UNITED STATES
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) OCTOBER 25, 2000
OCEAN ENERGY, INC.
(Exact name of registrant as specified in its charter)
TEXAS 1-8094 74-1764876
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification No.)
1001 FANNIN, SUITE 1600, HOUSTON, TEXAS 77002-6714
(Address of principal executive offices) (Zip code)
(713) 265-6000
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year,
if changed since last report)
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OCEAN ENERGY, INC.
ITEM 9. REGULATION FD DISCLOSURE.
In accordance with General Instruction B.2. of Form 8-K, the following
information shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933, except as shall be
expressly set forth by specific reference in such a filing.
UPDATED DISCLOSURE OF YEAR 2000 ESTIMATES
The table following this narrative sets forth the Company's current
estimates of its operating statistics for the fourth quarter and year ended
December 31, 2000. These estimates are based on the Company's historical
operating performance and trends, estimates of oil and gas reserves as of
September 30, 2000 and the Company's planned capital and operating budget for
2000. The following discussion updates the disclosure of Year 2000 estimates
contained in the Company's Form 8-K filed on February 23, 2000 and second
quarter Form 10-Q to reflect actual operating performance for the first three
quarters of 2000 and revised estimates for the fourth quarter of 2000.
The Company is not predicting what actual oil and gas prices will be
during the remainder of the year. For purposes of the 2000 estimates, the
Company has assumed price differentials due to location, quality and other
factors of a $2.75-$3.25 per Bbl discount from NYMEX pricing for crude oil
production and an $0.08-$0.13 per Mcf discount from Henry Hub pricing for
natural gas production. Ocean currently has hedged approximately 25,000 barrels
per day and 115,000 Mcf per day of its remaining 2000 crude oil and natural gas
production, respectively. Assuming current strip prices, the average price of
hedged production is estimated at $22.17 per Bbl for crude oil and $2.95 per Mcf
for natural gas. Depending upon various circumstances, the Company may
periodically enter into additional hedges of expected crude oil and natural gas
production.
While oil prices have been at or near multi-year highs this year, there
can be no assurance that current price levels will continue. Oil and gas prices
have fluctuated significantly in recent years in response to numerous economic,
political and environmental factors, and the Company expects that commodity
prices will continue to fluctuate significantly in the future. Changes in
commodity prices could significantly affect the Company's expected operating
results. In addition to directly affecting revenues, price changes can affect
expected production because production estimates necessarily assume that oil and
gas can profitably be produced at the assumed pricing levels. In addition to the
above pricing assumptions, the 2000 estimates were prepared assuming that
demand, curtailment, producibility and general market conditions for the
Company's oil and gas for fourth quarter 2000 will be substantially similar to
those of the first three quarters of 2000. No material assumptions concerning
acquisitions or divestments activities are included.
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OCEAN ENERGY, INC.
All of the estimates and assumptions set forth in this document
constitute forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and
the Private Securities Litigation Reform Act of 1995. Although the Company
believes that these forward-looking statements are based on reasonable
assumptions, it can give no assurance that its expectations will in fact occur
and cautions that actual results may differ materially from those in the
forward-looking statements. A number of factors could affect the future results
of the Company or the energy industry generally and could cause the Company's
expected results to differ materially from those expressed in this release.
These factors include, among other things:
- Commodity price changes, including local and regional variations;
- Risks and problems incident to the drilling and operation of
oil and gas wells, such as drilling difficulties or delays,
well explosions or other disasters, environmental risks, and
lack of control over timing of expenditures on third-party
operated properties;
- Changes in production and development costs;
- Changes in drilling success rates;
- Changes in laws and other regulatory actions;
- Political and economic events and conditions in the foreign
jurisdictions in which the Company operates;
- Risks incident to hedging activities;
- Changes in interest rates and capital market conditions;
- Changes in general economic conditions;
- Competition from others in the energy industry;
- The uncertainty inherent in estimates of oil and gas reserves
and production rates;
- Unusual or infrequent items that are not susceptible to estimation; and
- The risk factors and other conditions described in the
Company's report on Form 10-K for the period ended December
31, 1999 and in the reports on Form 10-Q for the periods ended
March 31, 2000 and June 30, 2000.
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OCEAN ENERGY, INC.
The Company cautions that the fourth quarter and year 2000 estimates
set forth below are given as of the date hereof only based on currently
available information, and that the Company is not undertaking any obligations
to update these estimates as conditions change or other information becomes
available.
UPDATED ESTIMATES FOR 2000
<TABLE>
<CAPTION>
Mid-Point of Estimated Ranges (*)
----------------------------------------------------------
Fourth Quarter Annual
-------------------------- ----------------------------
<S> <C> <C>
PRODUCTION:
Crude Oil 6 MMBbls 24 MMBbls
Natural Gas 40 Bcf 150 Bcf
OPERATING COSTS/BOE:
Lease operating expense $ 4.35 $ 4.63
General and administrative expense 0.55 0.58
Interest 1.31 1.52
Depreciation, depletion and amortization 6.17 6.24
-------- --------
$12.38 $12.97
EFFECTIVE TAX RATE 44 - 48% 44 - 48%
(80% deferred) (80% deferred)
PREFERRED DIVIDENDS $0.8 million $3.3 million
</TABLE>
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(*) These estimates represent approximately the mid-point of the range of the
Company's estimates of the above information. Actual results may differ
materially from these estimates. Pricing assumptions are included in the
narrative.
The Company has revised its estimates of operating statistics for the
year ended December 31, 2000 based on operating performance for the first nine
months of 2000 and revised estimates for the fourth quarter of 2000. Annual
production estimates have been reduced by approximately 5% due primarily to
production delays and operational turnarounds in Equatorial
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<PAGE>
OCEAN ENERGY, INC.
Guinea and Cote d'Ivoire. Lease operating costs per BOE have been increased by
approximately 5% to $4.63 per BOE, primarily due to increased production taxes
attributable to higher commodity prices. Estimated general and administrative
expenses for year 2000 increased to $0.58 per BOE due primarily to the decrease
in production estimates and an increase in expenses relating to compensation
plans that are tied directly to the market price of the Company's common stock.
Natural gas is stated herein in billion cubic feet ("Bcf"), or thousand
cubic feet ("Mcf"). Crude oil is stated in barrels ("Bbl") or million barrels
("MMBbls"). BOE represents one barrel of oil equivalent with six Mcf of gas
converted to one barrel of liquid.
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: October 25, 2000
OCEAN ENERGY, INC.
By: /s/ William L. Transier
-------------------------------
William L. Transier
Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
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