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) FEBRUARY 23, 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 5. OTHER EVENTS.
DISCLOSURE OF YEAR 2000 ESTIMATES
The table following this narrative sets forth the Company's current
estimates of its operating statistics for the 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 December 31, 1999 and the
Company's planned capital and operating budget for 2000.
The Company is not predicting what actual oil and gas prices will be
during the year. For purposes of the 2000 estimates, the Company has assumed
price differentials due to location, quality and other factors of a $2.00-$2.50
per Bbl discount from NYMEX pricing for crude oil production and a $0.10-$0.20
per Mcf discount from Henry Hub pricing for natural gas production. Ocean
currently has hedged approximately 45% and 19% of its expected 2000 crude oil
and natural gas production, respectively. Assuming current strip prices, the
average price of hedged production is estimated at $21.87 per Bbl for crude oil
and $2.77 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 in recent
months, 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 2000 will be substantially similar to those of
1999. The 2000 estimates also assume closure of Ocean's East Bay sale at the end
of the first quarter 2000. No other material assumptions concerning acquisitions
or divestments activities are included.
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;
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OCEAN ENERGY, INC.
- 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, 1998 and in the
reports on Form 10-Q for the periods ended March 31, 1999,
June 30, 1999, and September 30, 1999.
The Company cautions that the 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.
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OCEAN ENERGY, INC.
ESTIMATES FOR 2000
Mid-Point of
Estimate Ranges(*)
------------------
ANNUAL PRODUCTION:
Crude Oil 26 MMBbls
Natural Gas 165 Bcf
OPERATING COSTS/BOE:
Lease operating expenses $ 4.00
General and administrative expense .42
Interest 1.40
Depreciation, depletion and amortization 6.18
---------
$12.00
EFFECTIVE TAX RATE 40 - 48% (75% deferred)
PREFERRED DIVIDENDS $3.3 million
- ----------------------------------------
(*) 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.
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.
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OCEAN ENERGY, INC.
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: February 23, 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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