 3,981 5,297
------------- ------------ ------- ------- --------------
Total worldwide $ 244,870 $ 91,424 $88,008 $ 39,434 $ 26,004
------------- ------------ ------- ------- --------------
</TABLE>
The Company excludes from its depletion computation property acquisition and
exploration costs of unevaluated properties and major development projects in
progress. The excluded costs include $144.6 million ($114.3 million and $30.3
million classified as evaluated and unevaluated, respectively) for Block A-18
in the Malaysia-Thailand Joint Development Area that will become depletable
once production begins, which is estimated to occur between 30-36 months after
signing of a heads of agreement to a gas-sales contract. Additionally,
excluded costs include exploration costs of $23.3 million, $18.2 million and
$15.4 million in Guatemala, China and Italy, respectively. The balance of
excluded costs represents exploration work in other countries, none of which
is material. At this time, the Company is unable to predict either the timing
of the inclusion of these 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>
AUSTRALIA CANADA 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
---------- ------- ------ ------
</TABLE>
OIL AND GAS RESERVE DATA (OIL RESERVES ARE STATED IN THOUSANDS OF BARRELS AND
GAS RESERVES ARE STATED IN MILLIONS OF CUBIC FEET.)
The following tables present the Company's estimates of its proved oil and gas
reserves. The estimates for all proved reserves in the Fields in Colombia
were prepared by the Company's independent petroleum engineers, DeGolyer and
MacNaughton. The estimates for all proved reserves in Malaysia-Thailand and
the Liebre Field in Colombia were prepared by the Company's internal petroleum
reservoir engineers. The Company emphasizes that reserve estimates are
approximate 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, and there can be no assurance that the proved
undeveloped reserves will be developed within the periods anticipated. As of
December 31, 1997, 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 natural-gas prices derived from
what the Company believed to be the most comparable market price at December
31, 1997. There can be no assurance that the price established in any gas
contract would be equal to the price used in the Company's calculations.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
COLOMBIA MALAYSIA-THAILAND
-------------------- ------------------
OIL GAS OIL GAS
--------- --------- ------- ---------
PROVED DEVELOPED AND
UNDEVELOPED RESERVES:
AS OF DECEMBER 31, 1994 104,393 14,721 --- ---
Revisions --- --- --- ---
Sales (10,434) --- --- ---
Extensions and discoveries 32,556 1,127 --- ---
Production (5,089) (158) --- ---
--------- -------- ------- ---------
AS OF DECEMBER 31, 1995 121,426 15,690 --- ---
Revisions 270 (403) --- ---
Sales (548) (338) --- ---
Extensions and discoveries 19,900 --- 24,700 871,100
Production (5,738) (298) --- ---
--------- -------- ------- ----------
AS OF DECEMBER 31, 1996 135,310 14,651 24,700 871,100
Revisions 14,157 770 (2,000) (7,600)
Sales --- --- --- ---
Extensions and discoveries 2,308 --- 7,100 360,300
Production (5,776) (802) --- ---
--------- -------- ------- ---------
AS OF DECEMBER 31, 1997 145,999 14,619 29,800 1,223,800
--------- -------- ------- ---------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FRANCE INDONESIA UNITED STATES TOTAL WORLDWIDE
------- ---------- -------------- ---------------------
OIL OIL OIL GAS OIL GAS
------- ---------- ----- ------- -------- ----------
PROVED DEVELOPED AND
UNDEVELOPED RESERVES:
AS OF DECEMBER 31, 1994 6,244 402 596 7,197 111,635 21,918
Revisions --- 23 119 967 142 967
Sales (5,746) --- --- --- (16,180) ---
Extensions and discoveries --- --- --- --- 32,556 1,127
Production (498) (255) (121) (1,207) (5,963) (1,365)
------- ---------- ----- ------- -------- ----------
AS OF DECEMBER 31, 1995 --- 170 594 6,957 122,190 22,647
Revisions --- --- --- --- 270 (403)
Sales --- (75) (574) (6,482) (1,197) (6,820)
Extensions and discoveries --- --- --- --- 44,600 871,100
Production --- (95) (20) (475) (5,853) (773)
------- ---------- ----- ------- -------- ----------
AS OF DECEMBER 31, 1996 --- --- --- --- 160,010 885,751
Revisions --- --- --- --- 12,157 (6,830)
Sales --- --- --- --- --- ---
Extensions and discoveries --- --- --- --- 9,408 360,300
Production --- --- --- --- (5,776) (802)
------ ---------- ----- ------- -------- ----------
AS OF DECEMBER 31, 1997 --- --- --- --- 175,799 1,238,419
------ ---------- ----- ------- -------- ----------
</TABLE>
<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 GAS
-------- --------- ------ --------- ------ --------- --- ----- ------ ------
PROVED DEVELOPED RESERVES AT:
DECEMBER 31, 1995 65,856 10,515 --- --- --- 170 594 6,957 66,620 17,472
-------- --------- ------ --------- ------ --------- --- ----- ------ ------
DECEMBER 31, 1996 67,193 11,146 --- --- --- --- --- --- 67,193 11,146
-------- --------- ------ --------- ------ --------- --- ----- ------ ------
DECEMBER 31, 1997 81,931 14,619 --- --- --- --- --- --- 81,931 14,619
-------- --------- ------ --------- ------ --------- --- ----- ------ ------
</TABLE>
The Company's proportional equity interest in Crusader's estimated proved
developed and undeveloped oil and gas reserves at December 31, 1995, was 3.3
million barrels of oil and 60.9 billion cubic feet of gas.
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, 1997, 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 natural-gas prices derived from
what the Company believed to be the most comparable market price at December
31, 1997. 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
based. Actual future cash inflows may vary considerably.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MALAYSIA- UNITED TOTAL
COLOMBIA THAILAND INDONESIA STATES WORLDWIDE
---------- ---------- ---------- ------- ----------
DECEMBER 31, 1997:
Future cash inflows $2,524,291 $4,078,609 $ --- $ --- $6,602,900
Future production and
development costs 1,142,382 1,883,881 --- --- 3,026,263
---------- ---------- ---------- ------- ----------
Future net cash inflows before
income taxes $1,381,909 $2,194,728 $ --- $ --- $3,576,637
---------- ---------- ---------- ------- ----------
Future net cash inflows before
income taxes discounted at 10%
per annum $ 852,421 $ 427,463 $ --- $ --- $1,279,884
Future income taxes discounted at
10% per annum 173,785 36,756 --- --- 210,541
---------- ---------- ---------- ------- ----------
Standardized measure of discounted
future net cash inflows $ 678,636 $ 390,707 $ --- $ --- $1,069,343
---------- ---------- ---------- ------- ----------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
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>
MALAYSIA- UNITED TOTAL
COLOMBIA THAILAND 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
---------- --------- ---------- ------- ----------
</TABLE>
Subsequent to yearend, the price of oil declined significantly. Each $1
decrease in oil prices would have reduced the standardized measure of
discounted future net cash inflows (aftertax) in Colombia at December 31,
1997, by $58 million. The Company's proportional equity interest in
Crusader's standardized measure of discounted future net cash inflows was
$30.4 million at December 31, 1995.
Changes in the standardized measure of discounted future net cash inflows
follow:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DECEMBER 31,
---------------------------------------
1997 1996 1995
-------------- ----------- ----------
Total worldwide, excluding equity share:
Beginning of year $ 1,292,195 $ 641,696 $ 499,670
Sales, net of production costs (94,062) (97,323) (67,471)
Sales of reserves --- (10,473) (144,361)
Revisions of quantity estimates 75,253 2,617 2,348
Net change in prices and production costs (552,863) 228,349 42,044
Extensions, discoveries and improved recovery 42,918 1,125,733 339,413
Change in future development costs (5,936) (652,902) (102,323)
Development and facilities costs incurred 53,199 92,856 28,068
Accretion of discount 160,406 80,672 62,188
Changes in production rates and other (3,089) 19,088 22,917
Net change in income taxes 101,322 (138,118) (40,797)
-------------- ----------- ----------
End of year $ 1,069,343 $1,292,195 $ 641,696
-------------- ----------- ----------
</TABLE>
<PAGE>
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 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
----------- ------------ --------- ------------ --------
Year ended Dec. 31, 1997:
Allowance for doubtful
receivables $ 76 $ --- $ --- $ (35) $ 41
----------- ------------ --------- ------------ --------
Allowance for deferred
tax asset $ 30,657 $ 44,435 $ --- $ --- $ 75,092
----------- ------------ --------- ------------ --------
</TABLE>
___________________
Note -- Deductions for the allowance for doubtful receivables in the year
ended December 31, 1996, related primarily to disposal of other assets.
EXHIBIT 10.2
TRITON EXPLORATION SERVICES, INC.
(AS SUCCESSOR TO TRITON ENERGY CORPORATION)
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AS AMENDED AND RESTATED EFFECTIVE
JANUARY 1, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1. DEFINITIONS 1
ARTICLE 2. PARTICIPATION 6
ARTICLE 3. RETIREMENT BENEFITS 7
ARTICLE 4. ADMINISTRATION 10
ARTICLE 5. OTHER PROVISIONS 11
The purpose of the Triton Exploration Services, Inc. Supplemental Executive
Retirement Plan (the "Plan") is to provide deferred compensation to a select
group of management and highly compensated employees who contribute materially
to the continued growth, development and future business success of Triton
Exploration Services, Inc. (the "Corporation") and its affiliated companies
(collectively, the "Employers"), and to provide a retirement benefit package
that will assist the Employers in attracting, retaining and motivating the
best available talent to enter their employ.
ARTICLE 1
DEFINITIONS
As used in this document, unless otherwise defined or required by the context,
the following terms have the meanings set forth in this Article 1.
1.01 ACCRUED RETIREMENT BENEFIT
The Accrued Retirement Benefit of any Participant who, at any time on or
after January 1, 1998, is or was employed by an Employer and is or was an
officer of Parent, is determined using the formula used to compute the
Participant's Normal Retirement Benefit, multiplied by the Participant's
accrual percentage determined according to the following schedule on the basis
of the Participant's completed Years of Service:
YEARS OF SERVICE PERCENTAGE OF BENEFIT ACCRUED
Less than 1 0%
1 10%
2 20%
3 30%
4 40%
5 50%
6 60%
7 70%
8 80%
9 90%
10 or more 100%
------------- ----
The Accrued Retirement Benefit for any other Participant is determined
based upon the provisions of the Plan in effect on the date of the
Participant's termination of employment with the Corporation.
1.02 ACTUARIAL EQUIVALENT
Actuarial Equivalent means a form of benefit differing in time, period
and/or manner of payment from another form of benefit but having the same
value when computed based upon the following interest and mortality
assumptions:
Interest: 8% per annum, compounded annually
Mortality: 1983 Group Annuity Mortality Table using unisex rates
which are blended using 50% male rates and 50%
female rates
The present value of any Accrued Benefit for purposes of determining the
amount of a lump-sum distribution will be equal to the greater of the present
value determined using the interest rate and mortality table specified above
or the present value determined using the "Applicable Interest Rate" and
"Applicable Mortality Table."
The "Applicable Interest Rate" is the rate equal to the annual rate of
interest on 30-year Treasury securities for the month before the first day of
the Plan Year quarter of distribution or such other time as the Secretary of
the Treasury may by regulation prescribe.
The "Applicable Mortality Table" is the table based on the mortality
rates in Revenue Ruling 95-6 or such other table as the Secretary of the
Treasury may later prescribe.
1.03 AVERAGE MONTHLY COMPENSATION
A Participant's Average Monthly Compensation, as of a given date, is
determined by dividing the total Compensation he received during the five (5)
consecutive calendar years for which his Compensation was highest by the
number of months during such period for which he received Compensation. No
fractional calendar years resulting from a Participant's date of employment or
date of termination will be taken into account.
1.04 BENEFICIARY
Beneficiary is the person, persons, trust or other entity designated to
receive any amount payable upon the death of a Participant.
1.05 BOARD OF DIRECTORS
Board of Directors means the Board of Directors of the Corporation.
1.06 CHANGE IN CONTROL
Change in Control means the occurrence of any of the following:
(a) The consummation of:
(1) Any consolidation, amalgamation or merger of Parent in which
Parent is not the continuing or surviving corporation or pursuant to which
shares of Parent's common stock would be converted into cash, securities or
other property, other than a merger of Parent in which the holders of Parent's
common stock immediately prior to the merger have the same proportionate
ownership of common stock of the surviving corporation immediately after the
merger, or
(2) Any sale, lease, exchange or other transfer (excluding
transfer by way of hypothecation), in one transaction or a series of related
transactions, of all, or substantially all, of the assets of Parent ;
(b) The shareholders of Parent approve any plan or proposal for the
liquidation or dissolution of Parent,
(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) or any "group" (as
such term is used in Rule 13d-5 promulgated under the Securities Exchange Act
of 1934), other than Parent or any successor of Parent or any subsidiary of
Parent or any employee benefit plan of Parent or any subsidiary (including
such plan's trustee), becomes, without the prior approval of the Directors of
Parent, a beneficial owner for purposes of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, directly or indirectly, of securities of
Parent representing 25% or more of Parent's then outstanding securities having
the right to vote in the election of Directors of Parent, or
(d) During any period of two consecutive years, individuals who, at
the beginning of such period constituted the entire Board of Directors of
Parent, cease for any reason (other than death) to constitute a majority of
the Directors of Parent, unless the election, or the nomination for election,
by Parent's shareholders, of each new Director of Parent was approved by a
vote of at least two-thirds of the Directors of Parent then still in office
who were Directors of Parent at the beginning of the period.
1.07 COMPENSATION
Compensation means the base salary paid by a Participating Employer to an
Eligible Employee during the Plan Year, excluding any bonuses, commissions,
expense allowances, overtime, severance pay, overrides, royalties, or other
extraordinary compensation.
Compensation also includes any amounts of base salary which are not
otherwise includable in the gross income of an Eligible Employee due to (i)
Code Section 125, 402(a)(8), 402(h) or 403(b), (ii) any other voluntary
deferred compensation election by the Eligible Employee or (iii) other similar
amounts as determined from time to time by the SERP Administrative Committee.
1.08 CORPORATION
Corporation means Triton Exploration Services, Inc.
1.09 EFFECTIVE DATE
The Effective Date of the Plan is September 1, 1990. The Plan was most
recently amended and restated effective October 1, 1995. The Effective Date
of the amendments of the Plan effected by this restatement of the Plan is
January 1, 1998.
1.10 ELIGIBLE EMPLOYEE
Eligible Employees are those employees of each Participating Employer who
are officers and key management personnel and who are selected by the Board of
Directors to be eligible to participate in the Plan.
1.11 EMPLOYMENT COMMENCEMENT DATE
The date on which an Eligible Employee first performs an Hour of Service
for a Participating Employer is his Employment Commencement Date.
1.12 MONTHLY SOCIAL SECURITY BENEFIT
Monthly Social Security Benefit means the amount of monthly benefits
which an Eligible Employee would be entitled to receive as his "primary
insurance amount" determined under the provisions of the Social Security Act
as in effect on the January lst coincident with or immediately preceding the
earlier of (a) his date of retirement or termination or (b) his Normal
Retirement Date. Such amount will be determined assuming (a) that he has made
or will make appropriate application for such benefit, (b) that no event
occurs to delay or forfeit any part of such benefit, (c) that if he dies or
retires (except for Disability Retirement) before his Normal Retirement Date,
he will continue to receive until his Normal Retirement Date, remuneration
(which would be treated as taxable wages for purposes of the Social Security
Act) at the same rate as at the time of retirement or death, and
(d) that if he retires under the Plan on account of Disability, his Monthly
Social Security Benefit, as herein defined, will be the benefit payable if
his Social Security disability insurance benefit were to be approved at the
same time as his Disability Retirement Benefit. As used in this Section, the
term "primary insurance amount" has the meaning ascribed to it in the
federal Social Security Act, as amended, and in effect on the affected
Participant's date of retirement, death, severance, or Normal
Retirement Date, as the case may be.
A Participant's Monthly Social Security Benefit will be determined based
upon estimated compensation histories in accordance with the rules in this
paragraph. The pre-separation or pre-retirement compensation history is
estimated by applying a salary scale, projected backwards, to the
Participant's compensation (as defined in Section 3.03 of Revenue Ruling
71-446) at separation or retirement. The salary scale represents the actual
change in the average wages from year to year as used by the Social Security
Administration to determine earnings index factors for Social Security Average
Indexed Monthly Earnings.
The determination of the amount of a Participant's Monthly Social
Security Benefit will be made by the SERP Administrative Committee.
1.13 HOUR OF SERVICE
An Hour of Service is each hour for which a Participant is paid, or
entitled to payment, for the performance of duties for a Participating
Employer.
1.14 NORMAL RETIREMENT DATE
A Participant's Normal Retirement Date is the first day of the month that
coincides with or next follows the date on which the Participant retires after
satisfying the following conditions:
(a) Attainment of age 60, and
(b) Completion of 10 Years of Service.
1.15 PARENT
The term "Parent" means Triton Energy Limited, a Cayman Islands company.
1.16 PARTICIPANT
The term "Participant" means an Eligible Employee or former Eligible
Employee who is participating in the Plan and who is or who may become
eligible to receive a benefit of any type from the Plan or whose Beneficiary
may be eligible to receive any such benefit.
1.17 PARTICIPATING EMPLOYER
The term "Participating Employer" means the Corporation and any other
subsidiary of the Parent that has adopted the Plan for the benefit of its
Eligible Employees with the written consent of the SERP Administrative
Committee.
1.18 PENSION PLAN OFFSET
Pension Plan Offset means the monthly amount of retirement income
commencing at age 65 which is payable to a Participant under the Triton
Exploration Services, Inc. Retirement Income Plan. For married Participants,
such benefit will be in the form of a 50% joint and survivor annuity, and for
a single Participant, in the form of a life only benefit as determined in
accordance with the assumptions and methods set forth in the Triton
Exploration Services, Inc. Retirement Income Plan.
1.19 PLAN YEAR
Plan Year means the fiscal year of the Corporation.
1.20 SERP ADMINISTRATIVE COMMITTEE
The SERP Administrative Committee will mean the person or persons
appointed by the Board of Directors to administer the Plan in accordance with
Article 4.
1.21 YEARS OF SERVICE
Years of Service are based upon an Eligible Employee's elapsed time of
employment during which the Eligible Employee is entitled to receive
Compensation. A Year of Service (including a fraction thereof) will be
credited for each completed 365 days of such elapsed time which need not be
consecutive. Years of Service with any subsidiaries or other affiliates of
the Corporation will be recognized if so approved by the Board of Directors.
ARTICLE 2
PARTICIPATION
2.01 PARTICIPATION
The Board of Directors will, from time-to-time, select those officers and
key management personnel of the Participating Employers to be Eligible
Employees.
ARTICLE 3
RETIREMENT BENEFITS
3.01 NORMAL RETIREMENT
Subject to provisions of Section 5.03, a Participant who retires on his
Normal Retirement Date will begin to receive the Normal Retirement Benefit to
which he is entitled.
(A) NORMAL RETIREMENT BENEFIT
A Participant's Normal Retirement Benefit is the monthly pension
benefit commencing on his Normal Retirement Date payable in the Normal Benefit
Form in an amount equal to:
(1) 50% of his Average Monthly Compensation, minus
(2) The sum of (a) his Monthly Social Security Benefit plus (b)
his Pension Plan Offset.
In addition, the amount of a Participant's Normal Retirement Benefit
shall be reduced by the sum of (a) the Participant's monthly retirement
benefit determined under any applicable national pension system of countries
other than the United States and (b) any monthly retirement benefit that may
be provided to the Participant by an Employer outside of the United States.
The SERP Administrative Committee shall apply procedures similar to those for
determining the amount of the Participant's Monthly Social Security Benefit
and Pension Plan Offset for purposes of computing the amount of reductions in
this paragraph.
The amount of the Normal Retirement Benefit which is payable in any
month up to and including the month in which the Participant attains (or, if
deceased, would have attained) age 62 shall be determined without regard to
the reduction for the Monthly Social Security Benefit. The SERP Administrative
Committee shall apply a procedure similar to this with regard to national
pension system benefits outside the United States.
(B) NORMAL BENEFIT FORM
20 Years Certain - Monthly pension benefit payable for a period of
20 years.
3.02 EARLY RETIREMENT
Subject to the provisions of Section 5.03, a Participant may retire and
elect, in accordance with the provisions of Section 3.06, to begin receiving
monthly pension benefits as of the first day of any month that coincides with
or next follows the date upon which he satisfies the following requirements:
(a) Attainment of age 55; and
(b) Completion of five Years of Service.
A Participant who elects to begin receiving a monthly pension benefit
prior to his Normal Retirement Date will receive an amount equal to his
Accrued Retirement Benefit, reduced by .833% for each month by which the
benefit commencement date precedes the Participant's Normal Retirement Date.
Such monthly pension benefit will be paid in equal monthly installments
for a period of 20 years.
3.03 OTHER SEVERANCE OF EMPLOYMENT
Subject to the provisions of Section 5.03, a Participant who terminates
employment with all Employers for any reason (other than death) prior to the
completion of five Years of Service will be entitled to receive a monthly
pension benefit equal to his Accrued Retirement Benefit. Such monthly pension
benefit will begin on the first day of the month that coincides with or next
follows the later of the Participant's attainment of age 60 or the
Participant's last day of employment with all Employers and will be paid in
equal monthly installments for a period of 20 years.
3.04 PRE-RETIREMENT DEATH BENEFIT
Subject to the provisions of Section 5.03, if a Participant dies before
terminating employment, the Participant's designated Beneficiary will be
entitled to receive a monthly pension benefit which will commence on the first
day of the month following the Participant's date of death and will be paid in
equal monthly installments for a period of 20 years.
The amount of the monthly pension benefit will equal the Participant's
Accrued Retirement Benefit, reduced by .833% for each month by which the
benefit commencement date precedes the Participant's Normal Retirement Date.
No additional reduction will be made for a benefit commencement date which
precedes the Participant's Normal Retirement Date by more than five years.
3.05 REEMPLOYMENT
If a Participant (a) terminates employment, (b) receives a distribution
of all or a portion of his Accrued Retirement Benefit and (c) is later
reemployed, the Participant's Normal Retirement Benefit (and therefore his
Accrued Retirement Benefit) will be reduced by the Actuarial Equivalent value
of the benefit which was previously distributed. The Actuarial Equivalent
value for purposes of this Article will be determined based on the assumptions
used at the time of the previous distribution.
3.06 PARTICIPANT ELECTIONS
(A) FORM OF ELECTION
A Participant may make an election under this Section 3.06 at any time by
filing a completed benefit election form with the SERP Administrative
Committee. Any such benefit election form will be deemed valid (and will
therefore supersede a previously valid benefit election form) only if it is
executed and filed at least 24 months prior to the Participant's last day of
employment with all Employers.
The monthly pension benefit for a Participant who terminates employment
without a valid benefit election form will commence as of the first day of the
month that coincides with or next follows the later of the Participant's
attainment of age 60 or the Participant's last day of employment with all
Employers and will be paid in equal monthly installments for a period of 20
years.
(B) EARLY COMMENCEMENT OF BENEFITS
A Participant may elect for the commencement of monthly pension benefits
prior to his Normal Retirement Date under the provisions of Section 3.02. If a
Participant elects a benefit commencement date which precedes his attainment
of age 60 but does not complete five Years of Service, his monthly pension
benefit will commence in accordance with the provisions of Section 3.03.
(C) OPTIONAL BENEFIT FORMS
A Participant (or, upon the Participant's death, the Participant's
Beneficiary) may elect to receive his benefit under any of the following forms
of benefit distribution. The optional benefit forms are equal to the
Actuarial Equivalent of the Normal Benefit Form and may be in an amount more
than or less than that provided by the Normal Benefit Form depending on the
option selected. Such distribution may be in one or more of the following
forms:
(1) Lifetime Pension - monthly pension benefit payable during the
lifetime of the Participant.
(2) Joint & 50% Contingent Survivor Pension - monthly pension benefit
payable during the joint lifetime of the Participant and the Participant's
spouse; reduces to 50% of the original amount upon the death of the
Participant.
(3) Joint & 75% Contingent Survivor Pension - monthly pension benefit
payable during the joint lifetime of the Participant and the Participant's
spouse; reduces to 75% of the original amount upon the death of the
Participant.
(4) Joint & Survivor Pension - monthly pension benefit payable for as
long as either the Participant or the Participant's spouse is alive.
ARTICLE 4
ADMINISTRATION
4.01 SERP ADMINISTRATIVE COMMITTEE
(a) The Board of Directors will appoint a SERP Administrative
Committee consisting of one or more persons and may increase or decrease the
number of persons serving on the SERP Administrative Committee at any time and
from time to time. Any member of the SERP Administrative Committee may resign
upon ten days prior written notice to the Board of Directors. Unless
expressly provided to the contrary in writing, each member of the SERP
Administrative Committee will be deemed to resign upon his termination of
employment with the Participating Employers. The Board of Directors may
remove any such member at any time by notifying such person in writing and may
appoint a successor.
(b) The SERP Administrative Committee will be responsible for the
management, operation and administration of the Plan. The SERP Administrative
Committee will have all powers necessary to administer the Plan in accordance
with its terms. The SERP Administrative Committee will have the power,
exercisable in its sole and absolute discretion, to construe the Plan and
determine all questions that may arise thereunder and to establish rules,
forms and procedures for the administration of the Plan. In addition, the
SERP Administrative Committee will establish and maintain a claims procedure
similar to that set forth in Section 503 of the Employee Retirement Income
Security Act of 1974 and the regulations thereunder.
(c) The SERP Administrative Committee may engage or appoint such
assistants or representatives as it deems necessary for the effective exercise
of its duties in administering the Plan. The SERP Administrative Committee
may delegate to such assistants and representatives any powers and duties,
both ministerial and discretionary, as may be necessary or advisable. The
SERP Administrative Committee also may engage accountants, actuaries,
attorneys, and such other personnel as it deems necessary or advisable.
(d) All actions of the SERP Administrative Committee will require the
consent of a majority of the then members of the SERP Administrative
Committee. All actions taken by the SERP Administrative Committee will be
final, conclusive and binding on all parties.
(e) In the event the SERP Administrative Committee exercises any
discretionary authority under the Plan with respect to a Participant who is a
member of the SERP Administrative Committee, such discretionary authority will
be exercised solely and exclusively by those members of the SERP
Administrative Committee other than the Participant. In the event the
remaining members of the SERP Administrative Committee cannot reach a majority
conclusion, or, if such Participant is the sole member of the SERP
Administrative Committee, the Board of Directors of the Corporation will
appoint a temporary substitute SERP Administrative Committee member to
exercise all the powers of a qualified SERP Administrative Committee member
concerning the matter in which such Participant cannot so act or for which
there is a deadlock.
4.02 COSTS AND EXPENSES
All costs and expenses with respect to the adoption, implementation,
interpretation, and administration of the Plan will be borne by the
Corporation.
4.03 LIABILITY OF SERP ADMINISTRATIVE COMMITTEE
Unless resulting from his own fraud or willful misconduct, no member of
the SERP Administrative Committee will be liable for any loss arising out of
any action taken or failure to act by the SERP Administrative Committee or a
member thereof in connection with this Plan. The SERP Administrative
Committee and any individual member of the SERP Administrative Committee and
any agent thereof will be fully protected in relying upon the advice of
professional consultants or advisers employed by the Corporation or the SERP
Administrative Committee.
4.04 INDEMNIFICATION
Each Participating Employer jointly and severally indemnifies and agrees
to hold harmless the members of the SERP Administrative Committee and all
directors, officers and employees of the Participating Employers against any
loss, claim, cost, expense (including attorneys' fees), judgment or liability
arising out of any action taken or failure to act by the SERP Administrative
Committee or such individual in connection with this Plan; provided, however,
that this indemnity will not apply to an individual if such loss, claim, cost,
expense, judgment, or liability is due to such individual's fraud or willful
misconduct.
ARTICLE 5
OTHER PROVISIONS
5.01 CONSTRUCTION
This Plan will be construed in accordance with and governed by the laws
of the State of Texas. Words used in the singular will include the plural,
the masculine gender will include the feminine, and vice versa, whenever
appropriate.
5.02 BENEFIT UPON CHANGE IN CONTROL
(a) Acceleration of Accrual. In the event of a Change in Control,
notwithstanding any other provision in the Plan to the contrary, the Normal
Retirement Benefits of those Participants who are employed by a
Participating Employer on the date of the Change in Control will become fully
accrued notwithstanding the accrual schedule in Section 1.01.
(b) Form of Payment. The benefits payable to a Participant under
Article 3 will be distributed to the Participant in a single lump sum payment
in cash within thirty (30) days after the date of the Change in Control. Such
single lump sum payment will be the Actuarial Equivalent of each Participant's
Normal Retirement Benefit and will be based upon the greater of the
Participant's actual Years of Service prior to the Change in Control or 10
Years of Service.
(c) Additional Benefit. The amount of such single lump sum payment
shall be increased by an additional amount in cash (the "Gross Up Payment")
such that the net amount retained by the Participant, after reduction for
federal, state, and local tax and any applicable payroll tax will be equal to
the amount of the lump sum payment determined without regard to any such taxes
that may be assessed with respect to such single lump sum payment. For
purposes of determining the amount of the Gross Up Payment, the Participant
will be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation for the calendar year in which the single lump sum
payment is made and state and local income taxes at the highest marginal rates
of taxation in the state and locality of the Participant's residence on the
date the single lump sum payment is made, net of the maximum reduction in
federal income taxes that could be obtained from deduction of such state and
local taxes.
(d) Failure to Make Timely Payment. If the Participating Employer
fails to make such single lump sum payment and Gross Up Payment to the
Participant within thirty (30) day after the Change in Control, the total
amount shall bear interest at the maximum nonusurious rate allowed by law from
the date of the Change in Control until paid.
(e) Assumptions and Methods to Determine Benefits. On or after the
occurrence of a Change in Control, the assumptions and methods used to
determine the Accrued Benefit, any optional benefit, lump-sum distribution or
gross-up may not be changed in any manner that reduces the value of the
benefit, distribution or gross-up.
5.03 FORFEITURE OF BENEFITS UNDER THE PLAN
(a) Notwithstanding any other provisions of this Plan, in the event
any Participant's employment with a Participating Employer is terminated for
cause (as herein defined), such Participant or his Beneficiary will not be
entitled to receive any benefits under this Plan.
(b) Termination for cause as used in Section 5.03 above will mean
termination of employment for:
(1) Proven or admitted dishonest acts against any Employer which
substantially injures any Employer or the Participant's fellow employees; or
(2) Conviction for a felony or crime of moral turpitude.
(c) In the event any Participant terminates employment with all
Employers for any reason, neither such Participant nor his Beneficiary will be
entitled to receive any further benefits under this Plan if, at any time
within the two-year period following such termination, such Participant:
(1) Communicates or divulges, to or for the benefit of any
competitor or rival of the Employers, any of the trade secrets or advertising
processes used by any Employer;
(2) Reveals, divulges or makes known, directly or indirectly, to
any person or entity, the name or any other information concerning any client,
customer or account of any Employer, or any details concerning the
relationship between any Employer and such clients, customers and accounts; or
(3) Reveals, divulges or makes known, directly or indirectly, to
any person or entity any information concerning any prospective client,
customer or account of any Employer, or any details concerning the
relationship between any Employer and any such prospective clients, customers
and accounts which would interfere with such relationship.
For purposes of this Section 5.03(c), the term "prospective
client" will mean any individual, association, firm, corporation,
organization, or other entity whose business has been solicited by any
Employer at any time within one (1) year preceding the Participant's date of
employment termination.
5.04 SOURCE OF PAYMENT OF BENEFITS
The Participating Employers and Parent will be jointly and severally
liable for all benefits owing under this Plan, out of their general assets for
Participants, and no Participant or Beneficiary will have any claim or right
to any particular assets of the Participating Employers or Parent as a result
of participation in this Plan. Each Participant is a general unsecured
creditor of the Participating Employers and parent with no greater rights
than any other general unsecured creditor of the Participating Employers or
Parent. The Plan is totally unfunded and represents only the Participating
Employers' and Parent's unsecured promise to pay benefits as provided
hereunder. The Participating Employers or Parent may, but will not be
obligated to, purchase one or more life insurance or annuity policies or
contracts for the purpose of providing for their obligations hereunder. Any
such policies or contracts, if so purchased, will name the Participating
Employers or Parent as beneficiaries and sole owners, with all incidents of
ownership therein, including (but not limited to) the right to cash and loan
values, dividends (if any), death benefits, and the right of termination
thereof. Any such policies or contracts that may be purchased hereunder will
remain a general unrestricted asset of the Participating Employers or Parent.
Neither the Participant nor any Beneficiary will have any rights with respect
to, or claim against, any such policy or contract, and such policy or contract
will not be deemed to be held in trust for the benefit of any Participant or
any Beneficiary.
Notwithstanding any provision of this Section 5.04 to the contrary, the
Corporation previously entered into the Triton Energy Corporation Supplemental
Executive Retirement Plan Trust Agreement, dated August 22, 1990, pursuant to
which First City, Texas--Dallas was appointed to serve as trustee. First
City, Texas--Dallas has been succeeded by Texas Commerce Bank, N.A. as trustee
of such trust. The trust is a grantor trust with respect to the Corporation.
To the extent assets have been accumulated in the trust with respect to
benefits accrued under this Plan, any payment by the trust shall be in
satisfaction of the Corporation's obligations under this Plan.
5.05 EMPLOYMENT RIGHTS OF PARTIES NOT RESTRICTED
The adoption and maintenance of this Plan will not be deemed a contract
between any Employer and any Participant. Nothing in this Plan will give any
employee or Participant the right to be retained in the employ of an Employer
or to interfere with the right of an Employer to discharge any employee or
Participant at any time, nor will it give an Employer the right to require any
employee or Participant to remain in its employ, or to interfere with any
employee's or Participant's right to terminate his employment at any time.
5.06 DESIGNATION OF BENEFICIARY
Each Participant will be given the opportunity to designate a Beneficiary
or Beneficiaries, and, from time-to-time, the Participant may file with the
SERP Administrative Committee a new or revised designation on the form
provided by the SERP Administrative Committee. If a Participant is married,
the Participant's spouse will be the Participant's designated Beneficiary
unless the Participant designates another person or entity as his Beneficiary.
If a Participant dies without designating a Beneficiary, or if the
Participant is predeceased by all designated Beneficiaries, the SERP
Administrative Committee will distribute to the Participant's estate the
Actuarial Equivalent lump sum value in cash of all benefits that are payable
in the event of the Participant's death.
5.07 AMENDMENT OR TERMINATION OF THE PLAN
The Plan may be altered, amended, suspended, or terminated in whole or in
part, at any time and from time-to-time, by the Board of Directors, in its
sole discretion; however, no such action will reduce any Participant's Accrued
Retirement Benefit nor will such action adversely affect or alter the Accrued
Retirement Benefit or any right or obligation with respect to any Participant
who has terminated, retired or died and who has become entitled to or has
commenced to receive benefits hereunder.
5.08 ALIENATION
No person entitled to any benefit under this Plan will have any right to
sell, assign, transfer, hypothecate, encumber, commute, pledge, anticipate, or
otherwise dispose of his interest in the benefit, and any attempt to do so
will be void. No benefit under this Plan will be subject to any legal
process, levy, execution, attachment, or garnishment for the payment of any
claim against such person.
5.09 DISTRIBUTION IN THE EVENT PARTICIPATION IS DISALLOWED
Notwithstanding any provision in this Plan to the contrary, in the event
the SERP Administrative Committee, in its sole discretion, determines that the
participation of any Participant in this Plan may cause this Plan to fail to
be exempt from the requirements of Parts 2, 3, and 4 of Subtitle B of Title I
of ERISA as an unfunded plan of deferred compensation for a select group of
management or highly compensated employees, such Participant will cease to be
a Participant in this Plan as of the date such determination is made by the
SERP Administrative Committee, and as soon as administratively practicable the
single sum value of the benefit that he has accrued as of the date of such
determination under this Plan will be paid to such Participant (or to his
beneficiary or beneficiaries in the event of his death) in a single cash
payment in lieu of and in full satisfaction of all of his rights and interests
under this Plan. Such single sum value will be computed using the Actuarial
Equivalent of the Participant's Accrued Retirement Benefit.
5.10 BINDING ON PARTICIPATING EMPLOYERS, EMPLOYEES, AND THEIR SUCCESSORS
This Plan will be binding upon and inure to the benefit of the
Participating Employers , their successors and assigns, and the Participant
and his heirs, executors, administrators, and duly appointed legal
representatives.
IN WITNESS WHEREOF, this instrument has been executed by the duly
authorized and empowered officer of the Corporation, this 13th day of January,
1998 but effective as of the 1st day of January, 1998.
Triton Exploration Services, Inc.
By: ___________________________
Robert B. Holland, III
Sr. Vice President and Secretary
EXHIBIT 10.16
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-----------------------------------------
THIS EMPLOYMENT AGREEMENT ("Agreement"), made and entered into as of the
13th day of January, 1998, 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 and in the service of the Company as an officer, the Employer entered
into an Employment Agreement (the "Employment Agreement") as of January 1,
1997 with Employee that provides certain severance benefits to Employee in the
event Employee's employment is terminated subsequent to a change in control of
the Company under the circumstances described below and the Company is willing
to guarantee the performance of the Employer's obligations hereunder;
WHEREAS, the Employer, the Company and Employee wish to amend and restate
the Employment Agreement;
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, 1999; provided, however, that
commencing January 1, 1999 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 (the "Incumbent Directors"), 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 Incumbent Directors (so long as such new Director was
not nominated by a person who expressed an intent to effect a change in
control of the Company or engage in a proxy or other control contest) in which
case such new Director shall be considered an Incumbent Director.
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 6 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 5; 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).
4.4 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 (at no greater cost
or expense to Employee than was the case immediately prior to the change in
control of the Company), including without limitation plans providing medical,
dental, life and disability insurance coverage, provided that Employee's
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 not possible, the Employer shall arrange to provide
Employee, at the Employer's cost and expense, with benefits substantially
similar to those which Employee 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. EXCISE TAXES.
-------------
5.1 In the event that any payment or benefit received or to be
received by Employee pursuant to the terms of this Agreement (the "Contract
Payments") or in connection with Employee's termination of employment or
contingent upon a change in control of the Company pursuant to any plan or
arrangement or other agreement with the Employer or the Company (or any
affiliate) ("Other Payments" and, together with the Contract Payments, the
"Payments"), would be subject to the excise tax (the "Excise Tax"), imposed by
Section 4999 of the Code, as determined as provided below, the Employer shall
pay to Employee, at the time specified in Section 5.2 below, an additional
amount (the "Gross-Up Payment") such that the net amount retained by Employee,
after deduction of the Excise Tax on Contract Payments and Other Payments and
any federal, state and local income or other tax and Excise Tax upon the
payment provided for by this Section 5.1, and any interest, penalties or
additions to tax payable by Employee with respect thereto, shall be equal to
the total present value of the Contract Payments and Other Payments at the
time such Payments are to be made. For purposes of determining whether any of
the Payments will be subject to the Excise Tax and the amounts of such Excise
Tax, (1) the total amount of the Payments shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of the Code, and all
"excess parachute payments" within the meaning of Section 280G(b)(1) of the
Code shall be treated as subject to the Excise Tax, except to the extent that,
in the opinion of independent tax counsel selected by the Employer's
independent auditors and reasonably acceptable to Employee ("Tax Counsel"), a
Payment (in whole or in part) does not constitute a "parachute payment" within
the meaning of Section 280G(b)(2) of the Code, or such "excess parachute
payments" (in whole or in part) are not subject to the Excise Tax, (2) the
amount of the Payments that shall be treated as subject to the Excise Tax
shall be equal to the lesser of (A) the total amount of the Payments or (B)
the amount of "excess parachute payments" within the meaning of Section
280G(b)(1) of the Code (after applying clause (1) hereof), and (3) the value
of any noncash benefits or any deferred payment or benefit shall be determined
by Tax Counsel in accordance with the principles of Section 280G(d)(3) and (4)
of the Code. For purposes of determining the amount of the Gross-Up Payment,
Employee shall be deemed to pay federal income tax at the highest marginal
rates of federal income taxation applicable to individuals in the calendar
year in which the Gross-Up Payment is to be made and state and local income
taxes at the highest effective rates of taxation applicable to Employee in the
calendar year in which the Gross-Up Payment is to be made, net of the maximum
reduction in federal income taxes that can be obtained from deduction of such
state and local taxes, taking into account any limitations applicable to
individuals subject to federal income tax at the highest marginal rates.
5.2 Gross-Up Payments provided for in Section 5.1 hereof shall
be made upon the earlier of (i) the payment to Employee of any Contract
Payment or Other Payment or (ii) the imposition upon Employee or payment by
Employee of any Excise Tax.
5.3 The Employee shall notify the Employer in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Employer of a Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than 20 business days after the
Employee is informed in writing of such claim and shall apprise the Employer
of the nature of such claim and the date on which such claim is requested to
be paid. The Employee shall not pay such claim prior to expiration of the 30
day period following the date on which the Employee gives such notice to the
Employer (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Employer notifies the Employee in
writing prior to the expiration of such period that it desires to contest such
claim the Employee shall:
i) give the Employer any information reasonably requested by the
Employer relating to such claim;
ii) take such action in connection with contesting such claim as
the Employer shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim
by an attorney reasonably selected by the Employer and reasonably satisfactory
to the Employee;
iii) cooperate with the Employer in good faith in order to
effectively contest such claim; and
iv) permit the Employer to participate in any proceedings
relating to such claim;
provided, however, that the Employer shall bear and pay directly all
costs and expenses (including, but not limited to, additional interest and
penalties and related legal, consulting or other similar fees) incurred in
connection with such contest, and shall indemnify and hold the Employee
harmless, on an after-tax basis, for any Excise Tax or other tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses.
5.4 The Employer shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Employee to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Employee agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Employer
shall reasonably determine; provided, however, that if the Employer directs
the Employee to pay such claim and sue for a refund, the Employer shall
advance the amount of such payment to the Employee on a interest-free basis,
and shall indemnify and hold the Employee harmless, on an after-tax basis,
from any Excise Tax or other tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and provided, further, that if the
Employee is required to extend the statute of limitations to enable the
Employer to contest such claim, the Employee may limit this extension solely
to such contested amount. The Employer's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Employee shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority. In addition, no position may be taken nor any final
resolution be agreed to by the Employer without the Employee's consent if such
position or resolution could reasonably be expected to adversely affect the
Employee (including any other tax position of the Employee unrelated to the
matters covered hereby).
5.5 As a result of the uncertainty in the application of Section
4999 of the Code at the time of the initial determination by the Employer or
the Tax Counsel hereunder, it is possible that Gross-Up Payments which will
not have been made by the Employer should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder In the event
that the Employer exhausts its remedies and the Employee thereafter is
required to pay to the Internal Revenue Service an additional amount in
respect of any Excise Tax, the Employer or the Tax Counsel shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall
promptly be paid by the Employer to or for the benefit of the Employee.
5.6 If, after the receipt by Employee of the Gross-Up Payment or
an amount advanced by the Employer in connection with the contest of an Excise
Tax claim, the Employee becomes entitled to receive any refund with respect to
such claim, the Employee shall promptly pay to the Employer the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Employee of an amount
advanced by the Employer in connection with an Excise Tax claim, a
determination is made that Employee shall not be entitled to any refund with
respect to such claim and the Employer does not notify the Employee in writing
of its intent to contest the denial of such refund prior to the expiration of
30 days after such determination, such advance shall be forgiven and shall not
be required to be repaid.
6. SUCCESSORS; BINDING AGREEMENT.
-------------------------------
6.1 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 6 or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
6.2 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.
7. 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.
8. 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.
9. 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.
10. 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.
11. 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 12 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.
12. 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.
13. 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.
14. LEGAL FEES. The Employer shall pay Employee, no less frequently
-----------
than monthly, all legal fees and expenses reasonably incurred by Employee in
connection with this Agreement (including all such fees and expenses, if any,
incurred in contesting or disputing the nature of any such termination for
purposes of this Agreement or in seeking to obtain or enforce any right or
benefit provided by this Agreement, but excluding any legal fees and expenses
relating to a claim brought be Employee that a court has determined (in a
final, non-appealable judgment) to be brought in bad faith).
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the date and year first above written.
TRITON EXPLORATION SERVICES, INC.
By: ___________________________________
JOINDER OF THE COMPANY
The Company hereby joins in this Agreement for the purpose of
guaranteeing, and the Company does hereby unconditionally guarantee, to
Employee the due and prompt performance by the Employer, or its successors and
assigns as provided herein (the "Obligor") of the Obligor'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. In case of
the failure of the Obligor to punctually perform any obligation under this
Agreement, including the making of any payment hereunder, the Company hereby
agrees to cause any such obligation to be promptly performed when and as the
same shall be due. The Company hereby agrees that its obligations hereunder
shall be as if it were principal obligor and not merely surety, and shall be
absolute and unconditional, irrespective of, and shall be unaffected by, any
invalidity, irregularity or unenforceability of any provision of this
Agreement, any failure to enforce the provisions of this Agreement, or any
waiver, modification or indulgence granted to the Obligor with respect
thereto, by the Employee, or any other circumstance which may otherwise
constitute a legal or equitable discharge of a surety or guarantor. The
Company hereby waives diligence, presentment, demand, any right to require a
proceeding first against the Obligor, and all demands whatsoever, and
covenants that its obligations under this Agreement will not be discharged
except by performance in full of the Obligor's obligations hereunder. 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
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
----------------------------------------
THIS EMPLOYMENT AGREEMENT ("Agreement"), made and entered into as of the
13th day of January, 1998, 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 and in the service of the Company as an officer, the Employer entered
into an Employment Agreement (the "Employment Agreement") as of January 1,
1997 with Employee that provides certain severance benefits to Employee in the
event Employee's employment is terminated subsequent to a change in control of
the Company under the circumstances described below and the Company is willing
to guarantee the performance of the Employer's obligations hereunder;
WHEREAS, the Employer and Employee wish to amend and restate the
Employment Agreement;
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, 1999; provided, however, that
commencing January 1, 1999 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 Employee's 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 (the "Incumbent Directors"), 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 Incumbent Directors (so long as such new Director was
not nominated by a person who expressed an intent to effect a change in
control of the Company or engage in a proxy or other control contest) in which
case such new Director shall be considered an Incumbent Director .
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
Employee's 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 Employee's 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 Employee's 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 Employee's duties, the
Employer may terminate this Agreement for "Disability."
3.1-2 Termination by the Employer or Employee of Employee's
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 Employee.
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 Employee's 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 Employee 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 Employee (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 Employee 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 Employee 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 Employee's 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 Employee's employment for Cause,
Disability or Retirement or as a result of Employee's 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 Employee 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 Employee's
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 Employee 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) Employee's 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 Employee's benefits under any of such plans or deprive
Employee of any material fringe benefit enjoyed by Employee 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 Employee 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 6 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, Employee 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
----------
Employee's duties hereunder as a result of incapacity due to physical or
mental illness, Employee 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).
4.4 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 (at no greater cost
or expense to Employee than was the case immediately prior to the change in
control of the Company), including without limitation plans providing medical,
dental, life and disability insurance coverage, provided that Employee's
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 not possible, the Employer shall arrange to provide
Employee, at the Employer's cost and expense, with benefits substantially
similar to those which Employee 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 Employee 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 Employee.
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 Employee's 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 Employee 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 Employee 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. EXCISE TAXES.
-------------
5.1 In the event that any payment or benefit received or to be
received by Employee pursuant to the terms of this Agreement (the "Contract
Payments") or in connection with Employee's termination of employment or
contingent upon a change in control of the Company pursuant to any plan or
arrangement or other agreement with the Employer or the Company (or any
affiliate) ("Other Payments" and, together with the Contract Payments, the
"Payments"), would be subject to the excise tax (the "Excise Tax"), imposed by
Section 4999 of the Code, as determined as provided below, the Employer shall
pay to Employee, at the time specified in Section 5.2 below, an additional
amount (the "Gross-Up Payment") such that the net amount retained by Employee,
after deduction of the Excise Tax on Contract Payments and Other Payments and
any federal, state and local income or other tax and Excise Tax upon the
payment provided for by this Section 5.1, and any interest, penalties or
additions to tax payable by Employee with respect thereto, shall be equal to
the total present value of the Contract Payments and Other Payments at the
time such Payments are to be made. For purposes of determining whether any of
the Payments will be subject to the Excise Tax and the amounts of such Excise
Tax, (1) the total amount of the Payments shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of the Code, and all
"excess parachute payments" within the meaning of Section 280G(b)(1) of the
Code shall be treated as subject to the Excise Tax, except to the extent that,
in the opinion of independent tax counsel selected by the Employer's
independent auditors and reasonably acceptable to Employee ("Tax Counsel"), a
Payment (in whole or in part) does not constitute a "parachute payment" within
the meaning of Section 280G(b)(2) of the Code, or such "excess parachute
payments" (in whole or in part) are not subject to the Excise Tax, (2) the
amount of the Payments that shall be treated as subject to the Excise Tax
shall be equal to the lesser of (A) the total amount of the Payments or (B)
the amount of "excess parachute payments" within the meaning of Section
280G(b)(1) of the Code (after applying clause (1) hereof), and (3) the value
of any noncash benefits or any deferred payment or benefit shall be determined
by Tax Counsel in accordance with the principles of Section 280G(d)(3) and (4)
of the Code. For purposes of determining the amount of the Gross-Up Payment,
Employee shall be deemed to pay federal income tax at the highest marginal
rates of federal income taxation applicable to individuals in the calendar
year in which the Gross-Up Payment is to be made and state and local income
taxes at the highest effective rates of taxation applicable to Employee in the
calendar year in which the Gross-Up Payment is to be made, net of the maximum
reduction in federal income taxes that can be obtained from deduction of such
state and local taxes, taking into account any limitations applicable to
individuals subject to federal income tax at the highest marginal rates.
5.2 Gross-Up Payments provided for in Section 5.1 hereof shall
be made upon the earlier of (i) the payment to Employee of any Contract
Payment or Other Payment or (ii) the imposition upon Employee or payment by
Employee of any Excise Tax.
5.3 The Employee shall notify the Employer in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Employer of a Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than 20 business days after the
Employee is informed in writing of such claim and shall apprise the Employer
of the nature of such claim and the date on which such claim is requested to
be paid. The Employee shall not pay such claim prior to expiration of the 30
day period following the date on which the Employee gives such notice to the
Employer (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Employer notifies the Employee in
writing prior to the expiration of such period that it desires to contest such
claim the Employee shall:
i) give the Employer any information reasonably requested by the
Employer relating to such claim;
ii) take such action in connection with contesting such claim as
the Employer shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim
by an attorney reasonably selected by the Employer and reasonably satisfactory
to the Employee;
iii) cooperate with the Employer in good faith in order to
effectively contest such claim; and
iv) permit the Employer to participate in any proceedings
relating to such claim;
provided, however, that the Employer shall bear and pay directly all
costs and expenses (including, but not limited to, additional interest and
penalties and related legal, consulting or other similar fees) incurred in
connection with such contest, and shall indemnify and hold the Employee
harmless, on an after-tax basis, for any Excise Tax or other tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses.
5.4 The Employer shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Employee to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Employee agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Employer
shall reasonably determine; provided, however, that if the Employer directs
the Employee to pay such claim and sue for a refund, the Employer shall
advance the amount of such payment to the Employee on a interest-free basis,
and shall indemnify and hold the Employee harmless, on an after-tax basis,
from any Excise Tax or other tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and provided, further, that if the
Employee is required to extend the statute of limitations to enable the
Employer to contest such claim, the Employee may limit this extension solely
to such contested amount. The Employer's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Employee shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority. In addition, no position may be taken nor any final
resolution be agreed to by the Employer without the Employee's consent if such
position or resolution could reasonably be expected to adversely affect the
Employee (including any other tax position of the Employee unrelated to the
matters covered hereby).
5.5 As a result of the uncertainty in the application of Section
4999 of the Code at the time of the initial determination by the Employer or
the Tax Counsel hereunder, it is possible that Gross-Up Payments which will
not have been made by the Employer should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder In the event
that the Employer exhausts its remedies and the Employee thereafter is
required to pay to the Internal Revenue Service an additional amount in
respect of any Excise Tax, the Employer or the Tax Counsel shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall
promptly be paid by the Employer to or for the benefit of the Employee.
5.6 If, after the receipt by Employee of the Gross-Up Payment or
an amount advanced by the Employer in connection with the contest of an Excise
Tax claim, the Employee becomes entitled to receive any refund with respect to
such claim, the Employee shall promptly pay to the Employer the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Employee of an amount
advanced by the Employer in connection with an Excise Tax claim, a
determination is made that Employee shall not be entitled to any refund with
respect to such claim and the Employer does not notify the Employee in writing
of its intent to contest the denial of such refund prior to the expiration of
30 days after such determination, such advance shall be forgiven and shall not
be required to be repaid.
6. SUCCESSORS; BINDING AGREEMENT.
-------------------------------
6.1 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 6 or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
6.2 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
Employee hereunder as if Employee had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms
of this Agreement to Employee's devisee, legatee, or other designee or, if
there be no such designee, to Employee's estate.
7. 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.
8. 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.
9. 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.
10. 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.
11. 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.
12. 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 Employee 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.
13. 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.
14. LEGAL FEES. The Employer shall pay Employee, no less frequently
-----------
than monthly, all legal fees and expenses reasonably incurred by Employee in
connection with this Agreement (including all such fees and expenses, if any,
incurred in contesting or disputing the nature of any such termination for
purposes of this Agreement or in seeking to obtain or enforce any right or
benefit provided by this Agreement, but excluding any legal fees and expenses
relating to a claim brought be Employee that a court has determined (in a
final, non-appealable judgment) to be brought in bad faith).
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the date and year first above written.
TRITON EXPLORATION SERVICES, INC.
By: ___________________________________
<PAGE>
JOINDER OF THE COMPANY
The Company hereby joins in this Agreement for the purpose of
guaranteeing, and the Company does hereby unconditionally guarantee, to
Employee the due and prompt performance by the Employer, or its successors and
assigns as provided herein (the "Obligor") of the Obligor'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. In case of
the failure of the Obligor to punctually perform any obligation under this
Agreement, including the making of any payment hereunder, the Company hereby
agrees to cause any such obligation to be promptly performed when and as the
same shall be due. The Company hereby agrees that its obligations hereunder
shall be as if it were principal obligor and not merely surety, and shall be
absolute and unconditional, irrespective of, and shall be unaffected by, any
invalidity, irregularity or unenforceability of any provision of this
Agreement, any failure to enforce the provisions of this Agreement, or any
waiver, modification or indulgence granted to the Obligor with respect
thereto, by the Employee, or any other circumstance which may otherwise
constitute a legal or equitable discharge of a surety or guarantor. The
Company hereby waives diligence, presentment, demand, any right to require a
proceeding first against the Obligor, and all demands whatsoever, and
covenants that its obligations under this Agreement will not be discharged
except by performance in full of the Obligor's obligations hereunder. 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 10.37
AMENDMENT NO. 3
TO CREDIT AGREEMENT
This Amendment No. 3 (this "Amendment") dated as of __________________,
1997, to the Credit Agreement (as hereinafter defined) is hereby entered into
among Triton Colombia, Inc., Triton Energy Corporation, NationsBank N.A.
(Carolinas) ("Lender"), and the Export-Import Bank of the United States
("Eximbank").
WHEREAS, that certain Agreement and Plan of Merger ("Merger Agreement")
dated as of February 8, 1996, was entered into by and among Triton Energy
Corporation, a Delaware corporation ("Triton Delaware"), Triton Energy
Limited, a Cayman Island company and a wholly-owned subsidiary of Triton
Delaware ("Triton Cayman") and TEL Merger Corporation, a Delaware corporation
and a newly formed wholly-owned subsidiary of Triton Cayman;
WHEREAS, the Merger Agreement provides for the reorganization of Triton
Delaware, Triton Cayman and TEL Merger Corporation (the "Reorganization"), in
which TEL Merger Corporation merges into Triton Delaware, with Triton Delaware
as the surviving corporation, and whereby Triton Cayman becomes the parent
holding company of Triton Delaware;
WHEREAS, the Board of Directors of Triton Delaware called a Special
Meeting of Stockholders on March 25, 1996, at which the stockholders of
Triton Delaware adopted and approved the Reorganization proposed by the Board
of Directors pursuant to the terms of the Merger Agreement;
WHEREAS, under Section 9.05(b) of the Credit Agreement (as hereinafter
defined), Triton Delaware covenanted and agreed to provide Eximbank and Lender
a copy of its annual consolidated financial statements, including its balance
sheet, statement of income, and statement of cash flow, all to be audited by
an independent accounting firm acceptable to Eximbank.
THEREFORE, in consideration of the premises and the noted agreement
contained herein, and for other good and valuable consideration, the receipt
and sufficiency which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Capitalized Terms. All capitalized terms shall have the
meaning set forth in the credit agreement among Triton Colombia, Inc., Triton
Energy Corporation, Lender and Eximbank (the "Credit Agreement").
<PAGE>
Section 2. Amendments to the Credit Agreement. Subject to, and
effective upon the occurrence of the conditions set forth in Section 3 below,
each of the parties hereto agree that the Credit Agreement shall be amended as
follows:
The first and second sentences of Section 9.05(b) of the Credit Agreement
shall be deleted and the following sentences shall be inserted:
"Beginning with the 1997 fiscal year and continuing until all amounts
owing under this Agreement and the Note(s) have been paid in full, furnish to
the Lender and Eximbank, within 180 days after the end of its fiscal year, a
copy of the annual consolidated financial statements of its parent holding
company, Triton Energy Limited, a Cayman Islands company ("Triton Cayman"),
including its balance sheet, statement of income, and statement of cash flow,
for that fiscal year, all of which shall have been audited by an independent
accounting firm acceptable to Eximbank. All financial reports of Triton
Cayman to be submitted to the Lender or Eximbank shall be prepared in
accordance with generally accepted accounting principles in the United States
consistently applied ("GAAP"), shall be in the English language (or
accompanied by an accurate English translation), shall include the auditor's
opinion and any accompanying notes and shall fairly present the financial
condition of Triton Cayman and the results of its operations for the periods
covered. Beginning with the 1997 fiscal year and continuing until all amounts
owing under this Agreement and the Note(s) have been paid in full, furnish to
the Lender and Eximbank, within 180 days after the end of its fiscal year, a
copy of its internally generated unaudited annual financial statements,
including its balance sheet, statement of income, and statement of cash flow,
for that fiscal year, all of which shall be prepared in accordance with GAAP
(subject to the absence of footnotes).
Section 3. Condition to Effectiveness. The Amendments to the Credit
Agreement set forth in Section 2 hereof shall become effective, as of the date
hereof, upon the satisfaction of the following condition to effectiveness:
Amendment No. 3. Eximbank shall have received this Amendment, duly
executed and delivered by Triton Colombia, Inc., Triton Energy Corporation,
the Lender and Eximbank.
Section 4. Documents Otherwise Unchanged. Except as herein provided and
as provided in Amendment Nos. 1 and 2 to Credit Agreement, the Credit
Agreement shall remain unchanged and in full force and effect.
Section 5. Counterparts. This Amendment shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.
Section 6. Binding Effect. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
<PAGE>
Section 7. Governing Law. This Amendment shall be deemed to be a
contract made under the law of the State of New York, United States of
America, applicable to contracts entered into and to be performed entirely
within such State, and for all purposes shall be governed by, and construed in
accordance with the law of such State.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment
to be duly executed and delivered as of the date first above written.
TRITON COLOMBIA, INC. NATIONSBANK, N.A. (CAROLINAS)
By:_________________________________ By:__________________________
(Signature) Kathleen M. Gibson
Senior Vice President
Name:____________________________
(Print)
Title:____________________________
(Print)
EXPORT-IMPORT BANK OF THE TRITON ENERGY CORPORATION
UNITED STATES
By:_______________________________ By: __________________________
(Signature) (Signature)
Name:____________________________ Name:_________________________
(Print) (Print)
Title:___________________________ Title:_______________________
(Print) (Print)
EXHIBIT 10.43
PRIVILEGED & CONFIDENTIAL EXECUTION COPY
ATTORNEY WORK PRODUCT
STOCK PURCHASE AGREEMENT
BETWEEN
THE STRATEGIC TRANSACTION COMPANY
PURCHASER
AND
TRITON INTERNATIONAL PETROLEUM, INC.
SELLER
Dated as of September 2, 1997
<PAGE>
TABLE OF CONTENTS
-------------------
Section Page
- ------- ----
ARTICLE I
DEFINITIONS 1
1.1 Certain Definitions 1
ARTICLE II
SALE AND PURCHASE OF TPC SHARES 7
2.1 Sale and Purchase of TPC Shares 7
ARTICLE III
PURCHASE PRICE AND PAYMENT 7
3.1 Amount of Purchase Price 7
3.2 Payment of Purchase Price 7
ARTICLE IV
CLOSING AND TERMINATION 7
4.1 Closing Date 7
4.2 Termination of Agreement 8
4.3 Procedure Upon Termination 8
4.4 Effect of Termination 8
4.5 Repayment Obligations of the Seller 8
4.6 Waiver by the Seller 8
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLER 9
5.1 Organization and Good Standing 9
5.2 Authorization of Agreement 9
5.3 Capital and TPC Shares 10
5.4 Other Activities 10
5.5 Corporate Records 10
5.6 Conflicts; Consents of Third Parties 11
5.7 Litigation 11
5.8 Ownership and Transfer of TPC Shares 11
5.9 Financial Statements 11
5.10 No Undisclosed Liabilities 12
5.11 No Undisclosed Liabilities of Ocensa 13
5.12 Absence of Certain Developments 13
5.13 Claims 14
5.14 Compliance with Laws 14
5.15 No Misrepresentation 14
5.16 Related Documents 14
5.17 Rights as Initial Shipper and Throughput Obligor 14
5.18 Material Contracts 14
5.19 Taxes 15
5.20 Environmental Matters 15
5.21 Other Undisclosed Liabilities 16
5.22 Compliance with Related Agreements 16
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER 16
6.1 Organization and Good Standing 16
6.2 Authorization of Agreement 16
6.3 Conflicts; Consents of Third Parties 17
6.4 Litigation 17
ARTICLE VII
COVENANTS 17
7.1 Access to Information 17
7.2 Conduct of the Business 18
7.3 Consents 19
7.4 Other Actions 20
7.5 Confidentiality 20
7.6 Publicity 20
7.7 Holding of TPC Shares 20
7.8 Future Funding Obligations. 20
7.9 Right of First Refusal 20
7.10 Release of Liens 22
7.11 Changes Affecting the TPC Shares 22
7.12 Information 22
7.13 TPC Board of Directors 22
7.14 Obligations of Initial Shipper and Throughput Obligor 22
7.15 Obligations under the Ocensa Agreement 23
<PAGE>
ARTICLE VIII
CONDITIONS TO CLOSING 23
8.1 Conditions Precedent to Obligations of the Purchaser 23
8.2 Conditions Precedent to Obligations of the Seller 24
ARTICLE IX
DOCUMENTS TO BE DELIVERED 25
9.1 Documents to be Delivered by the Seller 25
9.2 Documents to be Delivered by the Purchaser 25
ARTICLE X
INDEMNIFICATION 26
10.1 Indemnification 26
10.2 Indemnification Procedures 27
ARTICLE XI
MISCELLANEOUS 28
11.1 Payment of Sales, Use or Similar Taxes 28
11.2 Survival of Representations and Warranties 28
11.3 Expenses 28
11.4 Further Assurances 29
11.5 Submission to Jurisdiction; Consent to Service of Process 29
11.6 Entire Agreement; Amendments and Waivers 29
11.7 Governing Law 29
11.8 Table of Contents and Headings 29
11.9 Notices 29
11.10 Severability 30
11.11 Binding Effect; Assignment 30
11.12 Non-Petition 30
11.13 Counterparts 31
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of September 2, 1997 (the
"Agreement"), between The Strategic Transaction Company, a company
incorporated under the laws of the Cayman Islands whose registered office is
at Elizabethan Square, P.O. Box 1984, George Town, Grand Cayman, Cayman
Islands, B.W.I. (the "Purchaser"), and Triton International Petroleum, Inc., a
company incorporated under the laws of the Cayman Islands whose registered
office is at Ugland House, P.O. Box 309, Grand Cayman, Cayman Islands, B.W.I.
(the "Seller").
W I T N E S S E T H:
WHEREAS, the Seller owns all of the issued and outstanding shares of
capital stock of Triton Pipeline Colombia, Inc., a company incorporated under
the laws of the Cayman Islands;
WHEREAS, Triton Pipeline Colombia, Inc. owns 9.6% of the shares of
common stock of Oleoducto Central S.A., a sociedad anonima existing under the
laws of Colombia;
WHEREAS, the Seller desires to sell to the Purchaser, and the
Purchaser desires to purchase from the Seller, such shares of capital stock of
Triton Pipeline Colombia, Inc. for the purchase price and upon the terms and
conditions hereinafter set forth; and
WHEREAS, certain terms used in this Agreement are defined in Section
1.1 hereof;
NOW, THEREFORE BE IT RESOLVED, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Definitions
For purposes of this Agreement, the following terms shall have the
meanings specified in this Section 1.1:
"Advance Tariff Agreement" means the Advance Tariff Agreement, dated
as of March 31, 1995, between Ocensa and Triton Colombia, Inc.
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person.
"Assignment for Rights Under the Advance Tariff Agreement" means the
Assignment and Acknowledgment Agreement for Rights Under the Advance Tariff
Agreement, dated as of June 1, 1995, between Ocensa and Bankers Trust Company,
as trustee.
"Assignment for Rights Under the Subscription Agreement" means the
Assignment and Acknowledgment Agreement for Rights Under the Subscription
Agreement and the Performance Guarantee Agreement, made as of June 1, 1995,
between Ocensa and Bankers Trust Company, as trustee.
"Assignment for Rights Under the Transportation Agreement" means the
Assignment and Acknowledgment Agreement for Rights Under the Transportation
Agreement, dated as of June 1, 1995, between Ocensa and Bankers Trust Company,
as trustee.
"Balance Purchase Price" shall have the meaning set forth in Section
3.2 hereof.
"Balance Sheets" shall have the meaning set forth in Section 5.9(a)
hereof.
"Balance Sheet Date" shall have the meaning set forth in Section
5.9(a) hereof.
"Claim" shall have the meaning set forth in Section 10.2(a) hereof.
"Class B Shares" means the non-voting Class B common stock of the
Purchaser to be issued by the Purchaser on or prior to the Closing Date.
"Closing" shall have the meaning set forth in Section 4.1 hereof.
"Closing Date" shall have the meaning set forth in Section 4.1
hereof.
"Common Security Trust Agreement" means the Common Security Trust
Agreement, dated as of June 1, 1995, among Ocensa, Bankers Trust Company, as
trustee, and holders from time to time of Senior Debt (as defined therein).
"Contract" means any contract, agreement, indenture, mortgage,
note, bond, loan, instrument, license, lease, commitment or other arrangement
or agreement.
"Distributions" shall have the meaning set forth in Section 1.1 of
the Dividend Trust Agreement.
"Dividend Account" shall have the meaning set forth in Section 2.2
of the Dividend Trust Agreement.
"Dividend Trust Agreement" means the Dividend Trust Agreement, dated
as of May 24, 1996, among Ocensa, Empresa Colombiana De Petroleos-Ecopetrol,
BP Colombia Pipelines Limited, Total Pipeline Colombie S.A., TPC, IPL
Enterprises (Colombia) Inc., TCPL International Investments Inc., and Bankers
Trust (Cayman) International, Ltd. as dividend trustee.
"Dividend Trustee" shall have the meaning set forth in Section 1.1
of the Dividend Trust Agreement.
"Environmental Law" means any foreign, federal, state or local
statute, regulation, ordinance, or rule of common law, as of now or hereafter
in effect in any way relating to the protection of human health and safety or
the environment.
"Escrow Agreement" means the escrow agreement to be entered into on
or prior to the Closing Date, among TPC, the Seller and an independent banking
institution relating to the escrow of an amount necessary to fund TPC's equity
funding obligations under the Ocensa Agreement and the Subscription Agreement.
"Expenses" shall have the meaning set forth in Section 10.1(a)(v)
hereof.
"Financing Plan" means the plan for the sources and amounts of
financing for the acquisition, construction and development of Oleoducto
Central (as defined in the Ocensa Agreement) (including capitalized interest).
"Financial Statements" shall have the meaning set forth in Section
5.9(a).
"Floating Rate Notes" means the floating rate notes to be issued by
the Purchaser pursuant to the terms of a trust indenture, dated as of the
Closing Date, between the Purchaser and First Trust of New York, N.A., as
indenture trustee.
"GAAP" means generally accepted United States accounting principles
as of the date hereof.
"Governmental Body" means any government or governmental,
administrative or regulatory body thereof, or political subdivision thereof,
whether federal, state, local or foreign, or any agency, instrumentality or
authority thereof, or any court or arbitrator (public or private).
"Hazardous Material" means any substance, material or waste which
is regulated by the foreign jurisdictions in which Ocensa conducts business,
or any state or local governmental authority including, without limitation,
petroleum and its by-products, asbestos, and any material or substance which
constitutes "hazardous waste," "hazardous substance," "hazardous material,"
"restricted hazardous waste," "industrial waste," "solid waste,"
"contaminant," "pollutant," "toxic waste" or "toxic substance" under any
provision of Environmental Law.
"Indemnifying Parties" shall have the meaning set forth in Section
10.1(a) hereof.
"Initial Payment" shall have the meaning set forth in Section 3.2
hereof.
"Law" means any federal, state, local or foreign law (including
common law or civil law), statute, code, ordinance, rule, regulation or other
requirement.
"Legal Proceeding" means any judicial, administrative or arbitral
actions, suits, proceedings (public or private), claims or governmental
proceedings.
"Lien" means any lien, pledge, mortgage, deed of trust, security
interest, claim, lease, charge, option, right of first refusal, easement,
servitude, transfer restriction under any shareholder or similar agreement,
encumbrance or any other restriction or limitation whatsoever.
"Losses" shall have the meaning set forth in Section 10.1(a)(v)
hereof.
"Material Adverse Change" means any material adverse change in the
business, properties, results of operations, prospects, condition (financial
or otherwise) of (i) Seller and its Affiliates, taken as a whole; (ii) TPC or
(iii) Ocensa.
"Material Adverse Effect" means any effect which has resulted in,
or is reasonably likely to result in, a Material Adverse Change.
"Material Contracts" shall have the meaning set forth in Section
5.18 hereof.
"Notification Date" shall have the meaning set forth in Section
7.9(b) hereof.
"Ocensa" means Oleoducto Central S.A., a sociedad anonima existing
under the laws of Colombia.
"Ocensa Agreement" means the Amended and Restated Oleoducto Central
Agreement, dated as of March 31, 1995, among Ocensa, Empresa Colombiana De
Petroleos-Ecopetrol, BP Colombia Pipelines Limited, Total Pipeline Colombie
S.A., TPC, IPL Enterprises (Colombia) Inc. and TCPL International Investments
Inc.
"Ocensa Balance Sheet" shall have the meaning set forth in Section
5.9(b) hereof.
"Ocensa Balance Sheet Date" shall have the meaning set forth in
Section 5.9(b) hereof.
"Ocensa Financial Statements" shall have the meaning set forth in
Section 5.9(b) hereof.
"Offeror" shall have the meaning set forth in Section 7.9(b) hereof.
"Order" means any order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award.
"Performance Guarantee Agreement" means the Performance Guarantee
Agreement, dated as of December 14, 1994, by Triton Energy Corporation in
favor of Ocensa.
"Permit" means any approval, authorization, consent, license, permit
or certificate.
"Person" means any individual, corporation, partnership, firm,
joint venture, association, joint-stock company, trust, unincorporated
organization, Governmental Body or other entity.
"Political Events Agreement" means the Political Events Agreement,
dated as of December, 14, 1994, among Ocensa, Empresa Colombiana De
Petroleos-Ecopetrol, BP Colombia Pipelines Limited, Total Pipeline Colombie
S.A., TPC, IPL Enterprises (Colombia) Inc., and TCPL International Investments
Inc.
"Purchase Price" shall have the meaning set forth in Section 3.1
hereof.
"Purchaser Indemnified Parties" shall have the meaning set forth in
Section 10.1(a) hereof.
"Related Documents" means the Advance Tariff Agreement, the
Assignment for Rights Under the Advance Tariff Agreement, the Assignment for
Rights Under the Subscription Agreement, the Assignment for Rights Under the
Transportation Agreement, the Common Security Trust Agreement, the Dividend
Trust Agreement, the Performance Guarantee Agreement, the Political Events
Agreement, the Subscription Agreement, the Tranche D Note Purchase Agreement,
the Transportation Agreement and the Voting Agreement and any other Contracts
that relate to or affect the rights or obligations of the Ocensa shares.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, or leaching into the
indoor or outdoor environment, or into or out of any property.
"Remedial Action" means all actions to (x) clean up, remove, treat
or in any other way address any Hazardous Material; (y) prevent the Release of
any Hazardous Material so it does not endanger or threaten to endanger public
health or welfare or the indoor or outdoor environment; or (z) perform
preremedial studies and investigations or post-remedial monitoring and care.
"Sale Date" shall have the meaning set forth in Section 7.9(b)
hereof.
"Sale Notice" shall have the meaning set forth in Section 7.9(b)
hereof.
"Sale Price" shall have the meaning set forth in Section 7.9(b)
hereof.
"Seller Documents" shall have the meaning set forth in Section 5.2
hereof.
"Subscription Agreement" means the Amended and Restated Subscription
Agreement, dated as of March 31, 1995, between Ocensa and TPC.
"Taxes" means (i) all federal, state, local or foreign taxes,
charges, fees, imposts, levies or other assessments, including, without
limitation, all net income, gross receipts, capital, sales, use, ad valorem,
value added, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, stamp, occupation, property and estimated taxes, customs duties,
fees, assessments and charges of any kind whatsoever; (ii) all interest,
penalties, fines, additions to tax or additional amounts imposed by any taxing
authority in connection with any item described in clause (i); and, (iii) any
transferee liability in respect of any items described in clauses (i) and/or
(ii).
"Tax Return" means all returns, declarations, reports, estimates,
information returns and statements required to be filed in respect of any
Taxes.
"Terminating Party" shall have the meaning set forth in Section 4.2
hereof.
"TPC" means Triton Pipeline Colombia, Inc., a company incorporated
under the laws of the Cayman Islands.
"TPC Shares" means all of the issued and outstanding shares of
capital stock of TPC, and shall include securities or other property that may
be issued or distributed in respect thereof as a result of any merger,
spinoff, stock split, stock combination, recapitalization or other similar
transaction.
"Tranche D Note Purchase Agreement" means the Tranche D Note
Purchase Agreement, dated April 29, 1996 by and between Ocensa, John Hancock
Mutual Life Insurance Company, John Hancock Variable Life Insurance Company,
John Hancock Life Insurance Company of America, Southland Life Insurance
Company, Security Life of Denver Insurance Company, Peerless Insurance
Company, Life Insurance Company of Georgia, NN Life Insurance Company of
Canada, New York Life Insurance Company and Bankers Trust Company.
"Transportation Agreement" means the Transportation Agreement, dated
as of March 31, 1995, between Ocensa and Triton Colombia, Inc.
"Triton Energy" means Triton Energy Limited, a company incorporated
under the laws of the Cayman Islands.
"Voting Agreement" means the Voting Agreement, dated as of May 24,
1996, among Ocensa, Empresa Colombiana De Petroleos - Ecopetrol, BP Colombia
Pipelines Limited, Total Pipeline Colombie S.A., TPC, IPL Enterprises
(Colombia) Inc., and TCPL International Investments Inc.
ARTICLE II
SALE AND PURCHASE OF TPC SHARES
2.1 Sale and Purchase of TPC Shares. Upon the terms and subject
to the conditions contained herein, on the Closing Date the Seller, as record
and beneficial owner, shall sell, assign, transfer, convey and deliver to
the Purchaser, and the Purchaser shall purchase from the Seller, the TPC
Shares, free from all Liens (other than as set forth in the Ocensa Agreement
and this Agreement), and with all rights now or hereafter attaching to the
TPC Shares.
ARTICLE III
PURCHASE PRICE AND PAYMENT
3.1 Amount of Purchase Price. The purchase price for the TPC Shares
shall be an amount equal to $90,000,000 (the "Purchase Price"), or such other
price which is agreed by the parties hereto to reflect an arms' length
valuation using accepted valuation methods.
3.2 Payment of Purchase Price.
On the date of execution of this Agreement, the Purchaser shall pay to the
Seller, a portion of the Purchase Price in the amount of $25 million (the
"Initial Payment"). Unless this Agreement is terminated by the Purchaser
pursuant to Section 4.2 hereof, on the Closing Date, subject to the
satisfaction of the terms and conditions set forth herein, the Purchaser shall
pay to the Seller, the balance of the Purchase Price (the "Balance Purchase
Price"). Payment of the aggregate Purchase Price shall be made by wire
transfer of immediately available funds into the account designated by the
Seller.
ARTICLE IV
CLOSING AND TERMINATION
4.1 Closing Date. Subject to the satisfaction
of the conditions set forth in Sections 8.1 and 8.2 hereof (or the waiver
thereof by the party entitled to waive that condition), the closing of the
sale and purchase of the TPC Shares provided for in Section 2.1 hereof (the
"Closing") shall take place on or prior to September 30, 1997. The date on
which the Closing shall be held is referred to in this Agreement as the
"Closing Date."
4.2 Termination of Agreement. This
Agreement may be terminated prior to the Closing at the election of the
Purchaser or the Seller (the "Terminating Party") on September 30, 1997, if
the Closing shall not have occurred by the close of business on such date as a
result of the determination by the Terminating Party, in its sole and absolute
discretion, that any of the conditions set forth in Section 8.1 or Section 8.2
hereof, as applicable, have not been satisfied as of such date. Each party
acknowledges and agrees that any such determination by the Terminating Party
shall be conclusive and binding on the other party. Each party hereby
irrevocably waives any right to contest or dispute such determination by the
Terminating Party for any reason whatsoever, including, without limitation,
the failure by the Terminating Party to comply with any of the covenants and
provisions contained in this Agreement that relate to the Terminating Party's
obligations to cooperate with or assist the other party to satisfy any of the
conditions set forth in Section 8.1 or Section 8.2 hereof, as applicable.
4.3 Procedure Upon Termination.
In the event of termination pursuant to Section 4.2 hereof, written notice
thereof shall forthwith be given by the Terminating Party to the other party,
and this Agreement shall terminate, and the obligations of the Purchaser to
purchase and the Seller to sell the TPC Shares hereunder shall be terminated,
without further action by the Purchaser or the Seller. If this Agreement is
terminated as provided herein, each party shall deliver to the other party all
documents, work papers and other material relating to the transactions
contemplated hereby, whether so obtained before or after the execution hereof,
to the party furnishing the same.
4.4 Effect of Termination. In the
event that this Agreement is terminated as provided in Section 4.2 hereof,
each of the parties shall be relieved of their duties and obligations arising
under this Agreement on and after the date of such termination and such
termination shall be without liability to the Purchaser or the Seller;
provided, however, that the obligations of the parties set forth in Section
4.5, Article X and Section 11.3 hereof shall survive any such termination and
shall be enforceable hereunder.
4.5 Repayment Obligations of the Seller. Within three business
days of any such termination of this Agreement pursuant to Section 4.2
hereof, the Seller shall pay to the Purchaser by wire transfer of
immediately available funds into an account designated by the Purchaser
(i) the Initial Payment; (ii) a structuring fee equal to $143,294.27;
and (iii) 50% of the reasonable transaction costs and expenses of the
Purchaser and its representatives pursuant to Section 11.3 hereof up to
a maximum of $400,000.
4.6 Waiver by the Seller. To the
fullest extent permitted by applicable law, the Seller hereby waives and
agrees that it shall not at any time insist upon, plead or in any manner
whatsoever claim or take the benefit or advantage of (i) any rights to notice
and/or a hearing, which might be required or permitted by any court prior to
allowing the Purchaser to terminate this Agreement pursuant to Section 4.2
hereof; (ii) the right to seek any legal or equitable remedies in any court of
law or equity against the Purchaser, including, without limitation, the right
to seek injunctive relief or specific performance of this Agreement, which may
delay, prevent or otherwise affect the repayment by the Seller of the Initial
Payment pursuant to Section 4.5 hereof; and (iii) any right of counterclaim,
set-off or defense against the Purchaser or any representative of the
Purchaser of any kind which exists or may arise in the future due to the
Purchaser's termination of this Agreement pursuant to Section 4.2 hereof.
Additionally, the Seller further agrees that its obligation to repay the
Initial Payment to the Purchaser pursuant to Section 4.5 hereof, shall be
absolute and unconditional and shall be paid in full in accordance with the
terms of Section 4.5 hereof irrespective of: (i) any lack of validity or
enforceability of, or any amendment or other modifications of, or waiver with
respect to, this Agreement; (ii) any release of any obligations under this
Agreement; or (iii) any other circumstances which might otherwise constitute a
defense available to, or discharge of, the Seller in respect of its
obligations under this Agreement, or the transactions contemplated hereunder,
and the Seller hereby waives its rights of abatement, diminution, postponement
or deduction, or to any defense, whether legal or equitable, or to any right
of set-off or recoupment against the Purchaser or its representatives arising
out of any termination of this Agreement by the Purchaser pursuant to Section
4.2 hereof. The Seller hereby acknowledges that it has been advised by
counsel with respect to this Agreement, the waivers set forth in this Section
4.6 hereof, and the transactions contemplated by this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchaser as of
the date of this Agreement and as of the Closing Date that:
5.1 Organization and Good Standing. The Seller and TPC are
companies duly organized, validly existing and in good standing under the
laws of their respective jurisdictions of incorporation as set forth above
and have all requisite corporate power and authority to own, lease and
operate their properties and to carry on their businesses as now conducted.
TPC is duly qualified or authorized to do business as a foreign corporation
and is in good standing under the laws of each jurisdiction in which it
owns or leases real property and each other jurisdiction in which the
conduct of its business or the ownership of its properties requires such
qualification or authorization except where the failure to be so qualified,
authorized or in good standing would not have a Material Adverse Effect.
5.2 Authorization of Agreement.
The Seller has all requisite power, authority and legal capacity to execute
and deliver this Agreement and each other agreement, document, or instrument
or certificate contemplated by this Agreement or to be executed by the Seller
in connection with the consummation of the transactions contemplated by
this Agreement, including, without limitation, the Escrow Agreement
(collectively, with this Agreement, the "Seller Documents"), and to
consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance by the Seller of this Agreement have been,
and each of the Seller Documents will be at or prior to the Closing Date,
duly authorized by all necessary corporate action on behalf of the Seller,
and when so executed and delivered by the Seller (assuming the due
authorization, execution and delivery by the other parties hereto and thereto)
will constitute legal, valid and binding obligations of the Seller,
enforceable against the Seller in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject,
as to enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
5.3 Capital and TPC Shares.
(a) The authorized share capital of TPC is US $50,000 and the
number of shares of capital stock of TPC issued and outstanding is 35,000,
with a par value of $1.00 per share. There are no put options, call options,
commitments, exchange rights, preferential rights, plans, covenants or other
agreements of any nature that are outstanding that provide for the purchase,
issue or sale of any of the TPC Shares or grant to any Person conversion or
exchange rights in connection with the TPC Shares, or pursuant to which any
Person, in any capacity, may be entitled to receive or subscribe for shares
issued or to be issued by TPC. All of the TPC Shares were duly authorized for
issuance and are validly issued, fully paid and non-assessable. None of the
TPC Shares has been issued in violation of any preferential right or right to
take up unsubscribed shares and none of the TPC Shares is subject to any Lien,
other than as set forth in the Ocensa Agreement and this Agreement.
(b) No Person has any claim pending or, to the Seller's best
knowledge, threatened against TPC based on the fact that any issue, exchange,
subscription, cancellation or redemption of TPC's share capital by TPC did not
comply with all the applicable Contracts and Laws, including, without
limitation, the Ocensa Agreement. Except for this Agreement, the Ocensa
Agreement and the Voting Agreement, there are no Contracts that are legally
binding and enforceable, with respect to the issue, redemption, conversion,
exchange, vote or transfer of any of the shares or other securities of TPC.
5.4 Other Activities. TPC was created solely
for the purpose of acquiring an interest in Ocensa and has not engaged in any
other activity, other than managing its interest in Ocensa since the date of
its incorporation. Other than its 9.6% interest of Ocensa, TPC, since its
date of incorporation, has not, and does not, directly or indirectly, own any
stock or other equity interest in any other Person.
5.5 Corporate Records. The Seller has delivered or made
available to the Purchaser:
(a) the seal and true, correct and complete copies of the
memorandum of association, articles of association or comparable
organizational documents of TPC; and
(b) the statutory books, books of account and documents of record
of TPC, complete and up-to-date and all other documents of TPC in the
possession of the Seller.
5.6 Conflicts; Consents of Third Parties.
(a) None of the execution and delivery by the Seller of this
Agreement and the Seller Documents, the consummation of the transactions
contemplated hereby or thereby, or compliance by the Seller with any of the
provisions hereof or thereof will (i) conflict with, or result in the breach
of, any provision of the memorandum of association, articles of association or
comparable organizational documents or statutory books of the Seller or TPC;
(ii) conflict with, violate, result in the breach or termination of, or
constitute a default under, any Contract to which the Seller or TPC is a party
or by which any of them or any of their respective properties or assets is
bound, including, without limitation, the Ocensa Agreement; (iii) violate any
statute, rule, regulation, order or decree of any Governmental Body by which
the Seller or TPC is bound; or (iv) result in the creation of any Lien upon
the properties or assets of TPC.
(b) Except as set forth in the Ocensa Agreement or as will have
been obtained on or prior to the Closing Date, no other consent, waiver,
approval, Order, Permit or authorization of, or declaration or filing with, or
notification to, any Person is required on the part of the Seller or TPC in
connection with the execution and delivery of this Agreement or the Seller
Documents, or the compliance by the Seller or TPC, as the case may be, with
any of the provisions hereof or thereof.
5.7 Litigation. There are no Legal Proceedings
initiated by any Person pending or, to the best knowledge of the Seller,
threatened against the Seller that are reasonably likely to prohibit or
restrain the ability of the Seller to enter into this Agreement or any of the
Seller Documents or to consummate the transactions contemplated hereby or
thereby.
5.8 Ownership and Transfer of TPC Shares. The Seller is the
record and beneficial owner of the TPC Shares and has valid title thereto,
free and clear of any and all Liens, otherthan as set forth in the Ocensa
Agreement and this Agreement; no Lien has been exercised over any of the
TPC Shares, there is no outstanding call on any of the TPC Shares and all
of the TPC Shares are fully paid. The Seller has the corporate power and
authority to sell, transfer, assign and deliver the TPC Shares as provided
in this Agreement, and such delivery will convey to the Purchaser good and
marketable title to the TPC Shares, free and clear of any and all Liens,
other than as set forth in the Ocensa Agreement and this Agreement.
5.9 Financial Statements.
(a) The Seller has delivered to the Purchaser copies of (i) the
unaudited balance sheet of TPC as at December 31, 1996 and the related
unaudited statements of income and of cash flows of TPC for the year then
ended; (ii) the unaudited balance sheet of TPC as at June 30, 1997 and the
related unaudited statements of income and cash flows of TPC for the 6 month
period then ended (iii) the consolidated audited balance sheet of Triton
Energy as at December 31, 1996 and the related consolidated audited statements
of income and cash flows of Triton Energy for the year then ended; and (iv)
the unaudited consolidated balance sheet of Triton Energy as at June 30, 1997
and the related unaudited consolidated statements of income and cash flows of
Triton Energy for the 6 month period then ended (such audited and unaudited
statements of TPC and Triton Energy, including the related notes, and
schedules thereto, are referred to herein as the "Financial Statements").
Each of the Financial Statements is complete and correct in all material
respects, has been prepared in accordance with GAAP (subject to the absence of
footnotes, and normal year-end adjustments in the case of the unaudited
statements) and in conformity with the practices consistently applied by TPC
or Triton Energy, as applicable, without modification of the accounting
principles used in the preparation thereof and presents fairly the financial
position, results of operations and cash flows of TPC and Triton Energy as
at the dates and for the periods indicated.
TPC has in cash or other current assets as reflected on its
unaudited balance sheet dated as at June 30, 1997, or will have in cash
through cash flows from operations, amounts sufficient to fund its obligations
as they come due and to conduct its business.
For the purposes hereof, the unaudited balance sheets of TPC as at
December 31, 1996 and June 30, 1997, the consolidated audited balance sheet of
Triton Energy as at December 31, 1996 and the unaudited consolidated balance
sheet of Triton Energy as at June 30, 1997 are collectively referred to as the
"Balance Sheets" and December 31, 1996 is referred to as the "Balance Sheet
Date."
(b) The Seller has delivered to the Purchaser copies of (i) the
audited balance sheet of Ocensa as at December 31, 1996 and the related
audited statements of income and cash flows of Ocensa for the year then ended;
and (ii) the unaudited balance sheet of Ocensa as at June 30, 1997 and the
related unaudited statements of income of Ocensa for the 6 month period then
ended (such audited and unaudited statements of Ocensa, including the related
notes and schedules thereto, are referred to herein as the "Ocensa Financial
Statements"). Each of the Ocensa Financial Statements is complete and correct
in all material respects, has been or will be prepared in accordance with
generally accepted accounting principles currently in effect in Columbia and
presents fairly the financial position, results of operations and cash flows
of Ocensa as at the dates and for the periods indicated.
For the purposes hereof, the audited and unaudited balance sheets of
Ocensa as at December 31, 1996 and June 30, 1997 are collectively referred to
as the "Ocensa Balance Sheet" and December 31, 1996 is referred to as the
"Ocensa Balance Sheet Date."
5.10 No Undisclosed Liabilities.
Neither Triton Energy nor TPC (except with respect to TPC's obligations under
the Ocensa Agreement and the Subscription Agreement) has any indebtedness,
obligations or liabilities of any kind (whether accrued, absolute,
con-tingent or otherwise, and whether due or to become due) that would have
been required to be reflected in, reserved against or otherwise described on
the Balance Sheets or in the notes thereto in accordance with GAAP which was
not so reflected in, reserved against or otherwise described in the Balance
Sheets or the notes thereto or that was not incurred in the ordinary course
of business consistent with past practice since the Balance Sheet Date.
5.11 No Undisclosed Liabilities of Ocensa.
(a) Except with respect to Ocensa's obligations under the Ocensa
Agreement and the Related Documents, Ocensa has no indebtedness, obligations
or liabilities of any kind (whether accrued, absolute, contingent or
otherwise, and whether due or to become due) that would have been required to
be reflected in, reserved against or otherwise described on the Ocensa Balance
Sheet or in the notes thereto in accordance with generally accepted accounting
principles currently in effect in Colombia which was not so reflected in,
reserved against or otherwise described in the Ocensa Balance Sheet or the
notes thereto or that was not incurred in the ordinary course of business
consistent with past practice since the Ocensa Balance Sheet Date.
(b) The Seller has delivered to the Purchaser the most current
Financing Plan which has been adopted by the Ocensa board of directors, and
such Financing Plan is complete and correct in all material respects. The
Seller is not aware of any proposed amendments or alterations to such
Financing Plan or any anticipated increases in any debt or equity funding that
have not been disclosed in writing to the Purchaser. Additionally, to the
Seller's best knowledge after reasonable investigation, the Seller is not
aware of any discussions or negotiations among the parties to the Ocensa
Agreement or the Ocensa board of directors to amend or alter such Financing
Plan nor is the Seller aware of any event that would require amendment or
alteration of such Financing Plan.
5.12 Absence of Certain Developments. Except as expressly
contemplated by this Agreement or as otherwise disclosed in writing to the
Purchaser, since the Balance Sheet Date or the Ocensa Balance Sheet Date,
as applicable:
(i) there has not been any Material Adverse Change nor has there
occurred any event which is reasonably likely to result in a Material Adverse
Change;
(ii) there has not been any change by TPC, Triton Energy or Ocensa
in accounting or Tax reporting principles, methods or policies;
(iii) TPC has not entered into any transaction or Contract or
conducted its business other than in the ordinary course consistent with past
practice;
(iv) TPC has not failed promptly to pay and discharge current
liabilities, except where disputed in good faith by appropriate
proceedings;
(v) TPC has not instituted or settled any material Legal
Proceeding;
(vi) there has been no termination or repudiation of the Ocensa
Agreement or any of the Related Documents; and
(vii) the Seller and its Affiliates are in full compliance with all
of the terms and provisions of the Ocensa Agreement and the Related Documents.
5.13 Claims. The Seller is not aware of any Legal
Proceedings, pending or threatened against TPC, Ocensa or the Seller or
against any of the officers, directors or key employees of TPC, Ocensa or the
Seller with respect to their business activities on behalf of TPC, Ocensa or
the Seller, or to which TPC, Ocensa or the Seller is otherwise a party, which,
if adversely determined, would have a Material Adverse Effect; nor to the
knowledge of the Seller is there any reasonable basis for any such Legal
Proceedings. None of TPC, Ocensa or the Seller is subject to any Order,
except to the extent the same is not reasonably likely to have a Material
Adverse Effect.
5.14 Compliance with Laws. The Seller is not aware of:
(a) any material violations by the Seller, TPC, Triton Colombia,
Inc., Triton Energy Corporation or Ocensa of any Laws in any jurisdiction in
connection with the operations of the Seller, TPC, Triton Colombia, Inc.,
Triton Energy Corporation or Ocensa at the date hereof; or
(b) any communications from any Governmental Body or
representatives concerning any investigation or allegation or noncompliance
with Laws in any jurisdiction, or deficiencies in financial reporting
practices or other matters that would reasonably be expected to have a
Material Adverse Effect.
5.15 No Misrepresentation. No representation or warranty of
the Seller contained in this Agreement or in any certificate or other
instrument furnished by the Seller to the Purchaser or its representatives
pursuant to the terms hereof, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading.
5.16 Related Documents. The Seller and its
Affiliates are in full compliance with the terms and provisions of the Ocensa
Agreement and the Related Documents, and no event of default, or event, which
with the passage of time or the giving of notice, would constitute an event of
default under the Ocensa Agreement or the Related Documents, has occurred,
including, without limitation, any event which has or would result in the
delivery of a "Restriction Notice" under the Dividend Trust Agreement.
5.17 Rights as Initial Shipper and Throughput Obligor. Upon
execution of this Agreement and upon consummation of the transactions
contemplated by this Agreement, Triton Colombia, Inc. shall continue to be
an Initial Shipper and Throughput Obligor (as each such term is defined
under the Ocensa Agreement and the Related Documents) and shall continue to
have all the rights and obligations of an Initial Shipper and Throughout
Obligor pursuant to the terms and provisions of the Ocensa Agreement
and the Related Documents.
5.18 Material Contracts. The Ocensa Agreement
and the Related Documents are all of the Contracts to which the
Seller, TPC, Triton Colombia, Inc., Triton Energy Corporation or any of their
respective Affiliates are a party or by which any of them are bound and (i)
which relate to the acquisition, financing, development or operations of
Ocensa and (ii) which could either (A) have a Material Adverse Effect and/or
(B) require an increase in the Equity Contributions, including Subordinated
Notes (as each such term is defined in the Ocensa Agreement), any increase in
the Senior Debt (as defined in the Ocensa Agreement) or any other increase in
the capital or funding requirements of TPC (collectively, the "Material
Contracts"). There have been made available to the Purchaser and its
representatives true and complete copies of all of the Material Contracts.
All of the Material Contracts are in full force and effect and are the legal,
valid and binding obligation of the Seller, TPC, Triton Colombia, Inc., Triton
Energy Corporation or any of their respective Affiliates, enforceable against
them in accordance with their terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). Neither the Seller, TPC, Triton Colombia,
Inc., Triton Energy Corporation nor any of their respective Affiliates is in
default in any material respect under any Material Contracts, nor, to the
knowledge of the Seller, is any other party to any Material Contract in
default thereunder in any material respect.
5.19 Taxes.
(a) To the best of the Seller's knowledge, (i) all Tax Returns
required to be filed by or on behalf of TPC have been properly prepared and
duly and timely filed with the appropriate taxing authorities in all
jurisdictions in which such Tax Returns are required to be filed (after giving
effect to any valid extensions of time in which to make such filings), and all
such Tax Returns were true, complete and correct in all material respects;
(ii) all amounts shown on such Tax Returns (including interest and penalties)
as due from TPC and all Taxes payable by or on behalf of TPC or in respect of
its income, assets or operations have been fully and timely paid, and adequate
reserves or accruals for Taxes have been provided in the Balance Sheet as at
June 30, 1997 of TPC with respect to any period for which Tax Returns have not
yet been filed or for which Taxes are not yet due and owing; and (iii) TPC is
in receipt of a letter from the Cayman Islands taxing authority stating that
TPC is exempt from any and all Taxes.
(b) There are no Liens as a result of any unpaid Taxes upon any of
the assets of TPC.
5.20 Environmental Matters. To the best of Seller's knowledge
after reasonable investigation:
(a) The operations of Ocensa are in compliance with all applicable
Environmental Laws and all Permits issued pursuant to Environmental Laws or
otherwise;
(b) Ocensa is not the subject of any outstanding written Order or
Contract with any Person respecting (i) Environmental Laws, (ii) Remedial
Action or (iii) any Release or threatened Release of a Hazardous Material;
(c) Ocensa has not received any written communication alleging that
Ocensa may be in violation of any Environmental Law, or any Permit issued
pursuant to Environmental Law, or may have any liability under any
Environmental Law; and
(d) There are no investigations of the business, operations, or
currently or previously owned, operated or leased property of Ocensa pending
or threatened which could lead to the imposition of any liability pursuant to
Environmental Law
which in each case, could have a Material Adverse Effect on TPC.
5.21 Other Undisclosed Liabilities. There is no provision of
applicable Law or any provision under any Contract or Related Document that
would (i) impose on the Purchaser as the shareholder of TPC or as a member
of an Initial Shipper Group (as defined in the Ocensa Agreement) any
liability for, or permit the imposition on the Purchaser as the shareholder
of TPC or as a member of an Initial Shipper Group any liability for, (A)
the actions or inaction of TPC or (B) the mere ownership of the shares
of TPC; or (ii) subject the Purchaser to any Legal Proceedings as a result
of any of the foregoing.
5.22 Compliance with Related Agreements. As of the Closing
Date, the TPC Shares will be validly transferred to the Purchaser in full
compliance with the conditions of Article Ten of the Ocensa Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents and warrants to the Seller as of the
date of this Agreement and as of the Closing Date that:
6.1 Organization and Good Standing. The Purchaser is a
company duly incorporated, validly existing and in good standing under the
laws of the Cayman Islands.
6.2 Authorization of Agreement.
The Purchaser has all requisite power, authority and legal capacity to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by the
Purchaser of this Agreement have been duly authorized by all necessary
corporate action on behalf of the Purchaser, and when so executed and
delivered by the Purchaser (assuming the due authorization, execution and
delivery by the other parties hereto) will constitute, legal, valid and
binding obligations of the Purchaser, enforceable against the Purchaser in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles
of equity, including principles of commercial reasonableness, good faith and
fair dealing (regardless of whether enforcement is sought in a proceeding at
law or in equity).
6.3 Conflicts; Consents of Third Parties.
(a) None of the execution and delivery by the Purchaser of this
Agreement, the consummation of the transactions contemplated hereby, or the
compliance by the Purchaser with any of the provisions hereof will (i)
conflict with, or result in the breach of, any provision of the memorandum
of association, articles of association or comparable organizational documents
of the Purchaser; (ii) conflict with, violate, result in the breach or
termination of, or constitute a default under, any Contract to which the
Purchaser is a party or by which the Purchaser or its properties or assets
are bound; (iii) violate any statute, rule, regulation, order or decree of
any Governmental Body by which the Purchaser is bound; or (iv) result in the
creation of any Lien upon the properties or assets of the Purchaser.
(b) No consent, waiver, approval, Order, Permit or authorization
of, or declaration or filing with, or notification to, any Person is
required on the part of the Purchaser in connection with the execution and
delivery of this Agreement or the compliance by the Purchaser with any of the
provisions hereof.
6.4 Litigation. There are no Legal Proceedings initiated by any
Person, pending or, to the best knowledge of the Purchaser, threatened against
the Purchaser that are reasonably likely to prohibit or restrain the
ability of the Purchaser to enter into this Agreement or consummate the
transactions contemplated hereby.
ARTICLE VII
COVENANTS
7.1 Access to Information.
(a) The Seller agrees that, prior to the Closing Date, the Seller
shall make available to the Purchaser, through its officers, employees and
representatives (including, without limitation, its legal advisors and
accountants), the properties, businesses, operations, books and records of
TPC and Ocensa as the Purchaser reasonably requests and the Seller shall make
extracts and copies of such books and records for delivery to the Purchaser,
to the extent the Seller may do so in compliance with Law and applicable
contractual requirements. Any such investigation and examination shall be
conducted during regular business hours and under reasonable circumstances,
and the Seller shall cooperate, and shall cause TPC to cooperate, fully
therein. No investigation by the Purchaser prior to or after the date of
this Agreement shall diminish or obviate any of the representations,
warranties, covenants or agreements of the Seller contained in this Agreement
or the Seller Documents.
(b) The Seller further agrees to cooperate with the Purchaser and
to give the Purchaser and its representatives access to such information as
may be necessary to effect a private placement of the Class B Shares with a
third party purchaser on or prior to the Closing Date. Such cooperation shall
include, without limitation, cooperation with the Purchaser in the preparation
of a private placement or offering memorandum, the preparation and/or review
of disclosure in the private placement or offering memorandum regarding the
Seller, TPC, Ocensa, the Ocensa Agreement and the Related Documents as may be
reasonably requested by Purchaser or its representatives, and the taking of
such other actions as are reasonably necessary to effectuate a private
placement of the Class B Shares on or prior to the Closing Date.
7.2 Conduct of the Business.
(a) Except as otherwise expressly contemplated by this Agreement or
with the prior written consent of the Purchaser, from the date hereof through
and including the Closing Date, the Seller shall not and shall cause its
Affiliates not to:
(i) conduct the business of TPC other than in the ordinary
course consistent with past practice;
(ii) violate in any material respect any applicable Laws;
(iii) transfer, issue, sell or dispose of any shares of
capital stock or other securities of TPC or grant options, warrants, calls or
other rights to purchase or otherwise acquire shares of the capital stock or
other securities of TPC;
(iv) effect any recapitalization, reclassification, stock
split or like change in the capitalization of TPC;
(v) amend the memorandum of association, articles of
association or comparable organizational documents or statutory books of TPC;
(vi) subject to any Lien (except for Liens that do not
materially impair the use of the property subject thereto in their respective
businesses as presently conducted), any of the properties or assets (whether
tangible or intangible) of TPC;
(vii) acquire any material properties or assets for TPC or
sell, assign, transfer, convey, lease or otherwise dispose of any of the
material properties or assets of TPC;
(viii) waive or release any material right of TPC except in
the ordinary course of business consistent with past practice;
(ix) permit TPC to enter into any transaction or to make or
enter into any Contract which by reason of its size or otherwise is not in the
ordinary course of business consistent with past practice;
(x) permit TPC to enter into or agree to enter into any merger
or consolidation with, any corporation or other entity;
(xi) permit TPC to make a unilateral declaration under Section
3.1 of the Political Events Agreement that a Political Event (as defined in
the Political Events Agreement) has occurred; or
(xii) agree to do anything prohibited by this Section 7.2(a) or
anything which would make any of the representations, warranties and
covenants of the Seller in this Agreement or the Seller Documents untrue or
incorrect in any material respect as of any time through and including the
Closing Date.
(b) Except as otherwise expressly contemplated by this Agreement
from the date hereof through and after the Closing Date, the Seller shall not
and shall cause its Affiliates not to:
(i) introduce any material change with respect to the
operation of Ocensa, including, without limitation, any amendments or
alterations to the Financing Plan;
(ii) fail to fully perform its obligations or duties under the
Ocensa Agreement and the Related Documents;
(iii) permit any increase in the Equity Contributions,
including Subordinated Notes (as each such term is defined in the Ocensa
Agreement) or permit any increase in the Senior Debt (as defined in the Ocensa
Agreement) or any other increase in the capital or funding requirements of
TPC; or
(iv) agree to do anything prohibited by this Section 7.2(b) or
anything which would make any of the representations, warranties and covenants
of the Seller in this Agreement or the Seller Documents untrue or incorrect in
any material respect as of any time through and after the Closing Date (except
insofar as they set out obligations that have been fully performed at the
Closing Date).
7.3 Consents. The Seller shall use its best
efforts, and the Purchaser shall cooperate with the Seller, to obtain at the
earliest practicable date all consents and approvals required to consummate
the transactions contemplated by this Agreement, including, without
limitation, the consents and approvals referred to in Section 5.6(b) hereof
and required by Article Ten of the Ocensa Agreement.
7.4 Other Actions. Each of the Seller and the Purchaser shall
use its best efforts to (i) take all actions necessary or appropriate to
consummate the transactions contemplated by this Agreement and (ii) cause
the fulfillment at the earliest practicable date of all of the conditions
to their respective obligations to consummate the transactions
contemplated by this Agreement.
7.5 Confidentiality. Each of the Seller and Purchaser
hereto acknowledges to the other party that all information or
documentation that any of the parties provided to the other before, on or
after the Closing Date, or that one of the parties would have provided in the
course of the negotiation of this Agreement, with the exception of the
information that is publicly available, shall be treated as confidential and
owned by such party and it shall not be disclosed to third parties (except to
legal and financial advisors of each party) without the consent of the party
that delivered the information or the document, except as required by
applicable Law.
7.6 Publicity. Neither the Seller nor the Purchaser shall
issue any press release or public announcement concerning this
Agreement or the transactions contemplated hereby without obtaining the
prior written approval of the other party hereto, which approval will not be
unreasonably withheld or delayed, unless, in the sole judgment of the
Purchaser or the Seller, disclosure is otherwise required by applicable Law,
provided that, to the extent required by applicable Law, the party intending
to make such release shall use its best efforts consistent with such
applicable Law to consult with the other party with respect to the text
thereof.
7.7 Holding of TPC Shares. The Purchaser shall accept
delivery of the TPC Shares on the Closing Date and shall pledge such
TPC Shares to First Trust of New York, N.A., as indenture trustee for the
Floating Rate Notes. The Purchaser agrees that it will cause such TPC Shares
to be held in trust in accordance with the terms of the trust indenture
relating to the Floating Rate Notes and shall not sell, pledge or
hypothecate and/or otherwise transfer or dispose of the TPC Shares except as
set forth in this Section 7.7 or in accordance with the terms of Section 7.9
hereof and any such transfer or disposition in breach of this Section 7.7
shall be void and of no effect.
7.8 Future Funding Obligations.
The Purchaser hereby covenants to notify the Seller if the Purchaser receives
notice under the Ocensa Agreement that the shareholders of Ocensa have an
opportunity to acquire additional equity shares under the Ocensa Agreement or
that any shares of Ocensa capital stock are proposed to be issued under the
Ocensa Agreement.
7.9 Right of First Refusal.
(a) The parties hereto agree that upon any sale of the TPC Shares,
the Seller shall have a right of first refusal on the TPC Shares as set forth
herein. The Seller's right of first refusal may be exercised by the Seller
itself or any third party designated by the Seller.
(b) In the event the Purchaser determines to sell the TPC Shares,
the Purchaser shall so inform the Seller in writing (the "Sale Notice") at
least 30 days prior to the closing date of the proposed disposition (the "Sale
Date"), stating the name and address of the proposed transferee (the
"Offeror") to the extent such information is not confidential, and the other
terms and conditions of such proposed disposition, including any consideration
proposed to be received for the TPC Shares (and, if the proposed disposition
is to be wholly or partly for consideration other than cash or an indebtedness
of the Offeror, the notice shall state the amount of the cash consideration,
if any, and shall describe all such nonmonetary consideration). The Sale
Notice shall be accompanied by a copy of such offer. The Seller shall have
the right to purchase the TPC Shares at the same consideration (the "Sale
Price") and on the same terms as are set forth in the Sale Notice (except that
any portion of the consideration set forth in the Sale Notice which is not
cash or indebtedness of the Offeror shall be payable in cash at the value
thereof as the Seller and the Purchaser may agree, or if they cannot agree,
then as determined by a third party mutually agreeable to the Seller and the
Purchaser not affiliated with any of the Seller or the Purchaser), exercisable
as more fully described herein. If the Seller decides to exercise its right
of first refusal, the Seller shall send irrevocable written notice thereof to
the Purchaser no later than ten business days after receipt of such notice
from the Purchaser (the "Notification Date") stating that it has decided to
purchase the TPC Shares at the Sale Price on the Sale Date. Such notice shall
also set forth delivery instructions for the TPC Shares. If the Seller has
delivered written notice on or prior to the Notification Date to the Purchaser
of its irrevocable decision to purchase the TPC Shares, such TPC Shares shall
be delivered by the Purchaser to the Seller or its designee, at the accounts
specified in the notice, on the Sale Date against receipt, in immediately
available funds, of the Sale Price at the account designated by the Purchaser.
Notwithstanding the foregoing, the Seller shall have no right of first refusal
if the Seller, Triton Colombia, Inc. or any of their respective direct or
indirect parent companies are in bankruptcy or insolvency proceedings.
Additionally, notwithstanding the foregoing, if there has occurred any event
of default with respect to the Seller or any of its direct or indirect parent
companies under any agreement which requires the payment of more than
$50,000,000 to any other party or parties thereto, the Sale Notice specified
in this Section 7.9(b) shall be delivered to the Seller by the Purchaser no
more than three business days prior to the Sale Date, and the Notification
Date specified in this Section 7.9(b) shall be one business day thereafter.
In order to secure the rights of the Seller under this Section 7.9, TPC shall
not, and the Purchaser shall not permit TPC to, sell or otherwise dispose of
any shares of Ocensa owned by TPC except under conditions that would permit
the Purchaser to sell the TPC Shares.
(c) If the Seller has not delivered irrevocable written notice of
its intent to purchase the TPC Shares on the Sale Date on or prior to the
Notification Date, the Purchaser shall be entitled to sell such TPC Shares,
without any restrictions, to any Person selected by the Purchaser without
further notice to the Seller. Additionally, if the Seller should default on
its payment obligations to the Purchaser after having delivered written notice
of its intent to purchase the TPC Shares, the Purchaser shall be at liberty to
sell the TPC Shares without restriction and without further notice to the
Seller; provided, however, that the Seller shall be liable to the Purchaser
for any expenses incurred by the Purchaser as a result of the Seller's
default.
(d) The Purchaser shall have no liability to the Seller hereunder
if any proposed sale of the TPC Shares to the Seller pursuant to this Section
7.9 does not comply with the provisions of Article Ten of the Ocensa
Agreement, or if such sale cannot be consummated due to the restrictions set
forth in Article Ten of the Ocensa Agreement. If the Seller determines to
exercise its right of first refusal set forth in this Section 7.9, the Seller
shall be responsible for taking all actions necessary to comply with the
provisions of Article Ten of the Ocensa Agreement. If within 45 days after
exercising its right of first refusal, the Seller is unable to meet the
conditions set forth in such Article Ten, the Purchaser shall, subject to
Section 7.15 hereof, be at liberty to sell the TPC Shares to any other Person
without any further restriction and without any liability to the Seller.
(e) Notwithstanding the foregoing, in the event of any sale by the
Purchaser of the TPC Shares to any Person other than the Seller, prior to
consummating such sale, the Purchaser shall obtain the agreement of such
Person, for the additional benefit of the Seller, that such Person shall not
acquire any interest in the name "Triton" or any name confusingly similar to
such name, and that such Person, as soon as is practicable following the
consummation of such sale, will change the name of TPC to a name that does not
contain the word "Triton" or any name confusingly similar thereto and will
cease the use of the name "Triton" in the conduct of the business of TPC.
7.10 Release of Liens. In the event that the Seller shall
exercise its right of first refusal, upon receipt by the Purchaser of the
Sale Price from the Seller, the Purchaser shall cause the TPC Shares to be
delivered to the Seller or its designee in accordance with the written
instructions provided by the Seller free and clear of all Liens, other
than as set forth in the Ocensa Agreement and this Agreement.
7.11 Changes Affecting the TPC Shares. In the event that TPC is
the subject of a merger, spin-off, recapitalization or other similar
transaction, any TPC Shares received by the Purchaser as the result of
such transactions shall be covered by this Agreement.
7.12 Information. The Purchaser shall cause TPC to provide
the Seller such information as the Seller may reasonably request
regarding matters on which holders of the TPC Shares or shares of
Ocensa are asked to vote.
7.13 TPC Board of Directors. The Purchaser, as sole
shareholder of TPC, will, in its sole discretion, appoint directors to
the Board of Directors of TPC.
7.14 Obligations of Initial Shipper and Throughput Obligor.
The Seller shall cause Triton Colombia, Inc. to fulfill all of its
obligations under the Ocensa Agreement and the Related Documents. The
Seller shall immediately notify the Purchaser of the occurrence of any event
which would cause the Initial Shipper or the Throughput Obligor (as
each such term is defined in the Ocensa Agreement and the Related
Documents) to be in default on any of its obligations thereunder.
7.15 Obligations under the Ocensa Agreement. Subject to
Section 7.9(d) hereof, if the Purchaser decides to sell any of the TPC
Shares, the Purchaser shall cause TPC to comply with the transfer
restrictions of Article Ten under the Ocensa Agreement, and the Purchaser
shall not attempt to circumvent the restrictions on transfer set forth in
Article Ten of the Ocensa Agreement, as set forth in Section 10.7 of the
Ocensa Agreement. The Purchaser shall immediately notify the Seller of
the occurrence of any event of which it has actual knowledge which would
cause TPC to be in violation of Article Ten of the Ocensa Agreement.
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 Conditions Precedent to Obligations of the Purchaser.
The obligation of the Purchaser to consummate the transactions
contemplated by this Agreement is subject to the fulfillment, on or prior
to the Closing Date, of each of the following conditions (any or all of
which may be waived by the Purchaser in whole or in part to the extent
permitted by applicable Law):
(a) all representations and warranties of the Seller contained
herein shall be true and correct in all material respects as of the Closing
Date;
(b) the Seller shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by it on or prior to the Closing Date;
(c) the Purchaser shall have been furnished with certificates
(dated the Closing Date and in form and substance reasonably satisfactory to
the Purchaser) executed by the Seller certifying as to the fulfillment of the
conditions specified in Sections 8.1(a) and 8.1(b) hereof;
(d) the Seller shall have delivered a duly completed and signed
transfer in favor of the Purchaser or its designee of the TPC Shares, together
with the relative certificates representing 100% of the TPC Shares. The TPC
Shares shall have been, or shall at the Closing Date be, validly delivered and
transferred to the Purchaser, free and clear of any and all Liens, other than
as set forth in the Ocensa Agreement and this Agreement;
(e) there shall not have been or occurred any Material Adverse
Change;
(f) the Seller shall have obtained all consents and waivers
referred to in Section 5.6(b) hereof, in a form reasonably satisfactory to the
Purchaser, with respect to the transactions contemplated by this Agreement and
the Seller Documents including, without limitation, any consents required by
Article Ten of the Ocensa Agreement;
(g) no Legal Proceedings shall have been instituted or threatened
or claim or demand made against the Seller, TPC, or Ocensa seeking to restrain
or prohibit or to obtain substantial damages with respect to the consummation
of the transactions contemplated hereby, and there shall not be in effect any
Order by a Governmental Body of competent jurisdiction restraining, enjoining
or otherwise prohibiting the consummation of the transactions contemplated
hereby;
(h) the Seller shall have delivered to the Dividend Trustee in
accordance with Section 4.16 of the Dividend Trust Agreement written notice of
the transfer of the TPC Shares as provided in this Agreement and the Seller
shall have caused the valid transfer of all rights of TPC to Distributions and
interests in the Dividend Account established for the benefit of TPC to the
designee of the Purchaser; and
(i) the Purchaser shall have consummated the sale to a third party
purchaser of the Class B Shares in a private placement of such Shares for an
aggregate purchase price at least equal to 3% of the Purchase Price.
8.2 Conditions Precedent to Obligations of the Seller. The
obligation of the Seller to consummate the transactions contemplated by
this Agreement is subject to the fulfillment, on or prior to the Closing
Date, of each of the following conditions (any or all of which may be waived
by the Seller in whole or in part to the extent permitted by
applicable Law):
(a) all representations and warranties of the Purchaser contained
herein shall be true and correct in all material respects as of the Closing
Date;
(b) the Purchaser shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by it on or prior to the Closing Date;
(c) the Seller shall have been furnished with certificates (dated
the Closing Date and in form and substance reasonably satisfactory to the
Seller) executed by the Purchaser certifying as to the fulfillment of the
conditions specified in Sections 8.2(a) and 8.2(b) hereof;
(d) the Seller shall have obtained all consents and waivers, if
any, referred to in Section 5.6(b) hereof, in a form reasonably satisfactory
to the Seller, with respect to the transactions contemplated by this
Agreement;
(e) no Legal Proceedings shall have been instituted or threatened
or claim or demand made against the Seller or the Purchaser seeking to
restrain or prohibit or to obtain substantial damages with respect to the
consummation of the transactions contemplated hereby, and there shall not be
in effect any Order by a Governmental Body of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby;
(f) the Seller shall be reasonably satisfied that the transactions
contemplated by the parties hereto shall be accounted for as a sale of assets
by the Seller and that the full amount of the Purchase Price shall be
accounted for as the proceeds of such sale; and,
(g) the Seller has received the Purchase Price in the manner
specified in Section 3.2 hereof.
ARTICLE IX
DOCUMENTS TO BE DELIVERED
9.1 Documents to be Delivered by the Seller.
(a) On the date of this Agreement, the Seller shall deliver, or
cause to be delivered, to the Purchaser, the opinions of Maples and Calder,
Simpson Thacher & Bartlett and Jackson Walker L.L.P., counsels to the Seller,
in form and substance reasonably satisfactory to the Purchaser.
(b) At the Closing, the Seller shall deliver, or cause to be
delivered, to the Purchaser the following:
(i) stock certificates representing the TPC Shares, duly endorsed
in blank or accompanied by stock transfer powers and with all requisite stock
transfer tax stamps attached;
(ii) the certificate referred to in Section 8.1(c) hereof;
(iii) the opinions of Maples and Calder and Simpson, Thacher &
Bartlett, counsels to the Seller, in form and substance reasonably
satisfactory to Purchaser;
(iv) copies of all consents and waivers referred to in Section
8.1(f) hereof;
(v) the Seller Documents;
(vi) an executed copy of the Escrow Agreement; and
(vii) such other documents as the Purchaser shall reasonably
request.
9.2 Documents to be Delivered by the Purchaser.
(a) On the date of this Agreement, the Purchaser shall deliver, or
cause to be delivered, to the Seller, the opinion of W.S. Walker & Co.,
counsel to the Purchaser.
(b) At the Closing, the Purchaser shall deliver, or cause to be
delivered, to the Seller the following:
(i) the Balance Purchase Price, in immediately available funds in
the manner specified in Section 3.2 hereof;
(ii) the certificate referred to in Section 8.2(c) hereof;
(iii) the opinion of W.S. Walker & Co., counsel to the Purchaser;
and
(iv) such other documents as the Seller shall reasonably request.
ARTICLE X
INDEMNIFICATION
10.1 Indemnification.
(a) The Seller and Triton Energy (collectively, the "Indemnifying
Parties"), hereby agree jointly and severally, to indemnify and hold the
Purchaser, and its directors, officers, employees, Affiliates, agents,
successors and assigns (collectively, the "Purchaser Indemnified Parties")
harmless from and against:
(i) any and all liabilities of TPC of every kind, nature and
description, absolute or contingent, existing as against TPC prior to and
including the Closing Date coming into being or arising from any third party
as a result of the acquisition and ownership of the TPC Shares by the
Purchaser including, without limitation, any environmental liability relating
to Ocensa or any Legal Proceedings instituted by Ocensa or any other party to
the Ocensa Agreement;
(ii) subject to Section 11.2 hereof, any and all losses,
liabilities, obligations, damages, costs, expenses, claims, actions,
judgments, awards or demands arising from any third party based upon,
attributable to or resulting from the failure of any representation or
warranty of the Seller set forth in Article V hereof, or any representation or
warranty contained in any certificate delivered by or on behalf of the Seller
pursuant to this Agreement, to be true and correct in all respects as of the
date made;
(iii) any and all losses, liabilities, obliga-tions, damages,
costs, expenses, claims, actions, judgments, awards or demands arising from
any third party based upon, attributable to or resulting from the breach of
any covenant or other agreement on the part of the Seller under this
Agreement;
(iv) in the event of the termination of this Agreement
pursuant to Section 4.2 hereof, any and all losses, liabilities, obligations,
damages, costs, expenses, claims, actions, judgments, awards or demands
instituted or asserted against or incurred by the Purchaser as the result of
it having entered into this Agreement, including, without limitation, as a
result of the payment by the Purchaser of the Initial Payment or the repayment
or non-repayment by the Seller of the Initial Payment; and
(v) any and all notices, actions, suits, proceedings, claims,
demands, assessments, judgments, costs, penalties and expenses, including
reasonable attorneys' and other professionals' fees and disbursements
(collectively, "Expenses") incident to any and all losses, liabilities,
obligations, damages, costs and expenses with respect to which indemnification
is provided hereunder (collectively, "Losses").
(b) The obligations to indemnify and hold harmless contained herein
shall continue to be valid and binding after the conclusion of the
transactions contemplated herein or the termination of this Agreement pursuant
to the terms hereof.
10.2 Indemnification Procedures.
(a) In the event that any Legal Proceedings shall be instituted or
that any claim or demand ("Claim") shall be asserted by any Person in respect
of which payment may be sought under Section 10.1 hereof, the Purchaser shall
reasonably and promptly cause written notice of the assertion of any Claim of
which it has knowledge which is covered by this indemnity to be forwarded to
the Indemnifying Parties (together with a copy of any such claim and any
related service of process and pleadings). The Indemnifying Parties shall
have the right, at their sole option and expense, to undertake the defense
thereof by counsel of their choice, which must be reasonably satisfactory to
the Purchaser, and to defend against, negotiate, settle or otherwise deal with
any Claim which relates to any Losses indemnified against hereunder. If the
Indemnifying Parties elect to defend against, negotiate, settle or otherwise
deal with any Claim which relates to any Losses indemnified against hereunder,
they shall within ten (10) days (or sooner, if the nature of the Claim so
requires) notify the Purchaser of their intent to do so. If the Indemnifying
Parties elect not to defend against, negotiate, settle or otherwise deal with
any Claim which relates to any Losses indemnified against hereunder, fails to
notify the Purchaser of their election as herein provided or contests their
obligation to indemnify the Purchaser for such Losses under this Agreement,
the Purchaser may defend against, negotiate, settle or otherwise deal with
such Claim (subject to the right of the Indemnifying Parties to assume the
defense of such Claim at any time prior to settlement or final determination
thereof). If the Purchaser defends any Claim, then the Indemnifying Parties
shall reimburse the Purchaser for the Expenses of defending such Claim upon
submission of periodic bills. If the Indemnifying Parties shall assume the
defense of any Claim, the Purchaser may participate, at his or its own
expense, in the defense of such Claim; provided, however, that such Purchaser
shall be entitled to participate in any such defense with separate counsel at
the expense of the Indemnifying Parties if the named parties to such Claim
include both the Purchaser and the Indemnifying Parties and, in the reasonable
opinion of counsel to the Purchaser, a conflict exists between the Purchaser
and the Indemnifying Parties that would make such separate representation
advisable. The parties hereto agree to cooperate fully with each other in
connection with the investigation, defense, negotiation or settlement of any
such Claim.
(b) After any final judgment or award shall have been rendered by a
court, arbitration board or administrative agency of competent jurisdiction
and the expiration of the time in which to appeal therefrom, or a settlement
shall have been consummated, or the Purchaser and the Indemnifying Parties
shall have arrived at a mutually binding agreement with respect to a Claim
hereunder, the Purchaser shall forward to the Indemnifying Parties notice of
any sums due and owing by the Indemnifying Parties pursuant to this Agreement
with respect to such matter and the Indemnifying Parties shall be required to
pay all of the sums so due and owing to the Purchaser by wire transfer of
immediately available funds within five business days after the date of such
notice.
(c) The failure of the Purchaser to give reasonably prompt notice
of any Claim shall not release, waive or otherwise affect the Indemnifying
Parties's obligations with respect thereto except to the extent that the
Indemnifying Parties can demonstrate actual loss and prejudice as a result of
such failure.
(d) The indemnification procedures set forth in Section 10.2
hereof shall not apply to any Claim asserted by or against the Purchaser
pursuant to Section 10.1(a)(iv) hereof and the Seller shall pay all Losses and
Expenses incurred by the Purchaser pursuant to Section 10.1(a)(iv) hereof
immediately upon demand by the Purchaser and submission of written
documentation evidencing the incurrence of such Losses and Expenses.
ARTICLE XI
MISCELLANEOUS
11.1 Payment of Sales, Use or Similar Taxes. All sales, use,
transfer, intangible, recordation, documentary stamp or similar Taxes or
charges, of any nature whatsoever, applicable to, or resulting from, the
transactions contemplated by this Agreement shall be borne by the
Seller.
11.2 Survival of Representations and Warranties. The parties
hereto hereby agree that the representations and warranties, covenants and
indemnities contained in this Agreement or in any certificate, document
or instrument delivered in connection herewith, shall remain in full
force and effect after the Closing Date (except insofar as they set out
obligations that have been fully performed at the Closing Date).
11.3 Expenses. The Seller agrees to pay on or about
the Closing Date: (i) all reasonable transaction fees, costs and expenses of
the Purchaser and its representatives incurred in connection with the
negotiation and execution of this Agreement and the Seller Documents and the
consummation of the transactions contemplated hereby and thereby; and, (ii) a
structuring fee equal to $143,294.27.
11.4 Further Assurances. The Seller and the Purchaser each
agrees to execute and deliver such other documents or agreements and to
take such other action as may be reasonably necessary or desirable for the
implementation of this Agreement and the consummation of the transactions
contemplated hereby.
11.5 Submission to Jurisdiction; Consent to Service of Process.
(a) The parties hereto hereby irrevocably submit to the
nonexclusive jurisdiction of any federal or state court located within the
State of New York over any dispute arising out of or relating to this
Agreement or any of the transactions contemplated hereby and each party hereby
irrevocably agrees that all claims in respect of such dispute or any suit,
action or proceeding related thereto may be heard and determined in such
courts. The parties hereby irrevocably waive, to the fullest extent permitted
by applicable law, any objection which they may now or hereafter have to the
laying of venue of any such dispute brought in such court or any defense of
inconvenient forum for the maintenance of such dispute. Each of the parties
hereto agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
(b) Each of the parties hereto hereby consents to process being
served by any party to this Agreement in any suit, action or proceeding by the
mailing of a copy thereof in accordance with the provisions of Section 11.9.
11.6 Entire Agreement; Amendments and Waivers. This
Agreement (together with any documents referred to herein or executed
contemporaneously by the parties in connection herewith) constitutes the
whole arrangement between the parties hereto and supersedes any previous
agreements or arrangements between them relating to the subject matter
hereof. No amendment to this Agreement shall be effective unless made in
writing and signed by duly authorized representatives of the Purchaser
and the Seller.
11.7 Governing Law. THE AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
11.8 Table of Contents and Headings.
The table of contents and section headings of this Agreement are
for reference purposes only and are to be given no effect in the construction
or interpretation of this Agreement.
11.9 Notices. All notices and other communications
under this Agreement shall be in writing and shall be deemed given when
delivered personally or mailed by certified mail, return receipt requested,
to the parties (and shall also be transmitted by facsimile to the Persons
receiving copies thereof) at the following addresses (or to such other address
as a party may have specified by notice given to the other party pursuant to
this provision):
If to the Seller, to:
Triton International Petroleum, Inc.
c/o Triton Energy
6688 North Central Expressway
Suite 1400
Dallas, TX 75206
Attention: Legal Department
Telephone: (214) 691-5200
Telecopy: (214) 691-0198
If to Purchaser, to:
The Strategic Transaction Company
Elizabethan Square
P.O. Box 1984
George Town, Grand Cayman
Cayman Islands, B.W.I.
Attention. Ms. Marlene Blake
Telephone: (809) 949-8244
Telecopy: (809) 949-8178
11.10 Severability. If any provision of this Agreement is
invalid or unenforceable, the balance of this Agreement shall remain in
effect.
11.11 Binding Effect; Assignment.
This Agreement shall be binding upon and inure to the benefit of the parties
and their respective successors and permitted assigns. Nothing in this
Agreement shall create or be deemed to create any third party beneficiary
rights in any Person not a party to this Agreement except as provided in
Section 4.5, Article X and Section 11.3 hereof and this Section 11.11. No
assignment of this Agreement or of any rights or obligations hereunder may be
made by either the Seller or the Purchaser (by operation of Law or otherwise)
without the prior written consent of the other party hereto and any attempted
assignment without the required consents shall be void; provided, however,
that, subject to the provisions of the Ocensa Agreement, the Purchaser may
assign any of its rights under this Agreement without the consent of the
Seller (including, without limitation, the Purchaser's rights to seek
indemnification hereunder and to recover the Initial Payment and any
interest thereon pursuant to Section 4.5 hereof) to any Person designated by
the Purchaser. Upon any such permitted assignment, the references in this
Agreement to the Purchaser shall also apply to any such assignee unless the
context otherwise requires.
11.12 Non-Petition. Notwithstanding any termination of the
transactions contemplated herein, the Seller shall not, and shall cause its
Affiliates not to, prior to the date which is one year and one day after the
maturity date of the Floating Rate Notes, acquiesce, petition or otherwise
invoke or cause any other Person to invoke the process of any
Governmental Body for the purpose of commencing or sustaining a case against
the Purchaser under any bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official to the Purchaser or any substantial part of the Purchaser's
property, or making a general assignment for the benefit of creditors or
ordering the winding up or liquidation of the affairs of the Purchaser.
11.13 Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but allof which
shall together constitute one Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first written above.
THE STRATEGIC TRANSACTION COMPANY
By:
Name:
Title:
TRITON INTERNATIONAL PETROLEUM, INC.
By:
Name:
Title:
AGREED AND ACCEPTED:
TRITON ENERGY LIMITED
By:
Name:
Title:
TRITON PIPELINE COLOMBIA, INC.
By:
Name:
Title:
EXHIBIT 10.44
FOURTH AMENDMENT TO STOCK PURCHASE AGREEMENT
------------------------------------------------
This FOURTH AMENDMENT, dated as of February 2, 1998, TO STOCK
PURCHASE AGREEMENT dated as of September 2, 1997, as amended as of September
30, 1997, October 31, 1997 and November 30, 1997 (collectively, the "Stock
Purchase Agreement"), between The Strategic Transaction Company (the
"Purchaser") and Triton International Petroleum, Inc. (the "Seller") relating
to the purchase of certain shares of common stock of Triton Pipeline Colombia,
Inc.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Purchaser and Seller are parties to the Stock Purchase
Agreement;
WHEREAS, pursuant to Section 11.6 of the Stock Purchase Agreement,
the Stock Purchase Agreement may be amended if in writing and signed by duly
authorized representatives of the Purchaser and Seller; and
WHEREAS, the Purchaser and the Seller desire to extend the date set
forth in Section 4.2 of the Stock Purchase Agreement on or prior to which the
Closing shall have occurred.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. DEFINED TERMS. All defined terms used herein which are not
otherwise defined shall have the meaning set forth in the Stock Purchase
Agreement.
2. AMENDMENT. (a) The Purchaser and Seller hereby agree to
amend Section 3.2 of the Stock Purchase Agreement such that it reads in its
entirety as follows:
3.2. Payment of Purchase Price. Payment of the aggregate Purchase
Price shall be made by wire transfer of immediately available funds into the
account designated by the Seller.
(b) The Purchaser and Seller hereby agree to amend Section 4.1 of the Stock
Purchase Agreement such that it reads in its entirety as follows:
<PAGE>
4.1. Closing Date. Subject to the satisfaction of the conditions
set forth in Sections 8.1 and 8.2 hereof (or the waiver thereof by the party
entitled to waive that condition), the closing of the sale and purchase of the
TPC Shares provided for in Section 2.1 hereof (the "Closing") shall take place
on or prior to February 2, 1998. The date on which the Closing shall be held
is referred to in this Agreement as the "Closing Date."
(c) The Purchaser and Seller hereby agree to amend Section 4.2 of the Stock
Purchase Agreement such that it reads in its entirety as follows:
4.2. Termination of Agreement. This Agreement may be terminated
prior to the Closing at the election of the Purchaser or the Seller (the
"Terminating Party") on February 2, 1998, if the Closing shall not have
occurred by the close of business on such date as a result of the
determination by the Terminating Party, in its sole and absolute discretion,
that any of the conditions set forth in Section 8.1 or Section 8.2 hereof, as
applicable, have not been satisfied as of such date.
(d) The Purchaser and Seller hereby agree to amend Section 4.4 of the Stock
Purchase Agreement such that it reads in its entirety as follows:
4.4. Effect of Termination. In the event that this Agreement is
terminated as provided in Section 4.2 hereof, each of the parties shall be
relieved of their duties and obligations arising under this Agreement on and
after the date of such termination and such termination shall be without
liability to the Purchaser or the Seller.
(e) The Purchaser and Seller hereby agree to amend Section 4.5 of the Stock
Purchase Agreement by deleting such Section in its entirety.
(f) The Purchaser and Seller hereby agree to amend Section 4.6 of the Stock
Purchase Agreement by deleting such Section in its entirety.
(g) The Purchaser and Seller hereby agree to amend Section 7.9 of the Stock
Purchase Agreement such that it reads in its entirety as follows:
7.9. Sale of the TPC Shares by the Purchaser. (a) In the event
the Purchaser determines to sell the TPC Shares, the Purchaser shall so inform
the Seller in writing at least 30 days prior to the date the Purchaser enters
into a binding commitment with respect to such sale (the "Sale Date"), stating
the name and address of the proposed transferee (the "Offeror") to the extent
identified and such information is not confidential, and the other terms and
conditions of such proposed disposition, including any consideration proposed
to be received for the TPC Shares (and, if the proposed disposition is to be
wholly or partly for consideration other than cash or an indebtedness of the
Offeror, the notice shall state the amount of the cash consideration, if any,
and shall describe all such non-monetary consideration). Notwithstanding the
foregoing, the Purchaser shall have no obligation to give such notice if the
Seller, Triton Colombia, Inc. or any of their respective direct or indirect
parent companies are in bankruptcy or insolvency proceedings. Additionally,
notwithstanding the foregoing, if there has occurred any event of default with
respect to the Seller or any of its direct or indirect parent companies under
any agreement which requires the payment of more than $50,000,000 to any other
party or parties thereto, the notice specified in this Section 7.9(a) shall be
delivered to the Seller by the Purchaser no more than three business days
prior to the Sale Date. In order to secure the rights of the Seller under
this Section 7.9, TPC shall not, and the Purchaser shall not permit TPC to,
sell or otherwise dispose of any shares of Ocensa owned by TPC except under
conditions that would permit the Purchaser to sell the TPC Shares.
(b) Notwithstanding the foregoing, in the event of any sale by the
Purchaser of the TPC Shares to any Person other than the Seller or one of its
Affiliates, prior to consummating such sale, the Purchaser shall obtain the
agreement of such Person, for the additional benefit of the Seller, that such
Person shall not acquire any interest in the name "Triton" or any name
confusingly similar to such name, and that such Person, as soon as is
practicable following the consummation of such sale, will change the name of
TPC to a name that does not contain the word "Triton" or any name confusingly
similar thereto and will cease to use the name "Triton" in the conduct of the
business of TPC.
(h) The Purchaser and Seller hereby agree to amend Section 7.10 of the Stock
Purchase Agreement such that it reads in its entirety as follows:
<PAGE>
7.10. Release of Liens. [Intentionally Omitted]
(i) The Purchaser and Seller hereby agree to amend Section 9.2(b)(i) of
the Stock Purchase Agreement such that it reads in its entirety as follows:
9.2(b)(i) the Purchase Price, in immediately available funds in the
manner specified in Section 3.2 hereof;
(j) The Purchaser and Seller hereby agree to amend Section 11.3 of the Stock
Purchase Agreement such that it reads in its entirety as follows:
11.3. Expenses. The Seller agrees to pay on or about the Closing
Date all reasonable transaction fees, costs and expenses of the Purchaser and
its representatives incurred in connection with the negotiation and execution
of this Agreement and the Seller Documents and the consummation of the
transactions contemplated hereby and thereby.
3. RATIFICATION. As amended by this Amendment, the Stock
Purchase Agreement is in all respects ratified and confirmed, including,
without limitation, Section 4.5 thereof, and the Stock Purchase Agreement as
so amended by this Amendment shall be read, taken and construed as one and the
same instrument.
4. FURTHER ASSURANCES. Each of the parties hereto agrees to
execute, acknowledge, deliver, file, record and publish such further
certificates, instruments, agreements and other documents, and to take all
such further action as may be required by law or reasonably requested by the
requesting party in furtherance of the purposes, objectives and intentions
underlying this Amendment and not inconsistent with the terms hereof.
5. SUCCESSORS. This Amendment shall be binding on and inure to
the benefit of the parties hereto and their respective successors and assigns.
6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
7. COUNTERPARTS. This Amendment may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment as of the date and year first above written.
THE STRATEGIC TRANSACTION COMPANY
By: ________________________________
Name:
Title:
TRITON INTERNATIONAL PETROLEUM, INC.
By: ________________________________
Name:
Title:
AGREED AND ACCEPTED:
TRITON ENERGY LIMITED
By:
Name:
Title:
TRITON PIPELINE COLOMBIA, INC.
By:
Name:
Title:
EXHIBIT 10.52
FIRST AMENDMENT TO
------------------
1997 SHARE COMPENSATION PLAN
---------------------------
This First Amendment to the 1997 Share Compensation Plan (this
"Amendment") is executed by Triton Energy Limited, a Cayman Islands company
("Triton"), as of January 13, 1998.
R E C I T A L S:
---------------
A. Triton has adopted the 1997 Share Compensation Plan (the "Plan");
and
B. In accordance with the terms of the Plan, the Board of Directors
has adopted certain amendments to the Plan effective as of January 13, 1998.
NOW, THEREFORE, in accordance with the terms of the Plan, the Plan is
amended in the following respects:
1. Section 4.2 is amended to read in its entirety as follows:
4.2 Election to Receive Elected Shares and/or Stock Options. Each
Participant eligible to receive Elected Shares may make an irrevocable
election (an "Election") either (a) to receive a grant of Ordinary Shares in a
number determined by the Committee from time to time in an amount or amounts
determined by the Committee (whether in a fixed amount or by formula) or (b)
not to participate in this Article IV. With respect to the participation by
Non-Employee Directors, each such Director is automatically eligible to elect
to receive a grant of 1,000 Elected Shares in conjunction with an election to
receive a grant of Stock Options to purchase 10,000 Ordinary Shares pursuant
to Section 5.7 of the Plan.
2. Section 4.4 is amended to read in its entirety as follows:
4.4 Issuance of Shares. Unless the Committee otherwise provides and
except as provided below with respect to Non-Employee Directors, on each date
on which a payment of compensation to a Participant is due, Ordinary Shares
shall be issued to such Participant in an amount determined by the Committee
pursuant to Section 4.1. With respect to each Non-Employee Director electing
to receive Elected Shares pursuant to Section 4.2, the Ordinary Shares shall
be issued on such date as the Committee may specify, or as soon thereafter is
reasonably practicable (although the date specified by the Committee shall be
deemed the date of issuance); provided that, with respect to Non-Employee
Directors electing to participate for the 1997 year, 1,000 Ordinary Shares
shall be issued on such date as any necessary prior approvals are obtained, or
as soon thereafter as is reasonably practicable (although the date specified
in the applicable Elected Share Agreement shall be deemed the date of
issuance); and provided further, that with respect to a Non-Employee Director
elected to the Board for the first time who elects to participate for the year
in which he or she is elected, 1,000 shares shall be issued on such date as
any necessary prior approvals are obtained, or as soon thereafter is
reasonably practicable (although the date of delivery of his or her election
to the Plan Administrator shall be deemed the date of issuance). All Electing
Shares issued or deemed issued pursuant to this Article IV shall be deemed
outstanding for all purposes as of the date of their deemed issuance; provided
that, with respect to Elected Shares issued to Non-Employee Directors pursuant
to this Section 4.4, unless the Committee otherwise specifies, for a period of
one year from the date of deemed issuance, such Elected Shares shall not be
sold, transferred or otherwise disposed of, and shall not be pledged or
otherwise hypothecated, and if for any reason other than death, disability or
Retirement, such Non-Employee Director is not a Director of the Company at the
end of such one-year term, then such shares shall be forfeited and returned to
the Company. The issuance of Elected Shares shall be evidenced by Elected
Share Agreements setting forth the total number of shares to be issued and
such other terms, restrictions and provisions as are consistent with the Plan.
3. Section 5.7 is amended to read in its entirety as follows:
5.7 Automatic Grant of Stock Options.
(a) Grant of Stock Options. In addition to the options provided for in
this Article V, throughout the term of this Plan, on such date or dates in
January of each year as the Committee may specify (and the Committee shall
specify the Date of Grant or the manner in which the Date of Grant shall be
determined based on the election by each Non-Employee Director), each
Non-Employee Director of the Company shall be entitled to elect to receive
either (i) 1,000 Elected Shares pursuant to Section 4.2 of the Plan and a
Nonqualified Stock Option to purchase 10,000 Ordinary Shares or (ii) a
Nonqualified Stock Option to purchase 15,000 Ordinary Shares. In addition, if
a person is first appointed or elected as a Non-Employee Director other than
at a date that would permit him or her to participate in the election provided
in the first sentence of this paragraph (a) , then on the date of such
appointment or election the Committee shall grant to such Non-Employee
Director a Nonqualified Stock Option to purchase 15,000 Ordinary Shares.
(b) Option Exercise Price. The exercise price for a Stock Option granted
under this Section 5.7 shall be equal to 100% of the Fair Market Value of an
Ordinary Share on the Date of Grant. Notwithstanding anything to the contrary
in this paragraph, the exercise price of each Stock Option granted pursuant to
this Section 5.7 shall not be less than the par value of an Ordinary Share.
(c) Option Period. The option period for each Stock Option granted under
this Section 5.7 will terminate ten years from the Date of Grant. No Stock
Option granted under this Section 5.7 may be exercised at any time after its
term.
(d) Exercise of Stock Option. Except only as specifically provided
elsewhere in this Plan and as set forth in any Stock Option Agreement, each
Stock Option granted under this Section 5.7 shall be fully vested and
exercisable as to all of the Ordinary Shares covered thereby on the Date of
Grant.
4. Paragraph (b) of Article VIII is amended to read in its entirety
as follows:
(b) Retirement. If a Participant ceases to be employed by the
Company or a Subsidiary, or ceases to serve as a Director or Advisor, as a
result of Retirement, (i) the Committee shall have the ability to accelerate
the vesting of the Participant's Stock Option and the lapse of any transfer
restrictions imposed on Restricted Shares or Elected Shares in its sole
discretion, and (ii) the Participant's Stock Option shall be exercisable (to
the extent exercisable on the effective date of such retirement or, if the
vesting of such Stock Option has been accelerated, to the extent exercisable
following such acceleration) (a) if such Stock Option is an Incentive Stock
Option, at any time three months after the effective date of such Retirement,
unless by its terms the Stock Option expires earlier, and (b) if such Stock
Option is a Nonqualified Stock Option (I) that was granted to a Non-Employee
Director pursuant to Section 5.7, at any time within three years after the
effective date of such Retirement, unless by its terms the Stock Option
expires sooner or the Committee agrees, in its sole discretion, to further
extend the term of such Nonqualified Stock Option; provided that if at any
time the Board or the Committee determines in good faith that the three-year
period would reasonably be expected to impair the ability of the Company to
effect a transaction that would be accounted for as a pooling of interests,
the Board or the Committee may amend this Plan, with the effect of amending
each such Stock Option outstanding hereunder, without any action of the Option
Holder, to provide that such period shall instead be one year from the
effective date of such Retirement, and (II) that was not granted to a
Non-Employee Director pursuant to Section 5.7, at any time within one year
after the effective date of such Retirement, unless by its terms the Stock
Option expires sooner or the Committee agrees, in its sole discretion, to
further extend the term of such Nonqualified Stock Option.
5. Except as amended by the provisions of this Amendment, all other
provisions of the Plan remain in full force and effect.
IN WITNESS WHEREOF, Triton Energy Limited has caused this Amendment to be
executed by its duly authorized officer effective as of the date and year
first above written.
TRITON ENERGY LIMITED
By:_________________________________
EXHIBIT 10.53
FIRST AMENDMENT TO RETIREMENT PLAN FOR DIRECTORS
------------------------------------------------
This First Amendment to Retirement Plan for Directors (this "Amendment")
is executed by Triton Energy Limited, a Cayman Islands company ("Triton"), as
of January 13, 1998.
R E C I T A L S:
---------------
A. Triton (through its predecessor company) has adopted the Amended
and Restated Retirement Plan for Directors (the "Plan"); and
B. The Board of Directors has adopted certain amendments to the Plan
effective as of January 13, 1998.
NOW, THEREFORE, the Plan is amended in the following respects:
1. Section 5 is amended to read in its entirety as follows:
"5. Amount of Benefits. The total benefits payable hereunder to a
Dorector for each fiscal year that he receives benefits hereunder shall be
equal to $25,000."
2. Except as amended by the provisions of this Amendment, all other
provisions of the Plan remain in full force and effect.
IN WITNESS WHEREOF, Triton Energy Limited has caused this Amendment to be
executed by its duly authorized officer effective as of the date and year
first above written.
TRITON ENERGY LIMITED
By:_________________________________
EXHIBIT 10.55
SECOND AMENDMENT TO
------------------
SECOND AMENDED AND RESTATED 1992 STOCK OPTION PLAN
------------------------------------------------
This Second Amendment to the Second Amended and Restated 1992 Stock
Option Plan (this "Amendment") is executed by Triton Energy Limited, a Cayman
Islands company ("Triton"), as of the effective date specified below.
R E C I T A L S:
---------------
A. Triton has adopted the Second Amended and Restated 1992 Stock
Option Plan (the "Plan"), and amended and restated the Plan effective as of
April 9, 1996; and
B. In accordance with the terms of the Plan, the Board of Directors
has adopted certain amendments to the Plan effective as of January 13, 1998.
NOW, THEREFORE, in accordance with the terms of the Plan, the Plan is
amended in the following respects:
1. Paragraph (b) of Article VII is amended to read in its entirety
as follows:
(b) Retirement. If a Participant ceases to be employed by the Company
or a Subsidiary, or ceases to serve as a Director or Advisor, as a result of
retirement, (i) the Committee shall have the ability to accelerate the vesting
of the Participant's Stock Option (other than a Non-discretionary Stock
Option, which shall automatically be accelerated) in its sole discretion, and
(ii) the Participant's Stock Option shall be exercisable (to the extent
exercisable on the effective date of such retirement or, if the vesting of
such Stock Option has been accelerated, to the extent exercisable following
such acceleration) (a) if such Stock Option is an Incentive Stock Option, at
any time three months after the effective date of such retirement, unless by
its terms the Stock Option expires earlier, and (b) if such Stock Option is a
Nonqualified Stock Option (I) that was granted to a Non-Employee Director
pursuant to Article IV, at any time within three years after the effective
date of such retirement, unless by its terms the Stock Option expires sooner
or the Committee agrees, in its sole discretion, to further extend the term of
such Nonqualified Stock Option; provided that if at any time the Board or the
Committee determines in good faith that the three-year period would reasonably
be expected to impair the ability of the Company to effect a transaction that
would be accounted for as a pooling of interests, the Board or the Committee
may amend this Plan, with the effect of amending each such Stock Option
outstanding hereunder, without any action of the Option Holder, to provide
that such period shall instead be one year from the effective date of such
Retirement, and (II) that was not granted to a Non-Employee Director pursuant
to Article IV, at any time within one year after the effective date of such
Retirement, unless by its terms the Stock Option expires sooner or the
Committee agrees, in its sole discretion, to further extend the term of such
Nonqualified Stock Option.
2. Except as amended by the provisions of this Amendment, all other
provisions of the Plan remain in full force and effect.
IN WITNESS WHEREOF, Triton Energy Limited has caused this Amendment to be
executed by its duly authorized officer effective this 13th day of January,
1998.
TRITON ENERGY LIMITED
By:_________________________________
Robert B. Holland, III,
Senior Vice President
EXHIBIT 12.1
TRITON ENERGY LIMITED AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS, EXCEPT RATIOS)
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Fixed charges, as defined:
Interest charges $ 50,625 $ 43,884 $ 41,305
Preferred dividend requirements of
subsidiaries adjusted to pre-tax basis --- --- ---
--------- --------- ---------
Total fixed charges $ 50,625 $ 43,884 $ 41,305
--------- --------- ---------
Earnings, as defined (2):
Earnings (loss) from continuing operations
before income taxes, minority interest,
extraordinary item and cumulative effect of
accounting change $ 16,896 $ 20,945 $ 16,600
Fixed charges, above 50,625 43,884 41,305
Less interest capitalized (25,818) (27,102) (16,211)
Plus undistributed (earnings) loss of affiliates --- (118) 2,249
Less preferred dividend requirements of
subsidiaries adjusted to pre-tax basis --- --- ---
--------- --------- ---------
$ 41,703 $ 37,609 $ 43,943
--------- --------- ---------
RATIO OF EARNINGS TO FIXED CHARGES (1) (2) 0.8 0.9 1.1
--------- --------- ---------
SEVEN MONTHS
ENDED YEAR ENDED MAY 31,
DEC. 31, ---------------------
1994 1994 1993
--------- --------- ----------
<S> <C> <C> <C>
Fixed charges, as defined:
Interest charges $ 20,285 $ 26,951 $ 16,336
Preferred dividend requirements of
subsidiaries adjusted to pre-tax basis --- 364 1,551
--------- --------- ----------
Total fixed charges $ 20,285 $ 27,315 $ 17,887
--------- --------- ----------
Earnings, as defined (2):
Earnings (loss) from continuing operations
before income taxes, minority interest,
extraordinary item and cumulative effect of
accounting change $ (22,834) $ (23,104) $ (147,445)
Fixed charges, above 20,285 27,315 17,887
Less interest capitalized (11,833) (16,863) (6,407)
Plus undistributed (earnings) loss of affiliates 4,102 (645) 3,012
Less preferred dividend requirements of
subsidiaries adjusted to pre-tax basis --- (364) (1,551)
--------- --------- ----------
$ (10,280) $ (13,661) $ (134,504)
--------- --------- ----------
RATIO OF EARNINGS TO FIXED CHARGES (1) (2) --- --- ---
--------- --------- ----------
</TABLE>
(1) Earnings were inadequate to cover fixed charges for the years ended
December 31, 1997 and 1996 by $8,922,000 and $6,275,000, for the seven months
ended December 31, 1994 by $30,565,000, and for the years ended May 31, 1994
and 1993 by $40,976,000 and $152,391,000, respectively.
(2) 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 and
$99,883,000 for the years ended May 31, 1994 and 1993, respectively.
Nonrecurring gains from the sale of assets and other gains aggregated
$6,253,000, $22,189,000, $13,617,000 and $56,193,000 for the years ended
December 31, 1997, 1996 and 1995, and May 31, 1994, respectively. The ratio of
earnings to fixed charges if adjusted to remove nonrecurring items, would have
been 0.7, 1.4 and 0.8 for the years ended December 31, 1997, 1996 and 1995,
respectively. Without nonrecurring items, earnings would have been inadequate
to cover fixed charges for the years ended December 31, 1997 and 1995 by
$15,175,000 and $9,921,000, for the seven months ended December 31, 1994 by
$29,581,000, and for the years ended May 31, 1994 and 1993 by $51,415,000 and
$45,183,000, 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>
YEAR ENDED DECEMBER 31,
-------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Fixed charges, as defined:
Interest charges $ 50,625 $ 43,884 $ 41,305
Preference dividend requirements of the Company 400 985 802
Preferred dividend requirements of subsidiaries
adjusted to pre-tax basis --- --- ---
--------- --------- ---------
Total fixed charges $ 51,025 $ 44,869 $ 42,107
--------- --------- ---------
Earnings, as defined (2):
Earnings (loss) from continuing operations
before income taxes, minority interest,
extraordinary item and cumulative effect of
accounting change $ 16,896 $ 20,945 $ 16,600
Fixed charges, above 51,025 44,869 42,107
Less interest capitalized (25,818) (27,102) (16,211)
Plus undistributed (earnings) loss of affiliates --- (118) 2,249
Less preference dividend requirements of the
Company and its subsidiaries adjusted to pre-tax basis (400) (985) (802)
--------- --------- ---------
$ 41,703 $ 37,609 $ 43,943
--------- --------- ---------
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERENCE DIVIDENDS (1) (2) 0.8 0.8 1.0
--------- --------- ---------
SEVEN MONTHS
ENDED
DEC. 31, YEAR ENDED MAY 31,
------------------
1994 1994 1993
--------- --------- ----------
<S> <C> <C> <C>
Fixed charges, as defined:
Interest charges $ 20,285 $ 26,951 $ 16,336
Preference dividend requirements of the Company 449 --- ---
Preferred dividend requirements of subsidiaries
adjusted to pre-tax basis --- 364 1,551
--------- --------- ----------
Total fixed charges $ 20,734 $ 27,315 $ 17,887
--------- --------- ----------
Earnings, as defined (2):
Earnings (loss) from continuing operations
before income taxes, minority interest,
extraordinary item and cumulative effect of
accounting change $ (22,834) $ (23,104) $ (147,445)
Fixed charges, above 20,734 27,315 17,887
Less interest capitalized (11,833) (16,863) (6,407)
Plus undistributed (earnings) loss of affiliates 4,102 (645) 3,012
Less preference dividend requirements of the
Company and its subsidiaries adjusted to pre-tax basis (449) (364) (1,551)
--------- --------- ----------
$ (10,280) $ (13,661) $ (134,504)
--------- --------- ----------
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERENCE DIVIDENDS (1) (2) --- --- ---
--------- --------- ----------
</TABLE>
(1) Earnings were inadequate to cover fixed charges and preference
dividends for the years ended December 31, 1997 and 1996 by $9,322,000 and
$7,260,000, for the seven months ended December 31, 1994 by $31,014,000, and
for the years ended May 31, 1994 and 1993 by $40,976,000 and $152,391,000,
respectively.
(2) 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 and
$99,883,000 for the years ended May 31, 1994 and 1993, respectively.
Nonrecurring gains from the sale of assets and other gains aggregated
$6,253,000, $22,189,000, $13,617,000 and $56,193,000 for the years ended
December 31, 1997, 1996 and 1995 and May 31, 1994, respectively. The ratio of
earnings to combined fixed charges and preference dividends if adjusted to
remove nonrecurring items, would have been 0.7, 1.4 and 0.7 for the years
ended December 31, 1997, 1996 and 1995, respectively. Without nonrecurring
items, earnings would have been inadequate to cover fixed charges and
preference dividends for the years ended December 31, 1997 and 1995 by
$15,575,000 and $10,723,000, for the seven months ended December 31, 1994 by
$30,030,000, and for the years ended May 31, 1994 and 1993 by $51,415,000 and
$45,183,000, respectively.
EXHIBIT 21.1
TRITON ENERGY LIMITED
Subsidiaries Schedule
<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 Holdings (UK) Limited United Kingdom
Triton Resources (UK) Limited United Kingdom
- --------------------------------------------- ----------------------
Triton Air Holdings, Inc. Delaware
Central BLF, Inc. Texas
Servion, Inc. Delaware
- --------------------------------------------- ----------------------
Triton Exploration Services, Inc. Delaware
North Central Aviation, Inc. Delaware
WWS Viators Corporation Delaware
- --------------------------------------------- ----------------------
Triton International Oil Corporation Delaware
Triton Colombia, Inc. Cayman Islands
Triton Oil Company of Thailand Texas
Triton Oil & Gas Corp. Delaware
- --------------------------------------------- ----------------------
Triton Guatemala S.A British Virgin Islands
- --------------------------------------------- ----------------------
Triton International Finance, Inc. Cayman Islands
- --------------------------------------------- ----------------------
Triton International Oil Corporation Cayman Islands
Triton Oil Company of Thailand (JDA) Limited Cayman Islands
- --------------------------------------------- ----------------------
Triton International Petroleum, Inc. Cayman Islands
TriJava (I) Indonesia B.V. Netherlands
TriJava (II) Indonesia B.V. Netherlands
Triton Algeria, Inc. Cayman Islands
Triton Angola, Inc. Cayman Islands
Triton Australia, Inc. Cayman Islands
Triton Bangladesh, Inc. Cayman Islands
Triton Brazil, 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 Exploration (Malaysia) Sdn. Bhd. Malaysia
TriBlora Indonesia B.V. Netherlands
Triton Hellas Exploration and Exploitation of
Hydrocarbons Anonymous Industrial Technical
and Commercial Company Linited by Shares Greece
Triton Indonesia Resources, Inc. Cayman Islands
Triton Madagascar, Inc. Cayman Islands
Triton Oman, Inc. Cayman Islands
Triton Tunisia, Inc. Cayman Islands
Titon Ventures, Inc. Cayman Islands
- --------------------------------------------- ----------------------
Triton Italy, Inc. Cayman Islands
- --------------------------------------------- ----------------------
Triton Oil Company of Malaysia, Inc. Cayman Islands
- --------------------------------------------- ----------------------
Triton Resources Argentina, Inc. Cayman Islands
- --------------------------------------------- ----------------------
Triton Resources Colombia, Inc. Cayman Islands
- --------------------------------------------- ----------------------
</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, 333-08005 and
333-27313) of Triton Energy Limited of our report dated February 5, 1998
appearing on page F-2 of this Form 10-K.
Price Waterhouse LLP
Dallas, Texas
March 31, 1998
EXHIBIT 23.2
March 2, 1998
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 24, 1998, entitled "Appraisal Report as of December 31, 1997 on
Certain Properties in Colombia owned by Triton Colombia Incorporated in
Colombia" under the caption "Items 1. and 2. Business and Properties -
Reserves" and in note 24 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, 1997, 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 12/31/97
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-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 13,451
<SECURITIES> 0
<RECEIVABLES> 12,963
<ALLOWANCES> 41
<INVENTORY> 0
<CURRENT-ASSETS> 141,973
<PP&E> 924,520
<DEPRECIATION> 89,014
<TOTAL-ASSETS> 1,098,039
<CURRENT-LIABILITIES> 257,193
<BONDS> 443,312
0
7,511
<COMMON> 365
<OTHER-SE> 288,744
<TOTAL-LIABILITY-AND-EQUITY> 1,098,039
<SALES> 145,419
<TOTAL-REVENUES> 149,496
<CGS> 51,357
<TOTAL-COSTS> 51,357
<OTHER-EXPENSES> 36,828
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,858
<INCOME-PRETAX> 16,896
<INCOME-TAX> 11,301
<INCOME-CONTINUING> 5,595
<DISCONTINUED> 0
<EXTRAORDINARY> (14,491)
<CHANGES> 0
<NET-INCOME> (8,896)
<EPS-PRIMARY> (0.26)
<EPS-DILUTED> (0.25)
</TABLE>
