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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 10, 1996
Seagull Energy Corporation
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(Exact name of registrant as specified in charter)
Texas
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(State or other jurisdiction of incorporation)
1-8094 74-1764876
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(Commission File Number) (IRS Employer Identification No.)
1001 Fannin, Suite 1700, Houston, Texas 77002 -6714
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(Address of principal executive offices) (Zip Code)
(713) 951-4700
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(Registrant's telephone number including area code)
Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 10, 1996, Seagull Energy Corporation, a Texas corporation
("Seagull" or the "Company"), acquired all of the outstanding common stock of
Esso Suez Inc. ("ESI") and certain assets of Esso Egypt Limited (the "EEL
Assets") from Exxon Corporation ("Exxon"), subject to formal governmental
approval, which was obtained on September 15, 1996. The economic effective date
for the acquisition was January 1, 1996 (the "Effective Date").
THE ASSETS OF ESI AND THE EEL ASSETS
ESI's assets consist of a 100% interest in the East Zeit oil producing
concession in the offshore Gulf of Suez. After accounting for production during
1996, Seagull estimates that the ESI concession area contained approximately
17.4 million barrels of net proved oil reserves at September 10, 1996. The ESI
concession area has current net production averaging approximately 4,000 - 5,000
barrels of crude oil per day.
The EEL Assets consist of the entire working interest in the South
Hurghada exploration concession located onshore on the coast of the Gulf of Suez
approximately 250 miles southeast of Cairo. The 63,000-acre South Hurghada
concession contains a number of currently drillable exploratory prospects, plus
two existing oil discoveries.
The Egyptian concessions require the working interest partners to pay
100% of the capital and operating costs. A portion of the oil produced and sold
from the concessions is available to the operating interest partners to recover
costs. The remaining oil produced and sold is divided between the Egyptian
government and the working interest partners. All Egyptian government royalties
and the working interest partners' Egyptian income taxes attributable to their
share of Egyptian taxable income (converted to barrels of crude oil based on the
value of such barrels) are included in the Egyptian government's share of
petroleum.
PURCHASE PRICE
The gross purchase price, including cash and receivables, of ESI and
the EEL Assets was approximately $168 million, including $4.5 million allocated
to the EEL Assets, and is subject to certain customary post-closing adjustments.
After the settlement of certain receivables held by ESI, Seagull paid
approximately $74 million in cash for ESI and the EEL Assets. The purchase price
of the assets of ESI and the EEL Assets was determined pursuant to arm's-length
negotiations between Seagull and Exxon, based on an economic effective date of
January 1, 1996. Seagull based the purchase price on the net present value of
the oil reserves attributable to the assets of ESI which reserves are described
above under "The Assets of ESI and the EEL Assets," and ESI's results of
operations since the effective date.
FINANCING
Seagull initially borrowed approximately $74 million under its existing
revolving credit facilities (the "Credit Facilities") to fund the purchase of
ESI and the EEL Assets. Under provisions included in the Credit Facilities, the
amount of senior indebtedness available to Seagull
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is subject to a borrowing base (the "Borrowing Base") based upon the proved
reserves of Seagull's exploration and production operations and the financial
performance of its other operations. The Borrowing Base is generally determined
annually, but may be redetermined, at the option of either Seagull or the banks,
one additional time each year. On September 19, 1996, after the funding of the
purchase of ESI and the EEL Assets, the Borrowing Base was $500 million and
borrowings outstanding under the Credit Facilities were $249 million, leaving
immediately available unused commitments of approximately $137 million, net of
outstanding letters of credit of $3 million, $100 million of borrowings
outstanding under the Company's senior notes and $11 million of borrowings
outstanding under Seagull's money market facilities. As a result of the purchase
of ESI and the EEL Assets, Seagull has requested an increase in the Borrowing
Base.
The descriptions of the stock purchase agreement pursuant to which
Seagull purchased ESI (the "ESI Purchase Agreement") and the purchase agreement
between Esso Egypt Limited and Seagull (the "EEL Purchase Agreement") pursuant
to which Seagull purchased the EEL Assets set forth above are qualified by
reference to the ESI Purchase Agreement and the EEL Purchase Agreement which are
filed as Exhibit 2.1 and 2.2, respectively, and are incorporated herein by
reference.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired.
The financial statements of Esso Suez Inc. for the years ended December
31, 1995, 1994 and 1993 and the six months ended June 30, 1996 and 1995
(incorporated by reference to Exhibit 99.1 of the Company's Current
Report on Form 8-K filed with the Securities and Exchange Commission on
August 28, 1996).
(b) Pro forma financial information.
It is impracticable to file pro forma financial statements required to
be provided by Item 7(b) of Form 8-K at this time. The pro forma
statements will be filed under cover of Form 8-K/A as soon as
practicable, but not later than November 25, 1996.
(c) Exhibits.
2.1 Stock Purchase Agreement Between Seagull Energy Corporation
and Exxon Corporation relating to all of the Outstanding
Capital Stock of Esso Suez Inc. as executed in Houston, Texas
on July 22, 1996 (incorporated by reference to Exhibit 2.1 to
the Company's Current Report on Form 8-K filed with the Secur-
ities and Exchange Commission on August 28, 1996).
2.2 Purchase and Sale Agreement Between Esso Egypt Limited and
Seagull Energy Corporation dated July 22, 1996 (incorporated
by reference to Exhibit 2.2 to the Company's Current Report on
Form 8-K filed with the Securities and Exchange Commission on
August 28, 1996).
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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.
Date: September 25, 1996
SEAGULL ENERGY CORPORATION
By: /s/Rodney W. Bridges
Rodney W. Bridges
Vice President and
Controller
(Principal
Accounting Officer)
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Exhibit Index
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Page
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2.1 Stock Purchase Agreement Between Seagull Energy Corporation and
Exxon Corporation relating to all of the Outstanding Capital
Stock of Esso Suez Inc. as executed in Houston, Texas on July 22,
1996 (incorporated by reference to Exhibit 2.1 to the Company's
Current Report on Form 8-K filed with the Securities and Exchange
Commission on August 28, 1996).
2.2 Purchase and Sale Agreement Between Esso Egypt Limited and
Seagull Energy Corporation dated July 22, 1996 (incorporated by
reference to Exhibit 2.2 to the Company's Current Report on Form
8-K filed with the Securities and Exchange Commission on August
28, 1996).
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