SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
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 (I.R.S. Employer
of incorporation or Identification No.)
Organization)
CALEDONIAN HOUSE, MARY STREET, P.O. BOX 1043, GEORGE TOWN, GRAND CAYMAN, CAYMAN
ISLANDS
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (345) 949-0050
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 the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Number of Shares
Title of Each Class Outstanding at April 30, 1999
Ordinary Shares, par value $0.01 per share 36,591,819
-----------------------------
<PAGE>
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TRITON ENERGY LIMITED AND SUBSIDIARIES
INDEX
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PART I. FINANCIAL INFORMATION PAGE NO.
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Item 1. Financial Statements
Condensed Consolidated Statements of Operations -
Three months ended March 31, 1999 and 1998 2
Condensed Consolidated Balance Sheets -
March 31, 1999 and December 31, 1998 3
Condensed Consolidated Statements of Cash Flows -
Three months ended March 31, 1999 and 1998 4
Condensed Consolidated Statement of Shareholders' Equity -
Three months ended March 31, 1999 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 17
Item 3. Quantitative and Qualitative Disclosures about Market Risk 24
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 25
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRITON ENERGY LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
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1999 1998
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Oil and gas sales $ 49,170 $ 36,175
Costs and expenses:
Operating 18,976 15,687
General and administrative 4,935 7,689
Depreciation, depletion and amortization 15,371 12,079
Special charges 1,220 ---
-------- --------
40,502 35,455
-------- --------
Operating income 8,668 720
Gain on sale of Triton Pipeline Colombia --- 50,227
Interest income 2,578 735
Interest expense, net (5,983) (5,166)
Other income, net 923 1,492
--------- --------
(2,482) 47,288
--------- --------
Earnings before income taxes 6,186 48,008
Income tax expense 4,299 5,096
--------- --------
Net earnings 1,887 42,912
Dividends on preference shares 180 187
--------- --------
Earnings applicable to ordinary shares $ 1,707 $ 42,725
========= ========
Average ordinary shares outstanding 36,663 36,566
========= ========
Basic earnings per ordinary share $ 0.05 $ 1.17
========= ========
Diluted earnings per ordinary share $ 0.03 $ 1.16
========= ========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
TRITON ENERGY LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
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ASSETS MARCH 31, DECEMBER 31,
1999 1998
---------- ----------
(UNAUDITED)
Current assets:
Cash and equivalents $ 205,881 $ 19,122
Trade receivables, net 13,620 9,554
Other receivables 48,127 48,415
Inventories, prepaid expenses and other 2,131 1,655
---------- ----------
Total current assets 269,759 78,746
Property and equipment, at cost, less accumulated depreciation
and depletion of $464,661 for 1999 and $451,986 for 1998 565,863 556,122
Deferred taxes and other assets 118,078 121,265
---------- ----------
$ 953,700 $ 756,133
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current maturities of long-term debt $ 9,027 $ 19,027
Accounts payable and accrued liabilities 44,209 45,892
Deferred income 35,254 35,254
---------- ----------
Total current liabilities 88,490 100,173
Long-term debt, excluding current maturities 408,956 413,465
Deferred income taxes 4,898 4,169
Deferred income and other 7,905 14,519
Shareholders' equity:
5% Preference shares, stated value $34.41 7,214 7,214
8% Preference shares, stated value $70.00 350,000 127,575
Ordinary shares, par value $0.01 367 366
Additional paid-in capital 571,194 575,863
Accumulated deficit (483,198) (485,085)
Accumulated other non-owner changes in shareholders' equity (2,126) (2,126)
---------- ----------
Total shareholders' equity 443,451 223,807
Commitments and contingencies (note 6) --- ---
---------- ----------
$ 953,700 $ 756,133
========== ==========
</TABLE>
The Company uses the full cost method to account for its oil and gas producing
activities.
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
TRITON ENERGY LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(IN THOUSANDS)
(UNAUDITED)
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1999 1998
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Cash flows from operating activities:
Net earnings $ 1,887 $ 42,912
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation, depletion and amortization 15,371 12,079
Amortization of deferred income (8,814) (8,814)
Gain on sale of Triton Pipeline Colombia --- (50,227)
Deferred income taxes and other 5,176 2,849
Changes in working capital pertaining to operating activities 426 10,482
--------- ----------
Net cash provided by operating activities 14,046 9,281
--------- ----------
Cash flows from investing activities:
Capital expenditures and investments (28,968) (51,057)
Proceeds from sale of Triton Pipeline Colombia --- 97,656
Other 1,066 196
--------- ----------
Net cash provided (used) by investing activities (27,902) 46,795
--------- ----------
Cash flows from financing activities:
Proceeds from revolving lines of credit and long-term debt --- 77,404
Payments on revolving lines of credit and long-term debt (14,514) (135,565)
Issuances of 8% preference shares, net 217,805 ---
Issuances of ordinary shares 132 620
Dividends paid on preference shares (2,873) (187)
--------- ----------
Net cash provided (used) by financing activities 200,550 (57,728)
--------- ----------
Effect of exchange rate changes on cash and equivalents 65 (122)
--------- ----------
Net increase (decrease) in cash and equivalents 186,759 (1,774)
Cash and equivalents at beginning of period 19,122 13,451
--------- ----------
Cash and equivalents at end of period $205,881 $ 11,677
========= ==========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
TRITON ENERGY LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1999
(IN THOUSANDS)
(UNAUDITED)
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OWNER SOURCES OF SHAREHOLDERS' EQUITY:
5% PREFERENCE SHARES:
Balance at December 31, 1998 $ 7,214
Conversion of 5% preference shares ---
----------
Balance at March 31, 1999 7,214
----------
8% PREFERENCE SHARES:
Balance at December 31, 1998 127,575
Issuance of 3,177,500 shares at $70 per share 222,425
----------
Balance at March 31, 1999 350,000
----------
ORDINARY SHARES:
Balance at December 31, 1998 366
Issuances under stock plans 1
----------
Balance at March 31, 1999 367
----------
ADDITIONAL PAID-IN CAPITAL:
Balance at December 31, 1998 575,863
Transaction costs for issuance of 8% preference shares (4,620)
Cash dividends, 5% preference shares (180)
Other 131
----------
Balance at March 31, 1999 571,194
----------
TOTAL OWNER SOURCES OF SHAREHOLDERS' EQUITY 928,775
----------
NON-OWNER SOURCES OF SHAREHOLDERS' EQUITY:
ACCUMULATED DEFICIT:
Balance at December 31, 1998 (485,085)
Net earnings 1,887
----------
Balance at March 31, 1999 (483,198)
----------
ACCUMULATED OTHER NON-OWNER CHANGES IN SHAREHOLDERS' EQUITY:
Balance at December 31, 1998 (2,126)
Other non-owner changes in shareholders' equity ---
----------
Balance at March 31, 1999 (2,126)
----------
TOTAL NON-OWNER SOURCES OF SHAREHOLDERS' EQUITY (485,324)
----------
TOTAL SHAREHOLDERS' EQUITY AT MARCH 31, 1999 $ 443,451
==========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
TRITON ENERGY LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN TABLES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
1. 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
exploring for oil and gas in these areas, as well as in southern Europe, Africa,
and the Middle East. All sales currently are derived from oil and gas
production in Colombia.
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements of the Company contain all adjustments of a normal
recurring nature necessary to present fairly the Company's financial position as
of March 31, 1999, and the results of its operations for the three months ended
March 31, 1999 and 1998, its cash flows for the three months ended March 31,
1999 and 1998, and shareholders' equity for the three months ended March 31,
1999. The results for the three months ended March 31, 1999, are not
necessarily indicative of the final results to be expected for the full year.
The condensed consolidated financial statements should be read in conjunction
with the Notes to Consolidated Financial Statements, which are included as part
of the Company's Annual Report on Form 10-K for the year ended December 31,
1998.
Certain other previously reported financial information has been reclassified to
conform to the current period's presentation.
2. 8% PREFERENCE SHARES ISSUANCE
In August 1998, the Company and HM4 Triton, L.P. ("HM4 Triton"), an affiliate
of Hicks, Muse, Tate & Furst Incorporated ("Hicks Muse"), entered into a stock
purchase agreement (the "Stock Purchase Agreement") that provided for a $350
million equity investment in the Company. The investment was effected in two
stages. At the closing of the first stage in September 1998 (the "First
Closing"), the Company issued to HM4 Triton 1,822,500 shares of 8% convertible
preference shares ("8% Preference Shares") for $70 per share (for proceeds of
$116.8 million, net of transaction costs). Pursuant to the Stock Purchase
Agreement, the second stage was effected through a rights offering for 3,177,500
shares of 8% Preference Shares at $70 per share, with HM4 Triton being obligated
to purchase any shares not subscribed. At the closing of the second stage, which
occurred on January 4, 1999 (the "Second Closing"), the Company issued an
additional 3,177,500 8% Preference Shares for proceeds totaling $217.8 million,
net of closing costs (of which, HM4 Triton purchased 3,114,863 shares).
Each 8% Preference Share is convertible at any time at the option of the holder
into four ordinary shares of the Company (subject to certain antidilution
protections). Holders of 8% Preference Shares are entitled to receive, when and
if declared by the Board of Directors, cumulative dividends at a rate per annum
equal to 8% of the liquidation preference of $70 per share, payable for each
semi-annual period ending June 30 and December 30, commencing June 30, 1999. At
the Company's option, dividends may be paid in cash or by the issuance of
additional whole shares of 8% Preference Shares. If a dividend is to be paid in
additional shares, the number of additional shares to be issued in payment of
the dividend will be determined by dividing the amount of the dividend by $70,
with amounts in respect of any fractional shares to be paid in cash. Holders of
8% Preference Shares are entitled to vote with the holders of ordinary shares on
all matters submitted to the shareholders of the Company for a vote, with each
share of 8% Preference Share entitling its holder to a number of votes equal to
the number of ordinary shares into which it could be converted at that time.
3. SPECIAL CHARGES
In July 1998, the Company commenced a plan to restructure the Company's
operations, reduce overhead costs and substantially scale back
exploration-related expenditures. The plan contemplated the closing of foreign
offices in four countries, the elimination of approximately 105 positions, or
41% of the worldwide workforce, and the relinquishment or other disposal of
several exploration licenses. As a result of the restructuring, the Company
recognized special charges totaling $18.3 million during the third and fourth
quarters of 1998. At March 31, 1999, all of the positions had been eliminated,
three foreign offices had closed and nine licenses had been relinquished, sold
or their commitments renegotiated. The Company expects to close the remaining
office and dispose of five other licenses during 1999. Since July 1998, the
Company has paid $8.3 million in severance, benefit continuation and
outplacement costs. At March 31, 1999, the remaining liability related to the
restructuring activities undertaken in 1998 was $5.8 million.
In March 1999, the Company accrued special charges of $1.2 million related to an
additional 15% reduction in the number of employees resulting from the
Company's continuing efforts to reduce costs. The special charges consisted of
$1 million for severance, benefit continuation and outplacement costs and $.2
million related to the write-off of surplus fixed assets.
4. ASSET DISPOSITIONS
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 (the "Purchaser") for $100 million. Net proceeds were approximately
$97.7 million after $2.3 million of expenses. The sale resulted in a gain of
$50.2 million.
In conjunction with the sale of TPC, the Company entered into an 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 quarterly
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. The equity swap is carried in the Company's financial
statements at fair value during its term, which, as amended, will expire April
14, 2000. The value of the equity swap in the Company's financial statements is
equal to the estimated fair value of the shares of OCENSA owned by TPC. Because
there is no public market for the shares of OCENSA, the Company estimates their
value using a discounted cash flow model applied to the distributions expected
to be paid in respect of the OCENSA shares. The discount rate applied to the
estimated cash flows from the OCENSA shares is based on a combination of current
market rates of interest, a credit spread for OCENSA's debt, and a spread to
reflect the preferred stock nature of the OCENSA shares. During the three months
ended March 31, 1999, the Company recorded income of $.3 million in other
income, net, related to the net payments received under and the change in the
fair market value of the equity swap. Net payments made (or received) under the
equity swap, and any fluctuations in the fair value of the equity swap, in
future periods, will affect other income in such periods. There can be no
assurance that changes in interest rates, or in other factors that affect the
value of the OCENSA shares and/or the equity swap, will not have a material
adverse effect on the carrying value of the equity swap.
Upon the expiration of the equity swap in April 2000, the Company expects that
the Purchaser will sell the TPC shares. Under the terms of the equity swap with
the Counterparty, upon any sale by the Purchaser of the TPC shares, the Company
will receive from the Counterparty, or pay 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
of $97 million. There can be no assurance that the value the Purchaser may
realize in any sale of the TPC shares will equal the value of the shares
estimated by the Company for purposes of valuing the equity swap. The Company
has no right or obligation to repurchase the TPC shares at any time, but the
Company is not prohibited from offering to purchase the shares if the Purchaser
offers to sell them.
5. 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 for the three months ended March 31, 1999 and 1998.
<PAGE>
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INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
THREE MONTHS ENDED MARCH 31, 1999:
Net earnings $ 1,887
Less: 5% Preference Share dividends (180)
-----------
Earnings available to ordinary shareholders 1,707
Basic earnings per ordinary share 36,663 $ 0.05
=========
Effect of dilutive securities:
8% Preference Shares 19,576
------------ -------------
Earnings available to ordinary shareholders
and assumed conversions $ 1,707
===========
Diluted earnings per ordinary share 56,239 $ 0.03
============= =========
THREE MONTHS ENDED MARCH 31, 1998:
Net earnings $ 42,912
Less: 5% Preference Share dividends (187)
-----------
Earnings available to ordinary shareholders 42,725
Basic earnings per ordinary share 36,566 $ 1.17
============= =========
Effect of dilutive securities:
Stock options --- 119
Convertible debentures --- 29
5% Preference Shares 187 218
----------- -------------
Earnings available to ordinary shareholders
and assumed conversions $ 42,912
===========
Diluted earnings per ordinary share 36,932 $ 1.16
============= =========
</TABLE>
6. COMMITMENTS AND CONTINGENCIES
In January 1999, the Company approved a capital spending program for the year
ending December 31, 1999, of approximately $117 million, excluding capitalized
interest, of which approximately $83 million related to the Cusiana and Cupiagua
fields (the "Fields"), and $34 million related to the Company's exploration
activities in other parts of the world.
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
other parts of the world discussed above, will be met without any material
adverse effect on the Company's operations or consolidated financial condition.
See Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Requirements.
<PAGE>
GUARANTEES
At March 31, 1999, the Company had guaranteed loans of approximately $1.4
million for a Colombian pipeline company in which the Company has an ownership
interest. The Company also guaranteed performance of $21.6 million in future
exploration expenditures in various countries. These commitments are backed
primarily by unsecured letters of credit.
LITIGATION
In July through October 1998, eight lawsuits were filed against the Company and
Thomas G. Finck and Peter Rugg, in their capacities as Chairman and Chief
Executive Officer and Chief Financial Officer, respectively. Each case was
filed on behalf of a putative class of persons and/or entities who purchased the
Company's securities between March 30, 1998, and July 17, 1998, inclusive, and
seeks recovery of compensatory damages, fees and costs. The cases allege
violations of securities laws in connection with disclosures concerning the
Company's properties, operations, and value relating to a prospective sale of
the Company or of all or a part of its assets. Additionally, one case alleges
negligent misrepresentation and seeks recovery of punitive damages. On September
21, 1998, a motion for consolidation and for appointment as lead plaintiffs and
for approval of selection of lead counsel was filed with respect to the cases.
With the exception of the request for consolidation, which has been agreed to,
the motion is presently pending. Also, pending is the Company's motion to
dismiss or transfer for improper venue.
The Company believes it has meritorious defenses to these claims and intends to
vigorously defend these actions. No discovery has been taken at this time, and
the ultimate outcome is not currently predictable. There can be no assurance
that the litigation will be resolved in the Company's favor. An adverse result
could have a material adverse effect on the Company's financial position or
results of operations.
The Company is subject to certain other litigation matters, none of which is
expected to have a material, adverse effect on the Company's operations or
consolidated financial condition.
7. CERTAIN FACTORS THAT COULD AFFECT FUTURE OPERATIONS
Certain information contained in this report, as well as written and oral
statements made or incorporated by reference from time to time by the Company
and its representatives in other reports, filings with the Securities and
Exchange Commission, press releases, conferences or otherwise, may be deemed to
be "forward-looking statements" within the meaning of Section 21E of the
Securities Exchange Act of 1934 and are subject to the "Safe Harbor" provisions
of that section. Forward-looking statements include statements concerning the
Company's and management's plans, objectives, goals, strategies and future
operations and performance and the assumptions underlying such forward-looking
statements. Forward-looking statements may be identified, without limitation,
by the use of the words "anticipates," "estimates," "expects," "believes,"
"intends," "plans" and similar expressions. These statements include
information regarding drilling schedules; expected or planned production
capacity; the closing of branch offices; future production of the Fields; the
negotiation of a gas-sales contract, completion of development and commencement
of production in Malaysia-Thailand; the Company's capital budget and future
capital requirements; the Company's meeting its future capital needs; future
general and administrative expense and the portion to be capitalized; future
interest expense and the portion to be capitalized; 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; the estimated fair value of derivative instruments, including the equity
swap; and proven oil and gas reserves and discounted future net cash flows
therefrom. These statements are based on current expectations and involve a
number of risks and uncertainties, including those described in the context of
such forward-looking statements, as well as those presented below. Actual
results and developments could differ materially from those expressed in or
implied by such statements due to these and other factors.
CERTAIN FACTORS RELATING TO THE OIL AND GAS INDUSTRY
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 acquisition
and 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
acquisition and 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, 1998, including capitalized
costs by geographic area, is set forth in note 22 of Notes to Consolidated
Financial Statements in Triton's Annual Report on Form 10-K for the year ended
December 31, 1998.
The markets for oil and natural gas historically have been volatile and are
likely to continue to be volatile in the future. Oil and natural-gas prices
have been subject to significant fluctuations during the past several decades in
response to relatively minor changes in the supply of and demand for oil and
natural gas, market uncertainty and a variety of additional factors that are
beyond the control of the Company. These factors include the level of consumer
product demand, weather conditions, domestic and foreign government regulations,
political conditions in the Middle East and other production areas, the foreign
supply of oil and natural gas, the price and availability of alternative fuels,
and overall economic conditions. It is impossible to predict future oil and gas
price movements with any certainty.
The Company's oil and gas business is also subject to all of the operating risks
normally associated with the exploration for and production of oil and gas,
including, without limitation, blowouts, explosions, uncontrollable flows of
oil, gas or well fluids, pollution, earthquakes, formations with abnormal
pressures, 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. In addition, the
Company could be held liable for environmental damages caused by previous owners
of its properties or its predecessors. 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
the risk of expropriation, nationalization, war, revolution, border disputes,
renegotiation or modification of existing contracts, import, export and
transportation regulations and tariffs; taxation policies, including royalty and
tax increases and retroactive tax claims; exchange controls, currency
fluctuations and other uncertainties arising out of foreign government
sovereignty over the Company's international operations; laws and policies of
the Untied States affecting foreign trade, taxation and investment; and the
possibility of having to be subject to the exclusive jurisdiction of foreign
courts in connection with legal disputes and the possible inability to subject
foreign persons to the jurisdiction of courts in the United States. 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
Colombia. Development of reserves in the Fields is ongoing and will require
additional drilling. 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 over the
last few years, 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 March 1999, the President of the United States announced
that Colombia would be certified. There can be no assurance that, in the
future, Colombia will receive certification or a national interest 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
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.
Development of gas production is in the planning stages, but is expected to take
several years and require the drilling of additional wells and the installation
of production facilities. 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 Malaysia and Thailand. In connection with the sale to a subsidiary of ARCO
of one-half of the shares of the Company's subsidiary that held its interest in
Block A-18, ARCO agreed to pay the future exploration and development costs
attributable to the Company's and ARCO's collective interest in Block A-18, up
to $377 million or until first production from a gas field, at which time the
Company and ARCO would each pay 50% of such costs.
INFLUENCE OF HICKS MUSE
In connection with the issuance of the 1,822,500 shares of 8% Preference Shares
to HM4 Triton in September 1998, the Company and HM4 Triton entered into a
shareholders agreement (the "Shareholders Agreement") pursuant to which, among
other things, the size of the Company's Board of Directors was set at ten, and
HM4 Triton exercised its right to designate four out of such ten directors. The
Shareholders Agreement provides that, in general, for so long as the entire
Board of Directors consists of ten members, HM4 Triton (and its designated
transferees, collectively) may designate four nominees for election to the Board
(with such number of designees increasing or decreasing proportionately with any
change in the total number of members of the Board and with any fractional
directorship rounded up to the next whole number). The right of HM4 Triton (and
its designated transferees) to designate nominees for election to the Board will
be reduced if the number of ordinary shares held by HM4 Triton and its
affiliates (assuming conversion of 8% Preference Shares into ordinary shares)
represents less than certain specified percentages of the number of ordinary
shares (assuming conversion of 8% Preference Shares into ordinary shares)
purchased by HM4 Triton pursuant to the Stock Purchase Agreement.
The Shareholders Agreement provides that, for so long as HM4 Triton and its
affiliates continue to hold a certain minimum number of ordinary shares
(assuming conversion of 8% Preference Shares into ordinary shares), the Company
may not take certain actions without the consent of HM4 Triton, including (i)
amending its Articles of Association or the terms of the 8% Preference Shares
with respect to the voting powers, rights or preferences of the holders of 8%
Preference Shares, (ii) entering into a merger or similar business combination
transaction, or effecting a reorganization, recapitalization or other
transaction pursuant to which a majority of the outstanding ordinary shares or
any 8% Preference Shares are exchanged for securities, cash or other property,
(iii) authorizing, creating or modifying the terms of any series of securities
that would rank equal to or senior to the 8% Preference Shares, (iv) selling or
otherwise disposing of assets comprising in excess of 50% of the market value of
the Company, (v) paying dividends on ordinary shares or other shares ranking
junior to the 8% Preference Shares, other than regular dividends on the
Company's 5% Preference Shares, (vi) incurring or guaranteeing indebtedness
(other than certain permitted indebtedness), or issuing preference shares,
unless the Company's leverage ratio at the time, after giving pro forma effect
to such incurrence or issuance and to the use of the proceeds, is less than 2.5
to 1, (vii) issuing additional shares of 8% Preference Shares, other than in
payment of accumulated dividends on the outstanding 8% Preference Shares, (viii)
issuing any shares of a class ranking equal or senior to the 8% Preference
Shares, (ix) commencing a tender offer or exchange offer for all or any portion
of the ordinary shares or (x) decreasing the number of shares designated as 8%
Preference Shares.
As a result of HM4 Triton's ownership of 8% Preference Shares and ordinary
shares and the rights conferred upon HM4 Triton and its designees pursuant to
the Shareholder Agreement, HM4 Triton has significant influence over the actions
of the Company and will be able to influence, and in some cases determine, the
outcome of matters submitted for approval of the shareholders. The existence of
HM4 Triton as a shareholder of the Company may make it more difficult for a
third party to acquire, or discourage a third party from seeking to acquire, a
majority of the outstanding ordinary shares. A third party would be required to
negotiate any such transaction with HM4 Triton, and the interests of HM4 Triton
as a shareholder may be different from the interests of the other shareholders
of the Company.
POSSIBLE FUTURE ACQUISITIONS
The Company's strategy includes the possible acquisition of additional reserves,
including through possible future business combination transactions. There can
be no assurance as to the terms upon which any such acquisitions would be
consummated or as to the affect any such transactions would have on the
Company's financial condition or results of operations. Such acquisitions, if
any, could involve the issuance of the Company's equity securities, which could
have a dilutive effect on the current shareholders. Furthermore, any such
acquisitions could require substantial financial expenditures that would need to
be financed through cash on hand, cash flow from operations or the issuance of
debt or equity securities. The Company may not be able to acquire companies or
oil and gas properties using its equity as currency. In the case of cash
acquisitions, the Company may not be able to generate sufficient cash flow from
operations or obtain debt or equity financing sufficient to fund future
acquisitions of reserves.
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.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL REQUIREMENTS
----------------------------------
Cash and cash equivalents totaled $205.9 million and $19.1 million at March
31, 1999, and December 31, 1998, respectively. Working capital (deficit) was
$181.3 million at March 31, 1999, compared with ($21.4 million) at December 31,
1998. Current liabilities included deferred income totaling $35.3 million at
March 31, 1999 and at December 31, 1998 related to a forward oil sale
consummated in 1995. In April 1999, the Company received substantially all of
the remaining proceeds (approximately $30 million) from the forward oil sale in
May 1995, which was included in other receivables at March 31, 1999.
<TABLE>
<CAPTION>
The following summary table reflects cash flows for the Company for the
three months ended March 31, 1999 (in thousands):
<S> <C>
Net cash provided (used) by operating activities $ 14,046
Net cash provided (used) by investing activities $(27,902)
Net cash provided (used) by financing activities $200,550
</TABLE>
Operating Activities
--------------------
The Company's cash flows provided by operating activities for the
three months ended March 31, 1999, benefited from increased production from the
Cusiana and Cupiagua fields (the "Fields") in Colombia. Gross production from
the Fields averaged 435,000 barrels of oil per day ("BOPD") during the first
three months of 1999, compared with 301,000 BOPD during the first three months
of 1998. The increased production was partially offset by a lower average
realized oil price. See "Results of Operations."
Investing Activities
---------------------
The Company's capital expenditures and other capital investments were
$29 million ($25.6 million excluding capitalized interest) for the three
months ended March 31, 1999, primarily for development of the Fields.
Financing Activities
---------------------
In August 1998, the Company and HM4 Triton, L.P. ("HM4 Triton"), an
affiliate of Hicks, Muse, Tate & Furst Incorporated ("Hicks Muse"), entered into
a stock purchase agreement (the "Stock Purchase Agreement") that provided for a
$350 million equity investment in the Company. The investment was effected in
two stages. At the closing of the first stage in September 1998 (the "First
Closing"), the Company issued to HM4 Triton 1,822,500 shares of 8% convertible
preference shares ("8% Preference Shares") for $70 per share (for proceeds of
$116.8 million, net of transaction costs). Pursuant to the Stock Purchase
Agreement, the second stage was effected through a rights offering for 3,177,500
shares of 8% Preference Shares at $70 per share, with HM4 Triton being obligated
to purchase any shares not subscribed. At the closing of the second stage, which
occurred on January 4, 1999 (the "Second Closing"), the Company issued an
additional 3,177,500 8% Preference Shares for proceeds totaling $217.8 million,
net of closing costs (of which, HM4 Triton purchased 3,114,863 shares).
Each 8% Preference Share is convertible at any time at the option of the
holder into four ordinary shares of the Company (subject to certain antidilution
protections). Holders of 8% Preference Shares are entitled to receive, when and
if declared by the Board of Directors, cumulative dividends at a rate per annum
equal to 8% of the liquidation preference of $70 per share, payable for each
semi-annual period ending June 30 and December 30 of each year. At the
Company's option, dividends may be paid in cash or by the issuance of additional
whole shares of 8% Preference Shares. If a dividend is to be paid in additional
shares, the number of additional shares to be issued in payment of the dividend
will be determined by dividing the amount of the dividend by $70, with amounts
in respect of any fractional shares to be paid in cash. The first dividend
period will be the period from January 4, 1999, to June 30, 1999. As of the date
hereof, the Company's Board of Directors had not made a final determination as
to whether to pay the dividend for that period in cash or additional shares. The
Board's determination will depend on a number of factors, including the
Company's cash balances and projected cash needs, the market price of the
Company's ordinary shares in relation to the conversion price of the 8%
preference shares, the potential dilutive effect of issuing additional 8%
preference shares and other factors. The Company expects that the record date
for the dividend will be June 18, 1999 and the payment date will be June 30. The
declaration of a dividend in cash or additional shares for any period should not
be considered an indication as to whether the Board will declare dividends in
cash or additional shares in future periods.
During the three months ended March 31, 1999, the Company repaid
borrowings totaling $14.5 million, including $10 million under unsecured credit
facilities that were outstanding at December 31, 1998.
Future Capital Needs
----------------------
Development of the Fields, including drilling and construction of ancillary
production enhancement facilities, will require further capital outlays. In
January 1999, the Company approved a capital spending program for the year
ending December 31, 1999, of approximately $117 million, excluding capitalized
interest, of which approximately $83 million related to the Fields ($21.6
million incurred through March 31), and $34 million related to the Company's
exploration activities in other parts of the world ($4 million incurred through
March 31). The Company is continuing its efforts to reduce exploration related
capital expenditures and anticipates the final exploration related capital
expenditures will be lower than plan for the year.
The Company expects to fund its capital requirements for 1999 with cash
flow from operations and cash. In connection with the sale to ARCO of
one-half of the shares through which the Company owned its interest in Block
A-18 of the Malaysia-Thailand Joint Development Area in August 1998, ARCO
agreed to pay the future exploration and development costs attributable to
the Company's and ARCO's collective interest in Block A-18, up to $377
million or until first production from a gas field.
In April 1999, the Company's Board of Directors authorized a share
repurchase program enabling the Company to repurchase up to ten percent of
the Company's 36.7 million outstanding ordinary shares. Purchases of
ordinary shares by the Company began in April and may be made from time to
time in the open market or through privately negotiated transactions at
prevailing market prices depending on market conditions. The Company has
no obligation to repurchase any of its outstanding shares and may
discontinue the share repurchase program at management's discretion.
As of May 11, 1999, the Company had repurchased a total of 287,100
ordinary shares.
In conjunction with the sale of TPC to an unrelated third party (the
"Purchaser") in February 1998, the Company entered into a five year equity swap
with a creditworthy financial institution (the "Counterparty"). The issuance to
HM4 Triton of the 8% Preference Shares resulted in the right of the Counterparty
to terminate the equity swap prior to the end of its five year term. In January
1999, the Counterparty exercised its right and designated April 2000 as the
termination date of the equity swap. Upon the expiration of the equity swap in
April 2000, the Company expects that the Purchaser will sell the TPC shares.
Under the terms of the equity swap with the Counterparty, upon any sale by the
Purchaser of the TPC shares, the Company will receive from the Counterparty, or
pay 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 of $97 million. There
can be no assurance that the value the Purchaser may realize in any sale of the
TPC shares will equal the value of the shares estimated by the Company for
purposes of valuing the equity swap. The Company has no right or obligation to
repurchase the TPC shares at any time, but the Company is not prohibited from
offering to purchase the shares if the Purchaser offers to sell them. See "-
Results of Operations - Other Income and Expenses" below, note 4 of Notes to
Condensed Consolidated Financial Statements, and "Item 7A. Quantitative and
Qualitative Disclosures about Market Risk" in Triton's Annual Report on Form
10-K for the year ended December 31, 1998.
RESULTS OF OPERATIONS
---------------------
Sales volumes and average prices realized were as follows:
THREE MONTHS ENDED
MARCH 31, 1999,
------------------
<TABLE> 1999 1998
<CAPTION> ------ ------
<S> <C> <C>
Sales volumes:
Oil (MBbls), excluding forward oil sale 3,206 1,896
Forward oil sale (MBbls delivered) 762 762
------ ------
3,968 2,658
====== ======
Gas (MMcf) 101 165
Weighted average price realized:
Oil (per Bbl) $ 12.37 $13.55
Gas (per Mcf) $ 0.86 $ 0.99
</TABLE>
<PAGE>
THREE MONTHS ENDED MARCH 31, 1999,
COMPARED WITH THREE MONTHS ENDED MARCH 31, 1998
Oil and Gas Sales
-----------------
Oil and gas sales for the first quarter of 1999 totaled $49.2 million, a
36% increase from the first quarter of 1998, due to higher production which was
partially offset by lower average realized oil prices. Oil production,
including production related to barrels delivered under the forward oil sale,
increased 49% in first quarter 1999, compared to the prior-year quarter,
resulting in an increase in revenues of $17.8 million. Gross production from
the Fields averaged 435,000 BOPD for the first quarter 1999, compared to 301,000
BOPD for the prior-year quarter. The increased production was primarily due to
the start-up in late 1998 of two 100,000 BOPD oil-production units at the
Cupiagua central processing facility. The average realized oil price decreased
$1.18 per barrel, or 9%, resulting in a decrease in revenues of $4.7 million
compared to the same period in 1998. The lower average realized oil price
resulted from a decrease in the 1999 average West Texas Intermediate ("WTI") oil
price, compared with the prior-year quarter.
In the latter half of March 1999, oil prices began to rise. As a result of
the increased prices, the Company has hedged its WTI price on a significant
portion of its remaining projected 1999 oil production. See Item 3.
"Quantitative and Qualitative Disclosures about Market Risk".
Costs and Expenses
--------------------
Operating expenses increased $3.3 million in 1999, and depreciation,
depletion and amortization increased $3.3 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 equivalent-barrel, which include field
operating expenses, pipeline tariffs and production taxes, were $5.04 and $5.99
in 1999 and 1998, respectively. Operating expenses on a per equivalent-barrel
basis were lower primarily due to higher production volumes. OCENSA pipeline
tariffs totaled $13.1 million or $3.50 per barrel, and $10.1 million or $3.90
per barrel in 1999 and 1998, respectively. 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 are assessed a premium tariff on a per-barrel basis, and OCENSA will
use revenues from such tariffs to reduce the Initial Shippers' tariff.
General and administrative expense before capitalization decreased $7.1
million, or 50%, to $7 million in 1999. Capitalized general and administrative
costs were $2.1 million and $6.4 million in 1999 and 1998, respectively.
General and administrative expenses, and the portion capitalized, decreased as a
result of restructuring activities undertaken during the second half of 1998.
In July 1998, the Company commenced a plan to restructure the Company's
operations, reduce overhead costs and substantially scale back
exploration-related expenditures. The plan contemplated the closing of foreign
offices in four countries, the elimination of approximately 105 positions, or
41% of the worldwide workforce, and the relinquishment or other disposal of
several exploration licenses. As a result of the restructuring, the Company
recognized special charges totaling $18.3 million during the third and fourth
quarters of 1998. At March 31, 1999, all of the positions had been eliminated,
three foreign offices had closed and nine licenses had been relinquished, sold
or their commitments renegotiated. The Company expects to close the remaining
office and dispose of five other licenses during 1999. Since July 1998, the
Company has paid $8.3 million in severance, benefit continuation and
outplacement costs. At March 31, 1999, the remaining liability related to the
restructuring activities undertaken in 1998 was $5.8 million.
In March 1999, the Company accrued special charges of $1.2 million related
to an additional 15% reduction in the number of employees resulting from the
Company's continuing efforts to reduce costs. The special charges consisted of
$1 million for severance, benefit continuation and outplacement costs and $.2
million related to the write-off of surplus fixed assets.
Other Income and Expenses
----------------------------
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 a gain of $50.2 million.
Gross interest expense for 1999 and 1998 totaled $9.4 million and $12.3,
respectively, while capitalized interest for 1999 decreased $3.7 million to $3.4
million. The decrease in gross interest expense is due to lower outstanding
borrowings resulting from the repayment of primarily all outstanding borrowings
under bank credit facilities in the third quarter of 1998. Capitalized interest
decreased primarily due to the writedown of unevaluated property totaling $73.9
million in June 1998 and a sale of 50% of the Company's Block A-18 project in
August 1998.
Other income, net included a foreign exchange gain (loss) of ($.4 million)
and $1.8 million in 1999 and 1998, respectively, primarily related to noncash
adjustments to deferred tax liabilities in Colombia associated with the change
in valuation of the Colombian peso versus the U.S. dollar. During 1999, the
Company recorded an unrealized gain of $.8 million, representing the change in
the fair value of the call options purchased in anticipation of a forward oil
sale. In addition, during 1999 and 1998, the Company recorded income (expense)
of $.3 million and ($.8 million), respectively, in other income, net, related to
the net payments received (made) under and the change in the fair value of the
equity swap entered into in conjunction with the sale of TPC. Net payments made
(or received) under the equity swap, and any fluctuations in the fair values of
the call options and the equity swap, in future periods will affect other income
in such periods. See "Item 7A. Quantitative and Qualitative Disclosures About
Market Risk" in Triton's Annual Report on Form 10-K for the year ended December
31, 1998.
Income Taxes
-------------
The income tax provisions for 1999 and 1998 included deferred tax expense
of $2.7 million and $4.1 million, respectively. Current taxes related to the
Company's Colombian operations totaled $1.6 million and $1 million in 1999 and
1998, respectively.
Recent Accounting Pronouncements
--------------------------------
In June 1998, the Financial Accounting Standards Board issued
Statement No. 133 ("SFAS 133"), "Accounting for Derivative Instruments and
Hedging Activities." SFAS 133 establishes accounting and reporting standards
for derivative instruments and for hedging activities. It requires enterprises
to recognize all derivatives as either assets or liabilities in the balance
sheet and measure those instruments at fair value. The requisite accounting for
changes in the fair value of a derivative will depend on the intended use of the
derivative and the resulting designation. The Company must adopt SFAS 133
effective January 1, 2000. Based on the Company's outstanding derivatives
contracts, the impact of adopting this standard would not have a material
adverse effect on the Company's operations or consolidated financial condition.
However, no assurances can be given with regards to the level of the Company's
derivatives activities at the time SFAS 133 is adopted or the resulting effect
on the Company's operations or consolidated financial condition.
Information Systems and the Year 2000
-------------------------------------
The Year 2000 issue involves circumstances where a computerized system may
not properly recognize or process date-sensitive information on or after January
1, 2000. The Company began a formal process in 1998 to identify those internal
computerized systems that are not Year 2000 compliant, prioritize those
business-critical computerized systems that need remediation or replacement,
test compliance once the appropriate corrective measures have been implemented,
and develop any contingency plans where considered necessary. In addition, the
Company intends to conduct a survey of partners, vendors and customers that the
Company believes could have an impact on the Company's material business
operations.
The Company's information technology infrastructure consists of desktop
Pentium class Intel based PC systems, servers and Sparc UNIX based computers and
off-the-shelf software packages. The systems are networked via Microsoft NT 4.0
and other telecommunications equipment. The Company does not use mini or
mainframe computer systems and uses only off-the-shelf software products. The
PBX and phone system is a standard off-the-shelf phone system with voice mail
capability. Additionally, telefax and copier machines are additional business
tools used by the Company in conducting its day-to-day activities.
The Company has completed its assessment of Year 2000 readiness of its
internal computerized systems and has made substantial progress toward
installing upgrades to its off-the-shelf financial and operational software
applications, hardware and telecommunications equipment. The Company expects
that such remediation procedures will be completed by the second quarter of
1999. The last phase will include testing of newly upgraded systems to ensure
compliance with Year 2000 date recognition and the development of contingency
plans. The Company expects to complete this last phase by the third quarter of
1999.
All of the Company's sales are derived from oil and gas production from the
Fields, which is heavily dependent upon the operation of the Fields by BP
Exploration Company (Colombia) Limited (the "Operator") and the transportation
of oil through OCENSA, a Colombian pipeline company. The Company is monitoring
progress of the Operator of the Fields and OCENSA on their activities related to
the Year 2000. At this time, the Company expects that field operations will not
be interrupted due to improper recognition of the Year 2000 by computerized
systems of the Operator of the Fields or OCENSA.
The Company also relies on other oil and gas partners, vendors, and
financial institutions in its daily operations. The Company believes it has
identified those third-party relationships that could have a material adverse
effect on the Company's results of operations and financial position should
their computerized systems not be compliant for the Year 2000. The Company
is in the process of surveying the identified third parties on their readiness
for the Year 2000 and will establish appropriate alternatives, if needed, where
noncompliance may pose a risk to the Company's operations.
The Company does not believe that the costs to resolve any Year 2000
issues will be material. To date, the Company has incurred approximately
$200,000 on Year 2000 matters and it expects that the total cost, primarily
consulting fees, will not exceed $500,000.
The failure to correct a material Year 2000 problem by the Company, its
partners or other vendors could result in an interruption of the Company's
normal business activities or operations, including production in the Fields or
transportation of the Company's crude oil to the port of Covenas. Any
interruptions could result in a material adverse effect on the Company's results
of operations, cash flows and financial condition. Due to the inherent
uncertainties relating to the effect of the Year 2000 on the Company's
operations, it is difficult to predict what impact, if any, noncompliance with
the Year 2000 issue will have on the Company's results of operations, cash flows
and financial condition.
As the Company progresses further through its Year 2000 analysis, it
intends to develop contingency plans for risks that could cause a material
adverse effect on the Company's results of operations, cash flows and financial
condition.
Certain Factors That Could Affect Future Operations
---------------------------------------------------
Certain information contained in this report, as well as written and oral
statements made or incorporated by reference from time to time by the Company
and its representatives in other reports, filings with the Securities and
Exchange Commission, press releases, conferences or otherwise, may be deemed to
be "forward-looking statements" within the meaning of Section 21E of the
Securities Exchange Act of 1934 and are subject to the "Safe Harbor" provisions
of that section. Forward-looking statements include statements concerning the
Company's and management's plans, objectives, goals, strategies and future
operations and performance and the assumptions underlying such forward-looking
statements. Forward-looking statements may be identified, without limitation,
by the use of the words "anticipates," "estimates," "expects," "believes,"
"intends," "plans" and similar expressions. These statements include
information regarding drilling schedules; expected or planned production
capacity; the closing of branch offices; future production of the Fields; the
negotiation of a gas-sales contract, completion of development and commencement
of production in Malaysia-Thailand; the Company's capital budget and future
capital requirements; the Company's meeting its future capital needs; future
general and administrative expense and the portion to be capitalized; future
interest expense and the portion to be capitalized; 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; the estimated fair value of derivative instruments, including the equity
swap; and proven oil and gas reserves and discounted future net cash flows
therefrom. These statements are based on current expectations and involve a
number of risks and uncertainties, including those described in the context of
such forward-looking statements, and in notes of Notes to Condensed Consolidated
Financial Statements. Actual results and developments could differ materially
from those expressed in or implied by such statements due to these and other
factors.
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
Oil sold by the Company is normally priced with reference to a defined
benchmark, such as light sweet crude oil traded on the New York Mercantile
Exchange. Actual prices received vary from the benchmark depending on quality
and location differentials. It is the Company's policy to use financial market
transactions with creditworthy counterparties from time to time, primarily to
reduce risk associated with the pricing of a portion of the oil and natural gas
that it sells. The policy is structured to underpin the Company's planned
revenues and results of operations. The Company also may enter into financial
market transactions to benefit from its assessment of the future prices of its
production relative to other benchmark prices. There can be no assurance that
the use of financial market transactions will not result in losses.
With respect to the sale of oil to be produced by the Company, the Company
has entered into an oil price collar with a creditworthy counterparty to
establish a weighted average minimum WTI benchmark price of $14.25 per barrel
and a maximum of $15.40 per barrel on 300,000 barrels per month during the
period from April through December 1999, for an aggregate of 2.7 million
barrels. As a result, to the extent the average monthly WTI price exceeds
$15.40, the Company will pay the counterparty the difference between the average
monthly WTI price and $15.40, and to the extent that the average monthly WTI
price is below $14.25, the counterparty will pay the Company the difference
between the average monthly WTI price and $14.25. In addition, the Company
established a weighted average WTI fixed price of $16.76 for an aggregate of 2
million barrels of production during the period from April through December
1999, under its marketing agreement with a third party.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: The following documents are filed as part of this Quarterly
Report on Form 10-Q:
1. 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>
<S> <C> <C>
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 The Chase Manhattan 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 Energy Limited and The Chase Manhattan Bank, as
Rights Agent. (4)
4.5 Amendment No. 2 to Rights Agreement dated as of August 30,
1998, between Triton Energy Limited and The Chase Manhattan Bank, as
Rights Agent. (5)
4.6 Unanimous Written Consent of the Board of Directors authorizing
a Series of Preference Shares. (6)
4.7 Amendment No. 3 to Rights Agreement dated as of January 5,
1999, between Triton Energy Limited and The Chase Manhattan Bank, as
Rights Agent. (7)
10.1 Amended and Restated Retirement Income Plan. (8)
10.2 Amendment to the Retirement Income Plan dated August 1, 1998. (9)
10.3 Amendment to Amended and Restated Retirement Income Plan dated
December 31, 1996. (10)
10.4 Amended and Restated Supplemental Executive Retirement Income Plan. (11)
10.5 1981 Employee Non-Qualified Stock Option Plan. (12)
10.6 Amendment No. 1 to the 1981 Employee Non-Qualified Stock Option Plan. (13)
10.7 Amendment No. 2 to the 1981 Employee Non-Qualified Stock
Option Plan. (12)
10.8 Amendment No. 3 to the 1981 Employee Non-Qualified Stock Option Plan. (8)
10.9 1985 Stock Option Plan. (14)
10.10 Amendment No. 1 to the 1985 Stock Option Plan. (12)
10.11 Amendment No. 2 to the 1985 Stock Option Plan. (8)
10.12 Amended and Restated 1986 Convertible Debenture Plan. (8)
10.13 1988 Stock Appreciation Rights Plan. (15)
10.14 1989 Stock Option Plan. (16)
10.15 Amendment No. 1 to 1989 Stock Option Plan. (12)
10.16 Amendment No. 2 to 1989 Stock Option Plan. (8)
10.17 Second Amended and Restated 1992 Stock Option Plan.(17)
10.18 Form of Amended and Restated Employment Agreement with
Triton Energy Limited and certain officers. (11)
10.19 Amended and Restated Employment Agreement among Triton
Energy Limited, Triton Exploration Services, Inc. and Robert
B. Holland, III. (6)
10.20 Form of Amended and Restated Employment Agreement among
Triton Energy Limited, Triton Exploration Services, Inc. and each
of Peter Rugg and Al E. Turner. (6)
10.21 Letter Agreement among Triton Energy Limited, Triton
Exploration Services, Inc. and Robert B. Holland, III dated December
17, 1998. (27)
10.22 Letter Agreement among Triton Energy Limited, Triton Exploration
Services, Inc. and Peter Rugg dated December 10, 1998. (27)
10.23 Form of Bonus Agreement between Triton Exploration Services, Inc. and
each of Al E. Turner, Robert B. Holland, III, and Peter Rugg dated July
15, 1998. (27)
10.24 Amended and Restated 1985 Restricted Stock Plan. (8)
10.25 First Amendment to Amended and Restated 1985 Restricted Stock Plan. (18)
10.26 Second Amendment to Amended and Restated 1985 Restricted Stock Plan. (17)
10.27 Executive Life Insurance Plan. (19)
10.28 Long Term Disability Income Plan. (19)
10.29 Amended and Restated Retirement Plan for Directors. (14)
10.30 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. (14)
10.31 Contract for Exploration and Exploitation for Tauramena with an effective
date of July 4, 1988, between Triton Colombia, Inc., and Empresa Colombiana
De Petroleos. (14)
10.32 Summary of Assignment legalized by Public Instrument No. 1255 dated
September 15, 1987 (Assignment is in Spanish language). (15)
10.33 Summary of Assignment legalized by Public Instrument No. 1602 dated
June 11, 1990 (Assignment is in Spanish language). (15)
10.34 Summary of Assignment legalized by Public Instrument No. 2586 dated
September 9, 1992 (Assignment is in Spanish language). (15)
10.35 401(K) Savings Plan. (8)
10.36 Amendment to the 401(k) Savings Plan dated August 1, 1998. (9)
10.37 Amendment to 401(k) Savings Plan dated December 31, 1996. (10)
10.38 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. (20)
10.39 Triton Crude Purchase Agreement between Triton Colombia, Inc. and Oil
Co., LTD. dated May 25, 1995. (21)
10.40 Credit Agreement among Triton Colombia, Inc., Triton Energy Corporation,
NationsBank, N.A. (Carolinas) and Export-Import Bank of the
United States. (18)
10.41 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. (18)
10.42 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. (17)
10.43 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. (10)
10.44 Form of Indemnity Agreement entered into with each director and officer
of the Company. (6)
10.45 Description of Performance Goals for Executive Bonus Compensation. (22)
10.46 Stock Purchase Agreement dated September 2, 1997, between The Strategic
Transaction Company and Triton International Petroleum, Inc. (11)
10.47 Fourth Amendment to Stock Purchase Agreement dated February 2, 1998,
between The Strategic Transaction Company and Triton International
Petroleum, Inc. (11)
10.48 Amended and Restated 1997 Share Compensation Plan. (27)
10.49 First Amendment to Amended and Restated Retirement Plan for Directors. (11)
10.50 First Amendment to Second Amended and Restated 1992 Stock Option Plan. (23)
10.51 Second Amendment to Second Amended and Restated 1992 Stock Option Plan. (11)
10.52 Amended and Restated Indenture dated July 25, 1997, between Triton Energy
Limited and The Chase Manhattan Bank. (24)
10.53 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. (24)
10.54 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. (24)
10.55 Share Purchase Agreement dated July 17, 1998 ,among Triton Energy Limited,
Triton Asia Holdings, Inc., Atlantic Richfield Company and ARCO JDA
Limited. (9)
10.56 Shareholders Agreement dated August 3, 1998, among Triton Energy Limited,
Triton Asia Holdings, Inc., Atlantic Richfield Company, and ARCO JDA
Limited. (9)
10.57 Stock Purchase Agreement dated as of August 31, 1998, between Triton
Energy Limited and HM4 Triton, L.P. (6)
10.58 Shareholders Agreement dated as of September 30, 1998, between Triton
Energy Limited and HM4 Triton, L.P. (6)
10.59 Financial Advisory Agreement dated as of September 30, 1998, between Triton
Energy Limited and Hicks, Muse & Co. Partners, L.P. (6)
10.60 Monitoring and Oversight Agreement dated as of September 30, 1998, between
Triton Energy Limited and Hicks, Muse & Co. Partners, L.P. (6)
10.61 Severance Agreement dated as of July 15, 1998, between Thomas G. Finck
and Triton Energy Limited. (6)
10.62 Severance Agreement dated April 9, 1999, made and entered into by and
among Triton Energy Limited, Triton Exploration Services, Inc. and Peter Rugg.
(28)
10.63 Consulting and Non-Compete Agreement dated April 9, 1999, made and entered
into By and between Triton Exploration Services, Inc. and Peter Rugg. (28)
10.64 Third Amendment to Amended and Restated 1985 Restricted Stock Plan. (28)
12.1 Computation of Ratio of Earnings to Fixed Charges. (28)
12.2 Computation of Ratio of Earnings to Combined Fixed Charges and Preference
Dividends. (28)
27.1 Financial Data Schedule. (28)
99.1 Heads of Agreement for the Supply of Gas from Block A-18 of the
Malaysia-Thailand Joint Development Area. (10)
99.2 Rio Chitamena Association Contract. (25)
99.2 Rio Chitamena Purchase and Sale Agreement. (25)
99.3 Integral Plan - Cusiana Oil Structure. (25)
99.4 Letter Agreements with co-investor in Colombia. (25)
99.5 Colombia Pipeline Memorandum of Understanding. (25)
99.6 Amended and Restated Oleoducto Central S.A. Agreement dated as of March 31,
1995. (26)
<S> <C> <C>
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(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 the Company's Registration Statement on Form 8-A/A
(Amendment No. 2) dated October 2, 1998, and incorporated herein by reference.
(6) Previously filed as an exhibit to Triton Energy Corporation's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1998, and incorporated herein
by reference.
(7) Previously filed as an exhibit to the Company's Registration Statement on Form 8-A/A
(Amendment No. 3) dated January 31, 1999, and incorporated herein by reference.
(8) 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.
(9) Previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998, and incorporated herein by reference.
(10) Previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998, and incorporated herein by reference.
(11) Previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997, and incorporated herein by reference.
(12) Previously filed as an exhibit to Triton Energy Corporation's Annual Report on Form
10-K for the fiscal year ended May 31, 1992 ,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 May 31, 1989, and incorporated by reference herein.
(14) 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.
(15) 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.
(16) 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.
(17) 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.
(18) 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.
(19) 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.
(20) 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.
(21) 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.
(22) 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.
(23) 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.
(24) 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.
(25) 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.
(26) 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.
(27) Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998, and incorporated herein by reference
(28) Filed herewith.
</TABLE>
(b) Reports on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRITON ENERGY LIMITED
By:/s/ Bernard Gros-Dubois
------------------------
Bernard Gros-Dubois
Vice President
(Principal Accounting and
Financial Officer)
Date: May 14, 1999
EXHIBIT 10.62
SEVERANCE AGREEMENT
This Severance Agreement (this "Agreement"), dated as of April 9, 1999, is
made and entered into by and among Triton Energy Limited, a Cayman Islands
company ("Triton"), Triton Exploration Services, Inc., a Delaware corporation
(the "Company"), and Peter Rugg ("Employee").
WITNESSETH:
WHEREAS, Employee is an employee of the Company and/or certain other
subsidiaries or affiliates of Triton; and
WHEREAS, the Company and Employee have reached agreement on the terms of
the termination of Employee's employment with the Company; and
WHEREAS, Triton, the Company and Employee desire that this Agreement set
forth the provisions regarding Employee's termination of employment with the
Company;
NOW, THEREFORE, in consideration of the premises and mutual promises
contained herein, the Company and Employee agree as follows:
1. TERMINATION OF EMPLOYMENT.
(a) As of April 15, 1999, Employee hereby resigns as an officer
and director of Triton, the Company and any and all subsidiaries or affiliates
of Triton, but not as an employee of the Company. Employee agrees to sign and
deliver a resignation from all positions as an officer and director of Triton
and its subsidiaries in the form attached to this Agreement, and to execute and
deliver such additional documents and take such further action as the Company
may reasonably request to evidence such resignation and elect his successor(s).
Effective as of June 15, 1999, Employee hereby resigns Employee's employment
with the Company and any and all subsidiaries or affiliates of Triton and the
Company. Triton, the Company and Employee agree that, except with respect to the
Consulting and Non-Compete Agreement between the Company and Employee of even
date herewith (the "Consulting and Non-Compete Agreement") and the Surviving
Company Obligations (as defined in Section 4(a)(ii) hereof), any and all
employment agreements, or similar understandings or arrangements, written or
oral, express or implied, between or among Employee and Triton, the Company and
any other subsidiary or affiliate of Triton are hereby terminated and of no
further force or effect.
(b) Employee represents and warrants that Employee has not removed
any property of the Company or any of its affiliates, except for any such
property that Employee has returned to the Company prior to the date of this
Agreement. In the event Employee discovers any property of the Company in
Employee's possession or control, Employee agrees to promptly return such
property to the Company.
2. COMPENSATION.
(a) The Company agrees to pay, or cause to be paid, Employee an
amount equal to $1,743,292.61 in the aggregate (being the sum of (1)
$1,000,000.00 and (2) the amount (determined by Milliman & Robertson) equal to
the net present value of Employee's benefits under the Supplemental Executive
Retirement Plan (the "SERP") that are vested by years of service in satisfaction
of its obligations to Employee under the SERP and (3) the compensation that
would be payable to Employee for the period from the date hereof through June
15, 1999), payable no later than one business day following the Effective Date
(as defined below), subject to any holdbacks or deductions required as a matter
of law, and provided that the payment in respect of the SERP shall be made as
soon as practicable after the Effective Date (but no later than three business
days following the Effective Date) from the trust. The term "Effective Date"
shall mean the date immediately following the expiration of the seven-day period
following the execution of this Agreement in duplicate originals.
(b) The Company agrees to pay the cost of continued health care
coverage as provided under the Consolidated Omnibus Reconciliation Act of 1985
(COBRA) through the earlier of (i) the date Employee becomes ineligible for
COBRA coverage or (ii) April 14, 2001. Employee agrees to notify the Company
upon Employee's becoming eligible for participation in a health plan sponsored
by a third party.
(c) On the Effective Date, the Company will cause all stock
options held by Employee as of the date of this Agreement to become
exercisable, and to remain exercisable until April 19, 2002.
3. CONFIDENTIALITY.
Employee represents that Employee has not removed, and agrees that Employee
will not (without the Company's prior written consent) remove, from the premises
of Triton, the Company or any other subsidiary or affiliate of Triton any
documents or copies thereof that constitute or contain any Confidential
Information (as hereinafter defined). Without limiting the generality of the
foregoing, Employee agrees that Employee shall (a) keep confidential all
Confidential Information at any time known to Employee, (b) not use any
Confidential Information for Employee's benefit or to the detriment of Triton,
the Company or any other subsidiary or affiliate of Triton or disclose any
Confidential Information to any third persons (except pursuant to a validly
issued subpoena or court order, and then only if the Company shall have been
promptly advised thereof and consulted with regarding an appropriate response
thereto), (c) not make copies of documents embodying any Confidential
Information, (d) exercise reasonable care to prevent dissemination of
Confidential Information to third persons, and (e) return to the Company any
documents which contain Confidential Information and which are or come into
Employee's possession. "Confidential Information" shall include any information
concerning any matters affecting or relating to the businesses, operations and
financial affairs of Triton, the Company or any other subsidiary or affiliate of
Triton that are of a special or unique nature or the disclosure of which could
cause harm to Triton, the Company or any other subsidiary or affiliate of
Triton, and this Agreement (including its existence and its contents) regardless
of whether any such Confidential Information is labeled or otherwise treated as
confidential, material, or important, but shall not include information that is
or becomes publicly known or enters the public domain other than through the act
or omission of Employee or any of Employee's legal or financial advisors or
through an act of any other party that is subject to another confidentiality
agreement with the Company.
4. GENERAL RELEASES; CERTAIN COVENANTS; NO DISPARAGEMENT.
(a) (i) As a material inducement to Triton and the Company to enter
into this Agreement, Employee hereby irrevocably and unconditionally releases,
acquits, and forever discharges Triton, the Company or any other subsidiary or
affiliate of Triton, and their respective directors, officers, employees,
shareholders, successors, assigns, agents, independent auditors and accountants,
representatives, and attorneys, and all persons acting by, through, under, or in
concert with them, or any of them (collectively, including Triton and the
Company, the "Company Releasees"), from any and all charges, complaints, claims,
liabilities, obligations, promises, controversies, damages, actions, suits,
rights, demands, costs, losses, debts and expenses (including attorneys' fees
and costs actually incurred), of any nature, known or unknown ("Claim" or
"Claims") and to the extent permitted by state and federal law, which Employee
has, owns, or holds, or claims to have, own or hold or which Employee at any
time hereafter may have, own or hold, or claim to have, own or hold, against
each or any of the Company Releasees based on any facts, circumstances, actions
or omissions existing or occurring on or before the Effective Date, including
but not limited to, any Claims involving securities or securities transactions,
any Claims based on harassment or hostile work environment based on race, sex,
religion, national origin, color, disability or age, any Claims involving
contracts, agreements or obligations related thereto (including, without
limitation, any Claims relating to any express or implied employment agreement
and any benefit plans of Triton, the Company or any other subsidiary or
affiliate of Triton, except for Claims for benefits accrued under the terms of
any such benefit plans through the date of this Agreement), any Claims involving
libel, slander or defamation, any Claims under federal, state or local law, any
Claims under federal, state or local law of discrimination on the basis of age,
sex, race, national origin, color, religion, disability, such as Claims under
the Age Discrimination in Employment Act of 1967, the Employee Retirement Income
Security Act, the Americans With Disabilities Act, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the retaliation provisions of the
Texas Workers' Compensation Act and the Texas Commission on Human Rights Act,
and any action related to Employee's employment, separation from, or affiliation
with Triton, the Company and any other Company Releasee, and excepting only any
claims based on a breach of this Agreement. This release shall be binding on
Employee's heirs, dependents, successors and assigns.
(ii) Notwithstanding the foregoing clause (i) of this Section 4(a), in
no event shall Employee be deemed to have released the Company Releasees from
any obligation they, or any one of them, have or may have (A) under the
Indemnity Agreement between Triton and Employee dated as of September 16, 1998,
(B) in respect of any benefits accrued in favor of Employee through the
Effective Date under the Company's Retirement Income Plan and 401(k) Savings
Plan, or (C) the indemnity obligations of the Company, Triton or any of their
affiliates to employee under their respective governing documents (collectively,
the "Surviving Company Obligations"); provided that Employee acknowledges that
the payments received pursuant to this Agreement will satisfy all obligations to
Employee under the SERP.
(b) As a material inducement to Employee to enter into this
Agreement, each of Triton and the Company, on its own behalf and on behalf of
its respective subsidiaries and affiliates, hereby irrevocably and
unconditionally releases, acquits and forever discharges Employee, and
Employee's heirs, dependents, successors and assigns, or any of them
(collectively, including Employee, the "Employee Releasees") from any Claims
which Triton, the Company or any other subsidiary or affiliate of Triton has,
owns, or holds or claims to have, own or hold or which Triton, the Company or
any other subsidiary or affiliate of Triton at any time hereafter may have, own
or hold, or claim to have, own or hold, or claim to have, own or hold, against
each of the Employee Releasees, excepting only any Claims based on a breach of
the terms of this Agreement, intentional injury to the property of Triton, the
Company or any other subsidiary or affiliate of Triton, fraud, theft,
embezzlement or misappropriation of corporate assets.
(c) Employee acknowledges and agrees that each Company Releasee
(other than Triton and the Company, which are direct contractual beneficiaries)
is expressly intended to be, and is hereby made, a third party beneficiary of
Employee's covenants and releases contained in this Agreement. The Company
acknowledges and agrees that each Employee Releasee (other than Employee, who is
a direct contractual beneficiary) is expressly intended to be, and is hereby
made, a third party beneficiary of Triton's and the Company's covenants and
releases contained in this Agreement.
(d) Each of the above releasors agrees to indemnify the releasees
described herein for all loss, cost, damage and expense, including, but not
limited to, attorneys' fees, incurred by such releasees described herein or any
one of them, arising out of any breach of the provisions of the releases as set
forth in Sections 4(a), (b) and (c) above.
(e) Neither Employee nor any corporation or other entity
controlled by Employee shall make or cause to be made, directly or indirectly,
any disparaging, negative or other similar remarks concerning the Company or any
subsidiary or affiliate of the Company to any third person.
5. OLDER WORKER BENEFIT PROTECTION ACT CLAUSES.
(a) "Knowing and Voluntary" Waiver. You may revoke this Agreement
------------------------------
within seven days after execution. By your signature below, you confirm that
you: (1) have read this Agreement carefully and completely; (2) have been given
a period of at least 45 days to consider and review this Agreement; (3) are
aware of your right to consult with legal counsel and acknowledge that you have
had ample opportunity to do so if you choose; and (4) understand all of the
provisions contained in the Agreement.
(b) Notice About Affected Employees. All employees of Triton
----------------------------------
Energy Limited who are subject to the mass layoff will be terminated and offered
this additional severance package. In accordance with the Older Workers Benefit
Protection Act, attached is a chart showing the job titles and ages of the
employees.
6. NO ADMISSION.
This Agreement (or its offer and negotiation) is not an admission by any of
Triton, the Company or Employee of any wrongdoing or liability.
7. NO REINSTATEMENT.
Employee agrees that Employee waives any right to reinstatement or future
employment with the Company following Employee's separation from the Company.
8. NON-DISCLOSURE; COOPERATION.
(a) Employee agrees that Employee will not disclose, or cause to be
disclosed the terms of this Agreement, or the fact that this Agreement exists,
except to Employee's attorneys, or to the extent otherwise required by law.
Employee agrees that Employee will cooperate in good faith with the Company in
connection with any civil or criminal litigation or governmental inquiry or
investigation involving the Company or any of its subsidiaries or affiliates, or
its or their properties, assets or businesses, or to which any of them may be a
party or a subject. Employee shall not in any way cooperate or lend assistance
to any parties that are now, or may in the future be, involved in legal
proceedings adverse to the Company except as may be required by applicable law.
(b) Employee and the Company acknowledge their mutual belief that the
excise tax (the "Excise Tax"), imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended, will not apply to the payments contemplated by this
Agreement and the Consulting and Non-Compete Agreement (the "Payments"). In the
event that the Internal Revenue Service asserts that an Excise Tax is due in
respect of the Payments, however, Employee will promptly notify the Company of
such claim. Upon receipt of such notice, the Company will have the right to
require that Employee either pay the claim, in which case (if Employee did not
theretofore file a personal income tax return reflecting the application of the
Excise Tax) the Company will pay the amount of the Excise Tax payable in respect
of the Payments, or contest the claim, in which case the Company will 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 if such contest is unsuccessful,
the Company will pay any Excise Tax or other tax (including interest and
penalties with respect thereto) imposed in respect of the Payments as a result
of such contest. The Company will have the right to control all proceedings
taken in connection with such contest and Employee agrees to take such action in
connection with contesting such claim as the Company shall reasonably request,
including, without limitation, accepting legal representation by an attorney
selected by the Company (who shall be reasonably satisfactory to Employee).
<PAGE>
8. REVOCATION.
It is further understood that for the seven-day period commencing upon the
execution of this Agreement in duplicate originals and ending on the day
immediately preceding the Effective Date, Employee may revoke this Agreement by
providing written notice to the Company, and this Agreement shall not become
effective or enforceable until such revocation period has expired. Moreover, if
Employee revokes this Agreement, any and all originals or copies of this
Agreement must be returned to the Company at the time of revocation.
10. NO DURESS.
This Agreement has been entered into voluntarily and not as a result of
coercion, duress, or undue influence. Employee agrees that Employee has read and
fully understands the terms of this Agreement and has been advised to consult
with an attorney before executing this Agreement. Additionally, Employee agrees
that Employee has been given at least twenty-one days to consider this
Agreement.
11. SEVERABILITY.
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws effective during the term hereof,
such provision shall be fully severable and this Agreement shall be construed
and enforced as if such illegal, invalid or unenforceable provision never
comprised a part hereof; and the remaining provisions hereof shall remain in
full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom. Furthermore, in lieu of
such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
12. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Texas. This Agreement is performable in Dallas County,
Texas.
13. ARBITRATION.
The parties agree that any controversy or claim arising out of or relating
to this Agreement, including any questions relating to its existence, validity
or termination, which cannot be resolved amicably by the parties within 30 days
after either party has notified the other, in writing, of the existence of a
dispute, will be settled exclusively by final and binding arbitration, before
three arbitrators. Arbitration will be governed by the Federal Arbitration Act
and administered by the Judicial Arbitration and Mediation Services Rules for
the Resolution of Employment Disputes (JAMS). The arbitrator is empowered to
award all appropriate remedies under Texas or federal law. The arbitrator shall
have exclusive authority to resolve any dispute relating to the validity,
interpretation, application and enforcement of this Agreement. Judgment on the
arbitrator's award may be enforced in any court with proper jurisdiction. Each
party will equally bear all costs and legal fees of arbitration, unless
otherwise required by law. The parties further agree that the arbitration will
occur in Dallas, Texas.
14. ENTIRE AGREEMENT.
This Agreement contains the entire understanding and agreement between or
among the Company, Triton and Employee with respect to the subject matter
herein, and supersedes all prior oral or written agreements between the parties
with respect to that subject matter.
15. NOTICE.
Any notice or communication hereunder must be in writing and given by
depositing the same in the United States mail, addressed to the party to be
notified, postage prepaid and registered or certified with return receipt
requested, by transmitting the same by facsimile transmission followed by United
States mail as aforesaid, or by delivering the same by overnight delivery
service or in person. Notice shall be deemed received on the date on which it is
delivered or transmitted by facsimile, or on the third business day following
the date on which it is so mailed. For purposes of notice, the addresses of
Employee shall be 4 Glenheather Court, Dallas, Texas 75225, and the address of
Triton or the Company shall be:
c/o Triton Energy
6688 N. Central Expressway
Suite 1400
Dallas, Texas 75206
Fax No.: (214) 691-0198
Attention: Legal Department
Any party may change its address for notice by written notice given to the other
parties in accordance with this Section.
16. PLEASE READ THIS AGREEMENT CAREFULLY. THIS AGREEMENT INCLUDES A
RELEASE OF ALL KNOWN OR UNKNOWN CLAIMS AGAINST TRITON ENERGY LIMITED, TRITON
EXPLORATION SERVICES, INC. AND THE OTHER SUBSIDIARIES AND AFFILIATES OF TRITON
ENERGY LIMITED, AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES,
SHAREHOLDERS, SUCCESSORS, ASSIGNS, AGENTS, INDEPENDENT AUDITORS AND ACCOUNTANTS,
REPRESENTATIVES, AND ATTORNEYS.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
____________________________
Peter Rugg
TRITON ENERGY LIMITED
By: __________________________
TRITON EXPLORATION SERVICES, INC.
By: __________________________
<PAGE>
April 15, 1999
To Triton Energy Limited and all of its direct and indirect subsidiaries
and affiliates
Gentlemen:
I hereby resign as a director and/or officer of Triton Energy Limited and
each of its direct and indirect subsidiaries and affiliates, including without
limitation those on the attached list.
Very truly yours,
Peter Rugg
EXHIBIT 10.63
CONSULTING AND NON-COMPETE AGREEMENT
This Consulting and Non-Compete Agreement (this "Agreement'), dated as of
April 9, 1999, is made and entered into by and between Triton Exploration
Services, Inc., a Delaware corporation (the "Company"), and Peter Rugg (the
"Consultant").
The Consultant has resigned his position as a senior executive of the
Company and the Consultant and the Company have entered into a Severance
Agreement dated as of April 9, 1999 (the "Severance Agreement"). As an executive
of the Company, the Consultant acquired unique knowledge of the Company's
business and has occupied a position of trust and confidence. The Company and
the Consultant desire that, effective as of June 16, 1999 (the "Effective
Date"), the Consultant serve as a consultant to the Company and agree to refrain
from competing with the Company, all as set forth in this Agreement.
In consideration of the mutual agreements, the Consultant and the Company
agree as follows:
1. Consulting Services. For the Consulting Period (as defined in Section
--------------------
2), the Consultant shall provide from time to time and as requested by the
Company consulting services relating to such matters as the Company may
reasonably request, including services relating to analyses of potential
acquisitions, divestitures, financing alternatives and other similar matters
(the "Services"). The Consultant shall report to the Chief Operating Officer of
the Company. The Consultant shall devote such time and energy to the business of
the Company as reasonably required to perform the Services; provided that the
Consultant will not be obligated to commit more than 25% of his business time.
2. Term. The Consultant and the Company agree that the consulting period
----
(the "Consulting Period ") shall begin on the Effective Date and end on the
six-month anniversary of the Effective Date.
3. Compensation. On April 19, 1999, the Company will pay to the Consultant
------------
an amount equal to $316,307.40.
4. Termination.
-----------
(a) If the Company terminates the Consulting Period without Cause prior to
the six-month anniversary of the Effective Date, the compensation contemplated
by this Agreement shall remain unaffected.
(b) If (i) the Company terminates the Consulting Period at any time for
Cause, or (ii) the Consultant terminates the Consulting Period at any time, in
addition to any other remedies available at law or equity, any stock options
then held by the Consultant shall immediately terminate. "Cause" shall mean (i)
the Consultant's breach of any material term of this Agreement or the Severance
Agreement, including, but not limited to, the covenants set forth in Section 5
hereof, (ii) the Consultant's continued willful failure or refusal, after
written notice, to perform his duties hereunder and (iii) any willful misconduct
by the Consultant resulting in material injury to the Company.
(c) The death or disability of the Consultant during the Consulting Period
shall not relieve the Company of its obligations under Section 3.
5. Non-Competition; Confidentiality; Payments. In consideration for the
--------------------------------------------
compensation set forth herein, the Consultant agrees as follows:
(a) Until the six-month anniversary of the Effective Date, the Consultant
will not directly or indirectly, on Consultant's own behalf or in the service of
or on behalf of any other individual or entity, either as a proprietor,
employee, agent, independent contractor, consultant, director, officer, partner
or stockholder,
(i) engage or participate in any business in competition with the
business that Triton Energy Limited or any of its subsidiaries (including
50%-owned subsidiaries) (the "Triton Companies") operated as of the date
immediately preceding the Effective Date in any of the countries of Colombia,
Malaysia, Thailand, Equatorial Guinea, Madagascar, Greece or Italy; provided,
however, that this Section l(a) shall not prohibit the Consultant from
purchasing or holding an aggregate equity interest of up to 3% in any business
in competition with the Triton Companies, or
(ii) perform any action, activity or course of conduct which is
detrimental in any material respect to the businesses or business reputation of
the Triton Companies, including without limitation (A) soliciting, recruiting or
hiring any employees of the Triton Companies and (B) soliciting or encouraging
any employee of the Triton Companies to leave the employment of the Triton
Companies.
(b) The Consultant shall not, without the prior written consent of the
Company, disclose to any other person or use, whether directly or indirectly,
any Confidential Information (as defined in the Severance Agreement) relating to
or used by the Company or any of its affiliates, whether in written, oral or
other form, except in connection with the performance of his duties hereunder.
(c) In the event of a breach or threatened breach by the Consultant of the
provisions of this Section 5, the Consultant acknowledges that the Company will
suffer irreparable injury and may not have an adequate remedy at law and
therefore may be entitled to a temporary restraining order or a preliminary or
permanent injunction restraining the Consultant from such breach without the
requirement of posting security or proving actual damages as well as an
equitable accounting of all profits or benefits arising out of such violation.
Nothing contained in this Section 5 or elsewhere in this Agreement shall be
construed as prohibiting the Company from pursuing any other remedies available
at law or equity for such breach or threatened breach by the Consultant.
6. Conditions to Effectiveness. This Agreement shall become effective on
-----------------------------
the Effective Date, provided that the Consultant shall have taken no action to
revoke, rescind or otherwise challenge the Severance Agreement.
7. Duties on Termination. At the Company's request at any time or upon
-----------------------
termination of the Consulting Period for any reason, the Consultant agrees to
deliver promptly to the Company all equipment, notebooks, documents, memoranda,
reports, files, samples, books, correspondence, lists, computer tapes or disks,
or other written or graphic records, and the like (and all copies thereof),
relating to the Company's business, which are or have been in his possession or
under his control.
8. Severability. In the event that any one or more of the provisions of
------------
this Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
of this Agreement shall not be affected thereby.
9. Notices. All notices and other communications under this Agreement
-------
shall be in writing and may be given by hand delivery, by Federal Express, by
telecopier or registered or certified mail, postage prepaid, return receipt
requested, addressed as follows (or at such other address as may be substituted
by notice given as herein provided):
If to the Company:
Triton Exploration Services Inc.
6688 North Central Expressway, Suite 1400
Dallas, Texas 75206
Attention: Legal Department
If to the Consultant:
4 Glenheather Court
Dallas, Texas 75225
Any notice or communication hereunder shall be deemed to have been given or made
as of the date so delivered if personally delivered or sent by Federal Express;
when receipt is acknowledged, if telecopied; and five calendar days after
mailing if sent by registered or certified mail.
10. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
--------------
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.
11. Entire Agreement. Except as specifically set forth herein, this
-----------------
Agreement, together with the Severance Agreement, represents the entire
agreement between the parties hereto with respect to the subject matter hereof,
and supersedes all prior agreements, representations and understandings.
12. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
--
together shall constitute one and the same instrument.
13. Assignment. Neither the Consultant not the Company may assign any
----------
rights hereunder without the prior written consent of the other party, which
shall not be unreasonably withheld; provided that the Company may assign this
Agreement to any successor to the Company or a substantial part of the Company's
business or assets.
14. Amendments; Waivers. (a) This Agreement may not be modified, amended,
--------------------
altered or supplemented except upon the written agreement executed by the
parties hereto.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
____________________________
Peter Rugg
TRITON EXPLORATION SERVICES, INC.
By: __________________________
Its: __________________________
EXHIBIT 10.64
TRITON ENERGY LIMITED
---------------------
AMENDED AND RESTATED RESTRICTED STOCK PLAN
------------------------------------------
THIRD AMENDMENT
---------------
This Third Amendment to the Triton Energy Limited Amended and Restated
Restricted Stock 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 maintains the Triton Energy Limited Amended and Restated
Restricted Stock Plan (as amended to date, the "Plan"), the purpose of which is
to encourage ownership of shares by employees of Triton and its subsidiaries and
to provide incentives for the employees to promote the success of the business
of Triton and its subsidiaries.
B. Triton desires to amend the Plan to increase the number of Ordinary
Shares issuable pursuant to the Plan.
C. Triton will seek the approval of its shareholders to the amendment
contemplated hereby at its annual meeting of shareholders to be held in 1999.
NOW, THEREFORE, in accordance with Section 1.7 of the Plan, the Plan is amended
in the following respects:
1. The first sentence of Section 1.4. of the Plan is amended in its entirety to
read as follows:
"The maximum aggregate number of Ordinary Shares subject to the Plan
shall be 300,000, subject to adjustments made in accordance with Section
1.9 and Section 3.10 of the Plan."
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 as of this 17th day of March, 1999.
TRITON ENERGY LIMITED
By:_________________________
James C. Musselman, President
and Chief Executive Officer
EXHIBIT 12.1
TRITON ENERGY LIMITED AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS, EXCEPT RATIOS)
(UNAUDITED)
<TABLE>
<CAPTION>
SEVEN MONTHS
THREE MONTHS ENDING ENDING
MARCH 31, YEAR ENDING DECEMBER 31, DEC. 31,
------------------ -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 1998 1998 1997 1996 1995 1994
-------- -------- ---------- --------- --------- --------- ----------
Fixed charges, as defined
Interest charges $ 9,740 $12,546 $ 50,253 $ 50,625 $ 43,884 $ 41,305 $ 20,285
Preferred dividend requirements of
subsidiaries adjusted to pre-tax basis --- --- --- --- --- --- ---
-------- -------- ---------- --------- --------- --------- ----------
Total fixed charges $ 9,740 $12,546 $ 50,253 $ 50,625 $ 43,884 $ 41,305 $ 20,285
======== ======== ========== ========= ========= ========= ==========
Earnings, as defined (2):
Earnings (loss) from continuing operations
before income taxes, minority interest and
extraordinary item $ 6,186 $48,008 $(238,609) $ 16,896 $ 20,945 $ 16,600 $ (22,834)
Fixed charges, above 9,740 12,546 50,253 50,625 43,884 41,305 20,285
Less interest capitalized (3,390) (7,137) (23,215) (25,818) (27,102) (16,211) (11,833)
Plus undistributed (earnings) loss of affiliates --- --- --- --- (118) 2,249 4,102
Less preferred dividend requirements of
subsidiaries adjusted to pre-tax basis --- --- --- --- --- --- ---
-------- -------- ---------- --------- --------- --------- ----------
$12,536 $53,417 $(211,571) $ 41,703 $ 37,609 $ 43,943 $ (10,280)
======== ======== ========== ========= ========= ========= ==========
RATIO OF EARNINGS TO FIXED CHARGES (1) (2) 1.3 4.3 --- 0.8 0.9 1.1 ---
======== ======== ========== ========= ========= ========= ==========
</TABLE>
<TABLE>
<CAPTION>
YEAR
ENDING
MAY 31,
<S> <C>
1994
Fixed charges, as defined ----------
Interest charges $ 26,951
Preferred dividend requirements of
subsidiaries adjusted to pre-tax basis 364
----------
Total fixed charges $ 27,315
==========
Earnings, as defined (2):
Earnings (loss) from continuing operations
before income taxes, minority interest and
extraordinary item $ (23,104)
Fixed charges, above 27,315
Less interest capitalized (16,863)
Plus undistributed (earnings) loss of affiliates (645)
Less preferred dividend requirements of
subsidiaries adjusted to pre-tax basis (364)
----------
$ (13,661)
==========
RATIO OF EARNINGS TO FIXED CHARGES (1) (2) ---
==========
____________________
</TABLE>
(1) Earnings were inadequate to cover fixed charges for the years ended
December 31, 1998, 1997 and 1996 by $261,824,000, $8,922,000 and $6,275,000,
respectively, for the seven months ended December 31, 1994 by $30,565,000 and
for the year ended May 31, 1994 by $40,976,000.
(2) Earnings reflect nonrecurring writedowns and loss provisions of
$1,220,000 for the three months ended March 31, 1999, $348,064,000, $46,153,000
and $1,058,000 for the years ended December 31, 1998, 1996 and 1995,
respectively, $984,000 for the seven months ended December 31, 1994 and
$45,754,000 for the year ended May 31, 1994, respectively. Nonrecurring gains
from the sale of assets and other gains aggregated $50,227,000 for the three
months ended March 31, 1998, $125,617,000, $6,253,000, $22,189,000, $13,617,000
and $56,193,000 for the years ended December 31, 1998, 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 1.4 and 0.3 for the three months
ended March 31, 1999 and 1998, respectively, 0.2, 0.7, 1.4 and 0.8 for the years
ended December 31, 1998, 1997, 1996 and 1995, respectively. Without
nonrecurring items, earnings would have been inadequate to cover fixed charges
for the three months ended March 31, 1998 by $9,356,000, for the years ended
December 31, 1998, 1997 and 1995 by $39,377,000, $15,175,000 and $9,921,000,
respectively, for the seven months ended December 31, 1994 by $29,581,000 and
for the year ended May 31, 1994 by $51,415,000.
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>
SEVEN MONTHS
THREE MONTHS ENDING ENDING
MARCH 31, YEAR ENDING DECEMBER 31, DEC. 31,
---------------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 1998 1998 1997 1996 1995 1994
-------- -------- ---------- --------- --------- --------- ----------
Fixed charges, as defined:
Interest charges $ 9,740 $12,546 $ 50,253 $ 50,625 $ 43,884 $ 41,305 $ 20,285
Preference dividend requirements of the Company 180 187 3,061 400 985 802 449
Preferred dividend requirements of subsidiaries
adjusted to pre-tax basis --- --- --- --- --- --- ---
-------- -------- ---------- --------- --------- --------- ----------
Total fixed charges $ 9,920 $12,733 $ 53,314 $ 51,025 $ 44,869 $ 42,107 $ 20,734
======== ======== ========== ========= ========= ========= ==========
Earnings, as defined (2):
Earnings (loss) from continuing operations
before income taxes, minority interest and
extraordinary item $ 6,186 $48,008 $(238,609) $ 16,896 $ 20,945 $ 16,600 $ (22,834)
Fixed charges, above 9,920 12,733 53,314 51,025 44,869 42,107 20,734
Less interest capitalized (3,390) (7,137) (23,215) (25,818) (27,102) (16,211) (11,833)
Plus undistributed (earnings) loss of affiliates --- --- --- --- (118) 2,249 4,102
Less preference dividend requirements of the
Company and its subsidiaries adjusted to
pre-tax basis (180) (187) (3,061) (400) (985) (802) (449)
-------- -------- ---------- --------- --------- --------- ----------
$12,536 $53,417 $(211,571) $ 41,703 $ 37,609 $ 43,943 $ (10,280)
======== ======== ========== ========= ========= ========= ==========
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERENCE DIVIDENDS (1) (2) 1.3 4.2 --- 0.8 0.8 1.0 ---
======== ======== ========== ========= ========= ========= ==========
YEAR
ENDING
MAY 31,
<S> <C>
1994
----------
Fixed charges, as defined:
Interest charges $ 26,951
Preference dividend requirements of the Company ---
Preferred dividend requirements of subsidiaries
adjusted to pre-tax basis 364
----------
Total fixed charges $ 27,315
==========
Earnings, as defined (2):
Earnings (loss) from continuing operations
before income taxes, minority interest and
extraordinary item $ (23,104)
Fixed charges, above 27,315
Less interest capitalized (16,863)
Plus undistributed (earnings) loss of affiliates (645)
Less preference dividend requirements of the
Company and its subsidiaries adjusted to
pre-tax basis (364)
----------
$ (13,661)
==========
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERENCE DIVIDENDS (1) (2) ---
==========
____________________
</TABLE>
(1) Earnings were inadequate to cover combined fixed charges and preference
dividends for the years ended December 31, 1998, 1997 and 1996 by $264,885,000,
$9,322,000 and $7,260,000, respectively, for the seven months ended December 31,
1994 by $31,014,000 and for the year ended May 31, 1994 by $40,976,000.
(2) Earnings reflect nonrecurring writedowns and loss provisions of
$1,220,000 for the three months ended March 31, 1999, $348,064,000, $46,153,000
and $1,058,000 for the years ended December 31, 1998, 1996 and 1995,
respectively, $984,000 for the seven months ended December 31, 1994 and
$45,754,000 for the year ended May 31, 1994. Nonrecurring gains from the sale of
assets and other gains aggregated $50,227,000 for the three months ended March
31, 1998, $125,617,000, $6,253,000, $22,189,000, $13,617,000 and $56,193,000 for
the years ended December 31, 1998, 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 1.4 and 0.3
for the three months ended March 31, 1999 and 1998, respectively, 0.2, 0.7, 1.4
and 0.7 for the years ended December 31, 1998, 1997, 1996 and 1995,
respectively. Without nonrecurring items, earnings would have been inadequate
to cover combined fixed charges and preference dividends for the three months
ended March 31, 1998 by $9,543,000, for the years ended December 31, 1998, 1997
and 1995 by $42,438,000, $15,575,000 and $10,723,000, respectively, for the
seven months ended December 31, 1994 by $30,030,000 and for the year ended May
31, 1994 by $51,415,000.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MARCH 31,
1999 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 205,881
<SECURITIES> 0
<RECEIVABLES> 13,620
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 269,759
<PP&E> 1,030,524
<DEPRECIATION> 464,661
<TOTAL-ASSETS> 953,700
<CURRENT-LIABILITIES> 88,490
<BONDS> 408,956
0
357,214
<COMMON> 367
<OTHER-SE> 85,870
<TOTAL-LIABILITY-AND-EQUITY> 953,700
<SALES> 49,170
<TOTAL-REVENUES> 49,170
<CGS> 18,976
<TOTAL-COSTS> 18,976
<OTHER-EXPENSES> 15,371
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,983
<INCOME-PRETAX> 6,186
<INCOME-TAX> 4,299
<INCOME-CONTINUING> 1,887
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,887
<EPS-PRIMARY> 0.05
<EPS-DILUTED> 0.03
</TABLE>
