<PAGE> 1
As filed with the Securities and Exchange Commission on December 13, 2000
Registration No. 333-50358
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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AMERADA HESS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
1311
(Primary Standard Industrial Classification Code Number)
13-4921002
(I.R.S. Employer Identification No.)
1185 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
(212) 997-8500
(Address, including ZIP code, and telephone number, including area code, of
registrant's principal executive offices)
J. BARCLAY COLLINS II, ESQ.
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
AMERADA HESS CORPORATION
1185 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
(212) 997-8500
(Name, address, including ZIP code, and telephone number, including area code,
of agent for service)
Copies to:
TIMOTHY B. GOODELL, ESQ.
WHITE & CASE LLP
1155 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
(212) 819-8200
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this registration statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT
FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL SECURITIES, AND IT IS
NOT SOLICITING AN OFFER TO BUY THESE SECURITIES, IN ANY JURISDICTION WHERE
THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED 13 DECEMBER 2000
OFFER DOCUMENT DATED 13 DECEMBER 2000
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IF YOU ARE IN
ANY DOUBT ABOUT THIS OFFER OR WHAT ACTION YOU SHOULD TAKE, YOU ARE RECOMMENDED
IMMEDIATELY TO SEEK YOUR OWN FINANCIAL ADVICE FROM YOUR STOCKBROKER, BANK
MANAGER, SOLICITOR, ACCOUNTANT OR OTHER INDEPENDENT FINANCIAL ADVISER AUTHORISED
UNDER THE FINANCIAL SERVICES ACT 1986 OR OTHER APPROPRIATE ADVISER.
If you have sold or otherwise transferred your LASMO securities, please send
this document and the accompanying documents as soon as possible to the
purchaser or transferee or to the agent through whom the sale or transfer was
made, for delivery to the purchaser or transferee.
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RECOMMENDED CASH AND SHARE OFFER
by
AMERADA HESS CORPORATION
and by
GOLDMAN SACHS INTERNATIONAL
on its behalf
(outside the United States)
for
all of the issued and to be issued share capital of
LASMO PLC
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Amerada Hess and Goldman Sachs International on behalf of Amerada Hess (outside
the United States) are offering to acquire, on the conditions and the further
terms set out in this document and in the accompanying acceptance form, all of
the LASMO shares and ADSs on the following basis:
<TABLE>
<S> <C>
FOR EVERY 78.7 LASMO SHARES HELD L98.29 IN CASH AND 1 NEW AMERADA HESS SHARE
FOR EVERY 78.7 LASMO ADSS HELD L294.87 IN CASH AND 3 NEW AMERADA HESS SHARES
(EACH ADS REPRESENTING 3 LASMO SHARES)
</TABLE>
We expect that, if all LASMO shares and ADSs are exchanged, we will issue an
aggregate of approximately 17,121,344 Amerada Hess shares and pay approximately
L1.683 billion in cash to LASMO securityholders.
Amerada Hess shares are traded on the New York Stock Exchange under the symbol
"AHC."
A LETTER FROM THE CHAIRMAN OF AMERADA HESS APPEARS ON PAGES 5 AND 6 OF THIS
DOCUMENT.
A LETTER OF RECOMMENDATION FROM THE CHAIRMAN OF LASMO APPEARS ON PAGES 7 TO 9 OF
THIS DOCUMENT.
The initial offer period will expire at 3.00 pm (London time), 10.00 am (New
York City time), on 12 January 2001, unless we specify a later closing date. At
the conclusion of the initial offer period if all the conditions have been
satisfied, fulfilled or, to the extent permitted, waived, we will extend the
offer for a subsequent offer period of at least 14 calendar days. LASMO
securityholders will have withdrawal rights during the initial offer period,
including any extension of that period, but not during the subsequent offer
period, except in limited circumstances.
TO ACCEPT THE OFFER, YOU MUST COMPLETE THE RELEVANT ACCEPTANCE FORM, TOGETHER
WITH ALL OTHER REQUIRED DOCUMENTS, AND RETURN THEM AS SOON AS POSSIBLE BUT, IN
ANY EVENT, SO AS TO BE RECEIVED BY NO LATER THAN 3.00 PM (LONDON TIME), 10.00 AM
(NEW YORK CITY TIME), ON 12 JANUARY 2001. THE PROCEDURE FOR ACCEPTANCE OF THE
OFFER IS SET OUT ON PAGES 29 TO 32 OF THIS DOCUMENT AND IN THE ACCOMPANYING
ACCEPTANCE FORM.
NEITHER THE SEC NOR ANY SECURITIES COMMISSION OF ANY STATE OF THE UNITED STATES
HAS APPROVED OR DISAPPROVED OF THE SECURITIES OFFERED BY OR ON BEHALF OF AMERADA
HESS OR DETERMINED IF THIS DOCUMENT IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENCE.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
IMPORTANT INFORMATION................. 2
TIMETABLE............................. 4
LETTER FROM THE CHAIRMAN OF AMERADA
HESS................................ 5
LETTER OF RECOMMENDATION FROM THE
CHAIRMAN OF LASMO................... 7
1. Introduction.................... 7
2. Terms of the Offer.............. 7
3. Background to and reasons for
recommending acceptance of the
Offer......................... 8
4. Management and employees........ 8
5. Dealing at low cost in Amerada
Hess Shares................... 9
6. Action to be taken to accept the
Offer......................... 9
7. Recommendation.................. 9
SUMMARY TERM SHEET.................... 10
SELECTED FINANCIAL INFORMATION OF
AMERADA HESS AND LASMO.............. 16
LETTER FROM GOLDMAN SACHS............. 19
1. Introduction.................... 19
2. The Offer....................... 19
3. Background to and reasons for
the Offer..................... 20
4. Mix and Match Election.......... 21
5. The Loan Note Alternative....... 22
6. Irrevocable Undertakings........ 23
7. Conditions and further terms of
the Offer..................... 24
8. Information relating to Amerada
Hess.......................... 24
9. Information relating to LASMO... 25
10. Financing of the Offer........... 25
11. Management and employees......... 25
12. LASMO Share Option Schemes....... 26
13. Fractions........................ 26
14. New Amerada Hess Shares.......... 26
15. Illustrative comparative per
share data.................... 27
16. Financial effects of
acceptance.................... 28
</TABLE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
17. Accounting treatment............. 28
18. Procedure for acceptance of the
Offer......................... 29
19. Rights of withdrawal............. 32
20. Settlement....................... 33
21. United Kingdom taxation.......... 35
22. United States federal taxation... 35
23. Overseas LASMO Securityholders... 35
24. Compulsory acquisition and
application for de-listing of
LASMO Securities.............. 36
25. LASMO L90,000,000 7 3/4 per cent.
Convertible Bonds due 2005.... 36
26. Further information.............. 36
27. Action to be taken............... 37
APPENDIX I Conditions and Further
Terms of the Offer.................. I-1
APPENDIX II Particulars of the Loan
Notes............................... II-1
APPENDIX III Further Information on
Amerada Hess -- Business Description
and Financial Results............... III-1
APPENDIX IV Further Information on
LASMO -- Business Description and
Financial Results................... IV-1
APPENDIX V Unaudited Pro Forma
Financial Information and
Projections......................... V-1
APPENDIX VI Additional Information... VI-1
APPENDIX VII Advice of LASMO's
Financial Adviser................... VII-1
APPENDIX VIII Description of Amerada
Hess Shares and changes in the
rights of LASMO Securityholders..... VIII-1
APPENDIX IX Certain Provisions of the
Companies Act....................... IX-1
APPENDIX X Definitions............... X-1
</TABLE>
<PAGE> 4
IMPORTANT INFORMATION
DEFINITIONS
Some words and terms used in this document are defined in Appendix X to this
document.
APPLICABLE DISCLOSURE REQUIREMENTS
Because Amerada Hess is making this offer for securities of an English company,
this offer is subject to English and US securities laws, regulations and
requirements. US investors should be aware that this document has been prepared
primarily in accordance with UK format and style, which differs from US format
and style for documents of this type. In particular, the Appendices to this
document contain material information that is required to be disclosed by US
federal securities laws.
FINANCIAL INFORMATION
The extracts from the consolidated financial statements of, and other
information about, Amerada Hess appearing in this document are presented in US
dollars (US$) and have been prepared in accordance with US GAAP. The extracts
from the consolidated financial statements of, and other information about,
LASMO appearing in this document are presented in pounds sterling (L) or pence
(p) and have been prepared in accordance with UK GAAP. US GAAP and UK GAAP
differ in some significant respects. Financial information relating to Amerada
Hess is contained in Appendix III. Financial Information relating to LASMO is
contained in Appendix IV. A reconciliation between UK GAAP and US GAAP in
respect of certain information set forth in this document is contained in
documents of the LASMO group incorporated by reference in this document. Certain
unaudited pro forma financial information relating to the enlarged group and
certain projections relating to LASMO are contained in Appendix V. The unaudited
pro forma financial information relating to the enlarged Amerada Hess group has
been prepared in accordance with US GAAP.
FORWARD-LOOKING STATEMENTS
This document, including information included or incorporated by reference in
this document, contains forward-looking statements concerning Amerada Hess and
LASMO, as well as the financial condition, results of operations and business of
Amerada Hess following the consummation of the offer. Generally, the words
"will," "may," "should," "continue," "believes," "expects," "intends,"
"anticipates" or similar expressions identify forward-looking statements. These
forward-looking statements involve risks and uncertainties that could cause
actual results to differ materially from those expressed in the forward-looking
statements. Many of these risks and uncertainties relate to factors that are
beyond the companies' ability to control or estimate precisely, such as future
market conditions, the behaviour of other market participants and the actions of
governmental regulators. These and other risk factors are detailed in the two
companies' SEC reports. You should not place undue reliance on these forward-
looking statements, which speak only as of the date of this document. The safe
harbor protection afforded by the U.S. Private Securities Litigation Reform Act
of 1995 does not apply to forward-looking statements made in connection with
exchange offers.
ABSENCE OF APPRAISAL RIGHTS
LASMO securityholders generally do not have appraisal rights under English law.
See the section entitled "Appraisal Rights" in Appendix VIII of this document.
INCORPORATION OF DOCUMENTS BY REFERENCE
THIS DOCUMENT INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION ABOUT
AMERADA HESS BY REFERENCE TO DOCUMENTS THAT AMERADA HESS PREVIOUSLY FILED WITH
THE SEC AND THAT ARE NOT PRESENTED IN OR DELIVERED WITH THIS DOCUMENT. THESE
DOCUMENTS ARE AVAILABLE WITHOUT CHARGE,
2
<PAGE> 5
UPON WRITTEN OR ORAL REQUEST, FROM AMERADA HESS AT THE ADDRESS AND TELEPHONE
NUMBER SET OUT ON PAGE III-8 OF THIS DOCUMENT. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUESTS SHOULD BE MADE NO LATER THAN 4 JANUARY
2000.
THIS DOCUMENT ALSO INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION
ABOUT LASMO BY REFERENCE TO DOCUMENTS THAT LASMO HAS PREVIOUSLY FILED WITH THE
SEC AND THAT ARE NOT PRESENTED IN OR DELIVERED WITH THIS DOCUMENT. THESE
DOCUMENTS ARE AVAILABLE WITHOUT CHARGE, UPON WRITTEN OR ORAL REQUEST, FROM LASMO
AT THE ADDRESS AND TELEPHONE NUMBER SET OUT ON PAGE IV-3 OF THIS DOCUMENT. IN
ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUESTS SHOULD BE MADE NO
LATER THAN 4 JANUARY 2000.
RELIANCE ON OFFER DOCUMENT
You should rely only on information contained in this document. Neither Amerada
Hess nor LASMO has authorised anyone to provide you with information that is
different. You should not assume that the information contained in this document
is accurate as of any date other than the date on the cover of this document,
and neither the mailing of this document to you nor the delivery of new Amerada
Hess shares in exchange for your LASMO securities will create any implication to
the contrary.
RULE 8 NOTICES
Any person who, alone or acting together with any other person(s) pursuant to an
agreement or understanding (whether formal or informal) to acquire or control
securities of Amerada Hess or of LASMO, owns or controls, or becomes the owner
or controller, directly or indirectly, of one per cent. or more of any class of
securities of Amerada Hess or of LASMO is generally required under the
provisions of Rule 8 of the City Code to notify the London Stock Exchange and
the Panel of every dealing in such securities during the offer period. Dealings
by Amerada Hess or by LASMO or by their respective "associates" (within the
definition set out in the City Code) in any class of securities of Amerada Hess
or of LASMO during the initial offer period must also be so disclosed. Please
consult your financial adviser immediately if you believe this Rule may be
applicable to you.
ADVISERS
Goldman Sachs International, which is regulated in the United Kingdom by The
Securities and Futures Authority Limited, is acting for Amerada Hess and no one
else in connection with the offer and will not be responsible to anyone other
than Amerada Hess for providing the protections afforded to customers of Goldman
Sachs International nor for giving advice in relation to the offer. Amerada Hess
is making the offer in the United States on its own behalf.
Schroder Salomon Smith Barney, which is regulated in the United Kingdom by The
Securities and Futures Authority Limited, is acting for LASMO and no one else in
connection with the offer and will not be responsible to anyone other than LASMO
for providing the protections afforded to customers of Schroder Salomon Smith
Barney nor for giving advice in relation to the offer.
---------------
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
We are not making the offer directly or indirectly in or into Canada, Australia
or Japan. YOU SHOULD NOT FORWARD OR TRANSMIT THESE DOCUMENTS IN OR INTO CANADA,
AUSTRALIA OR JAPAN.
3
<PAGE> 6
TIMETABLE
<TABLE>
<S> <C>
Announcement of offer....................................... 6 November 2000
Effective date of registration statement and date offer
document and other materials mailed to LASMO
securityholders........................................... 13 December 2000
Expiry of offer (unless extended or conditions satisfied)... 12 January 2001
Expected commencement of trading of new Amerada Hess shares
on the New York Stock Exchange assuming offer becomes or
is declared unconditional in all respects on 12 January
2001...................................................... 16 January 2001
</TABLE>
4
<PAGE> 7
LETTER FROM THE CHAIRMAN OF AMERADA HESS
LOGO
13 December 2000
To all holders of LASMO securities and, for information only, to participants in
the LASMO share option schemes, the LASMO Profit Sharing Scheme and the Monument
1996 Participating Share Plan
AMERADA HESS CORPORATION
RECOMMENDED CASH AND SHARE OFFER FOR
LASMO PLC
Dear Sir or Madam,
On 6 November 2000, it was announced that the boards of LASMO and Amerada Hess
had reached agreement on the terms of a recommended offer for the entire issued
and to be issued share capital of LASMO. We are extremely pleased at the
prospect of combining our two companies. The purpose of this letter is to
explain the offer and our reasons for making it and to urge you to accept it.
BENEFITS OF THE OFFER
We are very excited about this transaction. The combined companies will benefit
from an expanded exploration and production business, a strengthened
international reserve portfolio and an extended production profile. The
combination of LASMO and Amerada Hess will enhance our competitive position in a
consolidating industry. It will increase our production from an estimated
373,000 barrels of oil equivalent per day in 2000 to an expected 582,000 barrels
of oil equivalent per day in 2001, creating one of the largest global
independent exploration and production companies, with the necessary scale to
compete effectively in the international arena.
THE OFFER
Under the terms of the offer, which has been unanimously approved by the boards
of directors of Amerada Hess and LASMO, each LASMO securityholder will receive:
<TABLE>
<S> <C>
FOR EVERY 78.7 LASMO SHARES HELD L98.29 IN CASH AND 1 NEW AMERADA HESS SHARE
FOR EVERY 78.7 LASMO ADSS HELD L294.87 IN CASH AND 3 NEW AMERADA HESS SHARES
(EACH ADS REPRESENTING 3 LASMO SHARES)
</TABLE>
At the time of the announcement of the offer, the offer valued each LASMO share
at 180 pence, based on an exchange rate of US$1.4484: L1.00 and the closing
price on the New York Stock Exchange of US$62 13/16 per Amerada Hess share on 3
November 2000, the last New York Stock Exchange trading day prior to the
announcement.
The offer now values each LASMO share at 178 pence, based on an exchange rate of
US$1.4554 : L1.00 and the closing price on the New York Stock Exchange of
US$60 1/2 per Amerada Hess share on 11 December 2000, the latest practicable New
York Stock Exchange trading day prior to the posting of this document.
5
<PAGE> 8
REASONS TO ACCEPT THE OFFER
We believe the offer affords a very attractive opportunity for LASMO
securityholders. At the time of announcement, the offer:
- provided for payment of 69 per cent. of the offer price in cash
(approximately L1.25 per LASMO share), but with a 31 per cent. equity
component, enabling LASMO securityholders to continue to participate at
a favourable entry price in a strategically strengthened combined
enterprise, with significantly greater cash flow and reserves per share;
and
- represented a premium of approximately 28 per cent. to the closing
middle market price of a LASMO share on 3 November 2000, the last London
Stock Exchange dealing day prior to the announcement, and a premium of
approximately 33 per cent. to the average closing middle market price of
a LASMO share over the 6 months prior to the announcement.
We have already received irrevocable undertakings to accept the offer from two
major shareholders, Schroder Investment Management Limited and Electrafina S.A.,
as well as from the directors of LASMO, constituting in the aggregate 20.1 per
cent. of the total issued LASMO shares.
On behalf of the board of directors of Amerada Hess, I urge you to accept the
offer. We welcome you as shareholders of Amerada Hess and invite you to
participate in the increased shareholder value we believe this combination will
create.
Yours sincerely,
/s/ John B. Hess
John B. Hess
Chairman
6
<PAGE> 9
LETTER OF RECOMMENDATION FROM THE CHAIRMAN OF LASMO
<TABLE>
<S> <C>
LOGO LASMO PLC
101 Bishopsgate
London EC2M 3XH
Telephone: +44 020 7892 9000
Facsimile: +44 020 7892 9292
Telex: 8812970
http://www.lasmo.com
</TABLE>
13 December 2000
To all holders of LASMO securities and, for information only, to participants in
the LASMO share option schemes, the LASMO Profit Sharing Scheme and the Monument
1996 Participating Share Plan
AMERADA HESS CORPORATION
RECOMMENDED CASH AND SHARE OFFER FOR
LASMO PLC
Dear Sir or Madam,
1. INTRODUCTION
It was announced on 6 November 2000 that your board and the board of Amerada
Hess had reached agreement on the terms of a recommended cash and share offer
for the entire issued and to be issued share capital of LASMO. I am writing to
explain the background to the transaction and the reasons why the LASMO board
recommends that LASMO securityholders accept the offer.
Further details of the offer are set out in the letter from Goldman Sachs and in
Appendix I of this document.
2. TERMS OF THE OFFER
At the time of the announcement of the offer, the offer valued each LASMO share
at 180 pence, based on an exchange rate of US$1.4484: L1.00 and the closing
price on the New York Stock Exchange of US$62 13/16 per Amerada Hess share on 3
November 2000, the last New York Stock Exchange trading day prior to the
announcement of the offer. The cash element of the consideration represents
approximately 125 pence per LASMO share.
The offer now values each LASMO share at 178 pence, based on an exchange rate of
US$1.4554: L1.00 and the closing price on the New York Stock Exchange of
US$60 1/2 per Amerada Hess share on 11 December 2000, the latest practicable New
York Stock Exchange trading day prior to the posting of this document.
The offer, which will be subject to the conditions and further terms set out in
the letter from Goldman Sachs and Appendix I, will be made on the following
basis:
<TABLE>
<S> <C>
FOR EVERY 78.7 LASMO SHARES HELD L98.29 IN CASH AND 1 NEW AMERADA HESS SHARE
FOR EVERY 78.7 LASMO ADSS HELD L294.87 IN CASH AND 3 NEW AMERADA HESS
(EACH ADS REPRESENTING 3 LASMO SHARES) SHARES
</TABLE>
7
<PAGE> 10
There will be a mix and match election under which LASMO securityholders who
accept the offer may elect to vary the proportions of Amerada Hess shares and
cash (and/or loan notes, if applicable) which they receive, subject to other
LASMO securityholders making opposite elections.
There will also be a loan note alternative in respect of the cash element of the
offer, as adjusted by any mix and match elections (other than for US persons and
certain other shareholders outside the United Kingdom).
It is intended that appropriate proposals will be available to holders of
options under the LASMO share option schemes once the offer becomes or is
declared unconditional in all respects.
3. BACKGROUND TO AND REASONS FOR RECOMMENDING ACCEPTANCE OF THE OFFER
The stock market performance of the UK independent exploration and production
sector has been disappointing for investors. Even the recent surge in oil prices
has not been reflected in a significant re-rating of share prices in the sector.
Between 1 January 1999 and 3 November 2000, the last London Stock Exchange
dealing day prior to the announcement of the offer, LASMO's share price only
increased from 100 pence to 141 pence, despite the price of Brent Crude moving
from US$10.48 per barrel to US$31.73 over the same period and despite your
company's cashflow and profit gearing to higher oil prices.
This share price performance has been an area of concern for your board and we
therefore initiated an extensive analysis of a broad range of options earlier
this year. These options were against the background of the following matters:
- our share buyback announcement earlier this year was well received by
shareholders;
- our talks on asset disposals with other industry players led us to the
conclusion that, in the current business and oil price environment,
LASMO faced highly favourable sale conditions for its portfolio; and
- continuing industry consolidation meant that scale was becoming
increasingly important in the oil industry. The larger companies have
lower cost bases, are able to deliver higher returns on a substantially
lower and hence more competitive cost of capital and are able to take on
greater investment risk within the scope of significantly larger
portfolios. LASMO needed to respond to this trend or risk becoming less
competitive in accessing projects and in delivering the required balance
of risk and return to shareholders.
Your board was therefore unanimous in deciding to pursue Amerada Hess' proposal.
The offer, which represented at the time of its announcement a premium of
approximately 28 per cent. to the closing middle market price of a LASMO share
on 3 November 2000, the last London Stock Exchange dealing day prior to the
announcement, and a premium of approximately 33 per cent. to the average closing
middle market price of a LASMO share over the 6 months prior to the
announcement, includes a significant proportion of cash whilst also providing
our shareholders with the opportunity to participate in the enlarged group. Your
board has carefully considered the benefits of the transaction for holders of
shares in the enlarged Amerada Hess group. The combination will result in a
larger, more diversified asset base with a growing production profile and strong
reserve life. In addition, we believe that combining LASMO's exploration skills
with Amerada Hess' proven development expertise will create a more competitive
company able to deliver better returns. Following extensive negotiations, your
board was unanimous in deciding that the offer from Amerada Hess should be
recommended to shareholders.
4. MANAGEMENT AND EMPLOYEES
Amerada Hess has indicated that it attaches great importance to the skills and
experience of the management and employees of LASMO. The enlarged group will
have a broader geographic spread than either Amerada Hess or LASMO has
independently. The boards of both companies therefore
8
<PAGE> 11
believe that the combination of Amerada Hess and LASMO, with its strong
prospects for continued growth, will provide enhanced opportunities for the
employees of both groups.
Amerada Hess has given assurances to the board of LASMO that, on the offer
becoming or being declared unconditional in all respects, the accrued employment
rights of employees of LASMO, including pension rights, will be fully
safeguarded.
5. DEALING AT LOW COST IN AMERADA HESS SHARES
We are continuing to investigate ways for LASMO shareholders who will receive a
small number of Amerada Hess shares under the offer to deal at low cost.
However, as a result of legal difficulties we have been unable to implement a
third party low cost dealing facility at this stage of the transaction.
6. ACTION TO BE TAKEN TO ACCEPT THE OFFER
The procedure for acceptance of the offer is set out on pages 29 to 32 of this
document and in the accompanying acceptance form. In order to accept the offer,
you should ensure that you return your completed acceptance form as soon as
possible and, in any event, so as to be received by no later than 3.00 pm
(London time), 10.00 am (New York City time) on 12 January 2001.
7. RECOMMENDATION
YOUR DIRECTORS, WHO HAVE BEEN SO ADVISED BY SCHRODER SALOMON SMITH BARNEY, THEIR
FINANCIAL ADVISER, CONSIDER THE TERMS OF THE OFFER TO BE FAIR AND REASONABLE. IN
PROVIDING ADVICE TO THE DIRECTORS, SCHRODER SALOMON SMITH BARNEY HAS TAKEN INTO
ACCOUNT THE DIRECTORS' COMMERCIAL ASSESSMENTS.
ACCORDINGLY, YOUR DIRECTORS UNANIMOUSLY RECOMMEND LASMO SECURITYHOLDERS TO
ACCEPT THE OFFER. THE DIRECTORS OF LASMO HAVE IRREVOCABLY UNDERTAKEN TO ACCEPT
THE OFFER IN RESPECT OF THEIR OWN PERSONAL HOLDINGS AND THOSE OF THEIR CONNECTED
PERSONS. IN ADDITION, SCHRODER INVESTMENT MANAGEMENT LIMITED AND ELECTRAFINA
S.A., TWO OF OUR SIGNIFICANT SHAREHOLDERS, HAVE IRREVOCABLY UNDERTAKEN TO ACCEPT
THE OFFER IN RESPECT OF THEIR HOLDINGS REPRESENTING, TOGETHER WITH THE
DIRECTORS' SHAREHOLDINGS, 20.1 PER CENT. OF LASMO'S ISSUED SHARE CAPITAL.
Yours sincerely,
/s/ Antony Hichens
Antony Hichens
Chairman
Registered Office at the above address. Registered in England and Wales no.
1008965.
9
<PAGE> 12
SUMMARY TERM SHEET
The following are some of the questions you, as a holder of LASMO shares and/or
ADSs, may have and answers to those questions. We urge you to read carefully the
remainder of this document and the accompanying form of acceptance or letter of
transmittal.
-- WHO IS OFFERING TO BUY MY SHARES?
Our name is Amerada Hess. We are a Delaware corporation. We are listed on the
New York Stock Exchange (symbol: AHC).
We are a global integrated energy company engaged in the exploration and
production, purchase, transportation and sale of crude oil and natural gas, the
refining of crude oil and the sale of refined petroleum products. Exploration
and production activities take place primarily in the United States, the United
Kingdom, Norway, Denmark, Gabon, Indonesia, Thailand, Azerbaijan, Algeria and
Brazil. We have a refining joint venture in the United States Virgin Islands and
a retail marketing network focused on the East Coast of the United States.
We have total assets of approximately US$9.1 billion as of 30 September 2000 and
a market capitalisation of approximately US$5.5 billion as of that date. We had
proved oil and gas reserves of over 1 billion barrels of oil equivalent at 31
December 1999. Our oil and gas production has averaged 369,000 barrels of oil
equivalent per day for the nine months ended 30 September 2000. Our net income
for the nine months ended 30 September 2000 was US$683 million (US$7.57 per
share).
The address of our principal executive offices is 1185 Avenue of the Americas,
New York, New York 10036, and our telephone number is +1 212 997 8500.
-- WHY ARE YOU MAKING THIS OFFER?
The combination of Amerada Hess and LASMO will benefit from an expanded
exploration and production business, a strengthened international reserve
portfolio and an extended production profile. The combination will enhance our
competitive position in a consolidating industry. It will increase both cash
flow and reserves per share in the enlarged Amerada Hess group. The combination
will also increase our production from an estimated 373,000 barrels of oil
equivalent per day in 2000 to an expected 582,000 barrels of oil equivalent per
day in 2001, creating one of the largest global independent exploration and
production companies, with the necessary scale to compete effectively in the
international arena.
-- WHAT ARE THE CLASSES AND AMOUNTS OF LASMO SECURITIES SOUGHT IN THE OFFER?
We are seeking to acquire all of the issued and to be issued shares and ADSs of
LASMO. See paragraph 2 of the Letter from Goldman Sachs forming a part of this
document.
-- WHAT WOULD I RECEIVE IN EXCHANGE FOR MY LASMO SECURITIES?
We are offering to pay:
<TABLE>
<S> <C>
FOR EVERY 78.7 LASMO SHARES HELD L98.29 IN CASH AND 1 NEW AMERADA HESS SHARE
FOR EVERY 78.7 LASMO ADSS HELD (EACH ADS L294.87 IN CASH AND 3 NEW AMERADA HESS
REPRESENTING 3 LASMO SHARES) SHARES
</TABLE>
At the time of the announcement of the offer, the offer valued each LASMO share
at 180 pence, based on an exchange rate of US$1.4484: L1.00 and the closing
price on the New York Stock Exchange of US$62 13/16 per Amerada Hess share on 3
November 2000, the last New York Stock Exchange trading day prior to the
announcement.
10
<PAGE> 13
The offer now values each LASMO share at 178 pence, based on an exchange rate of
US$1.4554 : L1.00 and the closing price on the New York Stock Exchange of
US$60 1/2 per Amerada Hess share on 11 December 2000, the latest practicable New
York Stock Exchange trading day prior to the posting of this document.
LASMO shareholders should bear in mind that fluctuations in the dollar to
sterling exchange rate from time to time will affect the sterling value of any
investment in Amerada Hess shares and any dividend income from that investment
(payable in US dollars and subject to US withholding tax).
A comparison of the rights of holders of Amerada Hess shares and those of
holders of LASMO shares is contained in Appendix VIII of this document.
-- WHAT IS THE MIX AND MATCH ELECTION?
If you accept the offer, you can elect to vary the proportions of new Amerada
Hess shares and cash (and/or, where available, loan notes) which you would like
to receive, including electing to receive only cash or only new Amerada Hess
shares. However, your ability to make a mix and match election is subject to
other LASMO securityholders making opposite elections. If mix and match
elections cannot be satisfied in full, they will be scaled down on a pro rata
basis. These elections will not alter the maximum aggregate amount of Amerada
Hess shares or cash that we will pay for all the LASMO securities. Once you have
submitted your acceptance, you cannot change your mix and match election, but
you can withdraw your acceptance and related election until the end of the
initial offer period. See paragraph 5 of Part B of Appendix I of this document.
-- WHAT IS THE LOAN NOTE ALTERNATIVE?
We are providing a loan note alternative under which you can elect to receive
loan notes issued by Amerada Hess instead of cash. This alternative is not
available to US persons or certain other shareholders outside the United
Kingdom. Interest should be payable without the requirement to deduct US
withholding tax provided the holder is able to certify that it is a non-US
person unrelated to Amerada Hess. See paragraph 6 of Part B of Appendix I and
Appendix II of this document.
-- HOW DOES THE OFFER COMPARE WITH RECENT PRICES OF LASMO SHARES?
The offer, valued at 180 pence per LASMO share at the time of the announcement
of the offer, represented a premium of approximately 28 per cent. to the closing
mid-market price of a LASMO share on 3 November 2000, the last London Stock
Exchange dealing day prior to the announcement, and a premium of approximately
33 per cent. to the average closing mid-market price of a LASMO share over the 6
months prior to the announcement.
-- DOES THE LASMO BOARD OF DIRECTORS SUPPORT THE OFFER?
The board of directors of LASMO unanimously recommends that you accept the
offer. The board of directors of LASMO, who have been so advised by Schroder
Salomon Smith Barney, their financial adviser, consider the terms of the offer
to be fair and reasonable. In providing advice to the LASMO board of directors,
Schroder Salomon Smith Barney has taken into account the directors' commercial
assessments. See Appendix VII of this document for a summary of the material
financial analyses performed by Schroder Salomon Smith Barney with respect to
its advice to the LASMO board of directors at a meeting of the LASMO board held
on 19 October 2000 in connection with the LASMO board's recommendation of the
offer.
Each member of the board of directors has agreed to accept the offer for all of
his LASMO shares and ADSs. See the Letter of Recommendation from the Chairman of
LASMO in this document.
-- DO ANY OTHER SHAREHOLDERS SUPPORT THE OFFER?
We have received undertakings from two major shareholders, Schroder Investment
Management Limited and Electrafina S.A., to accept the offer, except in certain
circumstances. Accordingly, together with
11
<PAGE> 14
the undertakings we have received from the LASMO directors, we have received
undertakings to accept the offer in respect of a total of 270,276,705 LASMO
shares representing approximately 20.1 per cent of the existing LASMO ordinary
share capital.
-- DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
The cash element of the offer will be financed from our existing cash resources
and bank facilities arranged with Goldman Sachs Credit Partners L.P. for the
purposes of the offer. The offer is not conditional upon any financing
arrangements. See paragraph 10 of the Letter from Goldman Sachs and Appendix VI
of this document.
-- IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO ACCEPT THE OFFER?
Yes. If you accept the offer, part of your consideration will be in the form of
Amerada Hess shares, and you should consider our financial condition before you
decide to become one of our shareholders through the offer.
We believe we are well positioned to provide long-term growth and to withstand
volatile energy price environments as a result of our strong cash flow, reduced
cost structure, strong production growth and strong balance sheet. At 30
September 2000, Amerada Hess' total debt to capitalisation ratio was 36 per
cent. and earnings were $683 million ($7.57 per share) for the first nine months
of the year, higher than any full year in Amerada Hess' history. After
consummation of this transaction, Amerada Hess' debt to capitalisation ratio is
expected to be 54 per cent., falling to 42 per cent. and 28 per cent. at year
end 2001 and 2002, respectively, based on anticipated cash flows.
We have investment grade ratings on our public debt. Following announcement of
this transaction, Standard & Poor's raised its rating from BBB to BBB+, and
Moody's Investors Service confirmed its rating of Baa1.
You should also review the information set forth in Appendix III and the
documents incorporated by reference in this document which contain detailed
business, financial and other information about us.
-- HOW LONG DO I HAVE TO DECIDE WHETHER TO ACCEPT THE OFFER?
You will have until 3:00 pm, London time, 10:00 am, New York City time, on 12
January 2001, to decide whether to accept the offer, unless the offer is
extended. However, if you are an ADS holder and you cannot deliver everything
that is required in order to make a valid tender of LASMO ADSs by that time, you
may be able to use a guaranteed delivery procedure, which is described later in
this document. See paragraph 18 of the Letter from Goldman Sachs and paragraphs
10, 11 and 12 of Part B of Appendix I of this document.
-- WHAT IS THE DIFFERENCE BETWEEN THE INITIAL OFFER PERIOD AND THE SUBSEQUENT
OFFER PERIOD?
The initial offer period is the time during which withdrawal rights apply. The
initial offer period is the period from the date of this document until the time
and date (not being before 3.00 pm (London time), 10.00 am (New York City time)
on 12 January 2001) on which all the conditions are satisfied, fulfilled or, to
the extent permitted, waived or, if earlier, the time and date on which the
offer lapses.
The subsequent offer period starts as soon as the initial offer period
terminates. The subsequent offer period must remain open for at least 14
calendar days but we may extend it beyond that time until a further specified
date or until further notice. During the subsequent offer period no withdrawal
rights apply, except in limited circumstances. See paragraph 4 of Part B of
Appendix I of this document.
-- CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
Yes. If all of the conditions to the offer have not been either satisfied,
fulfilled or, to the extent permitted, waived by Amerada Hess by 3:00 pm, London
time, 10:00 am, New York City time, on 12 January 2001, Amerada Hess may choose,
but shall not be obliged, to extend the initial offer period. We may also be
12
<PAGE> 15
required to extend the initial offer period under applicable UK and US
securities laws if there is a material change in the offer. Once all the
conditions have been either satisfied, fulfilled or, to the extent permitted,
waived by Amerada Hess, we will extend the offer for a subsequent offer period
of at least 14 calendar days. See paragraph 1 of Part B of Appendix I of this
document.
-- HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will make a public announcement of the extension, not
later than 8:00 am London time and 8:00 am New York City time, on the next
business day after the day on which the offer was scheduled to expire. See
paragraph 3 of Part B of Appendix I of this document.
We will also announce by not later than 8.00 am London time and 8.00 am New York
City time on the business day following the end of the initial offer period that
there will be a subsequent offer period. The subsequent offer period will remain
open for at least 14 calendar days but we may extend it beyond that time until a
further specified date or until further notice.
-- WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
- We are not obliged to purchase any LASMO shares and/or LASMO ADSs unless
we have received valid acceptances (which have not been properly
withdrawn) in respect of at least 90 per cent. of the LASMO shares
(including LASMO shares represented by LASMO ADSs) to which the offer
relates. We may reduce this percentage, subject to certain limits. At
least five US business days prior to any reduction, we will announce
that we may do this through a press release and newspaper advertisement
of general circulation in the United States.
- We are not obliged to purchase any LASMO shares and/or LASMO ADSs unless
the new Amerada Hess shares to be issued under the offer have been
authorized for listing on the New York Stock Exchange and the
registration statement that we have filed with the SEC has been declared
effective.
- We are not obliged to purchase any LASMO shares and/or LASMO ADSs if,
among other things, the offer has been referred to the United Kingdom
Competition Commission by the Secretary of State for Trade and Industry
or the applicable waiting period under the United States
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, has
not expired or been waived.
See paragraph 7 of the Letter from Goldman Sachs, Part A of Appendix I and Part
B of Appendix I of this document.
-- HOW DO I ACCEPT THE OFFER?
To accept the offer, you must deliver the certificates representing your LASMO
shares or your LASMO ADRs, together with a completed form of acceptance in the
case of LASMO shares or a completed letter of transmittal in the case of ADSs,
to the UK Receiving Agent or the US Depositary, respectively, not later than the
time the offer expires. If your shares or ADSs are held in "street name" in the
United States, your nominee can tender them through the applicable book entry
transfer system. In the case of ADSs, if you cannot get any document or
instrument that is required to be delivered by the expiration of the offer, you
may gain some time by following the procedures for guaranteed delivery. See
paragraph 18 of the Letter from Goldman Sachs and paragraphs 10, 11 and 12 of
Part B of Appendix I of this document.
-- UNTIL WHAT TIME CAN I WITHDRAW MY ACCEPTANCE?
A LASMO securityholder who accepts the offer will be entitled to withdraw the
acceptance at any time until the end of the initial offer period. Thereafter,
withdrawals will not be possible except in very limited circumstances (i.e. if
Amerada Hess has failed to make certain announcements required by the City Code
or if it withdraws an announcement that the offer will not be increased or
further extended after a
13
<PAGE> 16
particular date). See paragraph 19 of the Letter from Goldman Sachs and
paragraph 4 of Part B of Appendix I of this document.
-- HOW DO I WITHDRAW MY ACCEPTANCE?
To withdraw shares or ADSs, you must deliver a written notice of withdrawal with
the required information to the UK Receiving Agent or the US Depositary,
respectively, while you still have the right to withdraw the shares or ADSs. See
paragraph 4 of Part B of Appendix I of this document.
-- WILL THE OFFER BE FOLLOWED BY A COMPULSORY ACQUISITION?
Yes. If all of the conditions to the offer are either satisfied, fulfilled or,
where permitted, waived and we have acquired 90 per cent. in nominal value of
LASMO shares (including LASMO shares represented by LASMO ADSs) then we will be
entitled to and intend to acquire all remaining LASMO shares and LASMO ADSs
pursuant to the Companies Act. Holders of LASMO shares and LASMO ADSs subject to
the compulsory acquisition would receive the same consideration as those holders
of LASMO shares and LASMO ADSs who accept the offer. See paragraph 24 of the
Letter from Goldman Sachs and paragraph 11 of Appendix VI of this document.
-- IF I DECIDE NOT TO ACCEPT, HOW WILL THE OFFER AFFECT MY SECURITIES?
If we are able to, we will acquire all LASMO shares and LASMO ADSs for which we
have not received acceptances pursuant to the compulsory acquisition provisions
of the Companies Act. We also intend to apply, or request that LASMO apply, to
the New York Stock Exchange, the London Stock Exchange and the UK Listing
Authority to have the LASMO ADSs and LASMO shares de-listed, terminate the
deposit agreement through which the ADS programme is operated and seek to have
the registration of the LASMO ADSs and LASMO shares under the Exchange Act
terminated. Termination of registration under the Exchange Act would
substantially reduce the information required to be furnished to holders of the
LASMO ADSs and LASMO shares and would make some other provisions of the Exchange
Act inapplicable to LASMO. See paragraph 24 of the Letter from Goldman Sachs and
paragraph 13 of Appendix VI of this document.
-- WHAT IS THE MARKET VALUE OF MY LASMO SECURITIES AS OF A RECENT DATE?
On 3 November 2000, the last dealing day before we announced the offer, the
closing mid-market price of LASMO shares reported on the London Stock Exchange
was 141 pence per share and the last sale price of ADSs reported on the New York
Stock Exchange was US$6 1/4. Between 3 November 1999 and 3 November 2000, the
price of LASMO shares ranged between 89.5 pence and 155.5 pence per share and
the price of LASMO ADSs ranged from US$4 7/16 and US$7 1/4 per ADS. We advise
you to obtain a recent quotation for LASMO shares and LASMO ADSs in deciding
whether to accept the offer. See paragraph 16 of the Goldman Sachs Letter and
paragraph 3 of Appendix VI of this document.
-- WILL I HAVE TO PAY ANY FEES OR COMMISSIONS?
If you are the record owner of your LASMO shares and/or LASMO ADSs and you
accept the offer, you will not have to pay brokerage fees or similar expenses.
If you own your LASMO shares and/or LASMO ADSs through a broker or other
nominee, and your broker accepts the offer on your behalf, your broker or
nominee may charge you a fee for doing so. You should consult your broker or
nominee to determine whether any charges will apply. See paragraphs 2 and 5 of
the Letter from Goldman Sachs and Appendix II of this document.
-- WILL I BE TAXED ON THE AMERADA HESS SHARES AND CASH THAT I RECEIVE?
For UK tax purposes, a UK resident holder will generally realise an immediate
chargeable gain or allowable loss to the extent that he receives cash under the
offer. To the extent that such a holder receives Amerada Hess shares and/or loan
notes, a further amount of chargeable gain or allowable loss on the holder's
LASMO shares will generally be rolled over into those Amerada Hess shares
and/or, in
14
<PAGE> 17
the case of loan notes, rolled over (for a non-corporate holder) or held over
(for a corporate holder) for UK capital gains tax purposes.
For US federal income tax purposes, a US holder generally will recognize gain or
loss upon the receipt of Amerada Hess shares and cash in exchange for such
holder's LASMO shares or LASMO ADSs pursuant to the offer in an amount equal to
the difference between (a) the sum of (i) the fair market value of such Amerada
Hess shares received and (ii) the US dollar value on the date of receipt of the
pounds sterling that would have been received and (b) the US holder's adjusted
tax basis in the LASMO shares or LASMO ADSs, as the case may be.
Further information regarding the application of both US and UK tax laws to
LASMO securityholders who accept the offer is set out in paragraphs 14 and 15 of
Appendix VI of this document.
-- IF I CHOOSE TO ACCEPT THE OFFER, HOW WILL MY RIGHTS AS AN AMERADA HESS
SHAREHOLDER DIFFER FROM MY RIGHTS AS A LASMO SECURITYHOLDER?
An explanation of the material differences between the rights of LASMO
securityholders and Amerada Hess shareholders is contained in Appendix VIII of
this document.
-- HOW WILL THIS TRANSACTION BE TREATED FOR ACCOUNTING PURPOSES?
The transaction will be accounted for using the purchase method of accounting.
See paragraph 17 of the Letter from Goldman Sachs.
-- WHERE CAN I FIND MORE INFORMATION ABOUT AMERADA HESS AND LASMO?
You can find more information about Amerada Hess and LASMO from various sources
described in the sections entitled "Where You Can Find Additional Information
about Amerada Hess" in Appendix III to this document and "Where You Can Find
Additional Information about LASMO" in Appendix IV to this document.
-- WHO CAN ANSWER QUESTIONS I MIGHT HAVE ABOUT THE OFFER?
If you have any questions about the offer, you should contact the Information
Agent, D.F. King & Co., Inc. in the UK on 0800 169 6962 and in the US on 1 (800)
628 8536 (Toll-Free). If you have any questions about procedures for acceptance
of the offer in the UK, you should contact the UK Receiving Agent, Computershare
Services PLC, on 0870 703 0056.
15
<PAGE> 18
SELECTED FINANCIAL INFORMATION OF AMERADA HESS AND LASMO
AMERADA HESS
SELECTED HISTORICAL FINANCIAL INFORMATION
The following selected financial information, which is presented in accordance
with US GAAP, has been derived from the consolidated financial statements of
Amerada Hess and should be read in conjunction with the consolidated financial
statements and notes thereto incorporated herein by reference. The unaudited
financial information presented below for the nine month periods ended 30
September 2000 and 1999 reflects all normal and recurring adjustments which, in
the opinion of management, are necessary for a fair presentation of Amerada
Hess' results of operations and financial position.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
30 SEPTEMBER YEARS ENDED 31 DECEMBER
----------------- ----------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
MILLIONS, EXCEPT PER SHARE DATA ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Sales and other operating revenues... $ 8,308 $ 4,770 $ 7,039 $ 6,580 $ 8,224 $ 8,270 $ 7,299
Net income (loss).................... 683 307 438(3) (459)(4) 8 660(5) (394)(6)
Net income (loss) per share
(diluted).......................... 7.57 3.40 4.85 (5.12) .08 7.09 (4.26)
Common dividends per share........... $ .45 $ .45 $ .60 $ .60 $ .60 $ .60 $ .60
Weighted average number of shares
outstanding (diluted).............. 90 90 90 90 92 93 93
BALANCE SHEET DATA (AT PERIOD END)
Cash and cash equivalents............ $ 259 $ 26 $ 41 $ 74 $ 91 $ 113 $ 56
Working capital...................... 359 187 249 90 464 690 358
Property, plant and equipment
(net).............................. 4,198 4,228 4,052 4,192 5,191 4,907 5,370
Total assets......................... 9,069 7,939 7,728 7,883 7,935 7,784 7,756
Total debt........................... 1,999 2,401 2,310 2,652 2,127 1,939 2,718
Stockholders' equity................. 3,543 2,927 3,038 2,643 3,216 3,384 2,660
Stockholders' equity per share....... $ 40.00 $ 32.27 $ 33.51 $ 29.26 $ 35.16 $ 36.35 $ 28.60
</TABLE>
(1) Amerada Hess uses the "successful efforts" method of accounting for oil and
gas exploration and production activities.
(2) On 1 January 1999, Amerada Hess adopted the last-in, first-out (LIFO)
inventory method for refining and marketing inventories.
(3) Includes after-tax gains on asset sales of $176 and special tax benefits of
$55, partially offset by impairment of assets and operating leases (after
income taxes) of $100.
(4) Reflects after-tax special charges aggregating $263 representing impairments
of assets and operating leases, a net loss on asset sales and accrued
severance.
(5) Includes after-tax gains on asset sales of $421.
(6) Includes after-tax impairments of $416.
16
<PAGE> 19
LASMO
SELECTED HISTORICAL FINANCIAL INFORMATION
The following summary financial data, which is presented in accordance with UK
GAAP, has been derived for the five years ended 31 December 1999 from the
consolidated financial statements of LASMO and for the six month periods ended
30 June 2000 and 1999 from the condensed financial statements of LASMO, and
should be read in conjunction with those statements and notes thereto,
incorporated herein by reference. A reconciliation between UK GAAP and US GAAP
with respect to the summary information below is included in the documents
incorporated by reference.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
30 JUNE YEARS ENDED 31 DECEMBER
----------------- ---------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
MILLIONS, EXCEPT PER SHARE DATA ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Sales and other operating
revenues......................... L 463 L 216 L 594 L 484 L 639 L 644 L 550
Net income (loss).................. 120 19 136 (416) 40 55 18
Net income (loss) per share
(diluted) -- pence............... 9.0p 2.0p 10.7p (43.70)p 4.2p 5.8p 1.9p
Common dividends per share --
pence............................ Nil Nil 2.5p 2.3p 2.3p 2.0p 1.3p
Weighted average number of shares
outstanding...................... 1,333 952 1,143 966 966 966 966
BALANCE SHEET DATA (AT PERIOD END)
Cash............................... L 314 L 483 L 384 L 459 L 383 L 353 L 444
Working capital.................... 276 444 323 532 319 348 350
Property, plant and equipment
(net)............................ 2,518 2,470 2,434 1,867 2,255 1,925 2,194
Total assets....................... 3,076 3,184 3,132 2,772 2,890 2,531 2,920
Total debt......................... 1,106 1,314 1,060 1,318 1,184 886 1,301
Stockholders' equity............... 1,467 1,390 1,326 1,281 1,297 913 1,468
Stockholders' equity per share
(pounds per share)............... L 1.10 L 1.50 L 1.20 L 1.30 L 1.40 L 1.00 L 1.60
</TABLE>
EXCHANGE RATE INFORMATION
The financial statements of LASMO are prepared in pounds sterling. The following
table sets forth, for the periods indicated, information concerning the noon
buying rate in The City of New York for cable transfers as certified by the
Federal Reserve Bank of New York for customs purposes for pounds sterling,
expressed in US dollars per pound sterling. The average rate is calculated by
using the average of the noon buying rates in The City of New York on each day
during a monthly period, and on the last day of each month during an annual
period.
<TABLE>
<CAPTION>
HIGH LOW END AVERAGE RATE
----- ----- ----- ------------
<S> <C> <C> <C> <C>
NINE MONTHS ENDED 30 SEPTEMBER 2000................. $1.65 $1.40 $1.48 $1.54
</TABLE>
<TABLE>
<CAPTION>
HIGH LOW END AVERAGE RATE
YEAR ENDED 31 DECEMBER ----- ----- ----- ------------
<S> <C> <C> <C> <C>
1999................................................ $1.68 $1.55 $1.62 $1.62
1998................................................ $1.72 $1.61 $1.66 $1.66
1997................................................ $1.70 $1.58 $1.64 $1.64
1996................................................ $1.71 $1.49 $1.71 $1.57
1995................................................ $1.64 $1.53 $1.55 $1.68
</TABLE>
As of 11 December 2000 the noon buying rate for pounds sterling was $1.4554.
Amerada Hess makes no representation that the amounts of sterling presented in
this Offer Document have been, could have been or could be converted into US
dollars at the rates indicated above.
17
<PAGE> 20
SELECTED UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following selected unaudited pro forma financial information, which is
presented in accordance with US GAAP, gives effect to the consummation of the
Offer using the purchase method of accounting for business combinations. The pro
forma selected financial data is based on the historical financial information
of Amerada Hess and LASMO and should be read in conjunction with the historical
financial statements, including footnotes.
The selected unaudited pro forma balance sheet data is presented as if the
transaction occurred on 30 September 2000. The selected unaudited pro forma
income statement data for the year ended 31 December 1999, and the nine months
ended 30 September 2000, are presented as if the business combination had been
completed on 1 January 1999.
The selected unaudited pro forma financial data are presented for illustrative
purposes only. They are based on assumptions and do not purport to be indicative
of the results of operations or the financial position that would have actually
occurred if the combination had been consummated on the dates indicated or that
may be expected in the future.
The unaudited pro forma financial information does not reflect any cost savings
or anticipated changes in expenses reflecting efficiencies resulting from
combining operations.
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
30 SEPTEMBER 2000 31 DECEMBER 1999
------------------------ ------------------------
PRO FORMA PRO FORMA
AMERADA AMERADA AMERADA AMERADA
HESS HESS HESS HESS
(HISTORICAL) AND LASMO (HISTORICAL) AND LASMO
MILLIONS, EXCEPT PER SHARE DATA ------------ --------- ------------ ---------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA
Sales and other operating revenues............. $ 8,308 $ 9,395 $ 7,039 $ 8,001
Net income..................................... 683 685 438 248
Net income per share (diluted)................. 7.57 6.38 4.85 2.31
Common dividends per share..................... .45 .45 .60 .60
Weighted average number of shares outstanding
(diluted)................................... 90 107 90 107
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
30 SEPTEMBER 2000
---------------------------
PRO FORMA
AMERADA AMERADA
HESS HESS
(HISTORICAL) AND LASMO
------------ ---------
<S> <C> <C>
BALANCE SHEET DATA (AT PERIOD END)
Cash and cash equivalents................................. $ 259 $ 319
Working capital........................................... 359 461
Property, plant and equipment (net)....................... 4,198 9,467
Total assets.............................................. 9,069 15,928
Total debt................................................ 1,999 5,774
Stockholders' equity...................................... 3,543 4,618
Stockholders' equity per share............................ $ 40.00 $ 43.16
</TABLE>
18
<PAGE> 21
LETTER FROM GOLDMAN SACHS INTERNATIONAL
LOGO
13 December 2000
To all holders of LASMO Securities and, for information only, to participants in
the LASMO Share Option Schemes, the LASMO Profit Sharing Scheme and the Monument
1996 Participating Share Plan
Dear Sir or Madam,
AMERADA HESS CORPORATION
RECOMMENDED CASH AND SHARE OFFER FOR
LASMO PLC
1. INTRODUCTION
On 6 November 2000, the boards of Amerada Hess and LASMO announced that they had
reached agreement with respect to the terms of a recommended cash and share
offer for the entire issued and to be issued share capital of LASMO. This letter
contains the terms of the formal Offer by Goldman Sachs on behalf of Amerada
Hess (except in the United States, where Amerada Hess is making the Offer on its
own behalf) and should be read in conjunction with the accompanying Acceptance
Form.
Your attention is drawn to the letter from the Chairman of LASMO on pages 7 to 9
of this document which states that the directors of LASMO, who have been so
advised by Schroder Salomon Smith Barney, consider the terms of the Offer to be
fair and reasonable. In providing its advice to the directors of LASMO, Schroder
Salomon Smith Barney has taken into account the commercial assessments of the
directors of LASMO. Accordingly, the directors of LASMO unanimously recommend
all LASMO Securityholders to accept the Offer, as they have agreed to do
themselves in respect of their aggregate holdings of 324,311 LASMO Shares.
TO ACCEPT THE OFFER, THE RELEVANT ACCEPTANCE FORM, TOGETHER WITH ALL OTHER
REQUIRED DOCUMENTS, MUST BE COMPLETED AND RETURNED AS SOON AS POSSIBLE BUT, IN
ANY EVENT, SO AS TO BE RECEIVED BY NO LATER THAN 3.00 PM (LONDON TIME), 10.00 AM
(NEW YORK CITY TIME), ON 12 JANUARY 2001. The procedure for acceptance of the
Offer is set out on pages 29 to 32 of this document and in the accompanying
Acceptance Form.
2. THE OFFER
Amerada Hess and Goldman Sachs on behalf of Amerada Hess (outside the United
States) are offering to acquire, subject to the Conditions and the further terms
set out or referred to in this document and in the relevant Acceptance Form, all
of the LASMO Securities on the following basis:
<TABLE>
<S> <C>
FOR EVERY 78.7 LASMO SHARES HELD L98.29 IN CASH AND 1 NEW AMERADA HESS SHARE
FOR EVERY 78.7 LASMO ADSS HELD L294.87 IN CASH AND 3 NEW AMERADA HESS SHARES
(EACH ADS REPRESENTING 3 LASMO SHARES)
</TABLE>
19
<PAGE> 22
At the time of the Announcement, the Offer valued each LASMO Share at 180 pence
and LASMO's issued share capital (allowing for LASMO's estimate of likely
dilution by the exercise of outstanding options) at approximately L2.4 billion
based in each case on the Closing Price per Amerada Hess Share of US$62 13/16 on
3 November 2000 (the last NYSE trading day prior to the Announcement) and an
exchange rate of US$1.4484: L1.00. The cash element of the consideration
represents approximately 125 pence per LASMO Share.
The Offer now values each LASMO Share at 178 pence, based on an exchange rate of
US$1.4554: L1.00 and the NYSE Closing Price of US$60 1/2 per Amerada Hess Share
on 11 December 2000, the latest practicable NYSE trading day prior to the
posting of this document.
The Offer (valued at 180 pence per LASMO Share at the time of the Announcement)
represented a premium of approximately 28 per cent. to the Closing Price of a
LASMO Share at the close of business on 3 November 2000, the last London Stock
Exchange dealing day prior to the Announcement, and a premium of approximately
33 per cent. to the average Closing Price of a LASMO Share over the 6 months
prior to the Announcement.
The Offer will result in the issue of up to approximately 17.1 million Amerada
Hess Shares (representing approximately 16.3 per cent. of the ordinary share
capital of Amerada Hess, as enlarged as a result of the Offer).
The Offer extends to all LASMO Shares (including LASMO Shares represented by
LASMO ADSs) unconditionally allotted or issued at the date of the Offer Document
and any further such shares which are unconditionally allotted or issued while
the Offer remains open for acceptance or on or before such earlier time and/or
date as Amerada Hess may (subject to the City Code, US securities laws and/or
with the consent of the Panel) decide.
The number of Amerada Hess Shares which will be issued on full acceptance of the
Offer is expected not to exceed approximately 17.1 million on the basis that, as
at 3 November 2000, 1,344,328,323 LASMO Shares had been issued (including LASMO
Shares represented by LASMO ADSs) and it is reasonable, in LASMO's opinion, to
expect that a further 3,121,406 new LASMO Shares may be issued during the
relevant period as a result of the exercise of options. Amerada Hess reserves
the right to adjust the Offer consideration, by reducing rateably the aggregate
number of Amerada Hess Shares to be issued under the Offer, if any issue of
LASMO Shares in excess of these amounts would mean that Amerada Hess would
otherwise be obliged to issue more than 17.18 million new Amerada Hess Shares
under the Offer or pursuant to the statutory compulsory acquisition arrangements
under Section 429 of the Companies Act. In that event, LASMO Securityholders
will instead be entitled to receive cash at a rate of L43.37 for each Amerada
Hess Share by which the Offer consideration is so adjusted. This represents the
NYSE Closing Price of an Amerada Hess Share on 3 November 2000, the last NYSE
trading day prior to the Announcement, translated into sterling at the rate of
US$1.4484: L1.00.
All LASMO Securities which are acquired by Amerada Hess under the Offer will be
acquired fully paid and free from all liens, equities, charges, equitable
interests, encumbrances and other interests and together with all rights now or
hereafter attaching thereto, including the right to receive and retain all
dividends and other distributions declared, made or payable after 6 November
2000.
3. BACKGROUND TO AND REASONS FOR THE OFFER
Amerada Hess' strategy is focused on the continued expansion of its exploration
and production business, the primary driver of future income growth. Refining
and marketing will play a smaller but more profitable role in its portfolio than
it has in the past.
The acquisition of LASMO, a pure exploration and production company, will add
significantly to Amerada Hess' oil and gas reserves and production profile. It
will also create a more balanced investment portfolio due to the complementary
nature of their assets, cashflows and investment opportunities. Further, given
the significant geographical overlap of both companies, Amerada Hess anticipates
significant synergies.
20
<PAGE> 23
Amerada Hess has hedged its foreign exchange exposure to lock in the purchase
price of the transaction and has hedged volumes equivalent to substantially all
of LASMO's anticipated 2001 oil production to support the accretive nature of
the transaction to earnings and cash flow and permit significant debt paydown
(it being understood that this statement is not intended to mean that Amerada
Hess' earnings or earnings per share for any period will necessarily exceed
those of any previous period).
Amerada Hess' management believes this combination will:
- continue the transformation of Amerada Hess into an exploration and
production company; exploration and production is expected to represent
approximately 76 per cent. of average capital employed at year end 2001
on a pro-forma basis (compared with 59 per cent. at year end 2000 for
Amerada Hess on a stand-alone basis);
- achieve Amerada Hess' strategic objective to increase its international
reserves outside the US and North Sea; international proved reserves
will be increased to 42 per cent. on a pro-forma basis from 14 per cent.
of total proved reserves at year-end 1999;
- enhance Amerada Hess' production growth from 5 per cent. pre-acquisition
to 6 per cent. post-acquisition on a compound annual basis through 2004,
while significantly extending its proved reserve life from 8.2 to 9.8
years;
- add high quality operated reserves at an attractive cost of US$5.49 per
proved boe;
- increase reserves per share from 11.3 proved boe per share at year end
1999 to 17.2 proved boe per share on a pro-forma basis;
- generate approximately US$130 million of annual pre-tax synergies
(approximately US$90 million of annual synergies after tax);
- preserve balance sheet flexibility through the issuance of equity
amounting to approximately 30 per cent. of the value of the Offer to
continue Amerada Hess' ability to fund its capital expenditures and its
share repurchase programme;
- be accretive to Amerada Hess' internal 2001 estimate of earnings per
share and cash flow per share (by 2.5 per cent. and 17.8 per cent.
respectively) based on futures prices (it being understood that this
statement is not intended to mean that Amerada Hess earnings or earnings
per share for any period will necessarily exceed those of any previous
period);
- increase Amerada Hess' production from an estimated 373,000 boe per day
in 2000 to an expected 582,000 boe per day in 2001 on a pro-forma basis,
making Amerada Hess one of the largest global independent exploration
and production companies with the scale to access a broader range of
investment opportunities that meet its financial goals.
4. MIX AND MATCH ELECTION
LASMO Securityholders who validly accept the Offer may elect under the Mix and
Match Election to vary the proportions in which they receive Amerada Hess Shares
and cash and/or Loan Notes, if applicable, in respect of their LASMO Securities.
Insofar as a LASMO Securityholder is entitled to receive additional cash under
the Mix and Match Election, it will be payable in an amount per Amerada Hess
Share equal to the sterling equivalent of the Closing Price, at the relevant
time, of each such Amerada Hess Share to which the LASMO Securityholder would
have been entitled under the basic terms of the Offer if the LASMO
Securityholder had not elected to receive additional cash. The relevant time for
ascertaining the value of an Amerada Hess Share for these purposes will be the
close of trading on the NYSE on the most recent NYSE trading day before the
LASMO Securityholder's entitlement under the Mix and Match Election falls to be
determined (i.e. the time and date at which the Mix and Match Election ceases to
be open for acceptance). The sterling equivalent will be determined at the US
dollar to pound sterling exchange rate at that time, as determined by Goldman
Sachs.
21
<PAGE> 24
Although the Offer will remain open for a Subsequent Offer Period of at least 14
calendar days after the date on which the Offer becomes or is declared
unconditional in all respects (at the end of the Initial Offer Period) and may
be extended beyond that time until a further specified date or until further
notice, the Mix and Match Election will remain open until but not beyond 3.00 pm
(London time), 10.00 am (New York City time) on the date falling five calendar
days after the Offer becomes or is declared unconditional in all respects. Mix
and Match Elections must be made at the same time as the acceptances of the
Offer to which they relate, on the relevant Acceptance Form.
The maximum number of new Amerada Hess Shares to be issued under the Offer and
the maximum amount of cash to be paid under the Offer will not be varied as a
result of the Mix and Match Election. Accordingly, the ability of a LASMO
Securityholder to make a Mix and Match Election will depend on the extent to
which other LASMO Securityholders make opposite elections. To the extent that
elections cannot be satisfied in full, they will be scaled down on a pro rata
basis. To the extent that elections can be satisfied, LASMO Securityholders will
receive new Amerada Hess Shares instead of cash (and/or Loan Notes, if
applicable), and vice versa.
Accordingly, LASMO Securityholders who make Mix and Match Elections will not
know the exact number of new Amerada Hess Shares or the amount of cash (and/or
Loan Notes) they will receive until settlement of the consideration under the
Offer, although an announcement of the approximate extent to which Mix and Match
Elections will be satisfied will be made two business days after the Mix and
Match Election ceases to be open for acceptance.
In addition, Amerada Hess reserves the right to limit the extent to which
elections by LASMO Securityholders under the Mix and Match Election (or any
subsequent mix and match election) will be capable of being satisfied by cash
and/or Amerada Hess Shares released by opposite elections by other LASMO
Securityholders insofar as it determines this to be necessary or desirable with
a view to ensuring that the aggregate number of Amerada Hess Shares and the
aggregate amount of cash payable to all LASMO Securityholders do not exceed the
levels which would apply in the event of full acceptance of the Offer with a
single closing date for the Mix and Match Election, whether as a result of the
operation of the provisions of Sections 429 to 430F of the Companies Act (which
permit compulsory acquisition of outstanding shares following a takeover offer)
or otherwise.
A Mix and Match Election made by a LASMO Securityholder may not be changed after
the time that it is first made on the relevant Acceptance Form. However,
acceptances including the associated Mix and Match Election may be withdrawn in
accordance with the procedures in paragraph 4 of Part B of Appendix I. This
right of withdrawal, except in the limited circumstances set out in paragraphs 4
(b), (c) and (d) of Part B of Appendix I, terminates at the time that the Offer
becomes unconditional in all respects (i.e. at the end of the Initial Offer
Period). Accordingly, Mix and Match Elections made in the 5 calendar day period
between the end of the Initial Offer Period and the time and date at which the
Mix and Match Election ceases to be open for acceptance cannot be changed or
withdrawn.
The Mix and Match Election is conditional upon the Offer becoming or being
declared unconditional in all respects. Your attention is drawn to paragraph 18
of this letter and to paragraph 5 of part B of Appendix I of this document which
set out the procedure for making a Mix and Match Election.
5. THE LOAN NOTE ALTERNATIVE
As an alternative to some or all of the cash consideration which would otherwise
be receivable under the Offer (including the Mix and Match Election), accepting
LASMO Shareholders (other than US persons and certain other shareholders not
resident in the United Kingdom) will be able to elect to receive Loan Notes to
be issued by Amerada Hess on the following basis:
FOR EVERY L1 OF CASH CONSIDERATION UNDER THE OFFER L1 NOMINAL VALUE OF LOAN
NOTES
The Loan Notes, which will be governed by English law, will be unsecured
obligations of Amerada Hess and will be issued, credited as fully paid, in
integral multiples of L1 nominal value. All fractional entitlements will be
disregarded and not paid.
22
<PAGE> 25
Goldman Sachs has advised that, based on market conditions on 11 December 2000
(the latest practicable day prior to the posting of this document), the value of
the Loan Notes (had they been in issue on that day) would have been not less
than 95 pence per L1 in nominal value.
The Loan Notes will be transferable (subject to certain conditions) in multiples
of L500 or such lower number as Amerada Hess may approve, but no application
will be made for them to be listed or dealt in on any stock exchange.
The Loan Notes have not been, and will not be, registered under the Securities
Act or under the laws of any State of the United States nor have any steps been
taken, nor will any be taken, to enable the Loan Notes to be offered in
compliance with applicable securities laws of Canada or Japan and no prospectus
in relation to the Loan Notes has been, or will be, lodged with the Australian
Securities Commission. Accordingly, the Loan Notes may not be offered, sold,
resold, delivered or distributed directly or indirectly, in or into the United
States, or to or for the account or benefit of any US person, except pursuant to
an exemption from, or in a transaction exempt from, or not subject to, the
requirements of the Securities Act or the relevant securities laws of any State
of the United States. The Loan Notes may not be offered, resold, sold or
delivered, or distributed directly or indirectly, in or into Canada, Australia
or Japan.
The Loan Notes will bear interest (from but excluding the date of issue to the
relevant holder of Loan Notes) payable (subject to any requirement to deduct tax
therefrom) semi-annually in arrears on 30 June and 31 December in each year, or
(if in any year the relevant date is not a business day) on the next following
business day, commencing on 2 July 2001, up to and including the next business
day following 31 December 2005, at a rate of 0.5 per cent. below LIBOR for six
month sterling deposits determined on the first business day of each interest
period. The first interest payment will be made on 2 July 2001 in respect of the
period up to (but excluding) 2 July 2001. Interest should be payable without the
requirement to deduct US withholding tax provided the holder is able to certify
that it is a non-US person unrelated to Amerada Hess.
The Loan Notes will be redeemable at par at the option of the holders, in whole
or in any part (being L500 in nominal amount or any integral multiple thereof),
on 31 December 2001 and on any subsequent interest payment date. If at any time
5 per cent. or less in nominal value of the Loan Notes issued remain
outstanding, Amerada Hess shall have the right on any interest payment date
falling on or after 31 December 2001 to redeem all of the outstanding Loan Notes
at par, together with accrued interest. Any Loan Notes outstanding on the next
business day following 31 December 2005 will be redeemed at par on that business
day (together with any accrued interest up to and excluding that date).
No Loan Notes will be issued unless, at the time the Offer becomes or is
declared unconditional in all respects, valid elections for the Loan Note
Alternative will result in the issue of at least L2 million in aggregate nominal
value of Loan Notes or such smaller amount as Amerada Hess may decide. If
insufficient elections are received, the LASMO Shareholders who validly accept
the Offer and elect to receive Loan Notes will instead receive cash in
accordance with the terms of the Offer (including the Mix and Match Election).
The Loan Note Alternative is conditional on the Offer becoming or being declared
unconditional in all respects and will remain open for so long as the Offer
remains open for acceptance. Further details of the terms of the Loan Note
Alternative are set forth in Appendix II.
6. IRREVOCABLE UNDERTAKINGS
Amerada Hess has received irrevocable undertakings to accept the Offer from the
directors of LASMO in respect of their entire holdings, amounting, in aggregate,
to 324,311 LASMO Shares representing 0.02 per cent. of the issued share capital
of LASMO. Such undertakings will cease to be binding only if the Offer lapses or
is withdrawn.
The Announcement stated that Amerada Hess had also received irrevocable
undertakings from Schroder Investment Management Limited and Electrafina S.A. to
accept the Offer in respect of an aggregate
23
<PAGE> 26
of approximately 276,279,208 LASMO Shares, representing approximately 20.56 per
cent. of LASMO's issued share capital. Schroder Investment Management Limited,
being a fund manager, has given an undertaking to accept the Offer in respect of
177,943,047 LASMO Shares insofar as the relevant clients have not withdrawn or
altered their mandate (in a manner inconsistent with acceptance) at the time
required for acceptance. Schroder Investment Management Limited has notified
Amerada Hess that its undertaking applies to 171,616,233 LASMO Shares and not
177,943,047 LASMO Shares as stated in the Announcement. Therefore, the
irrevocable undertakings received from the above institutions in fact represent
an aggregate of 269,952,394 LASMO Shares, representing approximately 20.08 per
cent. of LASMO's issued share capital.
The undertakings from Schroder Investment Management Limited and Electrafina
S.A. will cease to be binding if a third party makes an offer for the fully
diluted ordinary share capital of LASMO the value of which, upon announcement,
is more than 10 per cent. greater than 180p per LASMO Share or, if less, the
value of the Offer per LASMO Share at the close of the NYSE trading day
immediately preceding announcement of the new offer.
Accordingly, Amerada Hess has received irrevocable undertakings in respect of a
total of 270,276,705 LASMO Shares representing approximately 20.1 per cent. of
the existing issued LASMO ordinary share capital.
7. CONDITIONS AND FURTHER TERMS OF THE OFFER
The Offer (including the Loan Note Alternative) is subject to the Conditions and
further terms set out in Appendix I.
8. INFORMATION RELATING TO AMERADA HESS
Amerada Hess, headquartered in New York, is a global integrated energy company
engaged in the exploration for and the production, purchase, transportation and
sale of crude oil and natural gas, the refining of crude oil and the sale of
refined petroleum products. Exploration and production activities take place
primarily in the United States, the United Kingdom, Norway, Denmark, Gabon,
Indonesia, Thailand, Azerbaijan, Algeria and Brazil.
Amerada Hess produces approximately 370,000 barrels of oil equivalent per day,
two-thirds oil and one-third natural gas. Amerada Hess' total proved oil and gas
reserves as at 31 December 1999 were over 1 billion boe.
Amerada Hess' vision is to deliver superior returns while providing long-term
profitable growth. The acquisition of LASMO furthers Amerada Hess' strategy to
expand its exploration and production operations outside of the United States
and the North Sea and increase reserves outside these areas to at least
one-third of total reserves. Brazil, Venezuela, Africa, Central Asia and
Southeast Asia are all target areas.
Amerada Hess' future strategy will involve a balance among exploration, reserve
developments and reserve acquisitions. Amerada Hess is well positioned to
provide long-term growth and withstand volatile energy price environments as a
result of its strong cash flow, reduced cost structure, strong production growth
and strong balance sheet. At 30 September 2000, Amerada Hess' total debt to
capitalisation ratio was 36 per cent. and earnings were $683 million ($7.57 per
share) for the first nine months of the year, higher than any full year in
Amerada Hess' history. After consummation of this transaction, Amerada Hess'
debt to capitalisation ratio is expected to be 54 per cent., falling to 42 per
cent. and 28 per cent. at year end 2001 and 2002 respectively, based on
anticipated cash flows.
Refining and marketing has become a smaller, but more profitable, portion of
Amerada Hess' portfolio than it was in the past.
Refined petroleum products are manufactured at the HOVENSA refinery in St.
Croix, United States Virgin Islands, which is owned jointly by Petroleos de
Venezuela S.A. and Amerada Hess. The refinery
24
<PAGE> 27
is one of the largest in the world with a crude oil distillation capacity of
500,000 barrels per day and a fluid catalytic cracking unit that operates at
140,000 barrels per day.
Amerada Hess markets refined petroleum products on the East Coast of the United
States. These refined petroleum products are marketed through 27 terminals and
approximately 915 HESS brand retail outlets. Amerada Hess markets fuel oil,
natural gas and electricity to industrial and commercial customers on the East
Coast of the United States. Amerada Hess also markets natural gas to
approximately 350,000 customers in the UK.
Retail marketing is the area of emphasis in Amerada Hess' downstream business.
Amerada Hess' vision is to be the leading independent retail marketer on the
East Coast of the United States. Amerada Hess expects to have nearly 1,100
retail outlets by April 2001. Amerada Hess is focused on expanding HESS EXPRESS
convenience stores at its retail outlets which include fast food outlets.
For the nine months ended 30 September 2000, Amerada Hess reported total
revenues of US$8.5 billion (1999: US$5.2 billion) and net income of US$683
million (1999: US$307 million). Net assets as at 30 September 2000 were US$3.5
billion (31 December 1999: US$3.0 billion). For the full year ended 31 December
1999, Amerada Hess had total revenues of US$7.5 billion (1998: US$6.6 billion)
and net income of US$438 million (1998: US$(459) million).
Further information with respect to Amerada Hess is set forth in Appendix III to
this document.
9. INFORMATION RELATING TO LASMO
LASMO, headquartered in London, is a substantial oil and gas exploration and
production company whose activities and producing assets are presently
concentrated primarily in North West Europe and Indonesia, and these, together
with Venezuela, North Africa and Pakistan are the current material contributors
to reserves. At the end of 1999, LASMO was active in 14 countries around the
world, in nine of which it acted as operator. Production during 1999 was mainly
derived from six of these countries: the United Kingdom, The Netherlands,
Indonesia, Venezuela, Algeria and Pakistan.
As at 31 December 1999, LASMO's net proved oil and gas reserves were estimated
at 830 million boe. Approximately 62 per cent. relate to oil and 38 per cent.
relate to gas, with 24 per cent. of LASMO's net proved reserves located in North
West Europe, 27 per cent. located in Indonesia, 29 per cent. located in
Venezuela, 14 per cent. located in North Africa and 6 per cent. located in
Pakistan. For the year ended 31 December 1999, LASMO's average daily production
was 178,000 boe with approximately 56 per cent. derived from North West Europe
and approximately 27 per cent. derived from Indonesia. In the same period,
production of crude oil and natural gas each accounted for approximately 62 per
cent. and 38 per cent. respectively of LASMO's daily average production.
For the six months ended 30 June 2000, LASMO reported sales of L463 million
(1999: L216 million) and profit before exceptional items and taxation of L187
million (1999: L35 million). Net assets as at 30 June, 2000 were L1,467 million.
For the full year ended 31 December 1999, LASMO had sales of L594 million (1998:
L484 million) and profit before exceptional items and taxation of L170 million
(1998: L1 million).
Further information with respect to LASMO is set forth in Appendix IV to this
document.
10. FINANCING OF THE OFFER
The cash consideration under the Offer will be financed from existing cash
resources and bank facilities arranged with Goldman Sachs Credit Partners L.P.
for the purposes of the Offer.
Further details regarding these bank facilities are set out in paragraph 7 of
Appendix VI.
11. MANAGEMENT AND EMPLOYEES
The employment rights of employees of LASMO, including pension rights, will be
fully safeguarded. Amerada Hess attaches great importance to the skills and
experience of the management and employ-
25
<PAGE> 28
ees of LASMO and believes that they will benefit from the enhanced opportunities
available within the Amerada Hess Group.
12. LASMO SHARE OPTION SCHEMES
The Offer will extend to any further LASMO Shares (including LASMO Shares
represented by LASMO ADSs) unconditionally allotted or issued at the date of
this document and any further such shares which are unconditionally allotted or
issued while the Offer remains open for acceptance or on or before such earlier
time and/or date as Amerada Hess may, subject to the City Code, US securities
laws and/or with the consent of the Panel, decide; including those issued as a
result of the exercise of options granted under the LASMO Share Option Schemes.
It is intended that proposals in compliance with the City Code will be made
available to holders of options under the LASMO Share Option Schemes for the
realisation of the value of their options. The detailed terms of these proposals
are expected to be made available to holders of options on or before the date on
which the Offer becomes or is declared unconditional in all respects.
13. FRACTIONS
Fractions of new Amerada Hess Shares will not be allotted or issued to accepting
LASMO Securityholders. Fractional entitlements to new Amerada Hess Shares will
be aggregated and sold in the market and the net proceeds of sale distributed
pro rata to the holders of LASMO Securities entitled to them. Any LASMO
Securityholder may elect (by separate written notice to the UK Receiving Agent
or the US Depositary accompanying his or her Acceptance Form) to receive the
payment due in respect of fractional entitlements in either pounds sterling or
US dollars. In the absence of any such election, such payment will be made to
holders of LASMO ADSs in US dollars and to LASMO Shareholders in pounds
sterling, the proceeds having been converted from US dollars at a prevailing
exchange rate selected by Amerada Hess at the relevant time. Amerada Hess will
not be liable to LASMO Securityholders or any other person in respect of the
timing of any such sale or conversion or the price or exchange rate achieved in
respect of any such sale or conversion. Individual entitlements to amounts of
less than L5.00 (or its equivalent in US dollars at the relevant time) will not
be paid to holders of LASMO Securities but will be retained for the benefit of
the enlarged Amerada Hess Group.
14. NEW AMERADA HESS SHARES
The new Amerada Hess Shares will rank pari passu in all respects with existing
Amerada Hess Shares, including the right to any dividends and other
distributions declared, paid or made by reference to a record date after the
date on which they are issued. For the avoidance of doubt, LASMO Securityholders
will not be entitled to the dividend of Amerada Hess expected to be declared in
December 2000 and paid on or about 3 January 2001.
The new Amerada Hess Shares will be delivered in accordance with the terms of
the Offer and will be fully paid and free from all liens, equities, charges,
equitable interests, encumbrances and other interests and together with all
rights now or hereafter attaching thereto.
Amerada Hess Shares are traded in US dollars on the NYSE and dividends are
declared and paid in US dollars. The sterling value of any investment in Amerada
Hess Shares and any dividend income from that investment (payable in US dollars
and subject to US withholding tax) will be affected by fluctuations in the
dollar to sterling exchange rate from time to time.
The new Amerada Hess Shares are expected to be authorised for listing, subject
to official notice of issuance, on the NYSE, but they will not be listed or
traded on the London Stock Exchange or any other stock exchange.
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<PAGE> 29
15. ILLUSTRATIVE COMPARATIVE PER SHARE DATA
The following table presents historical net income, cash dividends and book
value for Amerada Hess and LASMO individually on a per share basis. The table
also presents unaudited pro forma per share data for Amerada Hess and LASMO. The
unaudited pro forma earnings and book value per share data give effect to the
business combination as if it occurred on 30 September 2000 for balance sheet
purposes and 1 January 1999 for income statement purposes and are based on the
Unaudited Pro Forma Condensed Consolidated Financial Information included in
Appendix V to this document.
The unaudited pro forma data is based on the terms of the business combination
in which Amerada Hess will offer cash and new Amerada Hess Shares for the LASMO
Shares. The information in the table below should be read in conjunction with
the respective audited and unaudited consolidated financial statements of
Amerada Hess and LASMO, including the notes thereto and the Unaudited Pro Forma
Condensed Consolidated Financial Information included in Appendix V to this
document.
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
30 SEPTEMBER 2000 31 DECEMBER 1999
----------------- -----------------
(UNAUDITED)
<S> <C> <C>
AMERADA HESS -- HISTORICAL
Earnings per common share
Basic................................................. $ 7.63 $ 4.88
Diluted............................................... $ 7.57 $ 4.85
Cash dividends per common share......................... $ 0.45 $ 0.60
Stockholders' equity per common share................... $40.00 $33.51
LASMO -- HISTORICAL
Earnings per ordinary share
Basic................................................. $ 0.19 $ 0.10
Diluted............................................... $ 0.19 $ 0.10
Cash dividends per ordinary share....................... $ -- $ 0.04
Stockholders' equity per ordinary share................. $ 1.47 $ 1.79
AMERADA HESS -- PRO FORMA COMBINED COMPANY
Earnings per common share
Basic................................................. $ 6.41 $ 2.32
Diluted............................................... $ 6.38 $ 2.31
Cash dividends per common share......................... $ 0.45 $ 0.60
Stockholders' equity per common share................... $43.16
LASMO -- PRO FORMA EQUIVALENT PER SHARE INFORMATION
Earnings per ordinary share
Basic................................................. $ 0.27 $ 0.10
Diluted............................................... $ 0.26 $ 0.10
Cash dividends per ordinary share....................... $ 0.02 $ 0.02
Stockholders' equity per ordinary share................. $ 1.79
</TABLE>
Amounts are calculated by multiplying the Amerada Hess pro forma combined
amounts by the ratio determined by dividing the combined cash and stock
consideration of $2.61 (L1.80) by the Amerada Hess share price of $62 13/16, the
price on 3 November 2000, the last NYSE trading day prior to the Announcement.
27
<PAGE> 30
16. FINANCIAL EFFECTS OF ACCEPTANCE
The following tables set out, for illustrative purposes only and on the bases
and assumptions set out below, the financial effects of acceptance on capital
value and income for a holder of 78.7 LASMO Shares accepting the Offer, if the
Offer becomes or is declared unconditional in all respects:
(A) INCREASE IN CAPITAL VALUE UNDER THE TERMS OF THE OFFER
<TABLE>
<CAPTION>
NOTES OFFER
----- -------
<S> <C> <C>
For 78.7 LASMO Shares
Cash consideration.......................................... (i) 98.29
Market value of a new Amerada Hess Share.................... (ii) 41.57
Market value of 78.7 LASMO Shares........................... (iii) 110.97
-------
Increase in capital value................................... 28.89
-------
Representing an effective increase of....................... 26.0%
=======
</TABLE>
(B) INCREASE IN GROSS INCOME UNDER THE TERMS OF THE OFFER
<TABLE>
<CAPTION>
NOTES OFFER
----- -------
<S> <C> <C>
For 78.7 LASMO Shares
Gross income from cash consideration........................ (iv) 5.34
Gross dividend income from a new Amerada Hess Share......... (v) 0.38
Gross dividend income from 78.7 LASMO Shares................ (vi) 2.19
-------
Increase in gross income.................................... (vii) 3.53
-------
Representing an effective increase of....................... 161.2%
=======
</TABLE>
NOTES
(i) Based on the cash element of the consideration of L98.29 for every 78.7
LASMO Shares.
(ii) Based on the Closing Price of an Amerada Hess Share on 11 December 2000
(the last practicable US business day prior to the posting of this
document) of $60 1/2 and an exchange rate of $1.4554 : L1.00, being the
noon buying rate published by the Federal Reserve Bank of New York on that
date.
(iii) Based on the Closing Price of a LASMO Share on 3 November 2000 (the last
practicable business day prior to the announcement of the Offer).
(iv) The gross income from the cash consideration is based on an assumption that
the cash consideration is re-invested so as to yield 5.430 per cent. gross
per annum, being the gross yield shown by the FT Actuaries Average Gross
Redemption Yield for medium coupon U.K. government securities of up to five
years maturity on 8 December 2000, as published in The Financial Times on 9
December 2000 (the last business day prior to the posting of this
document).
(v) The gross dividend income from a new Amerada Hess Share is based on the
aggregate of the quarterly dividends of $0.15, $0.15, $0.15 and $0.15 per
Amerada Hess Share for the periods ending 30 September 2000, 30 June 2000,
31 March 2000 and 31 December 1999, respectively. The gross dividend income
is based on an exchange rate of US$1.5613 : L1.00, being the average of the
daily noon buying rates published by The Federal Reserve Bank of New York
for the period 1 October 1999 to 30 September 2000.
(vi) The gross dividend income from a LASMO Share is based on the final dividend
for the year ended 31 December 1999 of 2.5p per LASMO Share grossed up by
the amount of the related UK tax credit.
(vii) Except as expressly stated in (v) and (vi) above, no account has been
taken of any potential liability to taxation. The comparison would be very
difficult for some categories of shareholder if tax were taken into
account, because of different tax rates applying to different categories
of income.
17. ACCOUNTING TREATMENT
Amerada Hess expects that the transaction will be accounted for using the
purchase method of accounting for business combinations. Under the purchase
method, the consummation of the Offer will be treated as an acquisition of LASMO
by Amerada Hess, and Amerada Hess will allocate the total
28
<PAGE> 31
purchase price among the acquired assets and liabilities based on their
estimated fair values at closing of the transaction.
18. PROCEDURE FOR ACCEPTANCE OF THE OFFER
THIS SECTION SHOULD BE READ TOGETHER WITH THE NOTES AND INSTRUCTIONS ON THE
RELEVANT ACCEPTANCE FORM.
(a) Holders of LASMO Shares
The attention of LASMO Shareholders is drawn to paragraphs 10 and 11 of
Part B of Appendix I to this document and to the relevant provisions of the
Form of Acceptance. You should note that, if you hold LASMO Shares in both
certificated and uncertificated (that is, in CREST) form, you should
complete a separate Form of Acceptance for each holding. In addition, you
should complete a separate Form of Acceptance for LASMO Shares held in
uncertificated form, but under different member account IDs. Similarly, you
should complete a separate Form of Acceptance for LASMO Shares held in
certificated form but under different designations. If you hold LASMO
Shares in CREST you should also refer to paragraphs (vi) and (viii) below.
ADDITIONAL FORMS OF ACCEPTANCE ARE AVAILABLE FROM THE UK RECEIVING AGENT
AND THE INFORMATION AGENT.
(i) To accept the Offer
To accept the Offer, you should complete Box 1 of the Form of
Acceptance, check the details contained in Box 2 of the Form of
Acceptance and, if your LASMO Shares are in CREST, complete Box 7 of the
Form of Acceptance. In all cases you should sign and date Box 6 of the
Form of Acceptance in accordance with the instructions printed on it.
ALL HOLDERS OF LASMO SHARES WHO ARE INDIVIDUALS SHOULD SIGN BOX 6 OF THE
FORM OF ACCEPTANCE IN THE PRESENCE OF A WITNESS, WHO SHOULD ALSO SIGN
BOX 6 IN ACCORDANCE WITH THE INSTRUCTIONS PRINTED ON IT.
(ii) To elect for the Mix and Match Election
To make a Mix and Match Election in respect of some or all of your LASMO
Shares you should complete Box 3A (to elect for additional Amerada Hess
Shares) OR Box 3B (to elect for additional cash) in addition to
completing Box 1 and checking Box 2. You should then sign and date Box 6
in accordance with the instructions printed on it. IN ALL CASES, HOLDERS
OF LASMO SHARES WHO ARE INDIVIDUALS MUST SIGN BOX 6 OF THE FORM OF
ACCEPTANCE IN THE PRESENCE OF A WITNESS, WHO SHOULD ALSO SIGN BOX 6 IN
ACCORDANCE WITH THE INSTRUCTIONS PRINTED THEREON.
You must not fill in both Box 3A and Box 3B. If you do so, you will be
deemed not to have made a Mix and Match Election.
Although the Offer will remain open for a Subsequent Offer Period of at
least 14 calendar days after the date on which the Offer becomes or is
declared unconditional in all respects (i.e. at the end of the Initial
Offer Period) and may be extended beyond that time until a further
specified time or until further notice, an election for the Mix and
Match Election will not be valid unless by not later than 3.00 p.m.
(London time), 10.00 a.m. (New York City time) on the date falling five
calendar days after that date (i) the UK Receiving Agent has received
the relevant Form of Acceptance, correctly completed in all respects and
(ii) either (1) if the LASMO Shares concerned are in certificated form,
the UK Receiving Agent has received all relevant share certificate(s)
and/or other document(s) of title or (2) if the LASMO Shares concerned
are in uncertificated form, there has occurred settlement of a TTE
instruction in favour of the escrow agent in relation to those LASMO
Shares in accordance with the procedures described in paragraphs 10(d)
to (l) of Part B of Appendix 1. Any Mix and Match Election must be made
at the same time as the acceptance of the Offer to which it relates.
29
<PAGE> 32
The invalidity of an election for the Mix and Match Election (including
the making of such election after the Mix and Match Election has closed)
will not affect the validity of an acceptance of the Offer.
(iii) To elect for the Loan Note Alternative
To elect for the Loan Note Alternative in respect of some or all of the
LASMO Shares for which you are accepting the Offer, you should complete
the Form of Acceptance as set out in (i) above and in addition complete
Box 4. The number inserted in Box 4 indicates the number of LASMO Shares
for which you wish to receive Loan Notes instead of the cash to which
you would otherwise be entitled under the Offer in respect of those
LASMO Shares. Note that if you wish to receive all your cash entitlement
under the Offer in Loan Notes, you should insert the same number of
LASMO Shares in Box 4 as you have in Box 1.
The attention of those holders of LASMO Shares considering accepting the
Loan Note Alternative is drawn to paragraph 5 of this letter, to
paragraph 6 of Part B of Appendix I to this document and to Appendix II
of this document. IN ALL CASES HOLDERS OF LASMO SHARES WHO ARE
INDIVIDUALS MUST SIGN BOX 6 OF THE FORM OF ACCEPTANCE IN THE PRESENCE OF
A WITNESS, WHO SHOULD ALSO SIGN BOX 6 IN ACCORDANCE WITH THE
INSTRUCTIONS PRINTED THEREON.
(iv) To elect for both the Mix and Match Election and the Loan Note
Alternative
To elect for both the Mix and Match Election and the Loan Note
Alternative, in respect of all of your LASMO Shares, you must complete
Box 1 and in respect of such number of LASMO Shares in respect of which
you wish to accept the Mix and Match Election and the Loan Note
Alternative, either Box 3A or Box 3B, and Box 4, and, if appropriate,
Boxes 5, 7, 8 and/or Box 9A or 9B, and then sign Box 6 in accordance
with its instructions. Holders of LASMO Shares who are individuals must
sign Box 6 of the Form of Acceptance in the presence of a witness, who
should also sign Box 6 in accordance with the instructions printed on
it.
If you make a Mix and Match Election at a time when it is open and elect
for the Loan Note Alternative, the following will apply:
(1) the Mix and Match Election will take effect first and will,
subject to elections of other Securityholders, adjust the amount of
cash to which you become entitled under the Offer;
(2) a "loan note ratio" will be calculated by dividing the number of
LASMO Shares entered in Box 4 by the total number of LASMO Shares
entered in Box 1; and
(3) the total amount of Loan Notes you will receive will be calculated
by multiplying your total cash entitlement under the Offer,
following implementation of your Mix and Match Election, by your
loan note ratio.
LASMO Securityholders should note that, for acceptances after the date
falling five calendar days after the date on which the Offer becomes
unconditional in all respects (i.e. at the end of the Initial Offer
Period), the Mix and Match Election will not be available and
accordingly the Loan Note Alternative will not be available in relation
to any Mix and Match Election for additional cash consideration made
after that date.
(v) Return of the Form of Acceptance
To accept the Offer, the Form of Acceptance must be completed and
returned, whether or not your LASMO Shares are in CREST. The completed,
signed and (if you are an individual) witnessed Form of Acceptance,
together with, if your LASMO Shares are not in CREST, the share
certificate(s) and/or other document(s) of title for your LASMO Shares,
should be
30
<PAGE> 33
returned (IF YOU ARE NOT IN THE UNITED STATES) BY POST OR BY HAND
(DURING NORMAL BUSINESS HOURS ONLY) TO THE UK RECEIVING AGENT,
COMPUTERSHARE SERVICES PLC OF PO BOX 859, THE PAVILIONS, BRIDGWATER
ROAD, BRISTOL, BS99 1XZ OR BY HAND ONLY (DURING NORMAL BUSINESS HOURS
ONLY) TO COMPUTERSHARE SERVICES PLC OF 7TH FLOOR JUPITER HOUSE, TRITON
COURT, 14 FINSBURY SQUARE, LONDON, EC2A 1BR OR (IF YOU ARE IN THE UNITED
STATES) TO THE US DEPOSITARY, THE BANK OF NEW YORK AT, BY MAIL, TENDER &
EXCHANGE DEPARTMENT, P.O. BOX 11248, CHURCH STREET STATION, NEW YORK,
NEW YORK 10286-1248 OR BY HAND OR OVERNIGHT COURIER AT TENDER & EXCHANGE
DEPARTMENT, 101 BARCLAY STREET, RECEIVE AND DELIVER WINDOW, NEW YORK,
NEW YORK 10286 AS SOON AS POSSIBLE BUT, IN ANY EVENT, SO AS TO BE
RECEIVED BY NO LATER THAN 3.00 PM (LONDON TIME), 10.00 AM (NEW YORK CITY
TIME), ON 12 JANUARY 2001. A reply-paid envelope is enclosed for your
convenience and may be used by holders of LASMO Shares for returning
Forms of Acceptance within the United Kingdom or the United States (as
the case may be). The instructions printed on the Form of Acceptance
shall be deemed to form part of the terms of the Offer.
Any Form of Acceptance received in an envelope postmarked in Canada,
Australia or Japan or otherwise appearing to Amerada Hess or its agents
to have been sent from Canada, Australia or Japan may be rejected as an
invalid acceptance of the Offer. For further information for overseas
LASMO Shareholders, see paragraph 23 of this letter and paragraph 9 of
Part B of Appendix I to this document.
(vi) LASMO Shares in uncertificated form (that is, in CREST)
If your LASMO Shares are in uncertificated form (that is, if you do not
have a share certificate because your LASMO Shares are held in CREST),
you should read carefully paragraph 10 of Part B of Appendix I to this
document, which sets out the acceptance procedures for holders of LASMO
Shares in uncertificated form.
IF YOU ARE A CREST SPONSORED MEMBER, YOU SHOULD REFER TO YOUR CREST
SPONSOR BEFORE TAKING ANY ACTION.
(vii) Share certificates not readily available or lost
If your LASMO Shares are in certificated form, but your share
certificates(s) and/or other document(s) of title is/are not readily
available or is/are lost, the Form of Acceptance should nevertheless be
completed, signed and returned as stated in paragraph (v) above together
with any share certificate(s) and/or other document(s) of title that you
have available, accompanied by a letter stating that the balance will
follow or that you have lost one or more of your share certificate(s)
and/or other document(s) of title to be forwarded as soon as possible.
No acknowledgement of receipt of documents will be given. In the case of
loss of your share certificate(s) and/or other document(s) of title, you
should write as soon as possible to LASMO's registrars, Computershare
Services PLC of PO Box 435, Owen House, 8 Bankhead Crossway North,
Edinburgh, EH11 4BR, for a letter of indemnity for lost share
certificate(s) and/or other document(s) of title which, when completed
in accordance with the instructions given, should be returned to the UK
Receiving Agent (if you are not in the United States) or to the US
Depositary (if you are in the United States) at the relevant address set
out in paragraph (v) above.
(viii) Deposits of LASMO Shares into, and withdrawals of LASMO Shares from,
CREST
Normal CREST procedures (including timings) apply in relation to any
LASMO Shares that are, or are to be, converted from uncertificated to
certificated form, or from certificated to uncertificated form, during
the course of the Offer (whether any such conversion arises as a result
of a transfer of LASMO Shares or otherwise). Holders of LASMO Shares who
are proposing so to convert any such LASMO Shares are recommended to
ensure that the
31
<PAGE> 34
conversion procedures are implemented in sufficient time to enable the
person holding or acquiring the LASMO Shares as a result of the
conversion to take all necessary steps in connection with an acceptance
of the Offer (in particular, as regards delivery of share certificate(s)
and/or other document(s) of title or transfers to an escrow balance as
referred to in the acceptance procedures referred to in sub-paragraph
(vi) above) PRIOR TO 3.00 PM (LONDON TIME), 10.00 AM (NEW YORK CITY
TIME) ON 12 JANUARY 2001.
(b) Holders of LASMO ADSs
The attention of holders of LASMO ADSs is drawn to paragraph 12 of Part B
of Appendix I to this document and to the relevant provisions of the Letter
of Transmittal.
For a holder of LASMO ADSs evidenced by LASMO ADRs validly to accept the
Offer, either (i) a properly completed and duly executed Letter of
Transmittal, together with any required signature guarantees or, in the
case of a book-entry transfer, an Agent's Message, and any other documents
required by the Letter of Transmittal, must be received by the US
Depositary at one of its addresses set out at the back of this document and
either the LASMO ADRs evidencing such LASMO ADSs must be received by the US
Depositary at one of such addresses or such LASMO ADRs evidencing such
LASMO ADSs must be delivered pursuant to the procedure for book-entry
transfer set out in paragraph 12(c) of Part B of Appendix I to this
document (and a Book-Entry Confirmation received by the US Depositary in
accordance with such procedures); or (ii) such holder must comply with the
guaranteed delivery procedures set out in paragraph 12(h) of Part B of
Appendix I to this document. Attention of LASMO ADS holders is drawn to
paragraph 12(h)(iii) of this document.
(c) Validity of acceptance
Without prejudice to Part B of Appendix I to this Offer Document and
subject to the City Code, Amerada Hess and Goldman Sachs reserve the right
to treat as valid in whole or in part any acceptance of the Offer which is
not entirely in order or which is not accompanied by (as applicable) the
relevant transfer to escrow or the relevant share certificate(s), LASMO
ADRs and/or other document(s) of title or which is received in a form or at
a place or places other than as set out in this document or on the relevant
Acceptance Form. In that event, no payment of cash or issue of new Amerada
Hess Shares or, if applicable, issue of Loan Notes under the Offer will be
required to be made until after the acceptance is entirely in order to
Amerada Hess' satisfaction and (as applicable) the relevant transfer to
escrow has been settled or the relevant share certificate(s) and/or other
document(s) of title or indemnities satisfactory to Amerada Hess have been
received by the UK Receiving Agent or the US Depositary, as the case may
be.
(d) General
No acknowledgement of receipt of any Acceptance Form, LASMO Share
certificates, LASMO ADRs or other documents of title or documentation in
respect of the Offer will be given.
IF YOU ARE IN ANY DOUBT AS TO THE PROCEDURES FOR ACCEPTANCE, PLEASE CONTACT
THE UK RECEIVING AGENT AT PO BOX 859, THE PAVILIONS, BRIDGWATER ROAD,
BRISTOL BS99 1XZ OR BY TELEPHONE ON 0870 703 0056 OR THE US DEPOSITARY AT
THE BANK OF NEW YORK, TENDER & EXCHANGE DEPARTMENT, P.O. BOX 11248, CHURCH
STREET STATION, NEW YORK, NEW YORK 10286-1248, OR BY TELEPHONE ON (212)
815-6156 OR THE INFORMATION AGENT AT D.F. KING & CO. INC., 77 WATER STREET,
NEW YORK, NEW YORK 10005, OR BY TELEPHONE ON (212) 269-5550 OR (800)
628-8536. YOU ARE REMINDED THAT IF YOU ARE A CREST SPONSORED MEMBER, YOU
SHOULD CONTACT YOUR CREST SPONSOR BEFORE TAKING ANY ACTION.
19. RIGHTS OF WITHDRAWAL
Except to the extent of the exemptive relief which has been granted by the SEC,
the Offer is subject to the US tender offer rules applicable to securities
registered under the Exchange Act, as well as to the
32
<PAGE> 35
City Code. This has necessitated a number of changes from the procedures which
normally apply to offers for companies governed by the City Code, including
those applicable to the rights of holders of LASMO Securities to withdraw their
acceptance of the Offer.
Under the Offer, holders of LASMO Securities will be able to withdraw their
acceptances at any time during the Initial Offer Period but will not have any
withdrawal rights during the Subsequent Offer Period, except in certain limited
circumstances (see paragraphs 4(c) and (d) of Part B of Appendix I to this
document). The Subsequent Offer Period must remain open for at least 14 calendar
days but may be extended beyond that time until a further specified date or
until further notice.
The Offer will be deemed not to have been validly accepted in respect of any
LASMO Securities acceptances in respect of which have been validly withdrawn.
However, the Offer may be accepted again in respect of any withdrawn LASMO
Securities following one of the procedures described in paragraph 18 of this
letter at any time prior to expiry or lapse of the Offer.
Further details of these rights of withdrawal and the procedure for effecting
withdrawals are set out in paragraph 4 of Part B of Appendix I to this document.
20. SETTLEMENT
(a) Date of Payment
The settlement procedure with respect to the Offer will be consistent with
UK practice, which differs from US domestic tender offer procedures in
certain material respects, particularly with regard to the date of payment.
Subject to either the satisfaction, fulfilment or, to the extent permitted,
waiver of all of the Conditions, settlement of consideration to accepting
LASMO Shareholders and accepting holders of LASMO ADSs or their designated
agents will be effected in the manner set out below:
(i) in the case of acceptances received complete in all respects by the
end of the Initial Offer Period, within 14 calendar days of such date;
or
(ii) in the case of acceptances received complete in all respects after
such date but while the Offer remains open for acceptance, within 14
calendar days of such receipt,
in the manner set out below.
(b) LASMO Shares in uncertificated form (that is, in CREST)
Where an acceptance relates to LASMO Shares in uncertificated form:
(i) the new Amerada Hess Shares to which the accepting LASMO Shareholder
is entitled under the Offer will be issued to such shareholder in
certificated form and share certificates and/or other documents of title
will be despatched by post (or by such other method as may be approved
by the Panel);
(ii) the cash consideration to which an accepting LASMO Shareholder is
entitled will be paid by means of CREST by Amerada Hess procuring the
creation of an assured payment obligation in favour of the accepting
LASMO Shareholder's payment bank in respect of the cash consideration
due, in accordance with the CREST assured payment arrangements; and
(iii) definitive certificates for any Loan Notes to which the accepting
LASMO Shareholder is entitled will be despatched by post (or by such
other method as may be approved by the Panel).
Amerada Hess reserves the right to settle all or any part of the cash
consideration referred to above, for all or any accepting LASMO
Shareholder(s), in the manner referred to in paragraph (c) below, if, for
any reason, it wishes to do so.
33
<PAGE> 36
(c) LASMO Shares in certificated form and LASMO ADSs
Where an acceptance relates to LASMO Shares in certificated form or LASMO
ADSs evidenced by LASMO ADRs, the new Amerada Hess Shares to which an
accepting LASMO Securityholder is entitled under the Offer will be issued
to the LASMO Securityholder in certificated form. Definitive certificates
for the new Amerada Hess Shares and cheques for cash due and, where
applicable, definitive certificates for any Loan Notes will be despatched
by post (or by such other method as may be approved by the Panel).
(d) Lapsing of the Offer
During the Initial Offer Period, if by the relevant Closing Date the
Conditions are not satisfied, fulfilled or, to the extent permitted,
waived, the Offer will lapse (unless a later Closing Date is selected by
Amerada Hess). If the Offer lapses then: (i) in respect of LASMO Shares in
certificated form and LASMO ADSs, the relevant share certificate(s), LASMO
ADRs and/or other documents of title will be returned by post (or by such
other method as may be approved by the Panel) within 14 calendar days of
the Offer lapsing to the person or agent whose name and address (outside
Canada, Australia or Japan) is set out in Box 2 (or, if applicable, Box 9A
or 9B) of the Form of Acceptance or to the person or agent whose name and
address (outside Canada, Australia or Japan) is set out in the Letter of
Transmittal (as applicable) or, if none is set out, to the name and address
of the person who is the first named holder at his or her registered
address; (ii) in respect of LASMO Shares in uncertificated form (that is,
in CREST), the UK Receiving Agent will, immediately after the lapsing of
the Offer (or within such longer period as the Panel may permit, not
exceeding 14 calendar days after the lapsing of the Offer), give transfer
from escrow instructions to CRESTCo to transfer all relevant LASMO Shares
held in escrow balances and in relation to which it is the escrow agent for
the purposes of the Offer to the original available balances of the holders
of LASMO Shares concerned; and (iii) in respect of LASMO ADSs delivered by
book-entry transfer into the US Depositary's account at a Book-Entry
Transfer Facility, LASMO ADSs will be credited to an account maintained at
the appropriate Book-Entry Transfer Facility.
Further information on the lapsing of the Offer is set out in paragraph 8
of Part B of Appendix I to this document.
(e) General
All documents and remittances sent by, to or from LASMO Securityholders or
their appointed agents will be sent at their own risk.
If a LASMO Securityholder has existing Amerada Hess Shares, the mandates,
instructions and instruments in force for the existing Amerada Hess Shares
will continue in relation to new Amerada Hess Shares received under the
Offer.
(f) Currency of cash consideration
Instead of receiving cash consideration in pounds sterling, LASMO
Shareholders who so wish may elect to receive US dollars on the basis that
the cash amount payable in pounds sterling to which such holder would
otherwise be entitled pursuant to the terms of the Offer will be converted,
without charge, from pounds sterling to US dollars at the exchange rate
obtainable by the relevant payment agent (either the UK Receiving Agent or
the US Depositary) on the spot market in London at approximately noon
(London time) on the date the cash consideration is made available by
Amerada Hess to the relevant payment agent for delivery in respect of the
relevant LASMO Shares. A LASMO Shareholder may receive such amount on the
basis set out above only in respect of the whole of his holding of LASMO
Shares in respect of which he accepts the Offer. LASMO Shareholders may not
elect to receive both pounds sterling and US dollars.
34
<PAGE> 37
Holders of LASMO ADSs are entitled under the terms of the Offer to receive
the cash element of the consideration in pounds sterling. The pounds
sterling consideration available to holders of LASMO ADSs is the same, per
LASMO Share, as that offered to LASMO Shareholders. To facilitate the
settlement of the Offer, unless they elect to receive pounds sterling,
holders of LASMO ADSs will receive consideration converted into US dollars
as described above, as if such holders of LASMO ADSs had elected to receive
US dollars.
Consideration in US dollars may be inappropriate for LASMO Securityholders
other than persons in the US and holders of LASMO ADS.
If you are a LASMO Shareholder and you wish to elect to receive cash
consideration in US dollars instead of pounds sterling under the Offer, you
should complete the appropriate box of the Form of Acceptance in addition
to taking the actions described in paragraph 18 above.
If you are a holder of LASMO ADSs and you wish to elect to receive cash
consideration in pounds sterling instead of US dollars under the Offer, you
should complete the appropriate box of your Letter of Transmittal in
addition to taking the actions described in paragraph 18 above.
THE ACTUAL AMOUNT OF US DOLLARS RECEIVED WILL DEPEND UPON THE EXCHANGE RATE
PREVAILING ON THE DAY ON WHICH FUNDS ARE MADE AVAILABLE TO THE RELEVANT
PAYMENT AGENT BY AMERADA HESS. LASMO SECURITYHOLDERS SHOULD BE AWARE THAT
THE US DOLLAR/POUND STERLING EXCHANGE RATE WHICH IS PREVAILING ON THE DATE
ON WHICH AN ELECTION IS MADE OR DEEMED TO BE MADE TO RECEIVE US DOLLARS AND
ON THE DATES OF DESPATCH AND RECEIPT OF PAYMENT MAY BE DIFFERENT FROM THAT
PREVAILING ON THE DAY ON WHICH FUNDS ARE MADE AVAILABLE TO THE RELEVANT
PAYMENT AGENT BY AMERADA HESS. IN ALL CASES, FLUCTUATIONS IN THE US
DOLLAR/POUNDS STERLING EXCHANGE RATE ARE AT THE RISK OF ACCEPTING LASMO
SECURITYHOLDERS WHO ELECT OR ARE TREATED AS HAVING ELECTED TO RECEIVE THEIR
CONSIDERATION IN US DOLLARS. NEITHER AMERADA HESS NOR ANY OR ITS ADVISERS
OR AGENTS SHALL HAVE ANY RESPONSIBILITY WITH RESPECT TO THE ACTUAL AMOUNT
OF CASH CONSIDERATION PAYABLE OTHER THAN IN POUNDS STERLING.
21. UNITED KINGDOM TAXATION
Information on the application of current UK tax law and Inland Revenue practice
applicable to LASMO Shareholders who accept the Offer is contained in paragraph
14 of Appendix VI to this document.
22. UNITED STATES FEDERAL TAXATION
Information on the application of current US federal tax law applicable to LASMO
Securityholders who accept the Offer is contained in paragraph 15 of Appendix VI
to this document.
HOLDERS OF LASMO SECURITIES ARE URGED TO CONSULT THEIR INDEPENDENT PROFESSIONAL
ADVISER IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES AS TO THE US AND UK TAX
CONSEQUENCES, AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
23. OVERSEAS LASMO SECURITYHOLDERS
The availability of the Offer to persons who are not resident in the United
Kingdom or the United States may be affected by the laws of the relevant
jurisdictions. Persons who are not resident in the United Kingdom or the United
States should inform themselves about and observe any applicable requirements.
The attention of LASMO Securityholders who are citizens or residents of
jurisdictions outside the United Kingdom or the United States is drawn to
paragraph 9 of Part B of Appendix I of this document and to the relevant
provisions of the Acceptance Form.
The Offer, including the Loan Note Alternative, is not being made, directly or
indirectly, in or into Canada, Australia or Japan. Accordingly, any accepting
LASMO Securityholder who is unable to give the representations and warranties
set out in paragraphs 11(b) and 12(i)(ii)(dd) (as applicable) of Part B of
Appendix I to this document may be deemed not to have accepted the Offer.
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<PAGE> 38
The Loan Notes which may be issued pursuant to the Offer will not be listed on
any stock exchange and have not been, and will not be, registered under the
Securities Act or under the laws of any State of the United States and may not
be offered, sold or delivered, directly or indirectly, in or into the United
States, or to or for the account or benefit of any US person, except pursuant to
an exemption from, or in a transaction not subject to, the requirements of the
Securities Act and the relevant securities laws of any State of the United
States. The Loan Notes may not be offered, sold or delivered, directly or
indirectly, in or into Canada, Australia or Japan. The Loan Note Alternative
will not be made into the United States or available to LASMO Securityholders in
the United States or to US persons outside the United States.
24. COMPULSORY ACQUISITION AND APPLICATION FOR DE-LISTING OF LASMO SECURITIES
If all of the Conditions are either satisfied, fulfilled or, to the extent
permitted, waived and Amerada Hess has acquired or contracted to acquire,
pursuant to the Offer or otherwise, at least 90 per cent. in nominal value of
the LASMO Shares to which the Offer relates, before the end of the four month
period provided by the Companies Act, Amerada Hess will be entitled, and
intends, to acquire the remaining LASMO Shares (including LASMO Shares
represented by LASMO ADSs) on the same terms as the Offer pursuant to the
compulsory acquisition procedure set out in sections 428 to 430F of the
Companies Act (see paragraph 11 of Appendix VI and Appendix IX to this
document).
When the Offer becomes or is declared unconditional in all respects, Amerada
Hess intends to procure the making of an application by LASMO for the removal of
LASMO Shares from the Official List of the UK Listing Authority and for the
cancellation of trading in LASMO Shares on the London Stock Exchange's market
for listed securities and also for the de-listing of LASMO ADSs and LASMO Shares
(the LASMO Shares do not trade on the NYSE and are listed on the NYSE only in
connection with the ADS program) from the NYSE. It is anticipated that
cancellation of listing from the Official List and cancellation of trading on
the London Stock Exchange will take effect no earlier than 20 business days
after the Offer becomes or is declared unconditional in all respects. De-listing
would significantly reduce the liquidity and marketability of any LASMO
Securities not assented to or tendered in the Offer. Amerada Hess will make an
announcement at least 20 business days prior to the cancellation of listing from
the Official List and the cancellation of trading on the London Stock Exchange
specifying the exact date upon which LASMO Shares will be de-listed. While it is
anticipated that cancellation of both listings will take place at the same time,
cancellation of the listing of the LASMO ADSs on the NYSE could take effect
earlier than cancellation of the listing and trading of the LASMO Shares on the
Official List of the UK Listing Authority and the London Stock Exchange,
respectively.
25. LASMO L90,000,000 7 3/4 PER CENT. CONVERTIBLE BONDS DUE 2005
On 1 March 2000 LASMO announced that it intended to redeem some or all of its
7 3/4 per cent. Convertible Bonds due 2005 on or at any time after 4 October
2000 at the principal amount together with interest accrued to the date fixed
for redemption. If and when Amerada Hess has implemented the compulsory
acquisition procedure as described in paragraph 24 above, Amerada Hess, within
sixty days after the completion of that procedure, will procure that LASMO
should implement the provisions of these bonds relating to their redemption.
26. FURTHER INFORMATION
Your attention is drawn to the further information contained in the Appendices
which form part of this document, and to the accompanying Acceptance Form, which
should be read in conjunction with this document. The Appendices and the
Acceptance Form contain material information which may not be summarised
elsewhere.
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27. ACTION TO BE TAKEN
YOU ARE URGED TO COMPLETE, SIGN AND RETURN THE FORM OF ACCEPTANCE OR LETTER OF
TRANSMITTAL (AS APPROPRIATE), TOGETHER WITH ALL THE REQUIRED DOCUMENTS, AS SOON
AS POSSIBLE AND, IN ANY EVENT, SO AS TO BE RECEIVED BY THE UK RECEIVING AGENT OR
THE US DEPOSITARY, AS APPROPRIATE, BY NO LATER THAN 3.00 PM (LONDON TIME), 10.00
AM (NEW YORK CITY TIME) ON 12 JANUARY 2001.
Yours sincerely,
/s/ Richard Murley
Richard Murley
Managing Director
for and on behalf of
GOLDMAN SACHS INTERNATIONAL
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APPENDIX I
CONDITIONS AND FURTHER TERMS OF THE OFFER
PART A -- CONDITIONS OF THE OFFER
The Offer, which will be made by Amerada Hess on its own behalf in the United
States and by Goldman Sachs on behalf of Amerada Hess elsewhere, will be subject
to the following conditions:
(a) valid acceptances being received (and not, where permitted, withdrawn) by
not later than 3.00 pm (London time), 10.00 am (New York City time), on 12
January 2001 (or such later time(s) and/or date(s) as Amerada Hess may,
subject to the rules of the City Code or with the consent of the Panel and
in accordance with the Exchange Act, decide) in respect of not less than 90
per cent. (or such lesser percentage as Amerada Hess may decide) in nominal
value of the LASMO Shares (including LASMO Shares represented by LASMO
ADSs) to which the Offer relates, provided that this condition will not be
satisfied unless Amerada Hess (together with any of its wholly-owned
subsidiaries and, to the extent that Amerada Hess so elects with the
consent of the Panel, Methodplan) shall have acquired or agreed to acquire,
whether pursuant to the Offer or otherwise, LASMO Shares (including LASMO
Shares represented by LASMO ADSs) carrying, in aggregate, more than 50 per
cent. of the voting rights then exercisable at general meetings of LASMO
(excluding, to the extent that Amerada Hess so elects with the consent of
the Panel, voting rights attached to the Methodplan Shares), including for
this purpose (to the extent, if any, required by the Panel) any such voting
rights attaching to any LASMO Shares (including LASMO Shares represented by
LASMO ADSs) which are unconditionally allotted or issued before the Offer
becomes or is declared unconditional as to acceptances, whether pursuant to
the exercise of any outstanding conversion or subscription rights or
otherwise and, for this purpose:
(i) the expression "LASMO Shares to which the Offer relates" shall be
construed in accordance with sections 428 to 430F of the Companies Act;
and
(ii) LASMO Shares which have been unconditionally allotted shall be
deemed to carry the voting rights which they will carry upon issue;
(b) the new Amerada Hess Shares having been authorised for listing, subject to
official notice of issuance, on the New York Stock Exchange and the
Registration Statement having been declared effective;
(c) insofar as the Offer or any matter arising therefrom constitutes a
concentration with a Community dimension within the scope of Council
Regulation (EEC) 4064/89, as amended (the "REGULATION"), the European
Commission indicating in terms satisfactory to Amerada Hess that it does
not intend to initiate proceedings under Article 6(1)(c) of the Regulation
either in relation to the proposed acquisition of the whole of the LASMO
business or in relation to those parts of the LASMO business over which it
retains jurisdiction following its decision to make a referral of any part
of the proposed acquisition to a competent authority of any Member State of
the European Union under Article 9(1) of the Regulation;
(d) insofar as the Offer or any matter arising therefrom is not a concentration
with a Community dimension or is such a concentration but is referred in
whole or part to the competent authority of the UK under Article 9(1) of
the Regulation, it being indicated in terms satisfactory to Amerada Hess,
that it is not the intention of the Secretary of State for Trade and
Industry to refer the Offer or any matter arising therefrom to the
Competition Commission;
(e) all filings which Amerada Hess considers appropriate having been made and
all or any applicable waiting periods (including any extensions thereof)
under the United States Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the regulations thereunder having expired or been
terminated (as appropriate) in respect of the Offer and the proposed
acquisition of LASMO by Amerada Hess;
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(f) the information supplied to Amerada Hess by LASMO prior to the release of
the Announcement with respect to the number of LASMO Shares in issue and
those which may fall to be issued pursuant to the exercise of subscription
or conversion rights or otherwise being accurate in all respects when
supplied and continuing to be accurate in all respects while the Offer
remains open for acceptance;
(g) no government or governmental, quasi-governmental, supranational, statutory
or regulatory body, court, trade agency, professional association or any
other person or body in any jurisdiction having decided to take,
instituted, implemented or threatened any action, proceedings, suit,
investigation or enquiry, or made, proposed or enacted, any statute,
regulation or order or taken any other steps and there continuing not to be
outstanding any statute, regulation, order or other such matter which in
any such case would or might:
(i) make the Offer or the acquisition by Amerada Hess of any shares or
other securities in, or control of, LASMO void, illegal or unenforceable
or otherwise restrain, prohibit, restrict or delay or impose additional
conditions or obligations with respect thereto or otherwise challenge or
interfere therewith;
(ii) require or prevent the divestiture by any member of the Wider
Amerada Hess Group or by any member of the Wider LASMO Group of all or
any material portion of their respective businesses, assets or property
or impose any material limitation on the ability of any of them to
conduct all or any material portion of their respective businesses or to
own all or any material portion of their respective assets or properties
to an extent which is material in the context of the Amerada Hess Group
or the LASMO Group respectively taken as a whole;
(iii) impose any limitation on the ability of any member of the Wider
Amerada Hess Group to acquire or to hold or to exercise effectively any
rights of ownership of shares or any other securities in LASMO or on the
ability of any member of the LASMO Group to hold or exercise effectively
any rights of ownership of shares in any member of the Wider LASMO Group
or to exercise management control over any member of the LASMO Group to
an extent which is material in the context of the Wider Amerada Hess
Group taken as a whole or the LASMO Group taken as a whole respectively;
(iv) require any member of the Amerada Hess Group or any member of the
LASMO Group to offer to acquire any shares or any other securities in
any of LASMO's subsidiaries or in any entity in which any member of the
LASMO Group has a substantial interest owned by any third party where
such interest would be material in the context of the Amerada Hess Group
or the LASMO Group, as the case may be;
(v) otherwise affect the business, profits or prospects of the LASMO
Group (taken as a whole) in a manner which is material and adverse;
and all applicable waiting and other time periods during which any such
government, body, court, agency, association or person could decide to
take, institute, implement or threaten any such action, proceeding,
suit, investigation or enquiry having expired or been terminated;
(h) (i) all necessary filings having been made, all appropriate waiting
periods under any applicable legislation or regulations of any
jurisdiction having expired or been terminated and all
authorisations, orders, recognitions, grants, consents, licences,
confirmations, clearances, permissions and approvals necessary for or
in respect of the Offer and the proposed acquisition of any shares
in, or control of, LASMO by Amerada Hess ("AUTHORISATIONS") having
been obtained, in terms and in a form reasonably satisfactory to
Amerada Hess, from all appropriate governments, governmental,
quasi-governmental, supranational, statutory or regulatory bodies or
trade agencies, professional associations or courts, or persons or
bodies with whom any member of the LASMO Group has entered into
contractual arrangements; and
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(ii) all Authorisations necessary to carry on the business of any member
of the Wider LASMO Group (the absence of which Authorisation would have
a material adverse effect on the LASMO Group taken as a whole) or to
enable any member of the Wider LASMO Group to continue to enjoy without
material interruption or modification the benefit of its interests in
its material assets, remaining in full force and effect and there being
no intimation of an intention to revoke or not to renew any of such
Authorisations and all necessary statutory or regulatory obligations in
any jurisdiction having been complied with in all material respects;
(i) there being no provision of any arrangement, agreement, licence or other
instrument to which any member of the Wider LASMO Group is a party, or by
or to which any such member or any of their assets may be bound, entitled
or be subject to and which, in consequence of the proposed acquisition of
any shares in, or control of, LASMO by Amerada Hess or otherwise, would or
might, to an extent which is material in the context of the LASMO Group
taken as a whole, result in:
(i) any monies borrowed by any such member becoming capable of being
declared repayable prior to their stated maturity or the ability of any
such member to incur any indebtedness being withdrawn or inhibited;
(ii) the creation of any mortgage, charge or other security interest over
the whole or any part of the business, property or assets of any such
member or any such security (whenever arising or having arisen) becoming
enforceable;
(iii) any such arrangement, agreement, licence or instrument being
terminated or adversely modified or any action being taken or any
obligation arising thereunder;
(iv) any assets of any such member being disposed of other than in the
ordinary course of business;
(v) the interests or business of any such member in or with any firm or
body or, in the case of a business, person or any arrangements relating
to such interest or business, being terminated or modified or affected;
and no event having occurred which, under any provision of any such
arrangement, agreement, licence or other instrument, could result in any of
the events or circumstances which are referred to in paragraphs (i) to (v)
of this condition (i) in any case where such result would be material in
the context of the LASMO Group taken as a whole;
(j) except as publicly announced through the London Stock Exchange or publicly
filed with the SEC by LASMO prior to 5 November 2000 no member of the LASMO
Group having since 31 December 1999:
(i) issued or authorised or proposed the issue of additional shares of
any class, or securities convertible into, or rights, warrants or
options to subscribe for or acquire, any such shares or convertible
securities (save as between LASMO and wholly-owned subsidiaries of LASMO
and save for options granted, and for any LASMO Shares allotted upon
exercise of options granted prior to 5 November 2000 under the LASMO
Share Option Schemes) or redeemed, purchased or reduced any part of its
share capital;
(ii) declared, paid or proposed to declare, pay or make, any bonus,
dividend or other distribution other than to other members of the LASMO
Group;
(iii) authorised or proposed or announced its intention to propose any
merger or demerger or acquisition or disposal of assets or shares,
(other than in the ordinary course of business) or any change in its
loan or share capital;
(iv) issued or proposed the issue of any debentures or incurred any
indebtedness or contingent liability which is material (other than in
the ordinary course of business);
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(v) disposed of or transferred, mortgaged or encumbered any asset or any
right, title or interest in any asset which is material (other than in
the ordinary course of business);
(vi) entered into any contract or commitment (whether in respect of
capital expenditure or otherwise) which is of a long term or unusual
nature or magnitude or which involves or could involve an obligation of
a nature or magnitude which is material (other than in the ordinary
course of business);
(vii) entered into any contract, reconstruction, amalgamation, scheme,
transaction or arrangement otherwise than in the ordinary course of
business which is material in the context of the LASMO Group taken as a
whole;
(viii) entered into an agreement or commitment or passed any resolution
with respect to any of the matters or events referred to in this
paragraph;
(ix) entered into or varied the terms of any service agreement with any of
the directors of LASMO; or
(x) (other than in respect of a member which is dormant and was solvent
at the relevant time) taken any corporate action or had any legal
proceedings started or threatened against it for its winding-up,
dissolution or reorganisation or for the appointment of a receiver,
administrative receiver, administrator, trustee or similar officer of
all or any of its assets or revenues or any analogous proceedings in any
jurisdiction or for the appointment of any analogous person in any
jurisdiction;
(k) since 31 December 1999 and except as publicly announced through the London
Stock Exchange or filed publicly with the SEC prior to 5 November 2000 by
LASMO:
(i) there having been no material adverse change in the business,
financial or trading position or profits, or prospects of the LASMO
Group taken as a whole;
(ii) there having been no material litigation, arbitration proceedings,
prosecution or other legal proceedings to which any member of the Wider
LASMO Group is a party (whether as plaintiff or defendant or otherwise)
and no such proceedings having been threatened against any member of the
Wider LASMO Group, in each case which could have a material adverse
effect on the LASMO Group taken as a whole;
(iii) no contingent liability having arisen which might be likely
materially and adversely to affect the LASMO Group;
(l) Amerada Hess not having discovered:
(i) that the financial or business information concerning the LASMO
Group, as contained in the information disclosed at any time publicly or
directly to Amerada Hess by any member of the LASMO Group contains a
material misrepresentation of fact or omits to state a fact necessary to
make the information contained therein not materially misleading to an
extent which is material in the context of the LASMO Group taken as a
whole;
(ii) that any member of the Wider LASMO Group is subject to any liability
(contingent or otherwise) which is not disclosed in LASMO's annual
report and accounts or filing on Form 20-F for the financial year ended
31 December 1999 and which is material in the context of the LASMO Group
taken as a whole; or
(iii) any information which affects any information disclosed prior to 5
November 2000 by any member of the Wider LASMO Group to Amerada Hess to
an extent which is material and adverse in the context of the LASMO
Group taken as a whole; and
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(m) Amerada Hess not having discovered:
(i) that any information supplied to Amerada Hess by LASMO with respect
to the nature of LASMO's interests in its material assets is or has
become materially inaccurate or misleading or that any member of the
Wider LASMO Group has become or may become subject to a material
interruption or modification of its ability to enjoy the benefit of its
interests in its material assets;
(ii) that any past or present member of the Wider LASMO Group has not
complied with all applicable laws of any relevant jurisdiction relating
to environmental matters which non-compliance would be likely to give
rise to any material liability or cost on the part of any member of the
Wider LASMO Group which is material in the context of the LASMO Group
taken as a whole;
(iii) that there is, or is likely to be, any material liability (whether
actual or contingent), or requirement to make good, repair, reinstate or
clean up any property now or previously owned, occupied or made use of
by any past or present member of the Wider LASMO Group which is material
in the context of the LASMO Group taken as a whole;
(iv) that circumstances exist whereby a person or class of persons would
be likely to have any claim or claims in respect of any product or
process of manufacture or materials used therein now or previously
manufactured, sold or carried out by any past or present member of the
Wider LASMO Group which claim or claims would be likely materially and
adversely to affect any member of the Wider LASMO Group and which is
material in the context of the LASMO Group taken as a whole.
The Offer will lapse unless the Conditions have been determined by Amerada Hess
in its reasonable opinion to have been and to remain satisfied, fulfilled or (if
capable of waiver) waived by 3.00 pm (London time), 10.00 am (New York City
time), on 12 January 2001 or to have been satisfied, fulfilled or (if capable of
waiver) waived by any later Closing Date applicable from time to time.
At the time when the Initial Offer Period ends, all the Conditions must have
been satisfied, fulfilled or, to the extend permitted, waived. Therefore,
withdrawal rights will apply until that time.
The Acceptance Condition shall be capable of being satisfied or being treated as
satisfied only at the time when all of the other Conditions shall have been
either satisfied, fulfilled or (to the extent permitted) waived unless Amerada
Hess, with the consent of the Panel, shall otherwise decide. In respect of LASMO
ADSs validly tendered pursuant to a Letter of Transmittal, Amerada Hess shall,
insofar as it may so determine, be deemed for the purposes of the Acceptance
Condition or generally to have agreed to acquire the tendered LASMO ADSs and the
LASMO Shares represented by such LASMO ADSs.
The Offer is not required to become or be declared unconditional in all respects
only on a Closing Date; it may become unconditional in all respects prior to the
Closing Date applicable from time to time (but not earlier than 3.00 pm (London
time), 10.00 am (New York City time) on 12 January 2001 and not, except with the
consent of the Panel, later than midnight (London time), 7.00 pm (New York City
time), on 11 February 2001).
Amerada Hess reserves the right to waive, in whole or in part, all or any of
Conditions (c) to (m) inclusive. Amerada Hess shall be under no obligation to
waive or treat as satisfied any of the Conditions by a date earlier than the
applicable Closing Date for its satisfaction notwithstanding that any other
Condition of the Offer may on or before such date have been satisfied, fulfilled
or, to the extent permitted, waived and/or that there are no circumstances
indicating that any such Conditions may not be capable of satisfaction or
fulfilment.
Amerada Hess reserves the right, subject to the consent of the Panel, to extend
the time allowed under the rules of the City Code for satisfaction of the
Acceptance Condition and accordingly for the satisfaction, fulfilment or, where
permitted, waiver of other Conditions, and thus to extend the duration of the
Initial Offer Period.
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The LASMO Shares held by Methodplan may not be voted by Methodplan as a result
of the operation of section 23 of the Companies Act. Amerada Hess has elected,
and has received the consent of the Panel in respect of such election, in
accordance with the terms of the Acceptance Condition, that any LASMO Shares
held by Methodplan at the date the Acceptance Condition is treated as satisfied
will not be counted for the purposes of the Acceptance Condition in determining
(a) whether or not Amerada Hess and/or any other relevant person has acquired or
agreed to acquire, whether pursuant to the Offer or otherwise, LASMO Shares
(including LASMO Shares represented by LASMO ADSs) carrying in aggregate more
than 50 per cent. of the voting rights then exercisable at general meetings of
LASMO or (b) the LASMO Shares (including LASMO Shares represented by LASMO ADSs)
of which LASMO (or any other relevant person) is required to acquire (or agree
to acquire) such percentage. This election will not otherwise affect the
determination, for the purposes of the Acceptance Condition, of whether valid
acceptances have been received in respect of not less than 90 per cent. (or such
lesser percentage as Amerada Hess may decide) in nominal value of the LASMO
Shares (including LASMO Shares represented by LASMO ADSs) to which the Offer
relates.
Essentially this means that the Methodplan Shares will not count in the
calculation of the 50 per cent. threshold in the Acceptance Condition.
If Amerada Hess is required by the Panel to make an offer for LASMO Securities
under the provisions of Rule 9 of the City Code, Amerada Hess may make such
alterations to the Conditions, including the Acceptance Condition, as are
necessary to comply with the provisions of that Rule.
Unless the Panel otherwise agrees, the Offer will lapse if (a) the acquisition
of LASMO is referred to the Competition Commission or (b) the European
Commission, pursuant to the Regulation, initiates proceedings in connection with
any aspect of the proposed acquisition under Article 6(1)(c) of the Regulation
or makes a referral in respect of any aspect of such acquisition to a competent
authority of the United Kingdom under Article 9(1) of the Regulation which is
followed by a reference of the proposed acquisition to the Competition
Commission, in any such case before 3.00 pm (London time), 10.00 am (New York
City time) on 12 January 2001 or the date when the Offer is declared or becomes
unconditional as to acceptances, whichever is the later. In those circumstances,
the Offer will cease to be capable of further acceptances and persons who have
accepted it will no longer be bound by their acceptances.
The attention of member firms of the NYSE is drawn to certain UK dealing
disclosure requirements following the Announcement. The Announcement commenced
an offer period under the City Code which is published and administered by the
Panel. An offer period is deemed to commence at the time when an announcement is
made of a proposed or possible offer, with or without terms.
The above disclosure requirements are set out in Rule 8 of the Code. In
particular, Rule 8.3 requires public disclosure of dealings during an offer
period by persons who own or control, or who would as a result of any
transaction own or control, 1 per cent. or more of any class of relevant
securities of the offeror or offeree company. Relevant securities includes all
instruments exchangeable into LASMO Shares or into Amerada Hess Shares. This
requirement will apply until the end of the Offer Period.
Disclosure should be made on the appropriate form before 12 noon London time on
the business day following the date of the dealing transaction. These
disclosures should be sent to the Company Announcements Office of the London
Stock Exchange and to the Panel.
Member firms should advise those of their clients who wish to deal in the
relevant securities of LASMO and Amerada Hess, whether in the US or the UK, that
they may be affected by these requirements. If there is any doubt as to their
application, the Panel should be consulted (telephone number +44 (0)20 7638
0129, fax number +44 (0)20 7256 9386).
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PART B -- FURTHER TERMS OF THE OFFER
The following further terms apply, unless the contrary is expressed or the
context requires otherwise, to the Offer and the Loan Note Alternative.
Unless the context otherwise requires, any reference in Part B of this Appendix
I and in the Acceptance Form:
(i) to the "Offer" will mean the Offer and will include any revision,
variation or renewal thereof or extension thereto and any election in
connection therewith;
(ii) to the Offer "becoming unconditional as to acceptances" means the
Acceptance Condition becoming or being determined by Amerada Hess to be
satisfied;
(iii) to the Offer "becoming unconditional in all respects" means all
Conditions being fulfilled, satisfied or, to the extent permitted,
waived; and
(iv) to "acceptances of the Offer" shall include deemed acceptances of the
Offer.
1. ACCEPTANCE PERIOD
(a) The Offer is initially open for acceptance until 3.00 pm (London time),
10.00 am (New York City time), on 12 January 2001. Amerada Hess reserves the
right (but will not be obliged, other than as may be required by the City
Code or the Exchange Act and the rules and regulations thereunder) at any
time or from time to time to extend the Offer after such time and, in such
event, will make a public announcement of such extension in the manner
described in paragraph 3 below. If all of the Conditions are not satisfied,
fulfilled or, to the extent permitted, waived by Amerada Hess as at 3.00 pm
(London time), 10.00 am (New York City time), on 12 January 2001, the Offer
will lapse and no LASMO Securities will be purchased under it unless Amerada
Hess extends the Offer by specifying a later Closing Date. Upon the
Conditions being satisfied, fulfilled or waived (i.e. at the end of the
Initial Offer Period), the Offer will be extended for a Subsequent Offer
Period which will remain open for at least 14 calendar days.
(b) Amerada Hess reserves the right (but will not be obliged) at any time and
from time to time to extend the Subsequent Offer Period for any period it
chooses. The Subsequent Offer Period must remain open for at least 14
calendar days but may be extended beyond that time until a further specified
date or until further notice. If Amerada Hess states that the Offer will
remain open until further notice, Amerada Hess will give not less than 14
calendar days' notice in writing to LASMO Securityholders who have not
accepted the Offer before closing the Subsequent Offer Period.
(c) Except with the consent of the Panel, the Offer, whether revised or not,
shall not be capable of becoming unconditional as to acceptances (nor,
therefore, unconditional in all respects) and, accordingly, the Initial
Offer Period is not (except with the consent of the Panel) capable of being
extended, after midnight (London time), 7.00 pm (New York City time), on 11
February 2001 (or any earlier time or date beyond which Amerada Hess has
stated that the Offer will not be extended and has not withdrawn that
statement). If all of the Conditions are not satisfied, fulfilled or, to
the extent permitted, waived by such time or by any later Closing Date
specified by Amerada Hess, with the consent of the Panel, the Offer will
lapse unless the Panel agrees otherwise. If the Offer lapses for any
reason, the Offer shall cease to be capable of further acceptance and
Amerada Hess and LASMO Securityholders shall cease to be bound by prior
acceptances. Amerada Hess reserves the right, with the permission of the
Panel and in accordance with the Exchange Act, to extend the final date for
acceptance of the Offer and for the satisfaction of the Acceptance
Condition and all the other Conditions and, accordingly, the Initial Offer
Period.
The Offer is not required to become or be declared unconditional in all
respects only on a Closing Date; it may become unconditional in all
respects prior to the Closing Date applicable from time to time (but not
earlier than 3.00 pm (London time), 10.00 am (New York City time), on 12
January
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2001 and not, except with the consent of the Panel, later than midnight
(London time), 7.00 pm (New York City time), on 11 February 2001).
(d) Although no revision is envisaged, if the Offer is revised, the Offer will
be extended, if necessary, for a period of at least 14 calendar days (or
such lesser period as may be permitted by the Panel and in accordance with
the Exchange Act) from the date on which written notification of the revised
Offer is posted to LASMO Securityholders. Except with the consent of the
Panel, no revision of the Offer may be made after 28 January 2001 or, if
later, the date which is 14 calendar days before the last date on which the
Offer can become unconditional as to acceptances.
(e) If a competitive situation arises (as determined by the Panel) after a "no
increase" and/or "no extension" statement has been made by or on behalf of
Amerada Hess in relation to the Offer, Amerada Hess may, if it has
specifically reserved the right to do so at the time the statement is made
(or otherwise with the consent of the Panel), withdraw the statement and be
free to increase or, as the case may be, to extend the Offer provided that
it complies with the requirements of the City Code and the Exchange Act and
in particular that:
(i) it announces the withdrawal as soon as possible and in any event
within four business days after the date of the announcement of the
competing offer or other competitive situation;
(ii) it notifies LASMO Securityholders in writing of the withdrawal (or,
in the case of LASMO Securityholders with registered addresses outside
the United Kingdom or United States, or whom Amerada Hess reasonably
believes to be nominees, custodians or trustees holding LASMO Securities
for such persons, by announcement in the United Kingdom and United
States) at the earliest practicable opportunity; and
(iii) any LASMO Securityholders who accepted the Offer after the date of
the "no increase" or "no extension" statement are given a right of
withdrawal in accordance with paragraph 4(d) of Part B of this Appendix
below. Withdrawal rights will apply in any event during the Initial
Offer Period.
Amerada Hess may, if it has specifically reserved the right to do so at the
time the statement is made, choose not to be bound by the terms of a "no
increase" or "no extension" statement if it would otherwise prevent the
posting of an increased or improved offer (either as to the value or nature
of the consideration offered or otherwise) which is recommended for
acceptance by the board of directors of LASMO, or in other circumstances
permitted by the Panel.
2. ACCEPTANCE CONDITION
(a) For the purposes of determining whether the Acceptance Condition has been
satisfied, Amerada Hess may, except as otherwise agreed by the Panel, only
take into account acceptances received or purchases of LASMO Securities made
in respect of which all relevant documents are received by the UK Receiving
Agent or the US Depositary by 3.00 pm (London time), 10.00 am (New York City
time), on 12 January 2001 or such later Closing Date as may be specified
but, except with the consent of the Panel, not later than 1.00 pm (London
time), 8.00 am (New York City time) on 11 February 2001 or, in each case,
any earlier Closing Date beyond which Amerada Hess has stated that the Offer
will not be extended (unless the Conditions are by that Closing Date
satisfied, fulfilled or, to the extent permitted, waived) and has not
withdrawn that statement.
If, with the consent of the Panel, the latest time and date at which the
Offer may become unconditional as to acceptances (and thus the latest time
at which it may become unconditional in all respects) is extended to a time
and date later than midnight (London time), 7.00 pm (New York City time) on
11 February 2001, so that the Initial Offer Period is accordingly extended,
acceptances received and purchases made in respect of which the relevant
documents are received by the UK Receiving Agent or the US Depositary after
1.00 pm (London time), 8.00 am (New York City time) on that later date may
only be taken into account with the agreement of the Panel, except where the
City Code permits otherwise.
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(b) Except as otherwise agreed by the Panel:
(i) an acceptance of the Offer in respect of LASMO Securities will only
be treated as valid for the purposes of the Acceptance Condition if the
requirements of Note 4 and, if applicable, Note 6 to Rule 10 of the City
Code are satisfied in respect of it;
(ii) a purchase of LASMO Securities by Amerada Hess or its nominee or (if
Amerada Hess is required by the Panel to make an offer for LASMO
Securities under Rule 9 of the City Code) by a person acting in concert
with Amerada Hess or its nominee, will only be treated as valid for the
purposes of the Acceptance Condition if the requirements of Note 5 and,
if applicable, Note 6 to Rule 10 of the City Code are satisfied in
respect of it; and
(iii) before the Offer may become unconditional as to acceptances the UK
Receiving Agent must issue a certificate to Amerada Hess or Goldman
Sachs which states the number of LASMO Securities in respect of which
acceptances have been received and not validly withdrawn and the number
of LASMO Securities otherwise acquired, whether before or during the
Offer Period, which comply with the provisions of the City Code referred
to in this paragraph 2(b) or which otherwise comply with the
requirements of the Panel. Copies of such certificate will be sent to
the Panel as soon as possible after it is issued.
(c) For the purpose of determining whether the Acceptance Condition has been
satisfied, Amerada Hess shall be entitled to take into account only those
LASMO Securities carrying voting rights which have been unconditionally
allotted or issued, whether pursuant to the exercise of conversion or
subscription rights or otherwise, before the determination takes place and
written notice of the allotment or issue of which, containing all relevant
details, has been received before that time by the UK Receiving Agent or
the US Depositary on behalf of Amerada Hess from LASMO or its agents at one
of the addresses set out at the back of this document. Notification by
e-mail, telex or facsimile transmission does not constitute written notice
for this purpose.
(d) In accordance with applicable SEC rules, at least five US business days
prior to any reduction in the percentage of LASMO Shares (including LASMO
Shares represented by LASMO ADSs) required to satisfy the Acceptance
Condition, Amerada Hess will announce that it has reserved the right so to
reduce the Acceptance Condition. The announcement will be made through a
press release designed to inform LASMO Securityholders in the United
Kingdom and elsewhere and by placing an advertisement in a newspaper of
national circulation in the United States. Such announcement will state the
exact percentage to which the Acceptance Condition may be reduced, will
state that such a reduction is possible but that Amerada Hess need not
declare its actual intentions until it is required to do so under the City
Code and will contain language advising LASMO Securityholders to withdraw
their LASMO Securities if their willingness to accept the Offer would be
affected by a reduction of the Acceptance Condition. Amerada Hess will not
make such an announcement unless it believes that there is a significant
possibility that a sufficient number of acceptances will be received to
permit the Acceptance Condition to be satisfied at such reduced level and
that the other Conditions will be satisfied, fulfilled or, to the extent
permitted, waived at such time. LASMO Securityholders who are not willing
to accept the Offer if the Acceptance Condition is reduced to a level lower
than 90 per cent. should not accept the Offer until it becomes or is
declared unconditional as to acceptances (which may be at a level lower
than 90 per cent.) and/or be prepared to withdraw their acceptances
promptly following an announcement by Amerada Hess of its reservation of
the right to reduce the Acceptance Condition. Upon any announcement being
made that the percentage of LASMO Shares (including LASMO Shares
represented by LASMO ADSs) required to satisfy the Acceptance Condition may
be reduced, the Offer shall not be capable of becoming or being declared
unconditional in all respects until the expiry of at least five US business
days thereafter. LASMO Securityholders will be able to accept the Offer for
at least five US business days after a reduction of the Acceptance
Condition either during the Initial Offer Period or the Subsequent Offer
Period. If Amerada Hess states that the Offer will remain open until
further notice, Amerada Hess will give not less than 14 calendar days'
notice in writing to LASMO Securityholders who have not accepted the Offer
before closing the Subsequent Offer Period.
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3. ANNOUNCEMENTS
(a) Without prejudice to paragraph 4 below, by 8.00 am (London time) in the
United Kingdom and 8.00 am (New York City time) in the United States on the
business day (the "RELEVANT DAY") after each day on which the Offer is due
to expire or becomes unconditional in all respects or on which the Offer is
revised or is extended (or such later time or date as the Panel may agree),
Amerada Hess will make an appropriate announcement and inform the London
Stock Exchange and the Dow Jones News Service. In the announcement Amerada
Hess will state (unless otherwise permitted by the Panel) the total number
of LASMO Securities and rights over LASMO Securities (as nearly as
practicable):
(i) for which acceptances of the Offer have been received, showing the
extent, if any, to which such acceptances have been received from
persons acting or deemed to be acting in concert with Amerada Hess for
the purposes of the Offer;
(ii) held by or on behalf of Amerada Hess or any person acting or deemed
to be acting in concert with Amerada Hess for the purposes of the Offer
before the Offer Period; and
(iii) acquired or agreed to be acquired by or on behalf of Amerada Hess or
any person acting or deemed to be acting in concert with Amerada Hess
for the purposes of the Offer during the Offer Period;
and the announcement will specify the percentage of the issued share
capital of LASMO represented by each of these figures.
(b) In calculating the number of LASMO Securities represented by acceptances and
purchases, Amerada Hess may only include acceptances and purchases if they
could be counted towards fulfilling the Acceptance Condition under Notes 4,
5 and 6 to Rule 10 of the City Code, unless the Panel agrees otherwise.
Subject to this, Amerada Hess may include or exclude, for announcement
purposes, acceptances and purchases not in all respects in order or which
are subject to verification.
(c) Any decision to extend the Offer may be made at any time up to, and will be
announced by, 8.00 am (London time) in the United Kingdom and 8.00 am (New
York City time) in the United States on the relevant day (or such later
time and/or date as the Panel may agree). If the Offer is not yet
unconditional in all respects (so that the Initial Offer Period has not yet
expired) the announcement will state the next Closing Date or, if the Offer
has become unconditional in all respects (with the result that the Initial
Offer Period has ended), the announcement will state that the Offer will
remain open for a Subsequent Offer Period until further notice or until a
further specified date not less than 14 calendar days after the end of the
Initial Offer Period.
(d) In this Appendix, a reference to the making of an announcement or the giving
of notice by or on behalf of Amerada Hess includes the release of an
announcement by Amerada Hess' public relations consultants or Goldman
Sachs, in each case on behalf of Amerada Hess, to the press and the
delivery by hand or telephone, e-mail, telex or facsimile or other
electronic transmission of an announcement to the London Stock Exchange and
the Dow Jones News Service, as the case may be. An announcement made
otherwise than to the London Stock Exchange and the Dow Jones News Service
will be notified simultaneously to the London Stock Exchange and the Dow
Jones News Service.
(e) Without limiting the manner in which Amerada Hess may choose to make any
public announcement and, subject to Amerada Hess' obligations under
applicable law (including Rules 14d-4(c) and 14d-6(c) under the Exchange
Act relating to Amerada Hess' obligations to disseminate promptly public
announcements concerning material changes to the Offer), Amerada Hess will
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by making a release to the London Stock
Exchange and the Dow Jones News Service.
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4. RIGHTS OF WITHDRAWAL
(a) Except as provided by this paragraph 4, acceptances and elections are
irrevocable.
(b) LASMO Securities in respect of which valid acceptances have been received
may be withdrawn pursuant to the procedures set out below at any time
during the Initial Offer Period and in certain other circumstances
described below. LASMO Securities in respect of which valid acceptances
have been received during the Initial Offer Period and that are not validly
withdrawn during the Initial Offer Period and LASMO Securities in respect
of which valid acceptances have been received during the Subsequent Offer
Period may not be withdrawn. Holders of LASMO Securities will not have
withdrawal rights during the Subsequent Offer Period, except in certain
limited circumstances described below. The Subsequent Offer Period must
remain open for at least 14 calendar days but may be extended beyond that
time until a further specified date or until further notice.
(c) Amerada Hess will only announce that the Acceptance Condition has been
satisfied, if all the other Conditions are also satisfied, fulfilled or, to
the extent permitted, waived and the Initial Offer Period will terminate.
Withdrawal rights will also terminate at that time, unless Amerada Hess
then fails to comply by 3.30 pm (London time), 10.30 am (New York City
time), on the relevant day (as defined in paragraph 3(a) of this Part B)
(or such later time and/or date as the Panel may agree) with any of the
other requirements specified in paragraph 3(a) of Part B of this Appendix,
in which case a LASMO Securityholder who has previously accepted the Offer
may withdraw his acceptance of the Offer by written notice in compliance
with paragraphs 4(e) and (f) of Part B of this Appendix (if appropriate)
given by post or by hand to the UK Receiving Agent or the US Depositary at
the addresses set out at the back of this document. Subject to paragraph
1(c) of Part B of this Appendix, this right of withdrawal may be terminated
not less than eight calendar days after the relevant day by Amerada Hess
confirming that the Offer is still unconditional in all respects, and
complying with the other requirements specified in paragraph 3(a) of Part B
of this Appendix. If that confirmation is given, the first period of 14
calendar days referred to in paragraph 1(b) of Part B of this Appendix will
start on the date of that confirmation and compliance.
(d) If a "no increase" and/or "no extension" statement is withdrawn in
accordance with paragraph 1(e) of Part B of this Appendix, a person who
accepts the Offer after the date of the statement may withdraw his
acceptance in the manner set out in paragraph 4(c) of Part B of this
Appendix during the period of eight calendar days after the date Amerada
Hess posts the notice of the withdrawal of that statement to LASMO
Securityholders.
(e) To be effective, a written notice of withdrawal must be received, subject to
paragraphs 4(c) and (d) of Part B of this Appendix, by the end of the
Initial Offer Period by the party (either the UK Receiving Agent or the US
Depositary) to whom the Acceptance Form was originally returned by the
relevant LASMO Securityholder and must specify the name of the person from
whom the acceptance was received, the number of LASMO Securities to be
withdrawn and (if share certificates or LASMO ADRs, as the case may be,
have been provided) the name of the registered holder of the relevant LASMO
Securities, if different from the name of the person from whom the
acceptance was received.
(f) In respect of LASMO ADSs, if LASMO ADRs have been delivered or otherwise
identified to the US Depositary, then, prior to the physical release of
such LASMO ADRs, the serial numbers shown on such LASMO ADRs must be
submitted and, unless the LASMO ADSs evidenced by such LASMO ADRs have been
delivered by an Eligible Institution, the signatures on the notice of
withdrawal must be guaranteed by an Eligible Institution. If interests in
LASMO ADSs evidenced by LASMO ADRs have been delivered pursuant to the
procedures for book-entry transfer set out in paragraph 12(c) of Part B of
this Appendix, any notice of withdrawal must specify the name and number of
the account at the appropriate Book-Entry Transfer Facility to be credited
with the withdrawn LASMO ADSs and must otherwise comply with such
Book-Entry Transfer Facility's procedures.
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(g) In this paragraph 4, "WRITTEN NOTICE" (including any letter of appointment,
direction or authority) means notice in writing bearing the original
signature(s) of the relevant accepting LASMO Securityholder(s) or his or
their agent(s) duly appointed in writing (evidence of whose appointment is
produced with the notice in a form satisfactory to Amerada Hess).
Notification by telex or facsimile or other electronic transmission or
copies will not be sufficient to constitute written notice. Any notice
which is postmarked in or otherwise appears to Amerada Hess or its agents
to have been sent from Canada, Australia or Japan may be treated as not
valid.
(h) Withdrawals of LASMO Securities in respect of which valid acceptances have
been received may not be rescinded (without Amerada Hess' consent) and any
LASMO Securities properly withdrawn and in respect of which valid
acceptances have not been received thereafter will thereafter be deemed not
to be the subject of a valid acceptance for the purposes of the Offer.
Withdrawn LASMO Securities may be subsequently the subject of a valid
acceptance, however, by following one of the procedures described in either
paragraph 10, 11 or 12 of Part B of this Appendix, as the case may be, at
any time whilst the Offer remains open.
(i) All questions as to the validity (including time of receipt) of any notice
of withdrawal will be determined by Amerada Hess, whose determination
(except as required by the Panel) will be final and binding. None of
Amerada Hess, LASMO, Goldman Sachs, the US Depositary, the UK Receiving
Agent or any other person will be under any duty to give notification of
any defects or irregularities in any notice of withdrawal or incur any
liability for failure to give such notification or for any determination
under this paragraph (i).
5. MIX AND MATCH ELECTION
(a) Elections for the Mix and Match Election will only be accepted in respect of
whole numbers of LASMO Securities. The number of LASMO Securities in
respect of which a Mix and Match Election is made represents the number of
LASMO Securities in respect of which the LASMO Securityholder wishes to
receive either all cash or, as the case may be, all new Amerada Hess
Shares, as consideration under the Offer.
(b) Valid elections for new Amerada Hess Shares made by LASMO Securityholders in
excess of their basic entitlement to new Amerada Hess Shares will be
satisfied in full where sufficient new Amerada Hess Shares are available as
a result of other accepting LASMO Securityholders validly making elections
for cash in excess of their basic entitlements under the Offer, thereby
releasing new Amerada Hess Shares to which they would otherwise be entitled
under the Offer.
If, under the Mix and Match Election, the number of new Amerada Hess Shares
made available as a result of valid elections for cash in excess of the
basic entitlement thereto is insufficient to satisfy in full all valid
elections for new Amerada Hess Shares in excess of LASMO Securityholders'
basic entitlements thereto, then such excess elections will be scaled down
on a pro rata basis and the balance of the consideration will be satisfied
in cash or, if an election for the Loan Note Alternative is available and
is made, in Loan Notes in accordance with the basic terms of the Offer.
(c) Valid elections for cash made by LASMO Securityholders in excess of their
basic entitlement to cash will be satisfied in full where sufficient cash
is available as a result of other accepting LASMO Securityholders validly
making elections for new Amerada Hess Shares in excess of their basic
entitlement under the Offer, thereby releasing cash to which they would
otherwise be entitled under the Offer.
If, under the Mix and Match Election, the amount of cash made available as
a result of valid elections for new Amerada Hess Shares in excess of the
basic entitlement thereto is insufficient to satisfy in full all valid
elections for cash in excess of LASMO Securityholders' basic entitlements
thereto, then such elections will be scaled down on a pro rata basis and
the balance of the consideration will be satisfied in accordance with the
basic terms of the Offer.
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(d) To the extent that valid Mix and Match Elections can be satisfied in
accordance with sub-paragraphs (b) and (c) above, LASMO Securityholders will
receive new Amerada Hess Shares instead of cash and vice versa based upon
the value of an Amerada Hess Share as at the close of business on the NSYE
on the most recent NYSE trading day prior to the date the relevant LASMO
Securityholder's entitlement under the Mix and Match Election falls to be
determined (i.e. the time and date at which the Mix and Match Election
ceases to be open for acceptance). The sterling equivalent of the value of
an Amerada Hess Share as at such date will be determined at the US$ to L
exchange rate at that time, as determined by Goldman Sachs.
(e) If a LASMO Securityholder eligible to elect for the Loan Note Alternative
elects for the Loan Note Alternative as well as for the Mix and Match
Election then, to the extent that the consideration he receives is modified
as a result of such elections, the Mix and Match Election will be deemed to
take effect before his election for the Loan Note Alternative and the Loan
Note Alternative will apply in accordance with paragraph 18(iv) of the
Letter from Goldman Sachs.
(f) Although the Offer will remain open for a Subsequent Offer Period of at
least 14 calendar days after the date on which the Offer becomes or is
declared unconditional in all respects (at the end of the Initial Offer
Period) and may be extended beyond that time until a further specified date
or until further notice, the Mix and Match Election will remain open until
but not beyond 3.00 pm (London time), 10.00 am (New York City time), on the
date falling five calendar days after the date on which the Offer becomes
or is declared unconditional in all respects.
(g) No election for the Mix and Match Election will be valid unless both a valid
acceptance of the Offer and a valid election for the Mix and Match Election,
duly completed in all respects and (i) accompanied by all relevant share
certificate(s), LASMO ADRs and/or other document(s) of title in respect of
LASMO Securities in certificated form, or, (ii) if the LASMO Securities to
which the acceptance relates are in uncertificated form, a settlement of a
transfer to escrow instruction in favour of the UK Receiving Agent as escrow
agent in relation to LASMO Shares or an Agent's Message to the US Depositary
in relation to LASMO ADSs in accordance with the procedures set out in this
document, are duly received by the time and date on which the Mix and Match
Election closes.
(h) In the event that a LASMO Securityholder purports to elect for both
additional cash and additional new Amerada Hess Shares under the Mix and
Match Election, both purported elections shall be deemed to be void, and
such LASMO Securityholder shall be deemed to have accepted the Offer on its
basic terms in respect of all the LASMO Securities to which the relevant
Acceptance Form relates or is deemed to relate.
(i) If any Acceptance Form which includes an election for the Mix and Match
Election is either received after the time and date upon which the Mix and
Match Election closes or is received before such time and date but is not,
and is not deemed to be, valid or complete in all respects at such time and
date, such election shall, for all purposes, be void and the LASMO
Securityholder purporting to make such election shall not, for any purpose,
be entitled to receive any variation of consideration under the Mix and
Match Election, but such acceptance, if otherwise valid, shall, subject to
the provisions of paragraph (j) below, be deemed to be an acceptance of the
Offer in respect of the number of LASMO Securities indicated in the
relevant Acceptance Form and the relevant LASMO Securityholder will, upon
the Offer becoming unconditional in all respects be entitled to receive the
basic consideration due under the Offer in respect thereof.
(j) The Mix and Match Election will lapse if the Offer lapses or expires. An
election under the Mix and Match Election may only be made in respect of
LASMO Securities for which the Offer is validly accepted. LASMO
Securityholders who do not make a Mix and Match Election will receive the
basic terms of the Offer. Mix and Match Elections must be made at the same
time as the acceptances of the Offer to which they relate, on the relevant
Acceptance Form.
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(k) Amerada Hess reserves the right to limit the extent to which elections by
LASMO Securityholders under the Mix and Match Election (or any subsequent
mix and match election) will be capable of being satisfied by cash and/or
Amerada Hess Shares released by opposite elections by other LASMO
Securityholders insofar as it determines this to be necessary or desirable
with a view to ensuring that the aggregate number of Amerada Hess Shares
and the aggregate amount of cash payable to all LASMO Securityholders do
not exceed the levels which would apply in the event of full acceptance of
the Offer with a single closing date for the Mix and Match Election,
whether as a result of the operation of the provisions of Sections 429 to
430F of the Companies Act (which permit compulsory acquisition of
outstanding shares following a takeover offer) or otherwise.
(l) A Mix and Match Election made by a LASMO Securityholder may not be changed
after the time that it is first made on the relevant Acceptance Form.
However, acceptances including the associated Mix and Match Election may be
withdrawn in accordance with the procedures in paragraph 4 of Part B of
Appendix I. This right of withdrawal, except in the limited circumstances
set out in paragraphs 4 (b), (c) and (d) of Part B of Appendix I,
terminates at the time that the Offer becomes unconditional in all respects
(i.e. at the end of the Initial Offer Period). Accordingly, Mix and Match
Elections made in the 5 calendar day period between the end of the Initial
Offer Period and the time and date at which the Mix and Match Election
ceases to be open for acceptance cannot be changed or withdrawn.
6. THE LOAN NOTE ALTERNATIVE
(a) As an alternative to all or part of the cash consideration to which they are
otherwise entitled under the Offer (including under the Mix and Match
Election), LASMO Shareholders (other than US persons and certain
shareholders not resident in the United Kingdom) who validly accept the
Offer may elect to receive Loan Notes to be issued by Amerada Hess on the
basis described below.
(b) The Loan Note Alternative is conditional upon all of the Conditions being
satisfied, fulfilled or, to the extent permitted, waived and will remain
open for as long as the Offer remains open for acceptance. Under the Loan
Note Alternative, Amerada Hess agrees with each LASMO Shareholder (other
than US persons and certain shareholders not resident in the United Kingdom)
who validly accepts the Offer and validly elects for the Loan Note
Alternative in respect of a number of LASMO Shares to issue to each such
LASMO Shareholder a Loan Note, credited as fully paid, of L1 nominal value,
in respect of each L1 cash consideration to which such LASMO Shareholder
would otherwise be entitled in respect of such number of LASMO Shares under
the Offer (including any additional cash to which a LASMO Shareholder
becomes entitled under the Mix and Match Election). No Loan Notes will be
issued unless, at the time the Offer becomes or is declared unconditional in
all respects, valid elections for the Loan Note Alternative will result in
the issue of at least L2 million in aggregate nominal amount of Loan Notes
or such smaller amount as Amerada Hess may, in its absolute discretion,
decide. If insufficient elections are received, the LASMO Shareholders who
have validly accepted the Offer and elected to receive Loan Notes will
(unless the board of Amerada Hess otherwise determines) receive cash in
accordance with the terms of the Offer (including the Mix and Match
Election).
(c) No election for the Loan Note Alternative will be valid unless both a valid
acceptance of the Offer and a valid election for the Loan Note Alternative,
duly completed in all respects and accompanied by, if appropriate, all
relevant share certificates and/or other document(s) of title, are duly
received by the time and date on which the Loan Note Alternative closes.
(d) If any acceptance of the Offer which includes an election for the Loan Note
Alternative is not, and is not deemed to be, valid or complete in all
respects at such time, such election shall for all purposes be void and the
holder(s) of LASMO Shares purporting to make such election shall not, for
any purpose, be entitled to receive the Loan Note Alternative, but any such
acceptance which is otherwise valid shall be deemed to be an acceptance of
the Offer (without the Loan Note Alternative) for the number of LASMO Shares
which are the subject of the acceptance and the holder(s) of
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LASMO Shares will, on the Offer becoming unconditional in all respects, be
entitled to receive the cash consideration due under the Offer in
accordance with the terms of the Offer.
(e) The insertion of a number in Box 4 on the Form of Acceptance shall, subject
to the other terms of the Offer, be treated in respect of the relevant
number of LASMO Shares as an election for the Loan Note Alternative.
(f) An election for the Loan Note Alternative will not be valid unless the Form
of Acceptance is completed correctly in all respects and is received in
accordance with paragraphs 10 and 11 below.
(g) The Loan Notes will be issued, credited as fully paid, in amounts and
integral multiples of L1 nominal value and fractional entitlements will be
disregarded and not paid.
(h) The Loan Notes have not been, and will not be, registered under the
Securities Act or under the laws of any State of the United States nor have
any steps been taken, nor will any be taken, to enable the Loan Notes to be
offered in compliance with applicable securities laws of Canada or Japan and
no prospectus in relation to the Loan Notes has been, or will be, lodged
with the Australian Securities Commission. Accordingly, the Loan Notes may
not be offered, sold, resold or delivered or distributed directly or
indirectly, in or into the United States, or to or for the account or
benefit of any US person, except pursuant to an exemption from, or in a
transaction exempt from, or not subject to, the requirements of the
Securities Act or the relevant securities laws of any State of the United
States. The Loan Notes may not be offered, sold or delivered, directly or
indirectly, in or into Canada, Australia or Japan.
(i) Goldman Sachs has advised that, based on market conditions on 11 December
2000 (the latest practicable date prior to the posting of this document),
the value of the Loan Notes (had they been in issue on that day) would not
have been less than 95 pence per L1 in nominal value.
(j) In respect of acceptances received after the date falling five calendar
days after the date on which the Offer becomes unconditional in all
respects (i.e. after the end of the Initial Offer Period), the Mix and
Match Election will not be available and accordingly the Loan Note
Alternative will not be available in relation to any Mix and Match Election
for additional cash consideration made after that date.
(k) Further details of the Loan Note Alternative are set out in Appendix II
below.
7. REVISION OF THE OFFER AND/OR THE LOAN NOTE ALTERNATIVE
(a) Although no revision is envisaged, if the Offer (in its original or
previously revised form(s)) is revised (either in terms or conditions or in
the value or form of the consideration offered or otherwise) and whether or
not the Mix and Match Election and/or the Loan Note Alternative (in their
original or any previously revised form(s)) are revised, the benefit of the
revised Offer will, subject as provided in paragraphs 7(b), 7(c), 7(e) and 9
of Part B of this Appendix, be made available to a LASMO Securityholder who
has validly accepted the Offer (in its original or any revised form(s)) and
not validly withdrawn such acceptance (a "PREVIOUS ACCEPTOR") if the revised
Offer represents, on the date on which it is announced (on such basis as
Goldman Sachs may consider appropriate), an improvement, or no diminution,
in the value of the consideration offered compared with the consideration or
terms previously offered. The acceptance by or on behalf of a Previous
Acceptor of the Offer (in its original or any revised form(s)) will, subject
as provided in paragraphs 7(b), 7(c), 7(e) and 9 of Part B of this Appendix,
be deemed an acceptance of the revised Offer and will constitute the
appointment of and direction to any director of Amerada Hess or of Goldman
Sachs as his attorney and/or agent with authority, whether or not he shall
have elected for the Mix and Match Election and/or the Loan Note
Alternative:
(i) to accept the revised Offer on his behalf;
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(ii) if the revised Offer includes alternative forms of consideration, to
make on his behalf elections for and/or accept the alternative forms
of consideration on his behalf in the proportions the attorney
and/or agent in his absolute discretion thinks fit; and
(iii) to execute on his behalf and in his name any further documents and
take such further actions (if any) as may be required to give effect
to those elections or acceptances.
In making any election and/or acceptance, the attorney and/or agent will
take into account the nature of any previous acceptance or elections made
by or on behalf of the Previous Acceptor and such other facts or matters as
he may reasonably consider relevant. The attorney and/or agent shall not be
liable to any LASMO Securityholder or any other person in making any such
election and/or acceptance or in making any determination in respect
thereof. In this paragraph, the expression the "Offer" shall, and shall be
deemed to, mean and include the Offer and/or the Mix and Match Election
and/or the Loan Note Alternative and/or all or any alternative forms of
consideration to be given under the Offer and any combination or choice of
the Offer and/or the Mix and Match Election and/or the Loan Note
Alternative and/or all or any alternative forms of consideration.
(b) The deemed acceptance and/or election referred to in paragraph 7(a) of Part
B of this Appendix will not apply and the power of attorney and authorities
conferred by that paragraph will not be exercised if, as a result, the
Previous Acceptor would (on such basis as Goldman Sachs may consider
appropriate) receive less in aggregate in consideration under the Offer than
he would have received in aggregate in consideration as a result of his
acceptance of the Offer in the form originally accepted by him or on his
behalf (unless the Previous Acceptor has previously agreed in writing to
receive less in aggregate consideration).
(c) The deemed acceptance and/or election referred to in paragraph 7(a) of Part
B of this Appendix will not apply and the power of attorney and the
authorities conferred by that paragraph will be ineffective in the case of
a Previous Acceptor who lodges, within 14 calendar days of the posting of
the document containing the revised Offer and/or any revised or other
alternative or elections, an Acceptance Form (or any other form issued on
behalf of Amerada Hess) in which he validly elects to receive consideration
under the revised Offer in some other manner than that set out in his
original acceptance.
(d) Amerada Hess and Goldman Sachs reserve the right to treat an executed
Acceptance Form relating to the Offer (in its original or any previously
revised form(s)) which is received (or dated) after the announcement of any
revised Offer as a valid acceptance of the revised Offer (and where
applicable a valid election for the alternative forms of consideration).
That acceptance will constitute an authority in the terms of paragraph 7(a)
of Part B of this Appendix on behalf of the relevant LASMO Securityholder.
(e) If Amerada Hess makes a material change in the terms of the Offer or if it
waives a material Condition of the Offer prior to the end of the Initial
Offer Period, Amerada Hess will disseminate additional tender offer
materials and extend the Offer to the extent required by Rules 14d-4(d),
14d-6(c) and 14e-1 under the Exchange Act. The minimum period during which
an offer must remain open following material changes in the terms of the
Offer, other than a change in price or a change in the percentage of
securities sought, will depend upon the facts and circumstances then
existing, including the materiality of the changes. With respect to a change
in price or, subject to certain limitations, a change in the percentage of
securities sought, a minimum of ten US business days is generally required
to allow for adequate dissemination to Securityholders. Any reduction of the
Acceptance Condition will be effected and announced in the manner described
in paragraph 2(d) of Part B of this Appendix.
8. GENERAL
(a) If the Offer lapses, neither Amerada Hess nor any person acting, or deemed
to be acting, in concert with Amerada Hess for the purposes of the Offer nor
any of their respective affiliates may, pursuant
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to the City Code, make an offer (whether inside or outside the United
Kingdom) for LASMO Securities for a period of one year following the date
of such lapse, except with the permission of the Panel.
(b) If the Offer lapses or is withdrawn, Acceptance Forms, LASMO share
certificates, LASMO ADRs and other documents of title will be returned by
post (or by such other method as the Panel may approve) within 14 calendar
days of the Offer lapsing or being withdrawn, at the risk of the LASMO
Securityholder in question, to the person or agent whose name and address
(outside Canada, Australia or Japan) is set out in the relevant box on the
Acceptance Form or, if none is set out, to the first-named holder at his
registered address (outside Canada, Australia or Japan) or, in the case of
LASMO ADSs delivered by book-entry transfer into the US Depositary's account
at a Book-Entry Transfer Facility pursuant to the procedures set forth in
paragraph 12(c) of Part B of this Appendix, such LASMO ADSs will be credited
within such period to an account maintained at the appropriate Book-Entry
Transfer Facility.
(c) The UK Receiving Agent will, immediately after the Offer lapses (or within
such longer period as the Panel may permit, not exceeding 14 calendar days
of the Offer lapsing) instruct CRESTCo to transfer all LASMO Shares held in
escrow balances and in relation to which it is the escrow agent for the
purposes of the Offer to the original available balances of the relevant
LASMO Shareholders.
(d) Except with the consent of the Panel:
(i) settlement of the consideration to which any LASMO Securityholder is
entitled under the Offer will be fully implemented in accordance
with the terms of the Offer without regard to any lien, right of
set-off, counterclaim or other analogous right to which Amerada Hess
or Goldman Sachs may otherwise be, or claim to be, entitled against
that LASMO Securityholder; and
(ii) settlement of the consideration will be effected in the manner
prescribed in paragraph 20 of the Letter from Goldman Sachs not
later than 14 calendar days after the later of the date on which the
Offer becomes unconditional in all respects and the date of receipt
of a valid and complete Acceptance Form from such holder of LASMO
Securities.
(e) The terms, provisions, instructions and authorities contained in the
Acceptance Forms also constitute part of the terms of the Offer. A word or
expression defined in this document has the same meaning when used in an
Acceptance Form, unless the context requires otherwise. The provisions of
this Appendix I shall be deemed to be incorporated in the Acceptance Forms.
(f) Any omission or failure to despatch this document, the Acceptance Forms,
any other documents relating to the Offer or any notice required to be
despatched under the terms of the Offer to, or any failure to receive the
same by, any person to whom the Offer is, or should be, made will not in
any way invalidate the Offer or create any implication that the Offer has
not been made to any such person. Subject to the provisions of paragraph 9
of Part B of this Appendix, the Offer is made to any LASMO Securityholder
to whom this document and the Acceptance Forms or any related document may
not have been despatched or who may not receive such documents, and these
persons may collect the relevant documents from the UK Receiving Agent, the
US Depositary or the Information Agent at the addresses set out at the back
of this document.
(g) Subject to the City Code, Amerada Hess and Goldman Sachs reserve the right
to treat as valid in whole or in part any acceptance of the Offer received
by the UK Receiving Agent or the US Depositary or otherwise on behalf of
Amerada Hess which is not entirely in order or in the correct form or which
is not accompanied by (as applicable) the relevant transfer to escrow or the
relevant share certificates, LASMO ADRs and/or other documents of title or
which are received by them in a form or at a place or places other than as
set out in this document or the relevant Acceptance Form. In that event, no
issue of new Amerada Hess Shares or payment of cash, or, if applicable,
issue of Loan Notes under the Offer will be made until after the acceptance
is entirely in order and (as applicable) the relevant transfer to escrow has
settled or the relevant share certificate(s), LASMO
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<PAGE> 57
ADRs and/or other document(s) of title or indemnities satisfactory to
Amerada Hess have been received by the UK Receiving Agent or the US
Depositary, as the case may be.
(h) If all of the Conditions have been either satisfied, fulfilled or, to the
extent permitted, waived and Amerada Hess has acquired or contracted to
acquire, pursuant to the Offer or otherwise, at least 90 per cent. in
nominal value of the LASMO Shares (including LASMO Shares represented by
LASMO ADSs) to which the Offer relates, before the end of the four month
period provided by the Companies Act, Amerada Hess will be entitled, and
intends, to acquire the remaining LASMO Securities on the same terms as the
Offer pursuant to the compulsory acquisition procedure set out in sections
428 to 430E of the Companies Act (see paragraph 11 of Appendix VI and
Appendix IX to this document). When the Offer becomes or is declared
unconditional in all respects, Amerada Hess intends to procure the making of
an application by LASMO for the removal of LASMO Shares from the Official
List of the UK Listing Authority and for the cancellation of trading in
LASMO Shares on the London Stock Exchange's market for listed securities and
also for the de-listing of LASMO ADSs and LASMO Shares (the LASMO Shares do
not trade on the NYSE and are listed on the NYSE only in connection with the
ADS program) from the NYSE. It is anticipated that cancellation of listing
from the Official List and cancellation of trading on the London Stock
Exchange will take effect no earlier than 20 business days after the Offer
becomes or is declared unconditional in all respects. De-listing would
significantly reduce the liquidity and marketability of any LASMO Securities
with respect to which valid acceptances were not received in the Offer.
Amerada Hess will make an announcement at least 20 business days prior to
cancellation of listing from the Official List and the cancellation of
trading on the London Stock Exchange specifying the exact date upon which
LASMO Shares will be de-listed. While it is anticipated that cancellation of
both listings will take place at the same time, cancellation of the listing
of the LASMO ADSs and LASMO Shares on the NYSE could take place earlier than
cancellation of the listing and trading of the LASMO Shares on the Official
List of the UK Listing Authority and the London Stock Exchange,
respectively.
(i) All powers of attorney, appointments of agents and authorities on the terms
conferred by or referred to in this Appendix or in the Acceptance Forms are
given by way of security for the performance of the obligations of the
relevant LASMO Securityholder and are irrevocable in accordance with
section 4 of the Powers of Attorney Act 1971, except in the circumstances
where the donor of the power of attorney or authority validly withdraws his
acceptance in accordance with paragraph 4 of Part B of this Appendix I.
(j) No acknowledgement of receipt of any Acceptance Form, share certificate,
LASMO ADR or other document of title will be given. All communications,
notices, certificates, LASMO ADRs, documents of title and remittances to be
delivered by, and sent to or from, LASMO Securityholders (or their
designated agent(s)) will be delivered or sent at their own risk.
(k) If a LASMO Securityholder has existing Amerada Hess Shares, the mandates,
instructions and instruments in force for the existing Amerada Hess Shares
will continue in force in relation to new Amerada Hess Shares received
under the Offer.
(l) Amerada Hess and Goldman Sachs reserve the right to notify any matter,
including the making of the Offer, to all or any LASMO Securityholders:
(i) with a registered address outside the United Kingdom and the United
States; or
(ii) whom Amerada Hess or Goldman Sachs knows to be a custodian, trustee
or nominee holding LASMO Securities for persons who are citizens,
residents or nationals of jurisdictions outside the United Kingdom
and the United States,
by announcement in the United Kingdom to the London Stock Exchange and in
the United States to the Dow Jones News Service or in any other appropriate
manner or by paid advertisement in newspapers published and circulated in
the United Kingdom and the United States. Such notice will be deemed to
have been sufficiently given, despite any failure by a LASMO Securityholder
to receive or see that notice. A reference in this document to a notice or
the provision of information in
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writing by or on behalf of Amerada Hess is to be construed accordingly. No
such document will be sent to an address in Canada, Australia or Japan.
(m) The Offer is made at 3.00 pm (London time), 10.00 am (New York City time) on
13 December 2000 and is capable of acceptance from and after that time.
Acceptance Forms and copies of this document may be collected from that
time onwards from the UK Receiving Agent, the US Depositary or the
Information Agent at one of the addresses set out at the back of this
document. The Offer is made in the United States by Amerada Hess on its own
behalf. The terms and conditions set forth in the letter from Goldman Sachs
apply equally to such offer.
(n) This Offer has been announced by means of an advertisement in The Financial
Times and The Wall Street Journal on 13 December 2000.
(o) The Offer, all acceptances of the Offer, all elections in respect of it and
the contract to which it gives rise, are governed by and will be construed
in accordance with English law. Execution by or on behalf of a LASMO
Securityholder of an Acceptance Form constitutes his irrevocable submission
to the jurisdiction of the courts of England in relation to all matters
arising in connection with the Offer. However, the conduct of the Offer is
also subject to US federal securities laws and the securities laws of the
States and other jurisdictions in the US in which the Offer is being made
if, and to the extent, applicable to the Offer.
(p) References in paragraphs 10, 11 and 12(i) of this Part B to a LASMO
Securityholder, a holder of LASMO Shares and a holder of LASMO ADSs will
include references to the person or persons executing the Acceptance Form
and in the event of one or more than one such person executing an
Acceptance Form, such provisions shall apply to them jointly.
(q) In relation to any acceptance of the Offer in respect of a holding of LASMO
Shares which are in uncertificated form, Amerada Hess reserves the right to
make such alterations, additions or modifications as may be necessary or
desirable to give effect to any purported acceptance of the Offer, whether
in order to comply with the facilities or requirements of CREST or
otherwise, provided such alterations, additions or modifications are
consistent with the requirements of the City Code or are otherwise made
with the consent of the Panel.
(r) All references in this Appendix I to any statute or statutory provision
shall include a statute or statutory provision which amends, consolidates
or replaces the same (whether before or after the date hereof).
(s) Fractions of new Amerada Hess Shares will not be allotted or issued to
accepting LASMO Securityholders. Fractional entitlements to new Amerada
Hess Shares will be aggregated and sold in the market and the net proceeds
of sale distributed pro rata to the holders of LASMO Securities entitled to
them. Any LASMO Securityholder may elect (by separate written notice to the
UK Receiving Agent or the US Depositary accompanying his or her Acceptance
Form) to receive the payment due in respect of fractional entitlements in
either pounds sterling or US dollars. In the absence of any such election,
such payment will be made to holders of LASMO ADSs in US dollars and to
LASMO Shareholders in pounds sterling, the proceeds having been converted
from US dollars at a prevailing exchange rate selected by Amerada Hess at
the relevant time. Amerada Hess will not be liable to LASMO Securityholders
or any other person in respect of the timing of any such sale or conversion
or the price or exchange rate achieved in respect of any such sale or
conversion. Individual entitlements to amounts of less than L5.00 (or its
equivalent in US dollars at the relevant time) will not be paid to holders
of LASMO Securities but will be retained for the benefit of the enlarged
Amerada Hess Group.
(t) The number of Amerada Hess Shares which will be issued on full acceptance
of the Offer is expected not to exceed approximately 17.1 million on the
basis that, as at 3 November 2000, 1,344,328,323 LASMO Shares had been
issued (including LASMO Shares represented by LASMO ADSs) and it is
reasonable, in LASMO's opinion, to expect that a further 3,121,406 new
LASMO Shares may be issued during the relevant period as a result of the
exercise of options. Amerada
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Hess reserves the right to adjust the Offer consideration, by reducing
rateably the aggregate number of Amerada Hess Shares to be issued under the
Offer, if any issue of LASMO Shares in excess of these amounts would mean
that Amerada Hess would otherwise be obliged to issue more than 17.18
million new Amerada Hess Shares under the Offer or pursuant to the
statutory compulsory acquisition arrangements under Section 429 of the
Companies Act. In that event, LASMO Securityholders will instead be
entitled to receive cash at a rate of L43.37 for each Amerada Hess Share by
which the Offer consideration is so adjusted. This represents the NYSE
Closing Price of an Amerada Hess Share on 3 November 2000, the last NYSE
trading day prior to the Announcement, translated into sterling at the rate
of US$1.4484: L1.00.
(u) All LASMO Securities which are acquired by Amerada Hess under the Offer will
be acquired fully paid and free from all liens, equities, charges,
equitable interests, encumbrances and other interests and together with all
rights now or hereafter attaching thereto, including the right to receive
and retain all dividends and other distributions declared, made or payable
after 6 November 2000.
(v) The new Amerada Hess Shares will rank pari passu in all respects with
existing Amerada Hess Shares, including the right to any dividends and
other distributions declared, paid or made by reference to a record date
after the date on which they are issued. For the avoidance of doubt, LASMO
Securityholders will not be entitled to the dividend of Amerada Hess
expected to be declared in December 2000 and paid on or about 3 January
2001.
9. OVERSEAS LASMO SECURITYHOLDERS
(a) The making of the Offer (including the Loan Note Alternative) in, or to
certain persons resident in, or nationals or citizens of, jurisdictions
outside the United Kingdom or the United States (and the availability of
Loan Notes to such persons or US persons) or to their nominees or trustees
may be prohibited or affected by the laws of the relevant jurisdiction.
LASMO Securityholders who are persons, citizens, residents or nationals of
jurisdictions outside the United Kingdom and the United States (or, in the
case of Loan Notes, outside the United Kingdom only) should inform
themselves about and observe any applicable legal requirements. It is the
responsibility of such LASMO Securityholders wishing to accept the Offer or
the Loan Note Alternative to satisfy themselves as to the full observance
of the laws of the relevant jurisdiction in connection with the Offer. This
includes the obtaining of any governmental, exchange control or other
consents which may be required, compliance with other necessary formalities
needing to be observed and the payment of any issue, transfer or other
taxes due in that jurisdiction by whomsoever payable and Amerada Hess and
Goldman Sachs and any persons acting on their behalf will be fully
indemnified and held harmless by any LASMO Securityholder for whom Amerada
Hess or Goldman Sachs are required to pay any issue, transfer or other
taxes. The Loan Note Alternative is not being made available to LASMO
Securityholders who are US persons, or to certain other overseas persons.
(b) The Offer (including the Loan Note Alternative) is not being made, directly
or indirectly, in or into Canada, Australia or Japan or by use of the mails
of, or by any means or instrumentality of interstate or foreign commerce
of, or of any facility of a national securities exchange of Canada,
Australia or Japan. This includes, but is not limited to, e-mail, facsimile
transmission, telex and telephone. Accordingly, copies of this document,
the Acceptance Forms, and any related offering documents are not being, and
must not be mailed, forwarded or otherwise distributed or sent in, into or
from Canada, Australia or Japan. Persons receiving such documents
(including, without limitation, custodians, nominees and trustees) must not
distribute, mail or send them in, into or from Canada, Australia or Japan
or use the Canadian, Australian or Japanese (or, if electing for the Loan
Note Alternative, Australian, Canadian, Japanese or US) mails or any such
means, instrumentality or facility for any purpose directly or indirectly
in connection with the Offer, and so doing may invalidate any related
purported acceptance of the Offer. Envelopes containing Acceptance Forms in
respect of the Offer must not be postmarked in Canada, Australia or Japan
(or, if electing for the Loan Note Alternative, Australia, Canada, Japan or
the US) or otherwise despatched from those jurisdictions and all acceptors
must provide addresses outside Canada, Australia or Japan (and, if
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electing for the Loan Note Alternative, the US) for the receipt of the
consideration to which they are entitled under the Offer or for the return
of Acceptance Forms or documents of title.
(c) Subject as provided below, a LASMO Securityholder will be deemed not to
have accepted the Offer if:
(i) he cannot give the representations and warranties set out in
paragraphs 11(b) and 12(i)(ii)(dd) of Part B of this Appendix;
(ii) he completes the relevant Box of the Acceptance Form with an address
in Canada, Australia or Japan or has a registered address in Canada,
Australia or Japan and in either case he does not insert in the relevant
Box of the Acceptance Form the name and address of a person or agent
outside Canada, Australia or Japan to whom he wishes the consideration
to which he is entitled under the Offer to be sent;
(iii) he inserts in the relevant Box of the Acceptance Form the name and
address of a person or agent in Canada, Australia or Japan to whom he
wishes the consideration to which he is entitled under the Offer to be
sent; or
(iv) the Acceptance Form received from him is in an envelope postmarked
in, or which otherwise appears to Amerada Hess or its agents to have
been sent from, Canada, Australia or Japan.
(d) If any person, despite the restrictions referred to in paragraph 9(b) of
Part B of this Appendix and whether pursuant to a contractual or legal
obligation or otherwise, forwards this document, the Acceptance Form or any
related offering document in, into or from Canada, Australia or Japan or
uses the mails or any means or instrumentality (including, without
limitation, e-mail, facsimile transmission, telex and telephones) of
interstate or foreign commerce of, or any facilities of a national
securities exchange of Canada, Australia or Japan in connection with that
forwarding, that person should:
(i) inform the recipient of that fact;
(ii) explain to the recipient that such action may invalidate any
purported acceptance by the recipient; and
(iii) draw the attention of the recipient to this paragraph 9.
(e) If any written notice from a LASMO Securityholder withdrawing his acceptance
in accordance with paragraph 4 of Part B of this Appendix is received in an
envelope postmarked in, or which otherwise appears to Amerada Hess or its
agents to have been sent from Canada, Australia or Japan, Amerada Hess
reserves the right, in its absolute discretion, to treat that notice as
invalid.
(f) The provisions of this paragraph 9 and any other terms of the Offer
relating to overseas holders of LASMO Securities may be waived, varied or
modified as regards specific LASMO Securityholders or on a general basis by
Amerada Hess in its sole discretion. Subject to this discretion, the
provisions of this paragraph 9 supersede any terms of the Offer
inconsistent with them. A reference in this paragraph 9 to a LASMO
Securityholder includes the person or persons executing the Acceptance Form
and, in the event of more than one person executing an Acceptance Form, the
provisions of this paragraph 9 apply to them jointly and severally.
(g) The Loan Notes to be issued pursuant to the Loan Note Alternative will not
be listed on any stock exchange and have not been, and will not be,
registered under the Securities Act or under the laws of any State of the
United States nor have any steps been taken, nor will any be taken, to
enable the Loan Notes to be offered in compliance with applicable
securities laws of Canada or Japan and no prospectus in relation to the
Loan Notes has been, or will be, lodged with the Australian Securities
Commission. Accordingly, the Loan Notes may not be offered, sold, resold,
delivered or distributed, directly or indirectly, in or into the United
States or to or for the account or benefit of any US person, except
pursuant to an exemption from, or in a transaction exempt from, or not
subject to, the requirements of the Securities Act or the relevant
securities laws of any State of the United
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States. The Loan Notes may not be offered, sold or delivered, directly or
indirectly, in or into Canada, Australia or Japan.
If in respect of a Form of Acceptance from any LASMO Shareholder the holder
is unable or Amerada Hess believes the holder is unable to make the
representations and warranties set out in paragraph 11(b) of this Appendix,
Amerada Hess reserves the right, in its absolute discretion, to ignore any
election in that Form of Acceptance to receive Loan Notes and to treat it
instead as an acceptance of the Offer for cash.
10. PROCEDURES FOR ACCEPTING THE OFFER IN RESPECT OF LASMO SHARES
(a) Holders of LASMO Shares will have received with this document a Form of
Acceptance. This section should be read together with the Form of
Acceptance. The provisions of this section shall be deemed to be
incorporated in, and to form a part of, the Form of Acceptance. The
instructions printed on the Form of Acceptance shall be deemed to form part
of the terms of the Offer.
If a holder of LASMO Shares holds LASMO Shares in both certificated and
uncertificated (that is, in CREST) form, he should complete a separate Form
of Acceptance for each holding. Similarly, such holder should complete a
separate Form of Acceptance for LASMO Shares held in uncertificated form,
but under different member account IDs, and for LASMO Shares held in
certificated form, but under different designations.
(b) To accept the Offer, any LASMO Shareholder, including any person in the US
who holds LASMO Shares, wishing to accept the Offer in respect of all or
any portion of such holder's LASMO Shares, should complete Box 1, check the
details contained in Box 2 and, if applicable, complete Boxes 3A or 3B, 4,
5, 8, 9A or 9B and, if such holder's LASMO Shares are in CREST, Box 7 on
the Form of Acceptance. In all cases, LASMO Shareholders should then sign
and date Box 6 of the Form of Acceptance in accordance with the
instructions printed on it. All LASMO Shareholders who are individuals
should sign Box 6 of the Form of Acceptance in the presence of a witness,
who should also sign Box 6 in accordance with the instructions printed on
it. Unless witnessed, an acceptance will not be valid.
(c) An accepting LASMO Shareholder should return the completed, signed and
witnessed Form of Acceptance, whether or not such LASMO Shares are in
CREST, to the UK Receiving Agent (if such accepting LASMO Shareholder is
not resident in the United States) or to the US Depositary (if such
accepting LASMO Shareholder is a resident in the United States). The
completed Form of Acceptance, together, if such holder's LASMO Shares are
in certificated form, with his share certificate(s) and/or other
document(s) of title, must be lodged with the UK Receiving Agent (if such
accepting LASMO Shareholder is not resident in the United States) or the US
Depositary (if such accepting LASMO Shareholder is a resident in the United
States), as soon as possible, but in any event so as to arrive NOT LATER
THAN 3.00 PM (LONDON TIME), 10.00 AM (NEW YORK CITY TIME) ON 12 JANUARY
2001.
If you have any questions as to how to complete the Form of Acceptance,
please contact the UK Receiving Agent on 0870 703 0056, the US Depositary
on +1 (212) 815 6156 or the Information Agent in the UK on 0800 169 6962 or
in the US on +1 (800) 628 8536.
A person in the US who holds LASMO Shares may submit the Form of
Acceptance, together with his share certificates and/or other document(s)
of title, to the US Depositary, who will receive such Form(s) of Acceptance
and certificate(s) and/or other document(s) of title on behalf of the UK
Receiving Agent. A Form of Acceptance contained in an envelope postmarked
in Canada, Australia or Japan or otherwise appearing to Amerada Hess or its
agents to have been sent from Canada, Australia or Japan may be rejected as
invalid.
(d) If LASMO Shares are in uncertificated form, the holder should insert in Box
7 of the Form of Acceptance the participant ID and member account ID under
which such LASMO Shares are held by him in CREST and otherwise complete and
return the Form of Acceptance as described above.
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In addition, such holders should take (or procure to be taken) the action
set out below to transfer the LASMO Shares in respect of which he wishes to
accept the Offer to an escrow balance, specifying the UK Receiving Agent
(in its capacity as a CREST participant under the participant ID referred
to below) as the escrow agent, as soon as possible but in any event so that
the transfer to escrow settles NOT LATER THAN 3.00 PM (LONDON TIME), 10.00
AM (NEW YORK CITY TIME) ON 12 JANUARY 2001.
(e) IF THE LASMO SHAREHOLDER IS A CREST SPONSORED MEMBER, HE SHOULD REFER TO HIS
CREST SPONSOR BEFORE TAKING ANY ACTION. Such holder's sponsor will be able
to confirm details of his participant ID and the member account ID under
which his LASMO Shares are held. In addition, only his CREST sponsor will
be able to send the TTE Instruction to CRESTCo in relation to his LASMO
Shares.
(f) If LASMO Shares are in uncertificated form, the holder of such LASMO Shares
should send (or, if he is a CREST sponsored member, procure that his CREST
sponsor sends) a TTE Instruction to CRESTCo which must be properly
authenticated in accordance with CRESTCo's specifications and which must
contain, in addition to the other information that is required for a TTE
Instruction to settle in CREST, the following details:
(i) the number of LASMO Shares to be transferred to an escrow balance;
(ii) the member account ID of such LASMO Shareholder. This must be the
same member account ID as the member account ID that is inserted in
Box 7 of the Form of Acceptance;
(iii) the participant ID of such LASMO Shareholder. This must be the same
participant ID as the participant ID that is inserted in Box 7 of
the Form of Acceptance;
(iv) the participant ID of the escrow agent (the UK Receiving Agent in its
capacity as a CREST receiving agent). This is 3RA43;
(v) the member account ID of the escrow agent. This is LASMO;
(vi) the Form of Acceptance Reference Number. This is the Form of
Acceptance Reference Number that appears next to Box 7 on page 3 of
the Form of Acceptance. This Reference Number should be inserted in
the first eight characters of the shared note field on the TTE
Instruction. Such insertion will enable the UK Receiving Agent to
match the transfer to escrow to your Form of Acceptance. The holder
of such shares should keep a separate record of this Form of
Acceptance Reference Number for future reference;
(vii) the Intended Settlement Date. This should be as soon as possible and
in any event not later than 3.00 pm (London time), 10.00 am (New
York City time) on 12 January 2001;
(viii) the Corporate Action Number for the Offer. This is allocated by
CRESTCo and can be found by viewing the relevant Corporate Action
Details in CREST; and
(ix) input with Standard Delivery instruction of 80.
(g) After settlement of the TTE Instruction, such LASMO Shareholder will not be
able to access the LASMO Shares concerned in CREST for any transaction or
charging purposes. If all of the Conditions are either satisfied, fulfilled
or, to the extent permitted, waived, the escrow agent will transfer the
LASMO Shares concerned to itself in accordance with paragraph 11(d) of Part
B of this Appendix.
(h) Such LASMO Shareholder is recommended to refer to the CREST Manual published
by CRESTCo for further information on the CREST procedures outlined above.
For ease of processing, such holder is requested, wherever possible, to
ensure that a Form of Acceptance relates to only one transfer to escrow.
(i) If no Form of Acceptance Reference Number, or an incorrect Form of
Acceptance Reference Number, is included on the TTE Instruction, Amerada
Hess may treat any amount of LASMO
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Shares transferred to an escrow balance in favour of the escrow agent
specified above from the participant ID and member account ID identified in
the TTE Instruction as relating to any Form(s) of Acceptance which
relate(s) to the same member account ID and participant ID (up to the
amount of LASMO Shares inserted or deemed to be inserted on the Form(s) of
Acceptance concerned).
(j) Such LASMO Shareholder should note that CRESTCo does not make available
special procedures, in CREST, for any particular corporate action. Normal
system timings and limitations will therefore apply in connection with a
TTE Instruction and its settlement. Such holder should therefore ensure
that all necessary action is taken by him (or by his CREST sponsor) to
enable a TTE Instruction relating to his LASMO Shares to settle prior to
3.00 pm (London time), 10.00 am (New York City time) on 12 January 2001. In
this connection such holder is referred in particular to those sections of
the CREST Manual concerning practical limitations of the CREST system and
timings.
(k) Amerada Hess will make an appropriate announcement if any of the details
contained in this paragraph 10 alter for any reason.
(l) Normal CREST procedures (including timings) apply in relation to any LASMO
Shares that are, or are to be, converted from uncertificated to
certificated form, or from certificated to uncertificated form, during the
course of the Offer (whether any such conversion arises as a result of a
transfer of LASMO Shares or otherwise). LASMO Shareholders who are
proposing so to convert any LASMO Shares are recommended to ensure that the
conversion procedures are implemented in sufficient time to enable the
person holding or acquiring the LASMO Shares as a result of the conversion
to take all necessary steps in connection with an acceptance of the Offer
(in particular, as regards delivery of share certificates or other
documents of title or transfers to an escrow balance as described above)
prior to 3.00 pm (London time), 10.00 am (New York City time) on 12 January
2001.
(m) If the share certificate(s) and/or other document(s) of title is/are not
readily available or is/are lost, the Form of Acceptance should
nevertheless be completed, signed and sent as stated above to the UK
Receiving Agent or the US Depositary so as to be received as soon as
possible, but in any event no later than 3.00 pm (London time), 10.00 am
(New York City time) on 12 January 2001, together with any share
certificate(s) and/or other document(s) of title that is/are available,
accompanied by a letter stating that the balance will follow or that the
accepting holder has lost one or more of his share certificate(s) and/or
other documents of title. If the share certificate(s) and/or other
document(s) of title are lost, the accepting holder should request the
registrar of LASMO (Computershare Services PLC, PO Box 435, Owen House, 8
Bankhead Crossway North, Edinburgh EH11 4BR) to send him a letter of
indemnity for completion in accordance with the instructions given. When
completed, the letter of indemnity must be lodged with the UK Receiving
Agent or the US Depositary, in accordance with the instructions given, in
support of the Form of Acceptance. Amerada Hess may treat as invalid, to
the extent that it so determines in its absolute discretion, any acceptance
which it has reason to believe has been delivered in breach of obligations
owed to a third party by the person delivering it, including (if relevant)
any obligation of the ADS Depositary under the Second Amended and Restated
Deposit Agreement dated as of 7 June 1993 relating to the LASMO ADSs.
11. FORM OF ACCEPTANCE FOR LASMO SHAREHOLDERS
Each holder of LASMO Shares who executes and lodges or has executed and lodged
on his behalf a Form of Acceptance with the UK Receiving Agent or the US
Depositary, subject to the rights of withdrawal set out in this document,
irrevocably undertakes, represents, warrants and agrees to and with Amerada
Hess, Goldman Sachs, the UK Receiving Agent and the US Depositary (and so as to
bind himself, his heirs, successors and assigns and his personal or legal
representatives) to the following effect:
(a) that the execution of the Form of Acceptance shall constitute:
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(i) an acceptance of the Offer in respect of the number of LASMO Shares
inserted or deemed to be inserted in Box 1 of the Form of Acceptance;
(ii) an irrevocable authority and request to Amerada Hess and/or its
agents to procure the issue to such LASMO Shareholder of such new
Amerada Hess Shares to which such LASMO Shareholder becomes entitled
under the Offer;
(iii) if Box 3A or Box 3B of the Form of Acceptance is completed, an
election under the Mix and Match Election to receive, subject to
availability as a result of offsetting elections:
(aa) new Amerada Hess Shares instead of the cash consideration to which
he would otherwise have been entitled to in consequence of the
basic terms of the Offer in respect of the number of LASMO Shares
inserted, or deemed to be inserted, in Box 3A; or
(bb) cash instead of the new Amerada Hess Shares to which he would
otherwise have been entitled to in consequence of the basic terms
of the Offer in respect of the number of LASMO Shares inserted, or
deemed to be inserted, in Box 3B;
(iv) if applicable, an election for the Loan Note Alternative in respect
of such amount of cash as would otherwise fall to be paid under the
Offer in respect of the number of LASMO Shares inserted, or deemed to be
inserted, in Box 4 of the Form of Acceptance (as adjusted in accordance
with the terms of the Offer to reflect any additional cash receivable as
a result of a valid Mix and Match Election); and
(v) an agreement to execute any further documents and give any further
assurances which may be required to enable Amerada Hess to obtain the
full benefit of paragraph 10 of Part B of this Appendix and this
paragraph 11 and/or to perfect any of the authorities expressed to be
given hereunder,
in each case on and subject to the terms and conditions set out or referred
to in this document and the Form of Acceptance;
(b) unless "NO" is put in Box 8 of the Form of Acceptance, that such LASMO
Shareholder;
(i) has not received or sent copies or originals of this document, the
Form of Acceptance or any related offering document in, into or from
Canada, Australia or Japan;
(ii) has not used in connection with the Offer or the execution or
delivery of the Form of Acceptance, directly or indirectly, the mails
of, or any means or instrumentality (including, without limitation,
e-mail, facsimile transmission, telex and telephone) of interstate or
foreign commerce of, or any facility of a national securities exchange
of Canada, Australia or Japan;
(iii) has not mailed or otherwise sent the Form of Acceptance into or from
Canada, Australia or Japan or signed in any of those jurisdictions and
such LASMO Shareholder is accepting the Offer from outside Canada,
Australia or Japan;
(iv) if he is electing for the Loan Note Alternative, is not a US person
or a distributor and he is not accepting the Offer with a view to the
offer, sale or delivery, directly or indirectly, of any Loan Notes in or
into the United States, Australia, Canada or Japan and will not hold or
acquire any Loan Notes for the account or benefit of any other person
who he has reason to believe is purchasing for the purpose of that
offer, sale or delivery; and
(v) is not an agent or fiduciary acting on a non-discretionary basis for
a principal, unless such agent or fiduciary is an authorised employee of
such principal or such principal has given any instructions with respect
to the Offer from outside Canada, Australia or Japan;
(c) that the execution of the Form of Acceptance constitutes, subject to the
Offer becoming unconditional in all respects in accordance with its terms
and to an accepting LASMO Shareholder not having validly withdrawn his
acceptance, the irrevocable appointment of any director of, or any
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person authorised by, Amerada Hess or Goldman Sachs as his agent and/or
attorney with an irrevocable instruction and authorisation to:
(i) complete and execute all or any form(s) of transfer, renunciation or
other document(s) in relation to the LASMO Shares referred to in
paragraph 11(a)(i) of Part B of this Appendix in favour of Amerada Hess
or as Amerada Hess or its agents may direct;
(ii) deliver any form(s) of transfer, renunciation or other document with
any certificate or other document of title for registration within six
months of the Offer becoming unconditional in all respects; and
(iii) take any other action as the agent and/or attorney may think
necessary or expedient in connection with his acceptance of the Offer
and/or the Mix and Match Election and/or Loan Note Alternative and to
vest in Amerada Hess (or as it may direct) the LASMO Shares referred to
in paragraph 11(a)(i) of Part B of this Appendix;
(d) that the execution of the Form of Acceptance and its delivery to the UK
Receiving Agent or the US Depositary constitutes an irrevocable appointment
of the UK Receiving Agent and the US Depositary as such LASMO Shareholder's
attorney and/or agent and an irrevocable instruction and authority to such
attorney and/or agent:
(i) subject to the Offer becoming unconditional in all respects and him
not having validly withdrawn his acceptance, to transfer to Amerada Hess
(or to such other person or persons as Amerada Hess or its agent may
direct) by means of CREST all or any of the Relevant LASMO Shares (but
not exceeding the number of LASMO Shares in respect of which the Offer
is accepted or deemed to be accepted); and
(ii) if the Offer does not become unconditional in all respects, to give
instructions to CRESTCo immediately after the Offer lapses (or within
such longer period as the Panel may permit, not exceeding 14 calendar
days of the Offer lapsing) to transfer all Relevant LASMO Shares to the
original available balance of the accepting LASMO Shareholder.
In this paragraph, "RELEVANT LASMO SHARES" means LASMO Shares in
uncertificated form in respect of which a transfer or transfers to escrow
has or have been effected in accordance with the procedures described in
paragraph 10 of Part B of this Appendix and where the transfer or transfers
to escrow was or were made in respect of LASMO Shares held under the same
member account ID and participant ID as the member account ID and
participant ID relating to the relevant Form of Acceptance (but
irrespective of whether or not any Form of Acceptance Reference Number, or
a Form of Acceptance Reference Number corresponding to that appearing on
the relevant Form of Acceptance, was included in the relevant transfer to
escrow instruction);
(e) that the execution of the Form of Acceptance constitutes, subject to the
Offer becoming unconditional in all respects and to an accepting LASMO
Shareholder not having validly withdrawn his acceptance, an irrevocable
authority and request:
(i) to LASMO or its agents to procure the registration of the transfer
of the LASMO Shares referred to in paragraph 11(a)(i) of Part B of this
Appendix and, in respect of LASMO Shares that are in certificated form,
the delivery of the share certificate(s) and other document(s) of title
in respect of the LASMO Shares to Amerada Hess or as it may direct;
(ii) if the LASMO Shares referred to in paragraph 11(a)(i) of Part B of
this Appendix are in certificated form, to Amerada Hess or its agents to
procure the despatch by post (or by such other method as may be approved
by the Panel) of a cheque for the cash consideration to which he is
entitled under the Offer;
(iii) if the LASMO Shares referred to in paragraph 11(a)(i) of Part B of
this Appendix are in uncertificated form, to Amerada Hess or its agents
to ensure that an assured payment obligation is created in favour of the
LASMO Shareholder's payment bank in accordance with
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the CREST assured payment arrangements in respect of any cash
consideration to which that shareholder is entitled to;
(iv) to Amerada Hess or its agents to procure that the name of the
accepting LASMO Shareholder is entered on the register of holders of
Loan Notes in respect of any Loan Notes to which such LASMO Shareholder
becomes entitled under the Offer (subject to the Loan Note Instrument)
and that any documents of title for any Loan Notes in respect of his
election for the Loan Note Alternative, are despatched by post (or by
such other method as may be approved by the Panel) at his risk to the
person or agent whose name and address is set out in Box 9B of the Form
of Acceptance or, if no person or agent's name and address is set out,
to the first-named holder at his registered address outside Canada,
Australia or Japan; and to procure that the name of the accepting LASMO
Shareholder is entered on the register of members of Amerada Hess in
respect of any new Amerada Hess Shares to which such LASMO Shareholder
becomes entitled in consequence of the Offer (subject to the by-laws of
Amerada Hess) and that any document(s) of title with respect to such new
Amerada Hess Shares are despatched by post (or by such other method as
may be approved by the Panel) to the person or agent whose name and
address is set out in Box 9B of the Form of Acceptance or, if no person
or agent's name and address is set out, to the first-named holder at his
registered address outside Canada, Australia or Japan; and
(v) to Amerada Hess, LASMO or their respective agents to record and act
on any instructions with regard to payments or notices which have been
entered in the records of LASMO in respect of his holding of LASMO
Shares;
(f) that the execution of the Form of Acceptance constitutes his agreement that
Amerada Hess may decide to despatch all or part of the consideration
payable to a LASMO Shareholder whose LASMO Shares are in uncertificated
form in accordance with paragraph 11(e)(ii) of Part B of this Appendix;
(g) that the execution of the Form of Acceptance gives a separate authority to
any director of, or person authorised by, Amerada Hess or Goldman Sachs
within the terms of paragraph 7 of Part B of this Appendix;
(h) that, subject to the Offer becoming unconditional in all respects and him
not having validly withdrawn his acceptance (or if the Offer will become
unconditional in all respects or lapse on the outcome of the resolution in
question or if the Panel gives its consent) and pending registration:
(i) Amerada Hess or its agent shall be entitled to direct the exercise
of any votes and any other rights and privileges (including the right to
requisition the convening of a general or separate class meeting of
LASMO) attaching to the LASMO Shares referred to in paragraph 11(a)(i)
of Part B of this Appendix;
(ii) the execution of the Form of Acceptance by the LASMO Shareholder, in
respect of the LASMO Shares referred to in paragraph 11(a)(i) of Part B
of this Appendix, constitutes an authority to LASMO or its agent to send
any notice, circular, warrant or other document or communication which
may be required to be sent to him as a member of LASMO (including any
share certificate(s) or other documents of title issued as a result of
conversion of such LASMO Shares into certificated form) to Amerada Hess,
care of the UK Receiving Agent;
(iii) the execution of the Form of Acceptance by the LASMO Shareholder, in
respect of the LASMO Shares referred to in paragraph 11(a)(i) of Part B
of this Appendix, constitutes an authority to any director of, or person
authorised by, Amerada Hess or Goldman Sachs to sign any document and do
such things as may in the opinion of that agent and/or attorney seem
necessary or desirable in connection with the exercise of any votes or
other rights or privileges attaching to the LASMO Shares held by him
(including, without limitation, signing any consent to short notice of a
general or separate class meeting as his agent and/or attorney and on
his behalf and executing a form of proxy appointing any person nominated
by Amerada Hess to attend general and separate class meetings of LASMO
and attending any
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such meeting and exercising the votes attaching to the LASMO Shares
referred to in paragraph 11(a)(i) of Part B of this Appendix on his
behalf, where relevant, such votes to be cast so far as possible to
satisfy any outstanding Condition of the Offer); and
(iv) the execution of the Form of Acceptance by the LASMO Shareholder, in
respect of the LASMO Shares referred to in paragraph 11(a)(i) of Part B
of this Appendix, constitutes an agreement not to exercise any such
rights without the consent of Amerada Hess and irrevocably undertakes
not to appoint a proxy for or to attend such general or separate class
meetings of LASMO.
This authority will cease to be valid if the acceptance is validly
withdrawn in accordance with paragraph 4 of Part B of this Appendix;
(i) that he will deliver to the UK Receiving Agent or the US Depositary, or
procure the delivery to the UK Receiving Agent or the US Depositary of, his
share certificates and/or other document(s) of title in respect of those
LASMO Shares referred to in paragraph 11(a)(i) of Part B of this Appendix
that are in certificated form, or an indemnity acceptable to Amerada Hess,
as soon as possible and in any event within two months of the Offer
becoming unconditional in all respects;
(j) that he is the sole legal and beneficial owner of the LASMO Shares in
respect of which the Offer is accepted or deemed to be accepted or he is
the legal owner of such LASMO Shares and he has the necessary capacity and
authority to execute the Form of Acceptance;
(k) that he agrees and acknowledges that he is not a customer (as defined in
the rules of The Securities and Futures Authority Limited) of Goldman Sachs
in connection with the Offer;
(l) that he will take (or procure to be taken) the necessary action to transfer
all those LASMO Shares referred to in paragraph 11(a)(i) of Part B of this
Appendix that are in uncertificated form in respect of which the Offer has
been accepted and not validly withdrawn to an escrow balance as soon as
possible and in any event so that the transfer to escrow settles within two
months of the Offer becoming unconditional in all respects;
(m) that if for any reason any LASMO Shares in respect of which a transfer to an
escrow balance has been effected are converted to certificated form, he
will immediately deliver or ensure the immediate delivery of the share
certificates or other documents of title in respect of all those LASMO
Shares that are converted to the UK Receiving Agent or the US Depositary at
the relevant address specified at the back of this document;
(n) that the creation of an assured payment obligation in favour of his payment
bank in accordance with the CREST assured payment arrangements as referred
to in paragraph 11(e)(iii) of Part B of this Appendix will, to the extent
of the obligation so created, discharge fully any obligation of Amerada
Hess or Goldman Sachs to pay to him the cash consideration to which he is
entitled under the Offer;
(o) that he will do everything as shall in the opinion of Amerada Hess or its
agents be necessary or expedient to vest in Amerada Hess or its nominees
the LASMO Shares referred to in paragraph 11(a)(i) of Part B of this
Appendix and to enable the UK Receiving Agent or the US Depositary to
perform its functions as escrow agent for the purposes of the Offer;
(p) that he agrees to ratify everything which may be done or effected by any
director of, or person authorised by, Amerada Hess, Goldman Sachs, the UK
Receiving Agent or the US Depositary in exercise of any of the powers
and/or authorities under Part B of this Appendix;
(q) that, if any provision of Part B of this Appendix will be unenforceable or
invalid or will not operate so as to afford Amerada Hess, Goldman Sachs,
the UK Receiving Agent or the US Depositary or any of their respective
directors or persons authorised by them, the benefit of the authority
expressed to be given in Part B of this Appendix, he will, with all
practicable speed, do everything that may be required or desirable to
enable Amerada Hess, Goldman Sachs, the UK Receiving Agent and the
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US Depositary and any of their respective directors or persons authorised
by them to secure the full benefit of Part B of this Appendix;
(r) that he represents and warrants that he is entitled to sell and transfer
the beneficial ownership of the LASMO Shares referred to in paragraph
11(a)(i) of Part B of this Appendix and that such Shares are sold fully
paid and free from all liens, equities, charges, encumbrances and other
interests and together with all rights attaching to them on or after 6
November 2000 including, without limitation, the right to receive and
retain all dividends and other distributions declared, made or payable
after that date;
(s) that he agrees that the terms and Conditions of the Offer are deemed to be
incorporated in, and form Part of, the Form of Acceptance which shall be
read and construed accordingly;
(t) that he agrees that, on execution, the Form of Acceptance takes effect as a
deed;
(u) that he agrees that the execution of the Form of Acceptance constitutes his
submission to the jurisdiction of the courts of England in relation to all
matters arising in connection with the Offer and the Form of Acceptance and
that nothing shall limit the right of Amerada Hess and/or Goldman Sachs to
bring any action, suit or proceeding arising out of or in connection with
the Offer and the Form of Acceptance in any other manner permitted by law
or in any court of competent jurisdiction; and
(v) if he is a US holder, that he certifies to the US Depositary that he is not
subject to back-up withholding tax by completing a Substitute Form W-9, or,
if the holder is a non-resident alien or foreign entity for US federal
income tax purposes, agrees to establish an exemption from certain US
federal information return reporting and backup withholding requirements by
completing a Substitute Form W-8BEN or W-8ECI which is available from the
US Depositary or the US Internal Revenue Service.
A reference in this paragraph 11 to a holder of LASMO Shares includes a
reference to the person or persons executing the Form of Acceptance and in
the event of more than one person executing a Form of Acceptance, the
provisions of this paragraph 11 will apply to them jointly and to each of
them.
12. PROCEDURES FOR TENDERING LASMO ADSS
(a) Letter of Transmittal/Notice of Guaranteed Delivery
If you are a holder of LASMO ADSs evidenced by LASMO ADRs, you will have
also received a Letter of Transmittal and a Notice of Guaranteed Delivery
for use in connection with the Offer. This section should be read together
with the instructions on the Letter of Transmittal. The provisions of this
paragraph 12 shall be deemed to be incorporated in, and form a part of, the
relevant Letter of Transmittal. The instructions printed on the relevant
Letter of Transmittal shall be deemed to form part of the terms of the
Offer.
(b) Valid tendering
For a holder of LASMO ADSs evidenced by LASMO ADRs to tender such LASMO
ADSs validly pursuant to the Offer, either:
(i) a properly completed and duly executed Letter of Transmittal,
together with any required signature guarantees or, in the case of a
book-entry transfer, an Agent's Message, and any other documents
required by the Letter of Transmittal, must be received by the US
Depositary at one of its addresses set out at the back of this document
and either the LASMO ADRs evidencing such LASMO ADSs must be received by
the US Depositary at one of such addresses or such LASMO ADRs evidencing
such LASMO ADSs must be delivered pursuant to the procedure for
book-entry transfer set forth below (and a Book-Entry Confirmation
received by the US Depositary in accordance with such procedures); or
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(ii) such holder must comply with the Guaranteed Delivery Procedures set
out in paragraph 12(h) below.
The Offer in respect of LASMO ADSs evidenced by LASMO ADRs shall be validly
accepted by (i) delivery of a Letter of Transmittal, the relevant LASMO
ADRs evidencing LASMO ADSs and other required documents to the US
Depositary by a holder of LASMO ADSs (without any further action by the US
Depositary) subject to the terms and Conditions set out in this document
and the Letter of Transmittal or (ii) completion of the book-entry transfer
procedures described below. The acceptance of the Offer by a tendering
holder of LASMO ADSs evidenced by LASMO ADRs pursuant to the procedures
described above, subject to the withdrawal rights described below, will be
deemed to constitute a binding agreement between such tendering holder of
LASMO ADSs and Amerada Hess upon the terms and subject to the Conditions of
the Offer. Accordingly, references in this document and in the Letter of
Transmittal to a tender of LASMO ADSs shall be construed to mean an
acceptance of the Offer in respect of such LASMO ADSs upon the terms and
subject to the Conditions of the Offer. If a LASMO ADR evidencing a LASMO
ADS has been tendered by a holder of LASMO ADSs, the LASMO Shares
represented by such LASMO ADSs may not be tendered independently by such
holder of LASMO ADSs. A Letter of Transmittal and other required documents
contained in an envelope postmarked in Canada, Australia or Japan or
otherwise appearing to Amerada Hess or its agents to have been sent from
Canada, Australia or Japan may be rejected as invalid.
(c) Book-entry transfer
The US Depositary will establish an account at each of the Book-Entry
Transfer Facilities with respect to interests in LASMO ADSs evidenced by
LASMO ADRs held in book-entry form for the purposes of the Offer within two
US business days from the date of this document. Any financial institution
that is a participant in any of the Book-Entry Transfer Facility's systems
may make book-entry delivery of interests in LASMO ADSs by causing a
Book-Entry Transfer Facility to transfer such interests in LASMO ADSs into
the US Depositary's account at such Book-Entry Transfer Facility in
accordance with that Book-Entry Transfer Facility's procedures for such
transfer.
Although delivery of interests in LASMO ADSs evidenced by LASMO ADRs may be
effected through book-entry transfer into the US Depositary's account at a
Book-Entry Transfer Facility, either:
(i) the Letter of Transmittal, properly completed and duly executed,
together with any required signature guarantees; or
(ii) an Agent's Message,
and, in either case, any other required documents, must in any case be
transmitted to, and received by, the US Depositary at one of its addresses
set out at the back of this document before LASMO ADSs evidenced by LASMO
ADRs will be either counted as a valid acceptance, or purchased, or such
holder must comply with the Guaranteed Delivery Procedures described below.
Delivery of documents to a Book-Entry Transfer Facility does not constitute
delivery to the US Depositary.
(d) Method of delivery
The method of delivery of LASMO ADRs, Letters of Transmittal and all other
required documents is at the option and risk of the tendering holder of
LASMO ADSs. LASMO ADSs will be deemed delivered only when the LASMO ADRs
representing such LASMO ADSs are actually received by the US Depositary
(including in the case of a book-entry transfer, by Book-Entry
Confirmation). If delivery is by mail, registered mail with return receipt
requested, properly insured, is recommended. In all cases, sufficient time
should be allowed to ensure timely delivery. No acknowledgement of receipt
of documents will be given by, or on behalf of, Amerada Hess.
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(e) Signature guarantees
No signature guarantee is required on the Letter of Transmittal if:
(i) the Letter of Transmittal is signed by the registered holder of the
LASMO ADSs tendered therewith and such registered holder has not
completed either the Box entitled "Special Delivery Instructions" or the
Box entitled "Special Payment Instructions" in the Letter of
Transmittal; or
(ii) such LASMO ADSs are tendered for the account of an Eligible
Institution.
In all other cases, all signatures on Letters of Transmittal must be
guaranteed by an Eligible Institution. See Instructions 1 and 5 to the
Letter of Transmittal.
(f) LASMO ADSs and ADRs
If the LASMO ADSs are registered in the name of a person other than the
person who signs the Letter of Transmittal, then the tendered LASMO ADRs
must be endorsed or accompanied by appropriate stock powers, signed exactly
as the name or names of the registered owner or owners appear on the LASMO
ADRs, with the signatures on the LASMO ADRs or stock powers guaranteed as
aforesaid. See Instruction 5 to the Letter of Transmittal.
(g) Partial acceptances (not applicable to book-entry holders of LASMO ADSs)
If fewer than all of the LASMO ADSs evidenced by any LASMO ADRs delivered
to the US Depositary are to be tendered, the holder thereof should so
indicate in the Letter of Transmittal by filling in the number of LASMO
ADSs which are tendered in the Box entitled "Number of ADSs Tendered". In
such case, a new LASMO ADR for the remainder of the LASMO ADSs represented
by the former LASMO ADR will be sent to the person(s) signing such Letter
of Transmittal (or as such person properly indicates thereon) as promptly
as practicable following the date the tendered LASMO ADSs are purchased.
All LASMO ADRs delivered to the US Depositary will be deemed to have been
tendered unless otherwise indicated. See Instruction 4 to the Letter of
Transmittal. In the case of partial tenders, LASMO ADSs not tendered will
not be reissued to a person other than the registered holder.
(h) Guaranteed delivery procedures
(i) If a holder of LASMO ADSs evidenced by LASMO ADRs wishes to tender
LASMO ADSs pursuant to the Offer and the LASMO ADRs evidencing such
LASMO ADSs are not immediately available or the procedures for
book-entry transfer cannot be completed on a timely basis, or if time
will not permit all required documents to reach the US Depositary whilst
the Offer remains open for acceptance, such holder's tender of LASMO
ADSs may be effected if all of the following conditions are satisfied
(the "GUARANTEED DELIVERY PROCEDURES"):
(aa) such tender is made by or through an Eligible Institution;
(bb) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by Amerada Hess is
received by the US Depositary, as provided below, whilst the Offer
remains open for acceptance; and
(cc) the LASMO ADRs evidencing all tendered LASMO ADSs (or, in the case
of LASMO ADSs held in book-entry form, timely confirmation of the
book-entry transfer of such interests in LASMO ADSs into the US
Depositary's account at a Book-Entry Transfer Facility as described
above) together with a properly completed and duly executed Letter
of Transmittal with any required signature guarantees or, in the
case of a book-entry transfer, an Agent's Message and any other
documents required by the Letter of Transmittal, are received by
the US Depositary within three New York Stock Exchange business
days after the date of execution of such Notice of Guaranteed
Delivery.
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<PAGE> 71
(ii) The Notice of Guaranteed Delivery may be delivered by hand,
transmitted by facsimile transmission or mailed to the US Depositary and
must include a signature guarantee by an Eligible Institution in the
form set out in such Notice of Guaranteed Delivery.
(iii) Receipt of a Notice of Guaranteed Delivery will not be treated as a
valid acceptance for the purpose of satisfying the Acceptance Condition.
To be counted towards satisfaction of this requirement, the LASMO ADRs
evidencing LASMO ADSs referred to in the Notice of Guaranteed Delivery
must be received prior to the relevant Closing Date by the US Depositary
(or, in the case of interests in LASMO ADSs evidenced by LASMO ADRs held
in book-entry form, timely confirmation of a book-entry transfer of such
interests in LASMO ADSs into the US Depositary's account at a Book-Entry
Transfer Facility pursuant to the procedures set out above) together
with a duly executed Letter of Transmittal with any required signature
guarantees (or, in the case of a book-entry transfer an Agent's Message)
and any other required documents.
(i) Other requirements
By executing the Letter of Transmittal as set out above, the tendering
holder of LASMO ADSs evidenced by LASMO ADRs will agree that, effective
from and after the time and date all Conditions are either satisfied,
fulfilled or, to the extent permitted, waived (unless the tendering holder
shall have validly withdrawn his tender prior to that time):
(i) Amerada Hess or its agents shall be entitled to direct the exercise
of any votes attaching to any LASMO Shares represented by LASMO ADSs, in
respect of which the Offer has been accepted or is deemed to have been
accepted (the "ACCEPTED ADSS") and any other rights and privileges
attaching to such LASMO Shares, including any right to requisition a
general meeting of LASMO or any class of its shareholders;
(ii) the execution of the Letter of Transmittal (together with any
signature guarantees) and its delivery to the US Depositary or the
completion of the book-entry transfer procedures shall constitute:
(aa) an authority to LASMO or its agents from the tendering holder of
Accepted ADSs to send any notice, circular, warrant, document or
other communication that may be required to be sent to him as a
holder of LASMO ADSs, to Amerada Hess at the office of the UK
Receiving Agent;
(bb) an authority to Amerada Hess or its agent to sign any consent to
short notice of a general meeting or separate class meeting on
behalf of the tendering holder of Accepted ADSs and/or to execute a
form of proxy in respect of such Accepted ADSs appointing any
person nominated by Amerada Hess to attend general meetings and
separate class meetings of LASMO and any adjournment thereof and to
exercise the votes attaching to the LASMO Shares represented by
such Accepted ADSs on his behalf;
(cc) the agreement of such tendering holder of Accepted ADSs not to
exercise any of such rights without the consent of Amerada Hess and
the irrevocable undertaking of such tendering holder of Accepted
ADSs not to appoint a proxy for or to attend any such general
meetings or separate class meetings;
(dd) a representation and warranty that such holder of LASMO ADSs (i)
has not received or sent copies or originals of this document or
any Letter of Transmittal or any related documents in, into or
from, Canada, Australia or Japan; (ii) has not used in connection
with the Offer or the execution or delivery of the Letter of
Transmittal, directly or indirectly, the mails of, or any means or
instrumentality (including, without limitation, e-mail, facsimile
transmission, telex and telephone) of interstate or foreign
commerce of, or any facility of a national securities exchange of
Canada, Australia or Japan; (iii) is
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<PAGE> 72
accepting the Offer from outside Canada, Australia or Japan; and
(iv) is not an agent or fiduciary acting on a non-discretionary
basis for a principal, unless such agent or fiduciary is an
authorised employee of such principal or such principal has given
any instructions with respect to the Offer from outside Canada,
Australia or Japan;
(ee) confirmation that such holder of LASMO ADSs is entitled to sell and
transfer the beneficial ownership of the Accepted ADSs and that
such Accepted ADSs are sold fully paid and free from all liens,
equitable interests, charges, and encumbrances and together with
all rights attaching thereto including voting rights and the right
to all dividends and other distributions declared, paid or made on
or after 6 November 2000 including, without limitation, the right
to receive and retain all dividends and other distributions
declared, made or payable after that date; and
(ff) the execution of the Letter of Transmittal (together with any
signature guarantees) and its delivery to the US Depositary (or the
completion of the book-entry transfer procedures) shall constitute
an authority to any director of Amerada Hess or Goldman Sachs and
to Amerada Hess or Goldman Sachs and/or their respective agents in
accordance with the terms of paragraph 7 of Part B of this
Appendix.
References in this paragraph 12 to a holder of LASMO ADSs shall include
references to the person or persons executing a Letter of Transmittal
and in the event of more than one person executing a Letter of
Transmittal the provisions of this Part B shall apply to them jointly
and to each of them.
13. CURRENCY OF CASH CONSIDERATION
Instead of receiving cash consideration in pounds sterling, LASMO Shareholders
who so wish may elect to receive US dollars on the basis that the cash amount
payable in pounds sterling to which such holder would otherwise be entitled
pursuant to the terms of the Offer will be converted, without charge, from
pounds sterling to US dollars at the exchange rate obtainable by the relevant
payment agent (either the UK Receiving Agent or the US Depositary) on the spot
market in London at approximately noon (London time) on the date the cash
consideration is made available by Amerada Hess to the relevant payment agent
for delivery in respect of the relevant LASMO Shares. A LASMO Shareholder may
receive such amount on the basis set out above only in respect of the whole of
his holding of LASMO Shares in respect of which he accepts the Offer. LASMO
Shareholders may not elect to receive both pounds sterling and US dollars.
Holders of LASMO ADSs are entitled under the terms of the Offer to receive the
cash element of the consideration in pounds sterling. The pounds sterling
consideration available to holders of LASMO ADSs is the same, per LASMO Share,
as that offered to LASMO Shareholders. To facilitate the settlement of the
Offer, unless they elect to receive pounds sterling, holders of LASMO ADSs will
receive consideration converted into US dollars as described above, as if such
holders of LASMO ADSs had elected to receive US dollars.
Consideration in US dollars may be inappropriate for LASMO Securityholders other
than persons in the US and holders of LASMO ADSs.
The actual amount of US dollars received will depend upon the exchange rate
prevailing on the day on which funds are made available to the relevant payment
agent (either the UK Receiving Agent or the US Depositary) by Amerada Hess.
LASMO Securityholders should be aware that the US dollar/pounds sterling
exchange rate which is prevailing at the date on which an election is made to
receive dollars and on the dates of despatch and receipt of payment may be
different from that prevailing on the day on which funds are made available to
the relevant payment agent by Amerada Hess. In all cases, fluctuations in the US
dollar/pounds sterling exchange rate are at the risk of accepting LASMO
Securityholders who elect or are treated as having elected to receive their
consideration in US dollars. Neither Amerada
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<PAGE> 73
Hess nor any of its advisers or agents shall have any responsibility with
respect to the actual amount of cash consideration payable other than in pounds
sterling.
14. SUBSTITUTE ACCEPTANCE FORMS
Holders of LASMO Securities have been sent with this document a Form of
Acceptance and/or a Letter of Transmittal (accompanied by a Notice of Guaranteed
Delivery). All holders of LASMO Shares, including persons in the US who hold
LASMO Shares, have been sent a Form of Acceptance, which they must use to accept
the Offer. All holders of LASMO ADSs have been sent a Letter of Transmittal and
a Notice of Guaranteed Delivery which they must use to accept the Offer. Should
any holder of LASMO Securities receive an incorrect form with which to accept
the Offer or require any additional forms, that person should contact the UK
Receiving Agent, the US Depositary or the Information Agent at the addresses set
out at the back of this document, who will provide the appropriate forms.
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<PAGE> 74
APPENDIX II
PARTICULARS OF THE LOAN NOTES
The Floating Rate Unsecured Loan Notes 2005 of Amerada Hess will be constituted
by a loan note instrument (the "LOAN NOTE INSTRUMENT") executed as a deed by
Amerada Hess. The issue of the Loan Notes is conditional on the Offer becoming
or being declared unconditional in all respects. The Loan Note Instrument will
contain provisions, inter alia, to the effect set out below.
FORM AND STATUS
1. The Loan Notes will be issued, credited as fully paid, by Amerada Hess in
amounts and integral multiples of L1 in nominal amount and will constitute
unsecured obligations of Amerada Hess. The Loan Note Instrument will not
contain any restrictions on borrowing, disposals or charging of assets by
Amerada Hess.
INTEREST
2. Interest on the outstanding Loan Notes will be payable (subject to any
requirement to deduct tax therefrom) in arrears on 30 June and 31 December
in each year or, if such a day is not a business day, on the next following
business day ("INTEREST PAYMENT DATES"). The first payment of interest on
the Loan Notes will be made on 2 July 2001 in respect of the period from
(but excluding) the date of issue up to (but excluding) 2 July 2001. The
period from (but excluding) the date of issue up to (but excluding) 2 July
2001 and the period from (and including) 2 July 2001 or any subsequent
interest payment date up to (but excluding) the next following interest
payment date is herein called an "INTEREST PERIOD". The last interest
payment date will be the next business day following 31 December 2005.
3. (a) Interest on the Loan Notes will accrue at the rate per annum which is
0.5 per cent. below LIBOR, treated for this purpose as the percentage
rate per annum equal to the offered quotation for six month sterling
deposits which appears on Telerate Page 3750 or Telerate Page 3740 (as
appropriate) at or about 11.00 am (London time) on the first business
day of the relevant interest period.
(b) If the display rate cannot be determined under paragraph (a) above,
LIBOR for this purpose shall be determined by Amerada Hess to be the
arithmetic mean (rounded, if necessary, to the nearest five decimal
places with the midpoint rounded upwards) of the rates at which the
Royal Bank of Scotland and Barclays Bank are offering six month sterling
deposits or its equivalent in the currency which, at the relevant time,
is the Loan Note currency at or as soon as practicable after 11.00 am
(London time) on the first day of the relevant interest period or, if
such day is not a business day, on the preceding business day.
(c) Each instalment of interest shall be calculated on the basis of a 365
day year and the number of days elapsed in the relevant interest period.
(d) The Loan Note Instrument may make provision for substituting another
Loan Note currency if sterling should cease to be the lawful currency of
the United Kingdom.
(e) If a rate of interest cannot be established as described in this
paragraph 3 for any interest period, the rate of interest on the Loan
Notes for such interest period shall be determined by Amerada Hess on
the basis of the arithmetic mean (rounded down, if necessary, to four
decimal places) of at least three (or such lesser number as may be
obtainable on the first day of the relevant interest period) quotations
on such inter bank market or (if on that day there is no available inter
bank market) such other market as Amerada Hess may select for six month
deposits of sterling or of the currency which is, on the first day of
the relevant interest period, the Loan Note currency.
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<PAGE> 75
REPAYMENT AND REDEMPTION
4. A holder of Loan Notes (a "NOTEHOLDER") shall be entitled to require Amerada
Hess to repay the whole (whatever the amount) or any part (being L500 in
nominal amount or any integral multiple thereof) of the principal amount of
his holding of Loan Notes at par, together with accrued interest thereon
(subject to any requirement to deduct tax therefrom) up to but excluding
the date of repayment, on any interest payment date falling on or after 31
December 2001, by giving not less than 30 days' prior notice in writing
(which shall be irrevocable) to Amerada Hess' registrars accompanied by
certificate(s) for all the Loan Notes to be repaid and a notice of
redemption (duly completed) in the prescribed form endorsed on the Loan
Notes to be repaid.
If at any time after 30 June 2001 the principal amount of all Loan Notes
outstanding equals 5 per cent. or less in nominal value of the Loan Notes
issued, Amerada Hess shall have the right on giving the remaining
Noteholders not less than 30 days' notice in writing expiring on 31
December 2001 or any subsequent interest payment date, to redeem all (but
not some only) of the outstanding Loan Notes at par together with accrued
interest thereon (subject to any requirement to deduct tax therefrom) up to
but excluding the date of repayment.
5. If at any time after 30 June 2001, in the reasonable opinion of Amerada
Hess, the interest payable on the Loan Notes falls to be treated as
non-deductible for US federal income tax purposes, Amerada Hess will have
the right, by giving the remaining Noteholders not less than 30 days'
notice in writing expiring on 31 December 2001, or any subsequent interest
payment date, to redeem all (but not some only) of the outstanding Loan
Notes at par together with accrued interest up to but excluding the date of
repayment (subject in each case to any requirement to deduct tax
therefrom).
6. Any Loan Notes not previously so repaid, redeemed or purchased will be
repaid in full at par on the next business day following 31 December 2005,
together with accrued interest thereon (subject to any requirement to
deduct tax therefrom) up to and excluding that business day.
7. Amerada Hess shall have the right on a redemption by Amerada Hess pursuant
to paragraph 6 of this Appendix II, by notice in writing to Noteholders
given not less than 28 days prior to the day specified in paragraph 6, to
pay each Noteholder (subject to certain limitations), in lieu and in
satisfaction of the sterling amount otherwise payable, an amount in US
dollars equal to the amount in US dollars that the sterling amount equal to
the principal amount of the Loan Notes to be redeemed could have purchased,
on the date being 28 days before the next business day following 31
December 2005, provided that such amount shall be no less or more than (and
if it would otherwise be, shall be equal to) 99.5 per cent. or 100.5 per
cent. of the amount in US dollars that the sterling principal amount of the
Loan Notes to be redeemed could have purchased on the next business day
following 31 December 2005.
8. Each Noteholder shall have the right on a redemption by Amerada Hess
pursuant to paragraph 6 of this Appendix II, by notice in writing to
Amerada Hess given not less than 28 days prior to the day specified in
paragraph 6, to require Amerada Hess to pay to such Noteholder (subject to
certain limitations), in lieu and in satisfaction of the sterling amount
otherwise payable, an amount in US dollars equal to the amount in US
dollars that the sterling amount equal to the principal amount of the Loan
Notes held by such Noteholder to be redeemed could have purchased, on the
date being 28 days before the next business day following 31 December 2005,
provided that such amount shall be no less or more than (and if it would
otherwise be, shall be equal to) 99.5 per cent. or 100.5 per cent. of the
amount in US dollars that the sterling principal amount of the Loan Notes
to be redeemed could have purchased on the next business day following 31
December 2005.
9. Any Loan Notes repaid, purchased or redeemed will be cancelled and shall not
be available for re-issue.
II-2
<PAGE> 76
10. Each Noteholder shall be entitled to require all of the Loan Notes held by
him to be repaid at par together with accrued interest (subject to any
requirement to deduct any tax therefrom) immediately if:
(a) any principal or interest on any of the Loan Notes held by that
Noteholder shall fail to be paid in full by the time at which Amerada
Hess is required to make payment in respect of that amount and the
relevant Noteholder has given Amerada Hess notice of that fact requiring
Amerada Hess to deliver a cheque or warrant for the relevant amount to
the registered address of the Noteholder and Amerada Hess has failed to
make such delivery within fourteen days of receiving such notice; or
(b) an order is made or a resolution is passed by the stockholders of
Amerada Hess for the dissolution of Amerada Hess; or
(c) an encumbrancer takes possession of, or a trustee, receiver,
administrator or similar officer is appointed or an administration order
is made in respect of, the whole or substantially the whole of the
undertaking of Amerada Hess and such person has not been paid out or
discharged within 30 days.
11. Amerada Hess will be entitled at any time to purchase any Loan Notes by
tender (available to all Noteholders alike), private treaty or otherwise, at
any price agreed by the Noteholder(s).
MODIFICATION
12. The Noteholders will have power by extraordinary resolution of the
Noteholders passed in accordance with the provisions of the Loan Note
Instrument or by resolution in writing signed by holders of not less than 75
per cent. of the outstanding Loan Notes, inter alia, to sanction any
modification, abrogation or compromise of or arrangement in respect of their
rights against Amerada Hess (but subject to the consent of Amerada Hess).
Amerada Hess may, with the consent of Goldman Sachs, amend the provisions of
the Loan Note Instrument, without such sanction or consent, if such
amendment is of a formal, minor or technical nature or to correct a manifest
error.
SUBSTITUTION OR EXCHANGE
13. The Loan Notes will contain provisions entitling Amerada Hess, subject to
certain conditions, to substitute on one or more occasions any other member
of the Amerada Hess Group as the principal debtor under the Loan Note
Instrument and the Loan Notes or to require all or any of the Noteholders to
exchange their Loan Notes for loan notes issued on the same terms mutatis
mutandis by such other members of the Amerada Hess Group. References to
Amerada Hess in this summary shall be construed accordingly. The obligations
of any substituted issuer or new issuer will be fully guaranteed by Amerada
Hess unless it has become a subsidiary of the substituted issuer or the new
issuer.
REGISTRATION, TRANSFER AND MARKETABILITY
14. The Loan Notes will be evidenced by certificates and will be registered and
transferable in minimum amounts of L500 or multiples thereof or such lower
amount as Amerada Hess may approve (or the entire holding), provided that
transfers will not be registered during the 21 days immediately preceding an
interest payment date or any other date by which a payment in respect of
interest or principal is required to be made.
15. No application has been made or is intended to be made to any stock exchange
for the Loan Notes to be listed or otherwise traded.
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<PAGE> 77
16. The Loan Notes have not been and will not be registered under the Securities
Act or under the laws of any State of the United States nor have any steps
been taken, nor will any be taken, to enable the Loan Notes to be offered in
compliance with applicable securities laws of Canada or Japan and no
prospectus in relation to the Loan Notes has been, or will be, lodged with
the Australian Securities Commission. Accordingly, the Loan Notes may not be
offered, sold, resold, delivered or distributed, directly or indirectly, in
or into the United States or to or for the account of or benefit of any US
person (except pursuant to an exemption from, or in a transaction exempt
from, or not subject to, the requirements of the Securities Act or the
relevant securities laws of any State of the United States), Australia,
Canada or Japan.
GOVERNING LAW
17. The Loan Notes and the Loan Note Instrument will be governed by and
construed in accordance with English Law.
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<PAGE> 78
APPENDIX III
FURTHER INFORMATION ON AMERADA HESS
BUSINESS DESCRIPTION AND FINANCIAL RESULTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
1. Business Description.................................... III-2
2. Financial Information for Amerada Hess.................. III-8
3. Results for the nine months ended 30 September 2000..... III-31
</TABLE>
III-1
<PAGE> 79
1. BUSINESS DESCRIPTION
We explore for, produce, purchase, transport and sell crude oil and natural gas
in the United States, United Kingdom, Norway, Denmark, Gabon, Indonesia,
Thailand, Azerbaijan, Algeria, Brazil and in certain other countries. We also
manufacture, purchase, transport and market refined petroleum and other energy
products. We own 50 per cent. of a refinery joint venture in the United States
Virgin Islands, and another refining facility, terminals and retail outlets
located on the East Coast of the United States.
EXPLORATION AND PRODUCTION
At 31 December 1999, we had 698 million barrels of proved crude oil and natural
gas liquids reserves compared with 695 million barrels at the end of 1998.
Proved natural gas reserves were 1,904 million Mcf at 31 December 1999 compared
with 2,055 million Mcf at 31 December 1998. Of our proved reserves (on a barrel
of oil equivalent basis) at 31 December 1999, 26 per cent. were located in the
United States, 60 per cent. were located in the United Kingdom, Norwegian and
Danish sectors of the North Sea and the remainder were located in Azerbaijan,
Gabon, Indonesia and Thailand.
Worldwide crude oil and natural gas liquids production amounted to 232,407
barrels per day in 1999 compared with 205,989 barrels per day in 1998. For the
nine month period ended 30 September 2000, crude oil and natural gas liquids
production amounted to 256,088 barrels per day compared with 219,694 barrels per
day for the comparable period of 1999. Worldwide natural gas production was
642,544 Mcf per day in 1999 compared with 576,477 Mcf per day in 1998. For the
nine month period ended 30 September 2000, natural gas production amounted to
676,700 Mcf per day compared with 616,700 Mcf per day for the comparable period
of 1999. We have a number of oil and gas developments in progress and an
inventory of drillable prospects in various countries.
United States
We operate offshore in the Gulf of Mexico and onshore in Texas, Louisiana and
North Dakota. During 1999, 28 per cent. of crude oil and natural gas liquids
production and 53 per cent. of our natural gas production were from United
States operations.
The table below sets forth average daily net production by area in the United
States:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
30 SEPTEMBER
2000 1999 1998
----------------- ------- -------
<S> <C> <C> <C>
CRUDE OIL, INCLUDING CONDENSATE AND NATURAL GAS
LIQUIDS (BARRELS PER DAY)
Gulf of Mexico.................................... 35,431 31,926 11,041
Texas............................................. 14,177 14,577 15,803
North Dakota...................................... 13,335 13,170 12,958
Louisiana......................................... 1,823 1,848 1,588
Other............................................. 2,688 3,084 3,530
------- ------- -------
TOTAL.......................................... 67,454 64,605 44,920
======= ======= =======
</TABLE>
III-2
<PAGE> 80
<TABLE>
<CAPTION>
NINE MONTHS ENDED
30 SEPTEMBER
2000 1999 1998
----------------- ------- -------
<S> <C> <C> <C>
NATURAL GAS (MCF PER DAY)
Gulf of Mexico.................................... 163,500 191,002 116,392
North Dakota...................................... 53,100 59,237 58,476
Louisiana......................................... 41,600 52,280 56,627
Texas............................................. 19,300 21,839 26,023
New Mexico........................................ 12,900 11,533 12,442
California*....................................... -- 1,463 18,320
Mississippi....................................... 1,000 690 5,569
------- ------- -------
TOTAL.......................................... 291,400 338,044 293,849
======= ======= =======
BARRELS OF OIL EQUIVALENT (PER DAY)................. 116,021 120,946 93,895
======= ======= =======
</TABLE>
* Properties sold in January 1999
We are proceeding with two developments in the Conger and Northwestern Fields in
the Gulf of Mexico and we expect production to commence from these fields in the
first quarter 2001. We expect developments to add 55,000 Mcf of natural gas per
day and 8,000 barrels of oil per day.
At 31 December 1999, we had an interest in 150 exploration blocks in the Gulf of
Mexico of which we operate 100. We also had 439,092 net undeveloped acres in the
Gulf of Mexico.
United Kingdom
We conduct our activities in the United Kingdom through our wholly-owned
subsidiary, Amerada Hess Limited. During 1999, 51 per cent. of our crude oil and
natural gas liquids production and 40 per cent. of our natural gas production
were from United Kingdom operations.
In late 1999, first gas was exported from the Neptune and Mercury Fields in the
southern North Sea, the first phase of the Easington Catchment Area (ECA)
project.
During April 2000, the Bittern Field was brought on stream in the United
Kingdom, produced through the Amerada Hess-operated Triton facility.
The table below sets forth our average daily net production in the United
Kingdom by field and our interest in each at 30 September 2000:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
30 SEPTEMBER
PRODUCING FIELD INTEREST (%) 2000 1999 1998
--------------- ----------------------- ----------------- ------- -------
<S> <C> <C> <C> <C>
CRUDE OIL, INCLUDING
CONDENSATE AND NATURAL GAS
LIQUIDS (BARRELS PER DAY)
Scott/Telford.............. 34.95/31.42 28,124 36,200 43,894
Beryl/Ness/Nevis/Buckland... 22.22/22.22/37.35/14.07 26,203 25,431 23,472
Fife/Fergus/Flora.......... 85.00/65.00/85.00 19,639 17,507 20,761
Schiehallion............... 15.67 14,536 12,315 3,149
Arbroath/Montrose/Arkwright.. 28.21 7,711 8,946 8,945
Hudson..................... 28.00 7,057 6,697 2,262
Ivanhoe/Rob Roy/Hamish..... 76.56 5,946 4,102 5,041
Bittern.................... 28.29 5,010 -- --
Renee/Rubie................ 14.00/19.20 1,969 2,742 --
Other...................... Various 5,592 3,859 7,929
------- ------- -------
TOTAL................... 121,787 117,799 115,453
======= ======= =======
</TABLE>
III-3
<PAGE> 81
<TABLE>
<CAPTION>
NINE MONTHS ENDED
30 SEPTEMBER
PRODUCING FIELD INTEREST (%) 2000 1999 1998
--------------- ----------------------- ----------------- ------- -------
<S> <C> <C> <C> <C>
NATURAL GAS (MCF PER DAY)
Beryl/Ness/Nevis/Buckland... 22.22/22.22/37.35/14.07 73,000 81,900 51,700
Everest/Lomond............. 18.67/16.67 59,700 56,900 60,500
Davy/Bessemer.............. 27.78/23.08 48,600 42,300 29,000
ECA -- Phase 1............. 23.84 35,500 -- --
Leman...................... 21.74 26,400 17,200 31,600
Indefatigable.............. 23.08 21,000 26,000 36,600
Scott/Telford.............. 34.95/31.42 19,100 25,500 31,100
Other...................... Various 11,100 8,000 10,500
------- ------- -------
TOTAL................... 294,400 257,800 251,000
======= ======= =======
BARRELS OF OIL EQUIVALENT
(PER DAY).................. 170,854 160,766 157,286
======= ======= =======
</TABLE>
We are developing several oil and gas fields in the United Kingdom North Sea and
we are evaluating other discoveries.
Amerada Hess Limited owns 25 per cent. of the shares of Premier Oil plc, a
United Kingdom company with worldwide exploration and production interests.
Norway
We conduct our activities in Norway through our wholly-owned Norwegian
subsidiary, Amerada Hess Norge A/S. Norwegian operations accounted for crude oil
and natural gas liquids production of 25,856 net barrels per day for the nine
months ended 30 September 2000 and 27,009 net barrels per day in 1999 and 28,322
net barrels per day in 1998. Substantially all of our Norwegian production is
from our 28.09 per cent. interest in the Valhall Field. An enhanced-recovery
waterflood project for the Valhall Field was approved in 2000 with anticipated
completion by the end of 2003.
Denmark
Amerada Hess A/S, our Danish subsidiary, brought the South Arne Field on-stream
in the third quarter of 1999. We operate this field with a 57.48 per cent.
interest. Net production from the South Arne Field for the nine months ended 30
September 2000 was 25,386 net barrels of crude oil per day and 34,900 Mcf of
natural gas per day.
Gabon
Amerada Hess Production Gabon ("AHPG"), our majority-owned Gabonese subsidiary,
has a 10 per cent. interest in the Rabi Kounga Field in Gabon. Our share of
production averaged 7,404 net barrels of crude oil per day for the nine months
ended 30 September 2000 and 10,226 net barrels of crude oil per day in 1999 and
14,345 net barrels per day in 1998. The decrease in our share of production in
1999 and 2000 was largely due to a reduced equity interest in AHPG. AHPG has a
40 per cent. interest in the developing onshore Atora Field. We expect
production from this field to begin in 2001 and to reach a net level of 4,300
barrels of crude oil per day.
Indonesia
We have a 30 per cent. interest in the Jabung production sharing contract, which
contains the North Geragai and Makmur Fields. Net production from these fields
averaged 3,700 barrels of crude oil per day for the nine months ended 30
September 2000. The Jabung production sharing contract area contains additional
discoveries for which development plans are either underway or being considered.
In
III-4
<PAGE> 82
addition, we have interests in other production sharing contracts in Indonesia
on which discoveries have been made.
Thailand
We have a 15 per cent. interest in the Pailin Field offshore Thailand. The field
came onstream in August 1999. Net production from our interest averaged 22,500
Mcf of natural gas per day for the nine months ended 30 September 2000.
Azerbaijan
We have a 1.68 per cent. equity interest in the AIOC Consortium in the Caspian
Sea. Net production from our interest is currently averaging approximately 1,500
barrels of oil per day. On 17 July 2000, we announced that we had reached
agreement, subject to governmental and co-venturer consent, to acquire a further
2.08 per cent. interest in the AIOC Consortium. We also have interests in two
onshore fields with initial net production of approximately 1,000 barrels per
day of crude oil.
Algeria
In April 2000, we acquired the Gassi El Agreb redevelopment project from
Sonatrach, the Algerian State oil company. The redevelopment project is designed
to increase production from the fields from the current gross level of 27,000
barrels per day of crude oil to 45,000 barrels per day late in 2003. Sonatrach
will retain 51 per cent. of gross production volumes, with the remaining 49 per
cent. being available for cost recovery by both Sonatrach and Amerada Hess.
After cost recovery, the remaining production will be divided between Sonatrach
and Amerada Hess based on the cumulative rate of return on capital invested.
Brazil
We have 32 per cent. net equity interests and operatorship of Blocks BC-8 in the
Southern Campos Basin and BS-2 in the Northern Santos Basin offshore Brazil. We
commenced exploration drilling on these blocks in 2000. We also acquired a 45
per cent. interest in an exploration licence on Block BM S-3 in the Santos Basin
and a 16 per cent. interest in an exploration licence on Block BCe-2 in the
Potiguar Basin. In June 2000, in the second Brazilian licensing round, we were
awarded two licences for exploration blocks in the Sergipe-Alagoas Basin,
BM-Seal-5 (Amerada Hess 85 per cent.) and BM-Seal-4 (Amerada Hess 40 per cent.).
REFINING AND MARKETING
Refining and marketing has become a smaller, more profitable portion of our
portfolio than it was in the past.
Refining
We own a 50 per cent. interest in the HOVENSA refining joint venture in the
United States Virgin Islands. We also own and operate a refining facility in
Port Reading, New Jersey.
HOVENSA
In 1999, total refinery crude runs averaged 418,000 barrels per day compared
with 421,000 barrels per day in 1998. The refinery joint venture with a
subsidiary of Petroleos de Venezuela S.A. was formed on 30 October 1998.
Petroleos de Venezuela supplies 155,000 barrels per day of Venezuelan Mesa crude
oil to HOVENSA under a long-term crude oil supply contract. The remaining crude
oil is purchased mainly under contracts of one year or less from third parties
and through spot purchases on the open market. After sales of refined products
by HOVENSA to third parties, we must purchase 50 per cent. of HOVENSA's
remaining production at market prices.
III-5
<PAGE> 83
In February 2000, HOVENSA reached agreement on a $600 million bank financing for
the construction of a 58,000 barrel per day delayed coking unit and related
facilities at its refinery. HOVENSA has begun building the coker, which is
anticipated to be completed in 2002. HOVENSA has a long-term supply contract
with Petroleos de Venezuela to purchase 115,000 barrels per day of Venezuelan
heavy Merey crude oil beginning when the coker is completed.
Port Reading Facility
We own and operate a fluid catalytic cracking facility in Port Reading, New
Jersey. This facility processes vacuum gas oil and residual fuel oil. It
currently operates at a rate of approximately 60,000 barrels per day and
produces substantially all gasoline and heating oil.
Marketing
We market refined petroleum products on the East Coast of the United States
through 27 terminals and approximately 915 HESS brand retail outlets. We market
fuel oil, natural gas and electricity to industrial and commercial customers on
the East Coast of the United States. We also market natural gas to approximately
350,000 customers in the UK.
We emphasize retail marketing in our downstream business. Our vision is to be
the leading independent retail marketer on the East Coast of the United States.
We expect to have nearly 1,100 retail outlets by April 2001. We are focused on
expanding HESS EXPRESS convenience stores at our retail outlets which include
fast food outlets.
Refined product sales averaged 356,000 barrels per day in the first nine months
of 2000 and 344,000 barrels per day in 1999 and 482,000 barrels per day in 1998.
Of total refined products sold in 1999, approximately 70 per cent. was obtained
from HOVENSA and Port Reading. We purchased the balance from others under
short-term supply contracts and by spot purchases from various sources.
COMPETITION AND MARKET CONDITIONS
The petroleum industry is highly competitive. We encounter competition from
numerous companies in each of our activities, particularly in acquiring rights
to explore for crude oil and natural gas and in the purchasing and marketing of
refined products. Many competitors are larger and have substantially greater
resources than we have. We also compete with producers and marketers of other
forms of energy.
The petroleum business involves large-scale capital expenditure and risk-taking.
In the search for new oil and gas reserves, long lead times are often required
from successful exploration to subsequent production. Operations in the
petroleum industry depend on a depleting natural resource. The number of areas
where it can be expected that hydrocarbons will be discovered in commercial
quantities is constantly diminishing and exploration risks are high. Areas where
hydrocarbons may be found are often in remote locations or offshore where
exploration and development activities are capital intensive and operating costs
are high.
The major foreign oil producing countries, including members of the Organization
of Petroleum Exporting Countries (also known as "OPEC"), exert considerable
influence over the supply and price of crude oil and refined petroleum products.
Their ability or inability to agree on a common policy on rates of production
and other matters has a significant impact on oil markets and our business. The
derivatives markets are also important in influencing the prices of crude oil,
natural gas and refined products. We cannot predict the extent to which future
market conditions may be affected by foreign oil producing countries, the
derivatives markets or other external influences.
OTHER ITEMS
Our operations may be affected by federal, state, local, territorial and foreign
laws and regulations relating to tax increases and retroactive tax claims,
expropriation of property, cancellation of contract
III-6
<PAGE> 84
rights, and changes in import regulations, as well as other political
developments. We have been affected by certain of these events in various
countries in which we operate. We market motor fuels through lessee-dealers and
wholesalers in certain states where legislation prohibits producers or refiners
of crude oil from directly engaging in retail marketing of motor fuels. Similar
legislation has been periodically proposed in the U.S. Congress and in various
other states. At this time, we cannot predict the effect of any of the foregoing
on its future operations.
We do not expect compliance with various environmental and pollution control
regulations imposed by federal, state and local governments to have a materially
adverse effect on our earnings and competitive position within the industry.
Capital expenditures for facilities, primarily to comply with federal, state and
local environmental standards, were $2 million in 1999 and we anticipate
comparable capital expenditures in 2000. In addition, we expended $8 million in
1999 for environmental remediation, with a comparable amount anticipated for
2000.
We employed approximately 8,485 persons in 1999 and 9,777 in 1998.
WHERE YOU CAN FIND ADDITIONAL INFORMATION ABOUT AMERADA HESS
We are required to comply with the reporting requirements of the Exchange Act
and, in accordance with those requirements, we file reports, proxy statements
and other information with the SEC. You can inspect and copy these reports,
proxy statements and other information at the SEC's Public Reference Room at 450
Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In
addition, the SEC maintains a Website (http://www.sec.gov) that contains the
reports, proxy statements and other information that we have filed. Material
that we have filed can also be inspected at the library of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
We have filed a Registration Statement on Form S-4 to register with the SEC the
new Amerada Hess shares to be delivered to LASMO securityholders in exchange for
their LASMO shares and ADSs. This document will be a part of that Registration
Statement and will constitute a prospectus of Amerada Hess. As allowed by SEC
rules, this document does not contain all the information LASMO securityholders
will be able to find in the Registration Statement or the exhibits to the
Registration Statement.
The SEC allows us to "incorporate by reference" information in this document,
which means that we can disclose important information to LASMO securityholders
by referring them to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this document,
except for any information superseded by information in this document. This
document incorporates by reference the documents set forth below that we have
previously filed with the SEC. These documents contain important information
about Amerada Hess and our finances.
- Annual Report on Form 10-K for the fiscal year ended 31 December 1999
- Quarterly Reports on Form 10-Q for the quarters ended 31 March 2000, 30 June
2000 and 30 September 2000
- Current Reports on Form 8-K filed on 25 October 2000 and 6 November 2000
- Definitive Proxy Statement with respect to the 2000 Annual Meeting of
Shareholders filed on 27 March 2000
We are also incorporating by reference all documents that we file with the SEC
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act between the
date of this document and the date the offer becomes or is declared
unconditional in all respects (or the date that the offer expires).
You can obtain any of these documents through Amerada Hess or the SEC. Documents
incorporated by reference are available from us without charge, excluding all
exhibits unless we have specifically incorporated by reference an exhibit in
this document. You also may obtain documents incorporated by reference in this
document by either inspecting them during normal business hours on any weekday
III-7
<PAGE> 85
(public holidays excepted) while the offer remains open for acceptance or
requesting them in writing or orally from us, at the following address and
telephone number:
Amerada Hess Corporation
1185 Avenue for the Americas
40th Floor
New York, NY 10036
USA
Attention: The Corporate Secretary
Telephone: +1 212 536 8593
You may rely only on the information concerning Amerada Hess contained or
incorporated by reference in this document in determining whether to accept the
offer. We have not authorised anyone to provide you with information that is
different from what is contained in this document. This document is dated 13
December 2000. You should not assume that the information contained in this
document is accurate as of any date other than such date, and neither the
mailing of this document to LASMO securityholders nor the delivery of new
Amerada Hess shares in exchange for LASMO securities will create any implication
to the contrary.
2. FINANCIAL INFORMATION FOR AMERADA HESS
The financial information for Amerada Hess set out below has been extracted
without material adjustment from the 1999 Annual Report of Amerada Hess filed on
Form 10-K with the SEC. The consolidated financial statements contained within
the 1999 Annual Report have been prepared in accordance with US GAAP and audited
in accordance with Generally Accepted Auditing Standards in the United States of
America. Ernst & Young LLP are auditors of Amerada Hess and reported without
qualification on the consolidated financial statements. The financial
information for Amerada Hess does not constitute statutory accounts within the
meaning of Section 240 of the Companies Act.
III-8
<PAGE> 86
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CONSOLIDATED INCOME
Thousands of US dollars, except per share data
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
---------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES
Sales (excluding excise taxes) and other
operating revenues.......................... $ 7,039,138 $ 6,579,892 $ 8,223,582
Non-operating income
Gain (loss) on asset sales.................. 273,441 (25,679) 16,463
Equity in income (loss) of HOVENSA L.L.C.... 6,988 (15,848) --
Other....................................... 141,787 82,740 120,435
----------- ----------- -----------
Total revenues............................ 7,461,354 6,621,105 8,360,480
----------- ----------- -----------
COSTS AND EXPENSES
Cost of products sold.......................... 4,240,910 4,373,616 5,577,924
Production expenses............................ 487,219 517,828 557,025
Marketing expenses............................. 387,298 378,506 328,975
Other operating expenses....................... 216,651 224,433 231,791
Exploration expenses, including dry holes and
lease impairment............................ 261,038 348,951 421,863
General and administrative expenses............ 231,546 270,668 236,269
Interest expense............................... 158,222 152,934 136,149
Depreciation, depletion and amortization....... 648,663 661,802 663,297
Impairment of assets and operating leases...... 127,998 206,478 80,602
----------- ----------- -----------
Total costs and expenses.................. 6,759,545 7,135,216 8,233,895
----------- ----------- -----------
Income (loss) before income taxes.............. 701,809 (514,111) 126,585
Provision (benefit) for income taxes........... 264,193 (55,218) 119,085
----------- ----------- -----------
NET INCOME (LOSS)................................ $ 437,616 $ (458,893) $ 7,500
=========== =========== ===========
NET INCOME (LOSS) PER SHARE
Basic.......................................... $ 4.88 $ (5.12) $ .08
=========== =========== ===========
Diluted........................................ $ 4.85 $ (5.12) $ .08
=========== =========== ===========
</TABLE>
STATEMENT OF CONSOLIDATED RETAINED EARNINGS
Thousands of US dollars, except per share data
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
---------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
BALANCE AT BEGINNING OF YEAR..................... $ 1,904,066 $ 2,463,005 $ 2,613,920
Net income (loss).............................. 437,616 (458,893) 7,500
Dividends declared - common stock
($.60 per share in 1999, 1998 and 1997)..... (54,311) (54,520) (55,090)
Common stock acquired and retired.............. - (45,526) (103,325)
----------- ----------- -----------
BALANCE AT END OF YEAR........................... $ 2,287,371 $ 1,904,066 $ 2,463,005
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial information.
III-9
<PAGE> 87
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
Thousands of US dollars
<TABLE>
<CAPTION>
AT DECEMBER 31
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................. $ 40,926 $ 73,791
Accounts receivable
Trade.................................................. 1,112,114 954,353
Other.................................................. 62,930 58,831
Inventories............................................... 372,713 482,182
Current portion of deferred income taxes.................. 67,418 114,194
Other current assets...................................... 171,469 203,355
----------- -----------
Total current assets................................. 1,827,570 1,886,706
----------- -----------
INVESTMENTS AND ADVANCES
HOVENSA L.L.C............................................. 709,569 702,581
Other..................................................... 282,599 232,826
----------- -----------
Total investments and advances....................... 992,168 935,407
----------- -----------
PROPERTY, PLANT AND EQUIPMENT
Exploration and production................................ 9,974,117 9,718,424
Refining and marketing.................................... 980,806 1,193,353
Shipping.................................................. 109,962 115,462
----------- -----------
Total -- at cost..................................... 11,064,885 11,027,239
Less reserves for depreciation, depletion, amortization
and lease impairment................................... 7,013,233 6,835,301
----------- -----------
Property, plant and equipment -- net................. 4,051,652 4,191,938
----------- -----------
NOTE RECEIVABLE............................................. 538,500 538,500
----------- -----------
DEFERRED INCOME TAXES AND OTHER ASSETS...................... 317,822 330,432
----------- -----------
TOTAL ASSETS................................................ $ 7,727,712 $ 7,882,983
=========== ===========
</TABLE>
The consolidated financial information reflects the successful efforts method of
accounting for oil and gas exploration and producing activities.
See accompanying notes to consolidated financial information.
III-10
<PAGE> 88
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (Continued)
Thousands of US dollars
<TABLE>
<CAPTION>
AT DECEMBER 31
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable -- trade................................. $ 771,797 $ 713,831
Accrued liabilities....................................... 621,334 554,632
Deferred revenue.......................................... 3,846 251,328
Taxes payable............................................. 158,852 100,686
Notes payable............................................. 17,912 3,500
Current maturities of long-term debt...................... 5,109 172,820
----------- -----------
Total current liabilities.............................. 1,578,850 1,796,797
----------- -----------
LONG-TERM DEBT.............................................. 2,286,660 2,476,145
----------- -----------
DEFERRED LIABILITIES AND CREDITS
Deferred income taxes..................................... 442,172 483,843
Other..................................................... 381,838 482,786
----------- -----------
Total deferred liabilities and credits................. 824,010 966,629
----------- -----------
STOCKHOLDERS' EQUITY
Preferred stock, par value $1.00
Authorized -- 20,000,000 shares for issuance in
series............................................... -- --
Common stock, par value $1.00
Authorized -- 200,000,000 shares
Issued -- 90,676,405 shares in 1999; 90,356,705 shares
in 1998.............................................. 90,676 90,357
Capital in excess of par value............................ 782,271 764,412
Retained earnings......................................... 2,287,371 1,904,066
Accumulated other comprehensive income.................... (122,126) (115,423)
----------- -----------
Total stockholders' equity............................. 3,038,192 2,643,412
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................. $ 7,727,712 $ 7,882,983
=========== ===========
</TABLE>
See accompanying notes to consolidated financial information.
III-11
<PAGE> 89
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
Thousands of US dollars
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
---------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)................................. $ 437,616 $ (458,893) $ 7,500
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation, depletion and amortization..... 648,663 661,802 663,297
Impairment of assets and operating leases.... 127,998 206,478 80,602
Exploratory dry hole costs................... 69,346 159,435 191,351
Lease impairment............................. 36,790 31,191 37,185
(Gain) loss on asset sales................... (273,441) 25,679 (16,463)
Provision (benefit) for deferred income
taxes..................................... 62,419 (137,922) (80,208)
Undistributed earnings of affiliates......... 7,102 33,430 (29,439)
----------- ----------- -----------
1,116,493 521,200 853,825
Changes in other operating assets and
liabilities (Increase) decrease in
accounts receivable....................... (155,525) 6,335 (148,488)
Decrease in inventories................... 79,648 122,204 333,477
Increase (decrease) in accounts payable,
accrued liabilities and deferred
revenue................................. (175,227) 185,403 198,596
Increase (decrease) in taxes payable...... 53,256 (87,118) (46,626)
Changes in prepaid expenses and other..... (148,640) (229,236) 59,223
----------- ----------- -----------
Net cash provided by operating
activities........................... 770,005 518,788 1,250,007
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures
Exploration and production..................... (727,086) (1,306,438) (1,157,938)
Refining, marketing and shipping............... (69,571) (132,240) (187,652)
----------- ----------- -----------
Total capital expenditures.............. (796,657) (1,438,678) (1,345,590)
Investment in affiliate........................... (59,171) -- --
Proceeds from asset sales and other............... 431,818 502,854 63,017
----------- ----------- -----------
Net cash used in investing activities... (424,010) (935,824) (1,282,573)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance (repayment) of notes..................... 14,412 (14,342) 1,982
Long-term borrowings.............................. 990,125 848,320 398,391
Repayment of long-term debt....................... (1,347,745) (317,144) (209,000)
Cash dividends paid............................... (54,262) (54,647) (55,373)
Common stock acquired............................. -- (59,167) (122,283)
Stock options exercised........................... 18,283 -- --
----------- ----------- -----------
Net cash provided by (used in) financing
activities........................... (379,187) 403,020 13,717
----------- ----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH............. 327 (3,347) (2,519)
----------- ----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS........... (32,865) (17,363) (21,368)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR...... 73,791 91,154 112,522
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR............ $ 40,926 $ 73,791 $ 91,154
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial information.
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<PAGE> 90
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CONSOLIDATED CHANGES IN COMMON STOCK
AND CAPITAL IN EXCESS OF PAR VALUE
Thousands of US dollars
<TABLE>
<CAPTION>
COMMON STOCK
----------------------- CAPITAL IN
NUMBER OF EXCESS OF
SHARES AMOUNT PAR VALUE
---------- ---------- ----------
<S> <C> <C> <C>
BALANCE AT JANUARY 1,1997............................ 93,073,305 $ 93,073 $ 754,559
Awards of nonvested common stock to employees
(net)........................................... 719,000 719 38,145
Common stock acquired and retired.................. (2,368,100) (2,368) (19,419)
Employee stock options exercised................... 27,000 27 1,346
---------- ---------- ----------
BALANCE AT DECEMBER 31, 1997......................... 91,451,205 91,451 774,631
Cancellations of nonvested common stock awards
(net)........................................... (26,000) (26) (1,292)
Common stock acquired and retired.................. (1,071,500) (1,071) (9,073)
Employee stock options exercised................... 3,000 3 146
---------- ---------- ----------
BALANCE AT DECEMBER 31, 1998......................... 90,356,705 90,357 764,412
Cancellations of nonvested common stock awards
(net)........................................... (2,500) (3) (102)
Employee stock options exercised................... 322,200 322 17,961
---------- ---------- ----------
BALANCE AT DECEMBER 31, 1999......................... 90,676,405 $ 90,676 $ 782,271
========== ========== ==========
</TABLE>
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME
Thousands of US dollars
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
------------------------------------
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
COMPONENTS OF COMPREHENSIVE INCOME (LOSS)
Net income (loss).................................. $ 437,616 $ (458,893) $ 7,500
Change in foreign currency translation
adjustment...................................... (6,703) (2,035) (35,467)
---------- ---------- ----------
COMPREHENSIVE INCOME (LOSS).......................... $ 430,913 $ (460,928) $ (27,967)
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial information.
III-13
<PAGE> 91
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL INFORMATION
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business: Amerada Hess Corporation and subsidiaries (the
"Corporation") engage in the exploration for and the production, purchase,
transportation and sale of crude oil and natural gas. These activities are
conducted primarily in the United States, United Kingdom, Norway, Denmark and
Gabon. The Corporation also has oil and gas activities in Azerbaijan, Brazil,
Indonesia, Thailand and other countries. In addition, the Corporation
manufactures, purchases, transports and markets refined petroleum and other
energy products. The Corporation owns 50% of a refinery joint venture in the
United States Virgin Islands. An additional refining facility, terminals and
retail gasoline stations are located on the East Coast of the United States.
In preparing financial statements, management makes estimates and assumptions
that affect the reported amounts of assets and liabilities in the balance sheet
and revenues and expenses in the income statement. Actual results could differ
from those estimates. Among the estimates made by management are: oil and gas
reserves, asset valuations and depreciable lives, pension liabilities,
environmental obligations, dismantlement costs and income taxes.
Principles of Consolidation: The consolidated financial information includes the
accounts of Amerada Hess Corporation and subsidiaries. The Corporation's
interests in oil and gas exploration and production ventures are proportionately
consolidated.
Investments in affiliated companies, 20% to 50% owned, including HOVENSA L.L.C.,
the Corporation's refining joint venture, are stated at cost of acquisition plus
the Corporation's equity in undistributed net income since acquisition, except
as stated below. The change in the equity in net income of these companies is
included in non-operating income in the income statement. The Corporation
consolidates a trading partnership in which it owns a 50% voting interest and
over which it exercises control.
Intercompany transactions and accounts are eliminated in consolidation.
Certain amounts in prior years' financial statements have been reclassified to
conform with current year presentation.
Revenue Recognition: The Corporation recognizes revenues from the sale of crude
oil, natural gas, petroleum products and other merchandise when title passes to
the customer.
The Corporation recognizes revenues from the production of natural gas
properties in which it has an interest based on sales to customers. Differences
between natural gas volumes sold and the Corporation's share of natural gas
production are not material.
Cash and Cash Equivalents: Cash equivalents consist of highly liquid
investments, which are readily convertible into cash and have maturities of
three months or less.
Inventories: Crude oil and refined product inventories are valued at the lower
of cost or market, except for inventories held for trading purposes which are
marked to market. For inventories valued at cost, the Corporation uses
principally the last-in, first-out inventory method.
Inventories of materials and supplies are valued at or below cost.
Exploration and Development Costs: Oil and gas exploration and production
activities are accounted for using the successful efforts method. Costs of
acquiring undeveloped oil and gas leasehold acreage, including lease bonuses,
brokers' fees and other related costs, are capitalized.
Annual lease rentals and exploration expenses, including geological and
geophysical expenses and exploratory dry hole costs, are charged against income
as incurred.
Costs of drilling and equipping productive wells, including development dry
holes, and related production facilities are capitalized.
III-14
<PAGE> 92
The Corporation does not carry the capitalized costs of exploratory wells as an
asset for more than one year, unless oil and gas reserves are found and
classified as proved, or additional exploration is underway or planned. If
exploratory wells do not meet these conditions, the costs are charged to
expense.
Depreciation, Depletion and Amortization: Depreciation, depletion and
amortization of oil and gas production equipment, properties and wells are
determined on the unit-of-production method based on estimated recoverable oil
and gas reserves. Depreciation of all other plant and equipment is determined on
the straight-line method based on estimated useful lives.
The estimated costs of dismantlement, restoration and abandonment, less
estimated salvage values, of offshore oil and gas production platforms and
certain other facilities are taken into account in determining depreciation.
Retirement of Property, Plant and Equipment: Costs of property, plant and
equipment retired or otherwise disposed of, less accumulated reserves, are
reflected in net income.
Impairment of Long-Lived Assets: The Corporation reviews long-lived assets,
including oil and gas properties, for impairment whenever events or changes in
circumstances indicate that the carrying amounts may not be recovered. If the
carrying amounts are not expected to be recovered by undiscounted future cash
flows, the assets are impaired and an impairment loss is recorded. The amount of
impairment is based on the estimated fair value of the assets determined by
discounting anticipated future net cash flows. The net present value of future
cash flows is based on the Corporation's estimates, including future oil and gas
prices applied to projected production profiles, discounted at a rate
commensurate with the risks involved. Oil and gas prices used for determining
asset impairments may differ from those used at year-end in the standardized
measure of discounted future net cash flows.
Provisions for impairment of undeveloped oil and gas leases are based on
periodic evaluations and other factors.
Maintenance and Repairs: The estimated costs of major maintenance, including
turnarounds at the Port Reading refining facility, are accrued. Other
expenditures for maintenance and repairs are charged against income as incurred.
Renewals and improvements are treated as additions to property, plant and
equipment, and items replaced are treated as retirements.
Environmental Expenditures: The Corporation capitalizes environmental
expenditures that increase the life or efficiency of property or that reduce or
prevent environmental contamination. The Corporation accrues for environmental
expenses resulting from existing conditions related to past operations when the
future costs are probable and reasonably estimable.
Employee Stock Options and Nonvested Common Stock Awards: The Corporation uses
the intrinsic value method to account for employee stock options. Because the
exercise prices of employee stock options equal or exceed the market price of
the stock on the date of grant, the Corporation does not recognize compensation
expense. The Corporation records compensation expense for nonvested common stock
awards ratably over the vesting period.
Foreign Currency Translation: The U.S. dollar is the functional currency
(primary currency in which business is conducted) for most foreign operations.
For these operations, adjustments resulting from translating foreign currency
assets and liabilities into U.S. dollars are recorded in income. For operations
that use the local currency as the functional currency, adjustments resulting
from translating foreign functional currency assets and liabilities into U.S.
dollars are recorded in a separate component of stockholders' equity entitled
"Accumulated other comprehensive income." Gains or losses resulting from
transactions in other than the functional currency are reflected in net income.
Hedging: The Corporation uses futures, forwards, options and swaps to hedge the
effects of fluctuations in the prices of crude oil, natural gas and refined
products and changes in interest rates and foreign currency values. These
transactions meet the requirements for hedge accounting, including designation
and correlation. The resulting gains or losses, measured by quoted market
prices, termination values or
III-15
<PAGE> 93
other methods, are accounted for as part of the transactions being hedged,
except that losses not expected to be recovered upon the completion of hedged
transactions are expensed. On the balance sheet, deferred gains and losses are
included in current assets and liabilities.
Trading: Commodity trading activities are marked to market, with gains and
losses recorded in operating revenue.
NOTE 2 -- SPECIAL ITEMS
1999: The Corporation recorded a gain of $274,100,000 ($176,000,000 after income
taxes) from the sale of its Gulf Coast and Southeast pipeline terminals, natural
gas properties in California and certain retail sites. Exploration and
production results include special income tax benefits of $54,600,000,
reflecting actions taken in 1999 to realize the United States tax impact of
certain prior year exploration activities and capital losses.
Exploration and production earnings also include an impairment of $58,700,000
($38,200,000 after income taxes) for the Corporation's interest in the Trans
Alaska Pipeline System. The Corporation currently has no crude oil production in
Alaska and there has been a significant reduction in crude oil volumes shipped
through the Corporation's share of the pipeline. Refining and marketing results
include an asset impairment of $34,000,000 (with no income tax benefit) for the
Corporation's crude oil storage terminal in St. Lucia, due to the nonrenewal of
a major third party storage contract. The terminal had been partially impaired
in 1998 as a result of the reduced crude oil storage requirements of the HOVENSA
joint venture. The Corporation also accrued $35,300,000 ($27,300,000 after
income taxes) for a further decline in the value of a drilling service
fixed-price contract due to lower market rates. At December 31, 1999, the
Corporation's reserve for drilling service contracts was $54,600,000, including
amounts provided in 1998. During the year, $70,700,000 of contract payments were
charged against the reserve.
Gains on asset sales are included on a separate line in non-operating income in
the income statement. The impairment of carrying values of the Alaska pipeline
and the crude oil storage terminal and the loss on the drilling service contract
are reflected in a separate impairment line in the income statement.
1998: The Corporation recorded a loss of $106,000,000 in connection with the
sale of the 50% interest in the fixed assets of its Virgin Islands refinery. The
Corporation also recorded an additional charge of $44,000,000 for the reduction
in carrying value of its crude oil storage terminal in St. Lucia that is being
used less as a result of the joint venture. No income tax benefit was recorded
on either charge. Exploration and production results included a charge of
$90,000,000 ($77,000,000 after income taxes) for the reduction in market value
of drilling service fixed-price contracts due to the decline in worldwide crude
oil prices. A charge of $54,000,000 ($35,000,000 after income taxes) was also
recorded for the impairment of capitalized costs related to a North Sea oil
discovery that was uneconomic. The Corporation expensed $29,000,000 for its
share of asset impairment of an equity affiliate and $13,000,000 for the
reduction in carrying value of developed and undeveloped properties in the
United States and United Kingdom. In addition, the Corporation recorded gains of
$80,300,000 ($56,200,000 after income taxes) on the sale of oil and gas assets
in the United States and Norway.
In 1998, the Corporation recorded pre-tax charges of $23,000,000 ($15,000,000
after income taxes) for severance costs. The severance costs covered
approximately 400 exploration and production employees (of which approximately
200 had been terminated at December 31, 1998). Approximately $2,000,000 of
severance was paid in 1998 and the remainder was paid in 1999. The Corporation
also recorded $8,000,000 of exit costs (accrued office lease costs).
Approximately $3,400,000 of this reserve was used in 1999 and the remainder was
reversed to income as a result of current plans for use of the office space.
1997: The Corporation recorded a charge of $80,600,000 ($55,000,000 after income
taxes) for impairment of long-lived assets and a long-term operating lease, as a
result of reserve revisions on two oil fields in the United Kingdom North Sea.
The Corporation also recorded income of $38,200,000 from a
III-16
<PAGE> 94
refund of United Kingdom Petroleum Revenue Taxes. In 1997, the Corporation sold
its interest in a United States natural gas field resulting in an after-tax gain
of $10,700,000.
NOTE 3 -- ACCOUNTING CHANGES
Effective January 1, 1999, the Corporation adopted the last-in, first-out (LIFO)
inventory method for valuing its refining and marketing inventories. The
Corporation believes that the LIFO method more closely matches current costs and
revenues and will improve comparability with other oil companies. The change to
LIFO decreased net income by $97,051,000 for the year ended December 31, 1999
($1.08 per share basic and diluted). There is no cumulative effect adjustment as
of the beginning of the year for this type of accounting change.
On January 1, 1998, the Corporation began capitalizing the cost of internal use
software in accordance with AICPA Statement of Position 98-1. This accounting
change increased net income for 1998 by $13,867,000 ($.15 per share).
In June 1998, the Financial Accounting Standards Board issued FAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. The Corporation
must adopt FAS No. 133 by January 1, 2001. This statement requires that the
Corporation recognize all derivatives on the balance sheet at fair value. For
derivatives that are not hedges, the change in fair value must be recognized in
income. For derivatives that hedge changes in the fair value of assets,
liabilities or firm commitments, the gains or losses are recognized in earnings
together with the offsetting losses or gains on the hedged items. For
derivatives that hedge cash flows of forecasted transactions, the gains or
losses are recognized in other comprehensive income until the hedged items are
recognized in income.
The Corporation has not yet determined what the effect of FAS No. 133 will be on
its income and financial position.
NOTE 4 -- INVENTORIES
Inventories at December 31 are as follows:
Thousands of US dollars
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Crude oil and other charge stocks........................... $ 67,539 $ 35,818
Refined and other finished products......................... 393,064 386,917
Less: LIFO adjustment....................................... (149,309) --
---------- ----------
311,294 422,735
Materials and supplies...................................... 61,419 59,447
---------- ----------
Total..................................................... $ 372,713 $ 482,182
========== ==========
</TABLE>
NOTE 5 -- REFINING JOINT VENTURE
In 1998, the Corporation formed HOVENSA L.L.C. (HOVENSA), a joint venture with
Petroleos de Venezuela, S.A. (PDVSA). The Corporation's Virgin Islands
subsidiary and PDVSA, V.I., Inc. (PDVSA V.I.), a wholly-owned subsidiary of
PDVSA, contributed their 50% interests in the fixed assets of the Virgin Islands
refinery, previously wholly-owned by the Corporation, to HOVENSA. HOVENSA is 50%
owned by a subsidiary of the Corporation and 50% owned by PDVSA V.I. and
operates the refinery. The Corporation purchased refined products from HOVENSA
at a cost of approximately $1,196,000,000 during 1999 and $151,000,000 during
the two months ended December 31, 1998. The Corporation sold crude oil to
HOVENSA at a cost of approximately $81,000,000 during 1999 and $7,000,000 during
the two months ended December 31, 1998.
III-17
<PAGE> 95
The Corporation's investment in the joint venture is accounted for using the
equity method. Summarized financial information for HOVENSA as of December 31,
1999 and for the year then ended and as of December 31, 1998 and for the two
months since inception follows:
Thousands of US dollars
<TABLE>
<CAPTION>
1999 1998
----------- ----------
<S> <C> <C>
Summarized balance sheet information at December 31
Current assets............................................ $ 432,877 $ 352,171
Net fixed assets.......................................... 1,328,407 1,343,712
Other assets.............................................. 27,094 27,711
Current liabilities....................................... (282,312) (133,454)
Long-term debt............................................ (150,000) (250,000)
Deferred liabilities and credits.......................... (25,750) (27,718)
----------- ----------
Partners' equity....................................... $ 1,330,316 $1,312,422
=========== ==========
Summarized income statement information
for the periods ended December 31
Total revenues............................................ $ 3,081,969 $ 344,896
Costs and expenses........................................ (3,064,075) (375,903)**
----------- ----------
Net income (loss)*..................................... $ 17,894 $ (31,007)
=========== ==========
</TABLE>
* The Corporation's share of HOVENSA's income in 1999 was $6,988 and its share
of the 1998 loss was $15,848.
** 1998 results include an inventory writedown of $31,999, which reduced costs
of products sold in 1999.
As part of the formation of the joint venture, PDVSA, V.I. purchased a 50%
interest in the fixed assets of the Corporation's Virgin Islands refinery for
$62,500,000 in cash and a 10-year note from PDVSA V.I. for $562,500,000 bearing
interest at 8.46% per annum and requiring principal payments over its term. At
December 31, 1999, the principal balance of the note was $538,500,000. In
addition, there was a $125,000,000, 10-year, contingent note, also bearing
interest at 8.46% per annum. The contingent note was not valued for accounting
purposes. PDVSA V.I.'s payment obligations under both notes are guaranteed by
PDVSA and secured by a pledge of PDVSA V.I.'s interest in the joint venture.
In February 2000, HOVENSA reached agreement on a $600,000,000 bank financing for
the construction of a 58,000 barrel per day delayed coking unit and related
facilities at its refinery and for general working capital requirements. In
connection with the financing, the Corporation and PDVSA V.I. agreed to amend
the note received by the Corporation at the formation of the joint venture.
PDVSA V.I. will defer principal payments on the note until after completion of
coker construction but not later than February 14, 2003. Principal payments are
due ratably until maturity on February 14, 2011. The interest rate on the note
has been increased to 9.46%. PDVSA V.I. has the option to reduce the interest
rate to the original rate of 8.46% by repaying principal in accordance with the
original amortization schedule.
NOTE 6 -- SHORT-TERM NOTES AND RELATED LINES OF CREDIT
Short-term notes payable to banks amounted to $17,912,000 at December 31, 1999
and $3,500,000 at December 31, 1998. The weighted average interest rates on
these borrowings were 6.3% and 8.8% at December 31, 1999 and 1998, respectively.
At December 31, 1999, the Corporation has uncommitted arrangements with banks
for unused lines of credit aggregating $376,000,000.
III-18
<PAGE> 96
NOTE 7 -- LONG-TERM DEBT
Long-term debt at December 31 consists of the following:
Thousands of US dollars
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
7 3/8% and 7 7/8% Debentures, due in 2009 and 2029.......... $ 990,026 $ --
6.1% Marine Terminal Revenue Bonds -- Series 1994 -- City of
Valdez, Alaska, due 2024.................................. 20,000 20,000
Pollution Control Revenue Bonds, weighted average rate 6.6%,
due through 2022.......................................... 52,623 52,607
Fixed rate notes, payable principally to insurance
companies, weighted average rate 8.0%*, due through
2014...................................................... 915,000 1,154,285
Global Revolving Credit Facility with banks, weighted
average rate 6.5%, due 2002............................... 120,000 1,195,000
Project lease financing, weighted average rate 5.1%, due
through 2014.............................................. 182,588 185,513
Capitalized lease obligations, weighted average rate 5.3%,
due through 2009.......................................... 8,332 35,960
Other loans, weighted average rate 8.0%, due through 2007... 3,200 5,600
---------- ----------
2,291,769 2,648,965
Less amount included in current maturities.................. 5,109 172,820
---------- ----------
Total..................................................... $2,286,660 $2,476,145
========== ==========
</TABLE>
* Includes effect of interest rate conversion agreements.
The aggregate long-term debt maturing during the next five years is as follows
(in thousands of US dollars): 2000 -- $5,109 (included in current liabilities);
2001 -- $25,411; 2002 -- $320,695; 2003 -- $80,990 and 2004 -- $159,794.
The Corporation's long-term debt agreements contain various restrictions and
conditions, including working capital requirements and limitations on total
borrowings and cash dividends. At December 31, 1999, the Corporation meets the
required working capital ratio of 1 to 1. Under the agreements, the Corporation
is permitted to borrow an additional $2,225,000,000 for the construction or
acquisition of assets. In addition, at December 31, 1999 it has $638,000,000 of
retained earnings free of dividend restrictions.
In 1999, the Corporation issued $1,000,000,000 of public debentures, of which
$300,000,000 bears interest at 7 3/8% and is due in 2009 and the remainder bears
interest at 7 7/8% and is due in 2029. After discount and the effect of interest
rate conversion agreements, the effective borrowing rates are 6.48% and 7.97%,
respectively.
The Corporation has a $2,000,000,000 Global Revolving Credit Facility (the
"Facility"), of which $120,000,000 is outstanding at December 31, 1999.
Borrowings bear interest at a margin above the London Interbank Offered Rate
("LIBOR") based on the Corporation's capitalisation ratio. The borrowing rate at
December 31, 1999 is .20% above LIBOR. Facility fees of .125% per annum are
payable on the amount of the credit line.
In 1998, the Corporation entered into the sale and leaseback of its interests in
the production platforms and related facilities of two Gulf of Mexico producing
properties. These transactions were accounted for as financings. At December 31,
1999, the outstanding obligations amount to $182,588,000, maturing through 2014.
The Corporation sold a portion of its subsequent year crude oil production in
1998 and used the proceeds to repay revolving credit debt. Accordingly, at
December 31, 1998, $249,325,000 is included in deferred revenue on the balance
sheet. There was no comparable transaction in 1999.
III-19
<PAGE> 97
At December 31, 1999, the Corporation has interest rate conversion agreements,
accounted for by the accrual method, that effectively convert fixed rate debt to
floating rate debt, increasing the percentage of its floating rate debt to 24%.
In 1999, 1998 and 1997, the Corporation capitalized interest of $15,754,000,
$23,559,000 and $10,284,000 on major development projects. The total amount of
interest paid (net of amounts capitalized), principally on short-term and
long-term debt, in 1999, 1998 and 1997 was $145,366,000, $154,419,000 and
$146,795,000, respectively.
NOTE 8 -- STOCK BASED COMPENSATION PLANS
The Corporation has outstanding stock options and nonvested common stock under
its 1995 Long-Term Incentive Plan (as amended, subject to stockholder approval)
and its Executive Long-Term Incentive Compensation and Stock Ownership Plan
(which expired in 1997). Generally, stock options vest one year from the date of
grant and the exercise price equals or exceeds the market price on the date of
grant. Nonvested common stock vests three or five years from the date of grant,
depending on the terms of the award.
The Corporation's stock option activity in 1999, 1998 and 1997 consisted of the
following:
<TABLE>
<CAPTION>
WEIGHTED-AVERAGE
OPTIONS EXERCISE PRICE
(THOUSANDS) PER SHARE
----------- ----------------
<S> <C> <C>
Outstanding at January 1, 1997.............................. 1,421 $58.99
Granted................................................... 873 54.75
Exercised................................................. (27) 50.86
Forfeited................................................. (19) 59.52
----- ------
Outstanding at December 31, 1997............................ 2,248 57.43
Granted................................................... 873 53.05
Exercised................................................. (3) 49.75
Forfeited................................................. (23) 56.22
----- ------
Outstanding at December 31, 1998............................ 3,095 56.21
Granted*.................................................. 1,804 55.66
Exercised................................................. (322) 53.22
Forfeited................................................. (70) 58.08
----- ------
Outstanding at December 31, 1999............................ 4,507 $56.18
===== ======
Exercisable at December 31, 1997............................ 1,376 $59.14
Exercisable at December 31, 1998............................ 2,230 57.44
Exercisable at December 31, 1999............................ 2,702 56.52
</TABLE>
* 1,118 stock options with an exercise price of $58.13 per share were granted in
December 1999 subject to approval of stockholders in 2000.
Exercise prices for employee stock options at December 31, 1999 ranged from
$49.00 to $65.94 per share. The weighted-average remaining contractual life of
employee stock options is 8.2 years.
The Corporation uses the Black-Scholes model to estimate the fair value of
employee stock options for pro forma disclosure of the effects on net income and
earnings per share. The Corporation used the following weighted-average
assumptions in the Black-Scholes model for 1999, 1998 and 1997, respectively:
risk-free interest rates of 5.9%, 5.6% and 5.9%; expected stock price volatility
of .207, .218 and .220; a dividend yield of 1.1%; and an expected life of seven
years. The Corporation's net income would have been reduced by approximately
$6,000,000 in 1999, $19,100,000 in 1998 and $7,600,000 in 1997 ($.07 per share
in 1999, $.21 per share in 1998 and $.08 per share in 1997, diluted) if option
expense were recorded using the fair value method.
III-20
<PAGE> 98
The weighted-average fair values of options granted for which the exercise price
equalled the market price on the date of grant were $18.45 in 1999, $17.50 in
1998 and $18.69 in 1997.
Total compensation expense for nonvested common stock was $9,831,000 in 1999,
$15,975,000 in 1998 and $11,553,000 in 1997. Awards of nonvested common stock
were as follows:
<TABLE>
<CAPTION>
SHARES OF
NONVESTED
COMMON STOCK WEIGHTED-AVERAGE
AWARDED PRICE ON DATE
(THOUSANDS) OF GRANT
------------ ----------------
<S> <C> <C>
Granted in 1997............................................. 746 $53.94
Granted in 1998............................................. 18 53.08
Granted in 1999............................................. 24 56.07
</TABLE>
At December 31, 1999, the number of common shares reserved for issuance is as
follows (in thousands):
1995 Long-term incentive plan
<TABLE>
<S> <C>
Future awards............................................. 3,882*
Stock options outstanding................................. 4,507*
Stock appreciation rights................................. 52
Warrants**.................................................. 1,055
-----
Total.................................................. 9,496
=====
</TABLE>
* Includes 3,882 shares reserved for future awards and 1,118 stock options
outstanding which are subject to approval of stockholders in 2000.
** Issued in connection with an insurance company financing, exercisable through
June 27, 2001 at $64.46 per share.
NOTE 9 -- FOREIGN CURRENCY TRANSLATION
Worldwide currency translation gains amounted to $17,577,000 (including
$7,688,000 of income tax benefits) in 1999. Foreign currency gains totaled
$2,511,000 in 1998 and $5,073,000 in 1997 after income tax effects. Effective
January 1, 1999, the Corporation changed the functional currency of its United
Kingdom operations from the British pound sterling to the U.S. dollar.
III-21
<PAGE> 99
NOTE 10 -- PENSION PLANS
The Corporation has defined benefit pension plans for substantially all of its
employees. The following table reconciles the benefit obligation and fair value
of plan assets and shows the funded status:
Thousands of US dollars
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Reconciliation of pension benefit obligation
Benefit obligation at January 1........................... $ 542,704 $ 464,728
Service cost.............................................. 21,639 19,280
Interest cost............................................. 34,333 32,841
Actuarial (gain) loss..................................... (71,262) 48,855
Benefit payments.......................................... (26,306) (23,000)
---------- ----------
Pension benefit obligation at December 31.............. 501,108 542,704
---------- ----------
Reconciliation of fair value of plan assets
Fair value of plan assets at January 1.................... 476,849 427,912
Actual return on plan assets.............................. 63,375 54,311
Employer contributions.................................... 19,678 16,833
Employee contributions.................................... -- 793
Benefit payments.......................................... (26,306) (23,000)
---------- ----------
Fair value of plan assets at December 31............... 533,596 476,849
---------- ----------
Funded status at December 31
Funded status............................................. 32,488 (65,855)
Unrecognized prior service cost........................... 7,761 9,041
Unrecognized (gain) loss.................................. (91,629) 2,861
---------- ----------
Accrued pension liability.............................. $ (51,380) $ (53,953)
========== ==========
</TABLE>
Pension expense consisted of the following:
Thousands of US dollars
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Service cost.................................... $ 21,639 $ 19,280 $ 19,109
Interest cost................................... 34,333 32,841 33,162
Expected return on plan assets.................. (41,072) (36,221) (32,390)
Amortization of transition asset (obligation)... 255 (72) (3,052)
Amortization of prior service cost.............. 1,280 1,280 1,280
Amortization of net gain........................ -- (22) (1,692)
---------- ---------- ----------
Pension expense............................... $ 16,435 $ 17,086 $ 16,417
========== ========== ==========
</TABLE>
Prior service costs and gains and losses in excess of 10% of the greater of the
benefit obligation and the market value of assets are amortized over the average
remaining service period of active employees.
The weighted-average actuarial assumptions used by the Corporation's pension
plans at December 31 were as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Discount rate............................................... 7.3% 6.4%
Expected long-term rate of return on plan assets............ 8.7% 8.3%
Rate of compensation increases.............................. 4.5% 4.9%
</TABLE>
III-22
<PAGE> 100
The Corporation also has a nonqualified supplemental pension plan covering
certain employees. The supplemental pension plan provides for incremental
pension payments from the Corporation's funds so that total pension payments
equal amounts that would have been payable from the Corporation's principal
pension plan were it not for limitations imposed by income tax regulations. The
benefit obligation related to this unfunded plan totalled $38,358,000 at
December 31, 1999 and $41,802,000 at December 31, 1998. Pension expense for the
plan was $6,743,000 in 1999, $6,271,000 in 1998 and $5,098,000 in 1997. The
Corporation has accrued $29,310,000 for this plan at December 31, 1999 and
$25,205,000 at December 31, 1998. The trust established to fund the supplemental
plan held assets valued at $13,586,000 at December 31, 1999 and $6,209,000 at
December 31,1998.
NOTE 11 -- PROVISION FOR INCOME TAXES
The provision (benefit) for income taxes consisted of:
Thousands of US dollars
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
United States Federal
Current......................................... $ 6,093 $ 9,510 $ 16,210
Deferred........................................ 81,657 (68,203) (27,254)
State............................................. 6,483 1,702 1,418
---------- ---------- ----------
94,233 (56,991) (9,626)
---------- ---------- ----------
Foreign
Current......................................... 189,198 71,492 181,665(b)
Deferred........................................ (15,058) (66,310) (41,599)
---------- ---------- ----------
174,140 5,182 140,066
---------- ---------- ----------
Adjustment of deferred tax
liability for foreign income tax rate change.... (4,180) (3,409) (11,355)
---------- ---------- ----------
Total........................................ $ 264,193(a) $ (55,218) $ 119,085
========== ========== ==========
</TABLE>
(a) Includes a benefit of $54,600 representing actions taken in 1999 to realize
the United States tax impact of certain prior year exploration activities
and capital losses.
(b) Includes income tax refund of $38,180.
Income (loss) before income taxes consisted of the following:
Thousands of US dollars
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
United States..................................... $ 397,237 $ (205,522) $ 3,533
Foreign*.......................................... 304,572 (308,589) 123,052
---------- ---------- ----------
Total........................................... $ 701,809 $ (514,111) $ 126,585
========== ========== ==========
</TABLE>
* Foreign income includes the Corporation's Virgin Islands, shipping and other
operations located outside of the United States.
III-23
<PAGE> 101
Deferred income taxes arise from temporary differences between the tax basis of
assets and liabilities and their reported amounts in the financial statements. A
summary of the components of deferred tax liabilities and assets at December 31
follows:
Thousands of US dollars
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Deferred tax liabilities
Fixed assets and investments.............................. $ 320,324 $ 272,461
Foreign petroleum taxes................................... 224,359 238,568
Other..................................................... 55,917 58,251
---------- ----------
Total deferred tax liabilities......................... 600,600 569,280
---------- ----------
Deferred tax assets
Accrued liabilities....................................... 98,510 194,109
Net operating and capital loss carryforwards.............. 299,962 224,765
Tax credit carryforwards.................................. 137,598 126,590
Other..................................................... 78,691 41,592
---------- ----------
Total deferred tax assets.............................. 614,761 587,056
Valuation allowance....................................... (182,253) (141,113)
---------- ----------
Net deferred tax assets................................ 432,508 445,943
---------- ----------
Net deferred tax liabilities........................... $ 168,092 $ 123,337
========== ==========
</TABLE>
The difference between the Corporation's effective income tax rate and the
United States statutory rate is reconciled below:
<TABLE>
<CAPTION>
1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
United States statutory rate................................ 35.0% (35.0)% 35.0%
Effect of foreign operations, including foreign tax
credits................................................... 3.0 24.2 72.3
Effect of capital and other loss carryforwards.............. -- (.2) (8.3)
State income taxes, net of Federal income tax benefit....... .6 .2 .7
Prior year adjustments...................................... (.8) (.3) (3.5)
Tax credits................................................. -- -- (.8)
Other....................................................... (.2) .4 (1.3)
----- ----- -----
Total..................................................... 37.6% (10.7)% 94.1%
===== ===== =====
</TABLE>
The Corporation has not recorded deferred income taxes applicable to
undistributed earnings of foreign subsidiaries that are indefinitely reinvested
in foreign operations. Undistributed earnings amounted to approximately $950
million at December 31, 1999, excluding amounts which, if remitted, generally
would not result in any additional U.S. income taxes because of available
foreign tax credits. If the earnings of such foreign subsidiaries were not
indefinitely reinvested, a deferred tax liability of approximately $120 million
would have been required.
For income tax reporting at December 31, 1999, the Corporation has general
business credit carryforwards of approximately $30 million, principally expiring
in 2000 and 2001. In addition, the Corporation has alternative minimum tax
credit carryforwards of approximately $110 million, which can be carried forward
indefinitely. At December 31, 1999, a net operating loss carryforward of
approximately $1 billion is also available to offset income of the HOVENSA joint
venture partners. Net operating loss carryforwards relating to several foreign
exploration and production areas amount to approximately $190 million at
December 31, 1999.
Income taxes paid (net of refunds) in 1999, 1998 and 1997 amounted to
$141,465,000, $140,470,000 and $259,767,000, respectively.
III-24
<PAGE> 102
NOTE 12 -- NET INCOME PER SHARE
The weighted average number of common shares used in the basic and diluted
earnings per share computations are summarized below:
Thousands of shares
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Common shares -- basic...................................... 89,692 89,585 91,254
Effect of dilutive securities
Nonvested common stock.................................... 436 -- 428
Stock options............................................. 152 -- 51
------ ------ ------
Common shares -- diluted.................................... 90,280 89,585 91,733
====== ====== ======
</TABLE>
Diluted common shares include shares that would be outstanding assuming the
fulfillment of restrictions on nonvested shares and the exercise of stock
options. In 1998, the above table excludes the antidilutive effect of 666,000
nonvested common shares and 78,000 stock options. The table also excludes the
effect of out-of-the-money options on 1,609,000 shares, 1,626,000 shares and
867,000 shares in 1999, 1998 and 1997, respectively.
NOTE 13 -- LEASED ASSETS
The Corporation and certain of its subsidiaries lease floating production
systems, drilling rigs, tankers, gasoline stations, office space and of the
assets for varying periods. At December 31, 1999, future minimum rental payments
applicable to capital and noncancelable operating leases with remaining terms of
one year or more (other than oil and gas leases) are as follows:
Thousands of US dollars
<TABLE>
<CAPTION>
OPERATING CAPITAL
LEASES LEASES
---------- ----------
<S> <C> <C>
2000........................................................ $ 274,551 $ 1,156
2001........................................................ 172,149 1,156
2002........................................................ 106,186 1,156
2003........................................................ 90,570 1,156
2004........................................................ 86,727 1,156
Remaining years............................................. 403,651 5,781
---------- ----------
Total minimum lease payments................................ 1,133,834 11,561
Less: Imputed interest...................................... -- 3,229
Income from subleases................................. 17,263 --
---------- ----------
Net minimum lease payments.................................. $1,116,571* $ 8,332
========== ==========
Capitalized lease obligations --
Current................................................... $ 531
Long-term................................................. 7,801
----------
Total.................................................. $ 8,332
==========
</TABLE>
* Of the total future minimum payments under operating leases, $79,590 has been
accrued at December 31, 1999.
III-25
<PAGE> 103
Rental expense for all operating leases, other than rentals applicable to oil
and gas leases, was as follows:
Thousands of US dollars
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Total rental expense.............................. $ 156,362 $ 178,560 $ 195,246
Less income from subleases........................ 51,418 29,979 11,792
---------- ---------- ----------
Net rental expense.............................. $ 104,944 $ 148,581 $ 183,454
========== ========== ==========
</TABLE>
NOTE 14 -- FINANCIAL INSTRUMENTS, HEDGING AND TRADING ACTIVITIES
The Corporation uses futures, forwards, options and swaps, individually or in
combination, to reduce the effects of fluctuations in crude oil, natural gas and
refined product prices and in fixed-price sales contracts. In addition, the
Corporation uses interest-rate conversion agreements to adjust the interest
rates on a portion of its long-term, fixed-rate debt. Foreign currency contracts
are used to protect the Corporation from fluctuations in exchange rates.
Commodity Hedging: At December 31, 1999, the Corporation's hedging activities
included commodity and financial contracts, maturing mainly in 2000, covering
29,700,000 barrels of crude oil and 1,400,000 barrels of refined products
(3,000,000 net barrels of crude oil and refined products in 1998). The
Corporation also hedged 4,500,000 net Mcf of natural gas in 1998.
The Corporation produced 85,000,000 barrels of crude oil and natural gas liquids
and 235,000,000 Mcf of natural gas in 1999, and had approximately 14,000,000
barrels of crude oil and refined products in its refining and marketing
inventories at December 31, 1999. Since the contracts described above are
designated as hedges and correlate to price movements of crude oil, natural gas
and refined products, any gains or losses resulting from market changes will be
offset by losses or gains on the Corporation's hedged inventory or production.
Net deferred losses from the Corporation's hedging activities were $61,200,000
at December 31, 1999, including $47,600,000 of unrealized losses ($5,000,000 of
gains at December 31, 1998, including $2,000,000 of unrealised gains).
Financial Instruments: At December 31, 1999, the Corporation has $400,000,000 in
interest-rate conversion agreements outstanding ($400,000,000 at December
31,1998). The Corporation also has $865,000,000 of notional value foreign
currency forward and purchased option contracts maturing generally in 2000
($97,000,000 at December 31, 1998) and $145,300,000 in letters of credit
outstanding ($137,900,000 at December 31, 1998). Notional amounts do not
quantify risk or represent assets or liabilities of the Corporation, but are
used in the calculation of cash settlements under the contracts.
Fair Value Disclosure: The carrying amounts of cash and cash equivalents,
short-term debt and long-term, variable-rate debt approximate fair value. The
Corporation estimates the fair value of its long-term, fixed-rate note
receivable and debt generally using discounted cash flow analysis based on
current interest rates for instruments with similar maturities. Interest-rate
conversion agreements and foreign currency exchange contracts are valued based
on current termination values or quoted market prices of comparable contracts.
The Corporation's valuation of commodity contracts considers quoted market
prices, time value, volatility of the underlying commodities and other factors.
III-26
<PAGE> 104
The carrying amounts of the Corporation's financial instruments and commodity
contracts, including those used in the Corporation's hedging and trading
activities, generally approximate their fair values at December 31,1999, except
as follows:
Millions of US dollars, asset (liability)
<TABLE>
<CAPTION>
1999 1998
----------------------- -----------------------
BALANCE SHEET FAIR BALANCE SHEET FAIR
AMOUNT VALUE AMOUNT VALUE
------------- ------- ------------- -------
<S> <C> <C> <C> <C>
Long-term, fixed-rate note receivable........ $ 539 $ 493 $ 563 $ 563
Long-term, fixed-rate debt................... (2,163) (2,141) (1,418) (1,477)
Interest-rate conversion agreements.......... -- (11) -- (24)
</TABLE>
Market and Credit Risks: The Corporation's financial instruments expose it to
market and credit risks and may at times be concentrated with certain
counterparties or groups of counterparties. The credit worthiness of
counterparties is subject to continuing review and full performance is
anticipated.
Commodity Trading: The Corporation, principally through a consolidated
partnership, trades energy commodities, including futures, forwards, options and
swaps, based on expectations of future market conditions. The Corporation's
results from trading activities, including its share of the earnings of the
trading partnership which has been profitable in 1999, 1998 and 1997, amounted
to net income of $19,000,000 in 1999, a net loss of $26,000,000 in 1998 and net
income of $4,000,000 in 1997.
The following table presents the year-end fair values of energy commodities and
derivative instruments used in trading activities and the average aggregate fair
values during the year:
Millions of US dollars, asset (liability)
<TABLE>
<CAPTION>
FAIR VALUE
-----------------------------------------------
AT AVERAGE AT AVERAGE
DECEMBER 31, FOR DECEMBER 31, FOR
1999 1999 1998 1998
------------ ------- ------------ -------
<S> <C> <C> <C> <C>
Commodities.................................... $ 69 $ 85 $ 98 $ 75
Futures and forwards
Assets....................................... 225 143 29 43
Liabilities.................................. (233) (148) (29) (39)
Options
Held......................................... 178 67 (7) (3)
Written...................................... (192) (76) 8 5
Swaps
Assets....................................... 546 356 110 59
Liabilities.................................. (549) (342) (117) (60)
</TABLE>
III-27
<PAGE> 105
Notional amounts of commodities and derivatives relating to trading activities
follow:
Millions of barrels of oil equivalent
<TABLE>
<CAPTION>
AT DECEMBER 31
--------------
1999 1998
---- ----
<S> <C> <C>
Commodities................................................. 3 7
Futures and forwards
Long...................................................... 177 39
Short..................................................... (168) (51)
Options
Held...................................................... 343 20
Written................................................... (318) (21)
Swaps*
Held...................................................... 304 83
Written................................................... (329) (81)
</TABLE>
* Includes 41 million barrels long and 53 million barrels short related to basis
swaps at December 31, 1999 (18 million barrels long and 20 million barrels
short in 1998).
NOTE 15 -- SEGMENT INFORMATION
The information which follows is required by FAS No. 131, Disclosures about
Segments of an Enterprise and Related Information, and includes financial
information by geographic area and operating segment. Financial information by
major geographic area for each of the three years ended December 31, 1999
follows:
Millions of US dollars
<TABLE>
<CAPTION>
UNITED STATES* EUROPE OTHER CONSOLIDATED
-------------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
1999
Operating revenues....................... $ 4,948 $ 1,944 $ 147 $ 7,039
Property, plant and equipment (net)...... 1,289 2,396 367 4,052
1998
Operating revenues....................... $ 5,046 $ 1,474 $ 60 $ 6,580
Property, plant and equipment (net)...... 1,457 2,351 384 4,192
1997
Operating revenues....................... $ 6,552 $ 1,614 $ 58 $ 8,224
Property, plant and equipment (net)...... 2,872 2,106 213 5,191
</TABLE>
* Includes U.S. Virgin Islands and shipping operations.
The Corporation operates principally in the petroleum industry and its operating
segments are (1) exploration and production and (2) refining, marketing and
shipping. Exploration and production operations include the exploration for and
the production, purchase, transportation and sale of crude oil and natural gas.
Refining, marketing and shipping operations include the manufacture, purchase,
transportation, marketing and trading of petroleum and other energy products.
III-28
<PAGE> 106
The following table presents financial data by major operating segment for each
of the three years ended December 31, 1999:
Millions of US dollars
<TABLE>
<CAPTION>
REFINING,
EXPLORATION MARKETING
AND AND
PRODUCTION SHIPPING CORPORATE CONSOLIDATED*
----------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
1999
Operating revenues
Total operating revenues.............. $ 2,719 $ 4,541 $ 1
Less: Transfers between affiliates.... 222 -- --
---------- ---------- ----------
Operating revenues from unaffiliated
customers.......................... $ 2,497 $ 4,541 $ 1 $ 7,039
========== ========== ========== ==========
Operating earnings (loss)............... $ 324 $ 133 $ (150) $ 307
Special items........................... 19 112 -- 131
---------- ---------- ---------- ----------
Net income (loss)..................... $ 343 $ 245 $ (150) $ 438
========== ========== ========== ==========
Earnings of equity affiliates........... $ (9) $ 11 $ 7 $ 9
Interest income......................... 12 50 1 63
Interest expense........................ -- -- 158 158
Depreciation, depletion, amortization
and
lease impairment...................... 641 42 2 685
Provision (benefit) for income taxes.... 184 118 (38) 264
Investments in equity affiliates........ 148 778 61 987
Identifiable assets..................... 4,396 2,993 339 7,728
Capital employed........................ 3,137 2,211 -- 5,348
Capital expenditures.................... 727 68 2 797
1998
Operating revenues
Total operating revenues.............. $ 1,980 $ 4,717 $ 1
Less: Transfers between affiliates.... 118 -- --
---------- ---------- ----------
Operating revenues from unaffiliated
customers.......................... $ 1,862 $ 4,717 $ 1 $ 6,580
========== ========== ========== ==========
Operating earnings (loss)............... $ (18) $ (18) $ (160) $ (196)
Special items........................... (113) (150) -- (263)
---------- ---------- ---------- ----------
Net income (loss)..................... $ (131) $ (168) $ (160) $ (459)
========== ========== ========== ==========
Earnings of equity affiliates........... $ (22) $ (13) $ 5 $ (30)
Interest income......................... 11 11 1 23
Interest expense........................ -- -- 153 153
Depreciation, depletion, amortization
and
lease impairment...................... 566 125 2 693
Provision (benefit) for income taxes.... 7 (38) (24) (55)
Investments in equity affiliates........ 96 781 56 933
Identifiable assets..................... 4,286 3,126 471 7,883
Capital employed........................ 3,231 2,065 -- 5,296
Capital expenditures.................... 1,307 129 3 1,439
</TABLE>
III-29
<PAGE> 107
<TABLE>
<CAPTION>
REFINING,
EXPLORATION MARKETING
AND AND
PRODUCTION SHIPPING CORPORATE CONSOLIDATED*
----------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
1997
Operating revenues
Total operating revenues.............. $ 3,086 $ 5,280 $ 1
Less: Transfers between affiliates.... 142 1 --
---------- ---------- ----------
Operating revenues from unaffiliated
customers.......................... $ 2,944 $ 5,279 $ 1 $ 8,224
========== ========== ========== ==========
Operating earnings (loss)............... $ 258 $ (110) $ (134) $ 14
Special items........................... (6) -- -- (6)
---------- ---------- ---------- ----------
Net income (loss)..................... $ 252 $ (110) $ (134) $ 8
========== ========== ========== ==========
Earnings of equity affiliates........... $ 21 $ 6 $ 5 $ 32
Interest income......................... 14 3 1 18
Interest expense........................ -- -- 136 136
Depreciation, depletion, amortization
and
lease impairment...................... 580 118 2 700
Provision (benefit) for income taxes.... 164 -- (45) 119
Investments in equity affiliates........ 114 77 53 244
Identifiable assets..................... 3,727 3,713 495 7,935
Capital employed........................ 2,468 2,875 -- 5,343
Capital expenditures.................... 1,158 183 5 1,346
</TABLE>
* After elimination of transactions between affiliates, which are valued at
approximate market prices.
III-30
<PAGE> 108
3. RESULTS FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2000
The following unaudited financial information has been extracted from the Form
10-Q for September 30, 2000 of Amerada Hess filed with the SEC.
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CONSOLIDATED INCOME
Millions of US dollars, except per share data
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
------------------ ------------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
REVENUES
Sales (excluding excise taxes) and other
operating revenues......................... $ 2,833 $ 1,802 $ 8,308 $ 4,770
Non-operating income
Gains on asset sales....................... -- 165 -- 273
Equity in income of HOVENSA L.L.C.......... 24 7 76 24
Other...................................... 30 3 87 95
------- ------- ------- -------
Total revenues........................... 2,887 1,977 8,471 5,162
------- ------- ------- -------
COSTS AND EXPENSES
Cost of products sold......................... 1,768 1,073 5,361 2,935
Production expenses........................... 139 111 401 327
Marketing expenses............................ 157 108 385 288
Other operating expenses...................... 60 52 168 168
Exploration expenses, including dry holes and
lease impairment........................... 65 45 217 186
General and administrative expenses........... 50 70 152 184
Interest expense.............................. 42 39 119 116
Depreciation, depletion and amortization...... 176 159 516 434
------- ------- ------- -------
Total costs and expenses................. 2,457 1,657 7,319 4,638
------- ------- ------- -------
Income before income taxes.................... 430 320 1,152 524
Provision for income taxes.................... 173 162 469 217
------- ------- ------- -------
NET INCOME...................................... $ 257 $ 158 $ 683 $ 307
======= ======= ======= =======
NET INCOME PER SHARE
Basic......................................... $ 2.89 $ 1.77 $ 7.63 $ 3.42
======= ======= ======= =======
Diluted....................................... $ 2.86 $ 1.75 $ 7.57 $ 3.40
======= ======= ======= =======
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
(in millions)................................. 89.8 90.5 90.2 90.2
COMMON STOCK DIVIDENDS PER SHARE................ $ .15 $ .15 $ .45 $ .45
</TABLE>
See accompanying notes to consolidated financial information.
III-31
<PAGE> 109
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
Millions of US dollars
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................. $ 259 $ 41
Accounts receivable....................................... 1,848 1,175
Inventories............................................... 367 373
Other current assets...................................... 585 239
------- -------
Total current assets................................. 3,059 1,828
------- -------
INVESTMENTS AND ADVANCES
HOVENSA L.L.C............................................. 785 710
Other..................................................... 236 282
------- -------
Total investments and advances....................... 1,021 992
------- -------
PROPERTY, PLANT AND EQUIPMENT
Total -- at cost.......................................... 11,621 11,065
Less reserves for depreciation, depletion, amortization
and lease impairment................................... 7,423 7,013
------- -------
Property, plant and equipment -- net................. 4,198 4,052
------- -------
NOTE RECEIVABLE............................................. 539 539
------- -------
DEFERRED INCOME TAXES AND OTHER ASSETS...................... 252 317
------- -------
TOTAL ASSETS................................................ $ 9,069 $ 7,728
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable -- trade................................. $ 1,389 $ 772
Accrued liabilities....................................... 923 625
Taxes payable............................................. 329 159
Notes payable............................................. 2 18
Current maturities of long-term debt...................... 57 5
------- -------
Total current liabilities............................ 2,700 1,579
------- -------
LONG-TERM DEBT.............................................. 1,940 2,287
------- -------
DEFERRED LIABILITIES AND CREDITS
Deferred income taxes..................................... 516 442
Other..................................................... 370 382
------- -------
Total deferred liabilities and credits............... 886 824
------- -------
STOCKHOLDERS' EQUITY
Preferred stock, par value $1.00
Authorized -- 20,000,000 shares for issuance in series
3% cumulative convertible series
Authorized -- 330,000 shares
Issued -- 326,805 shares in 2000 (liquidation
preference of $16).............................. -- --
Common stock, par value $1.00
Authorized -- 200,000,000 shares
Issued -- 88,574,505 shares at September 30, 2000;
90,676,405 shares at December 31, 1999............... 89 91
Capital in excess of par value............................ 825 782
Retained earnings......................................... 2,769 2,287
Accumulated other comprehensive income.................... (140) (122)
------- -------
Total stockholders' equity............................. 3,543 3,038
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................. $ 9,069 $ 7,728
======= =======
</TABLE>
See accompanying notes to consolidated financial information.
III-32
<PAGE> 110
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
Nine Months Ended September 30
Millions of US dollars
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income................................................ $ 683 $ 307
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation, depletion and amortization............. 516 434
Exploratory dry hole costs........................... 91 34
Lease impairment..................................... 20 23
Gains on asset sales................................. -- (273)
Provision for deferred income taxes.................. 181 45
Undistributed earnings of affiliates................. (69) (6)
---------- ----------
1,422 564
Changes in operating assets and liabilities and
other............................................... 9 (120)
---------- ----------
Net cash provided by operating activities......... 1,431 444
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures...................................... (610) (617)
Proceeds from asset sales and other....................... (2) 413
---------- ----------
Net cash used in investing activities............. (612) (204)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in notes payable...................... (16) 30
Long-term borrowings...................................... -- 621
Repayment of long-term debt............................... (394) (902)
Cash dividends paid....................................... (54) (54)
Common stock acquired..................................... (188) --
Stock options exercised................................... 51 17
---------- ----------
Net cash used in financing activities............. (601) (288)
---------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH..................... -- --
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ 218 (48)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.............. 41 74
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 259 $ 26
========== ==========
</TABLE>
See accompanying notes to consolidated financial information.
III-33
<PAGE> 111
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL INFORMATION
Millions of US dollars, except per share amounts
NOTE 1 -- The financial information included in this report reflects all normal
and recurring adjustments which, in the opinion of management, are necessary for
a fair presentation of the Corporation's consolidated financial position at
September 30, 2000 and December 31, 1999, and the consolidated results of
operations for the three- and nine-month periods ended September 30, 2000 and
1999 and the consolidated cash flows for the nine-month periods ended September
30, 2000 and 1999. The unaudited results of operations for the interim periods
reported are not necessarily indicative of results to be expected for the full
year.
Certain notes and other information have been condensed or omitted from this
interim financial information. Such statements, therefore, should be read in
conjunction with the consolidated financial statements and related notes
included in the 1999 Annual Report to Stockholders, which have been incorporated
by reference in the Corporation's Form 10-K for the year ended December 31,
1999.
NOTE 2 -- Inventories consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
<S> <C> <C>
Crude oil and other charge stocks........................... $ 119 $ 67
Refined and other finished products......................... 469 393
Less: LIFO adjustment....................................... (310) (149)
---------- ----------
278 311
Materials and supplies...................................... 89 62
---------- ----------
Total inventories......................................... $ 367 $ 373
========== ==========
</TABLE>
NOTE 3 -- The Corporation accounts for its investment in HOVENSA L.L.C. using
the equity method. Summarized income statement information for HOVENSA follows:
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
------------------------ ------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Total revenues...................... $ 1,353 $ 873 $ 3,825 $ 2,142
Costs and expenses.................. 1,304 858 3,671 2,091
---------- ---------- ---------- ----------
Net income........................ $ 49 $ 15 $ 154 $ 51
========== ========== ========== ==========
Amerada Hess Corporation's share.... $ 24 $ 7 $ 76 $ 24
========== ========== ========== ==========
</TABLE>
In February 2000, HOVENSA reached agreement on a $600 bank financing for the
construction of a 58 thousand barrel per day delayed coking unit and related
facilities at its refinery and for general working capital requirements. In
connection with this financing, the Corporation and PDVSA V.I. agreed to amend
the note received by the Corporation at the formation of the joint venture.
PDVSA V.I. deferred principal payments on the note until after completion of
coker construction but not later than February 14, 2003. The interest rate on
the note increased to 9.46%. In October 2000, PDVSA V.I. exercised its option to
repay principal in accordance with the original amortization schedule and
reduced the interest rate to the original rate of 8.46%.
III-34
<PAGE> 112
NOTE 4 -- The provision for income taxes consisted of the following:
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
------------------------ ------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Current............................. $ 81 $ 84 $ 288 $ 172
Deferred............................ 92 78 181 45
---------- ---------- ---------- ----------
Total............................. $ 173 $ 162 $ 469 $ 217
========== ========== ========== ==========
</TABLE>
NOTE 5 -- Foreign currency gains (losses), after income tax effects, amounted to
the following:
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
------------------------ ------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Foreign currency gains (losses)..... $ -- $ (24) $ 3 $ 12
========== ========== ========== ==========
</TABLE>
NOTE 6 -- The weighted average number of common shares used in the basic and
diluted earnings per share computations are as follows (in millions):
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
------------------------ ------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Common shares -- basic.............. 88.8 89.8 89.5 89.6
Effect of dilutive securities
(equivalent shares)
Nonvested common stock............ .3 .4 .3 .5
Stock options..................... .5 .3 .3 .1
Convertible preferred stock....... .2 -- .1 --
---------- ---------- ---------- ----------
Common shares -- diluted............ 89.8 90.5 90.2 90.2
========== ========== ========== ==========
</TABLE>
NOTE 7 -- The Corporation uses futures, forwards, options and swaps,
individually or in combination, to reduce the effects of fluctuations in crude
oil, natural gas and refined product prices. These contracts correlate to
movements in the value of inventory and the prices of crude oil and natural gas,
and as hedges, any resulting gains or losses are recorded as part of the hedged
transaction. After-tax earnings from exploration and production activities were
reduced by approximately $50 and $100 for the third quarter and nine months of
2000, due to hedging activities. At September 30, 2000, after-tax deferred
losses on the Corporation's petroleum hedging contracts expiring through 2001
were approximately $190, including $145 of unrealized losses.
NOTE 8 -- Interest costs related to certain long-term construction projects have
been capitalized in accordance with FAS No. 34 as follows:
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
------------------------ ------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest capitalized................ $ -- $ 3 $ 3 $ 14
========== ========== ========== ==========
</TABLE>
III-35
<PAGE> 113
NOTE 9 -- Comprehensive income, which includes net income and the effects of
foreign currency translation recorded directly in stockholders' equity, is as
follows:
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
------------------------ ------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Comprehensive income................ $ 247 $ 165 $ 665 $ 306
========== ========== ========== ==========
</TABLE>
NOTE 10 -- On May 15, 2000, the Corporation acquired the 51% of The Meadville
Corporation's outstanding stock that it did not already own for approximately
$168 in cash, deferred payments and preferred stock. The deferred payments are
non-interest bearing and have been discounted to $97 using a market interest
rate. The Corporation accounted for this acquisition using the purchase method.
The Meadville Corporation owned and operated 178 Merit retail gasoline stations
located in the northeastern United States. This acquisition does not materially
affect the Corporation's financial position or results of operations.
NOTE 11 -- The Corporation's results by operating segment were as follows:
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
------------------------ ------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Operating revenues
Exploration and production (1).... $ 973 $ 766 $ 2,893 $ 1,984
Refining, marketing and
shipping....................... 2,080 1,166 5,969 3,089
---------- ---------- ---------- ----------
Total.......................... $ 3,053 $ 1,932 $ 8,862 $ 5,073
========== ========== ========== ==========
Net income (loss)
Exploration and production (2).... $ 238 $ 71 $ 634 $ 179
Refining, marketing and shipping
(3)............................ 62 128 174 240
Corporate, including interest..... (43) (41) (125) (112)
---------- ---------- ---------- ----------
Total.......................... $ 257 $ 158 $ 683 $ 307
========== ========== ========== ==========
</TABLE>
(1) Includes transfers to affiliates of $220 and $554 during the three- and
nine-month periods ended September 30, 2000, respectively, compared to $130
and $303 for the corresponding periods of 1999.
(2) Includes after-tax gains on asset sales of $30 during the nine-months ended
September 30, 1999.
(3) Includes after-tax gains on asset sales of $106 and $146 in the three-and
nine-month periods ended September 30, 1999, respectively.
NOTE 12 -- The Corporation will adopt FAS No. 133, Accounting for Derivative
Instruments and Hedging Activity, on January 1, 2001. The Corporation has not
yet determined what the effects of FAS No. 133 will be on its income and
financial position.
III-36
<PAGE> 114
APPENDIX IV
FURTHER INFORMATION ON LASMO
BUSINESS DESCRIPTION AND FINANCIAL RESULTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
1. Business Description.................................... IV-2
2. Financial Information for LASMO......................... IV-4
3. Financial Information for the six months ended 30 June
2000................................................... IV-31
</TABLE>
IV-1
<PAGE> 115
1. BUSINESS DESCRIPTION
LASMO, headquartered in London, is a substantial oil and gas exploration
production company whose activities and producing assets are presently
concentrated primarily in North West Europe and Indonesia, and these, together
with Venezuela, North Africa and Pakistan, are the current material contributors
to reserves. At the end of 1999, LASMO was active in 14 countries around the
world, in nine of which it acted as operator. Production during 1999 was mainly
derived from six of these countries: the United Kingdom, The Netherlands,
Indonesia, Venezuela, Algeria and Pakistan.
As at 31 December 1999, LASMO estimated its net proved oil and gas reserves at
830 million barrels of oil equivalent. Approximately 62 per cent. relate to oil
and 38 per cent. relate to gas, with 24 per cent. of LASMO's net proved reserves
located in North West Europe, 27 per cent. in Indonesia, 29 per cent. in
Venezuela, 14 per cent. in North Africa and 6 per cent. in Pakistan. For the
year ended 31 December 1999, LASMO's average daily production was 178,000
barrels of oil equivalent with approximately 56 per cent. derived from North
West Europe and approximately 27 per cent. derived from Indonesia. In the same
period, production of crude oil and natural gas each accounted for approximately
62 per cent. and 38 per cent. respectively of LASMO's daily average production.
For the six months ended 30 June 2000, LASMO reported sales of L463 million
(1999: L216 million) and profit before exceptional items and taxation of L187
million (1999: L35 million). Net assets as at 30 June 2000 were L1,467 million.
For the full year ended 31 December 1999, LASMO had sales of L594 million (1998:
L484 million) and profit before exceptional items and taxation of L170 million
(1998: L1 million).
During the six months to 30 June 2000, LASMO's exploration programme resulted in
three discoveries in Indonesia and two in Venezuela. Production in both
Liverpool Bay and Venezuela increased significantly. LASMO received approvals
and won contracts in North Africa and reached milestones in bringing gas to
market in Pakistan.
WHERE YOU CAN FIND ADDITIONAL INFORMATION ABOUT LASMO
LASMO is subject to the reporting requirements of the Exchange Act and, in
accordance with those requirements, files reports and other information with the
SEC. You can inspect and copy these reports and other information filed by LASMO
with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You may obtain information on the operation of the
Public Reference Room by calling the SEC on 1-800-SEC-0330.
The SEC allows LASMO to "incorporate by reference" information in this document,
which means that LASMO can disclose important information by referring to
another document filed separately with the SEC. The information incorporated by
reference is deemed to be part of this document, except for any information
superseded by information in this document. This document incorporates by
reference the documents set forth below that LASMO has previously filed with the
SEC. These documents contain important information about LASMO and its finances.
- Annual Report on Form 20-F for the fiscal year ended 31 December 1999.
- Form 6-K filed with the SEC on 21 November 2000.
LASMO is also incorporating by reference all documents that it files with the
SEC pursuant to Sections 13(1), 13(c) and 15(d) of the Exchange Act between the
date of this document and the date the offer becomes or is declared
unconditional in all respects (or the date that the offer expires).
IV-2
<PAGE> 116
You may obtain any of these documents through LASMO or the SEC. Documents
incorporated by reference are available from LASMO without charge, excluding all
exhibits unless LASMO has specifically incorporated by reference an exhibit in
this document. You also may obtain documents incorporated by reference in this
document by either inspecting them during normal business hours on any weekday
(public holidays excepted) while the offer remains open for acceptance or by
requesting them in writing or orally from LASMO, at the following address and
telephone number:
LASMO plc
101 Bishopsgate
London EC2M 3XH
England
<TABLE>
<S> <C>
Attention: Company Secretary
Telephone: +44 20 7892 9000
</TABLE>
IV-3
<PAGE> 117
2. FINANCIAL INFORMATION FOR LASMO
The financial information relating to LASMO set out below has been extracted
without material adjustment from the UK audited accounts of LASMO for the three
years ended 31 December 1999 except for the restatement of the 1997 and 1998
financial statements to comply with Financial Reporting Standard No.12
"Provisions, Contingent Liabilities and Contingent Assets" ("FRS 12").
FRS 12 requires the full discounted cost of decommissioning to be recognised as
an asset and liability when the obligation to rectify environmental damage
arises. Previously the provision for decommissioning costs was built up over the
life of field. The unwinding of the discount is included in the profit and loss
account as a financial item and is added to the net interest charge.
The implementation of FRS 12 has had the effect of increasing the net book value
of tangible fixed assets by L16 million, reducing the decommissioning provision
by L8 million and increasing reserves by L24 million as at 31 December 1998.
There has been no material effect on reported earnings.
The financial information for LASMO does not constitute statutory accounts
within the meaning of Section 240 of the Companies Act. Ernst & Young,
Registered Auditors, of Becket House, 1 Lambeth Palace Road, London SE1 7EU,
England, are auditors of LASMO and have made audit reports under Section 235 of
the Companies Act on the consolidated statutory accounts for the three years
ended 31 December 1999, which have been delivered to the Registrar of Companies
in accordance with Section 242 of the Companies Act.
STATEMENT OF ACCOUNTING POLICIES
BASIS OF PREPARATION
Principal accounting policies are set out below. These policies are consistent
with those adopted in previous years, amended for the effects of adopting FRS
12.
The financial information has been prepared under the historical cost
convention, using the "successful efforts" method of accounting, and in
accordance with applicable accounting standards as defined by the Companies Act.
The preparation of financial statements requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
BASIS OF CONSOLIDATION
The consolidated financial information includes the financial statements of
LASMO plc and all its subsidiary undertakings for the year ended 31 December
1999. All these undertakings are companies, and hereafter are identified as
such, except for a 50 per cent. interest in a general partnership (Unimar
Company) which has been accounted for using the gross equity method. No profit
and loss account is presented for the company as permitted by Section 230 of the
Companies Act.
The Group conducts a substantial proportion of its oil and gas exploration and
development activity through unincorporated joint ventures. The share of these
joint ventures' results and net assets attributable to LASMO are reflected in
the Group's consolidated financial information except where LASMO acts as
operator on behalf of a consortium of partners, in which case, amounts due
to/from third parties are reported gross as are amounts due to/from the
non-operating partners.
Subsidiaries acquired or sold during the year are included from the effective
date of acquisition or to the effective date of disposal.
TURNOVER
Turnover comprises amounts receivable for invoiced sales, exclusive of value
added taxation and similar levies. The Group's entitlement to proceeds from
Indonesian LNG sales is included in turnover after
IV-4
<PAGE> 118
adjustment to add back the Group's share of transportation and liquefaction
costs and debt service which is deducted on an incurred basis on loans raised by
the owner to finance the construction and expansion costs of the Bontang LNG
plant which is operated on a break even basis. Cost of sales is also adjusted to
reflect these deductions, except that only equal annual charges for debt service
are deducted so as to spread the financing costs over the remaining lives of the
respective sales contracts rather than the uneven repayment schedules
established for the loans. The resultant deferred debt service charges are
included in debtors.
Turnover includes a service fee based on production from the Dacion Area in
Venezuela and calculated in accordance with the terms of the operating
agreement. A set fee of $2.50 per barrel is receivable for baseline production
and a fee determined by reference to a basket of crude oil products is
receivable for incremental production. Baseline production for 1999 was 10,700
boepd, and declines by 8 per cent. per annum.
PETROLEUM REVENUE TAX (PRT)
PRT is treated as a production cost and has been charged or credited before
arriving at operating profit. Provision is made for current PRT on revenue from
petroleum sales less all allowable deductions for the period.
DEFERRED TAXATION
Deferred taxation is provided in respect of liabilities relating to timing
differences between profits as computed for taxation purposes and profits as
stated in the financial information, except to the extent that the liability is
not expected to crystallise in the foreseeable future. The provision arises
principally from the different accounting and tax treatments for amortising oil
and gas expenditure.
FOREIGN CURRENCIES
Transactions in foreign currencies are recorded at exchange rates ruling at the
date of each transaction or a contract rate where applicable.
Assets and liabilities of overseas subsidiary and associated companies and of UK
companies with non-sterling functional currencies are translated into sterling
at rates current at the balance sheet date. Trading results and cash flows of
such companies are translated into sterling at average rates. Unrealised gains
or losses on revaluation of net assets of overseas subsidiary and associated
companies and on revaluation of Group borrowings arranged to finance or hedge
those net assets are taken directly to retained earnings. All other gains and
losses on translation are dealt with in the profit and loss account.
DERIVATIVE FINANCIAL INSTRUMENTS
The Group may, from time to time, use derivative financial instruments
(derivatives) to limit its exposure to fluctuations in foreign currency exchange
rates and interest rates, and to manage some of its exposure to changes in oil
prices.
Gains or losses arising on oil price derivatives are recognised in revenues from
oil production when hedged volumes are sold.
As part of exchange risk management, foreign currency swap agreements and
forward contracts are used to hedge movements in underlying currencies of
certain borrowings. Gains and losses on these derivatives are deferred and
recognised on maturity of the underlying debt together with the matching
exchange loss or gain on the debt.
Foreign currency forward contracts and options are used to hedge significant
non-sterling firm commitments or receivables. Gains or losses on these
derivatives are deferred and recognised in the profit and loss account or as
adjustments to carrying amounts, as appropriate when the underlying transaction
is completed.
IV-5
<PAGE> 119
The Group also enters into interest rate swap transactions in its management of
interest rate exposure. Interest rate swap agreements generally involve the
exchange of fixed and floating interest rate payment obligations without
exchange of the underlying principal amounts. The results of these transactions
are recognised in interest expense in the period hedged by the agreements.
PENSION COSTS
The Group operates a number of pension schemes worldwide, the principal scheme
being that in the United Kingdom, which is of the defined benefits type.
Contributions to this scheme are charged to the profit and loss account so as to
spread the cost of pensions over the employees' working lives within the Group.
The regular cost is attributed to individual years using the projected unit
method. Variations in pension cost, which are identified as a result of
actuarial valuations, are amortised over the average expected remaining working
lives of employees. Differences between amounts funded and the amounts charged
to the profit and loss account are treated as either provisions or prepayments
in the balance sheet.
FIXED ASSETS
Exploration and appraisal expenditure
Exploration expenditure comprises all costs, including premium payments,
associated with the acquisition of new acreage, the drilling of exploratory
wells and other costs incurred in evaluating the commercial viability of
geological entities.
Appraisal expenditure comprises costs incurred in the survey, exploration and
appraisal of license areas not yet under development or in production.
Exploration and appraisal expenditure is classified as an intangible fixed asset
until a decision is reached concerning the commercial viability of the field to
which it relates. Expenditure is then either written off or transferred to
tangible fixed assets. General seismic and other expenditure not connected with
a specific exploration license is written off to the profit and loss account
immediately.
Development expenditure
Development expenditure comprises all costs including financing costs,
exploration and appraisal expenditure incurred in bringing a field to commercial
production and is classified as a tangible asset. No depletion is charged in
respect of development expenditure. Once a field achieves commercial production,
development expenditure is transferred to production assets.
Production assets
Expenditure on production assets represents the Group's share of total
expenditure on the exploration, appraisal and development of oil and gas fields
which are currently in commercial production. This expenditure includes costs of
capital assets, financing costs and general technical and supervisory services
plus, for depletion calculation purposes only, any anticipated further
development expenditure and is stated at cost. Production assets are depleted by
field on a unit of production method, in the proportion of actual production for
the period to the total estimated remaining commercial reserves of the field on
an entitlement basis. The remaining commercial reserves figure is that estimated
at the end of the period plus the production during the period. For depletion
purposes, the separate reservoirs in the Dacion Area in Venezuela are treated as
one field.
Impairment of value
Each year management compares the net book amounts carried in respect of each
field with the estimated recoverable amount. Any impairment of tangible assets
identified is provided for. The estimated recoverable amount is the higher of
the net realisable value and the value in use. The value in use is determined by
reference to estimated future discounted cash flows.
IV-6
<PAGE> 120
Oil and gas reserves
Proven and probable oil and gas reserves are estimated quantities of
commercially producible hydrocarbons which existing geological, geophysical and
engineering data show to be recoverable in future years from known reservoirs.
Other tangible assets
Office equipment and vehicles are stated at cost less accumulated depreciation,
which is provided so as to write off those assets over their estimated useful
lives, ranging from three to fifteen years.
LEASES
Assets held under leases which result in the Group receiving substantially all
risks and rewards of ownership (capital leases) are capitalised as tangible
fixed assets at the estimated present value of underlying lease payments. The
corresponding capital lease obligation is included with borrowings. Rentals
under operating leases are charged against income as incurred.
DECOMMISSIONING PROVISIONS
Provision is made for the cost of decommissioning of Group-owned assets at the
time the obligation to rectify environmental damage arises. Such provision
represents the Group's share of the estimated discounted liability for costs
which may be incurred in removing production platforms and facilities at the end
of the producing life of each field.
EFFECT OF CHANGES IN ESTIMATES
The effect of revisions of previous estimates of proven and probable oil and gas
reserves and of costs is taken up prospectively in unit of production
calculations.
CONSUMABLE STORES
Consumable stores are stated at the lower of cost and net realisable value.
INVESTMENTS
Investments included in current assets are stated at the lower of cost and net
realisable value.
GOODWILL
In accordance with accounting policies extant at the time, goodwill has been
written off to reserves in the year of acquisition. This goodwill would be
charged in the profit and loss account on subsequent disposal of the business to
which it relates. Any goodwill arising from future acquisitions will be
capitalised and amortised over an appropriate period.
IV-7
<PAGE> 121
LASMO plc AND SUBSIDIARY COMPANIES
CONSOLIDATED PROFIT AND LOSS ACCOUNT
<TABLE>
<CAPTION>
YEARS ENDED 31 DECEMBER
-----------------------------
NOTES 1999 1998 1997
----- ------- ------- -------
(RESTATED)
(L MILLION, EXCEPT PER
ORDINARY SHARE AMOUNTS)
<S> <C> <C> <C> <C>
TURNOVER............................................. 2
Group and share of joint venture..................... 647 536 722
Less share of joint venture's turnover............... (53) (52) (83)
Continuing operations................................ 542 484 639
Acquisition.......................................... 52 -- --
------- ------- -------
594 484 639
Cost of sales........................................ 3 (369) (392) (401)
Provision for oil and gas assets..................... (3) -- --
Exceptional provision for oil and gas assets......... 4 -- (307) --
------- ------- -------
GROSS PROFIT/(LOSS).................................. 222 (215) 238
Exploration costs written off........................ 4 (34) (52) (54)
Exceptional write-off of intangible assets........... 4 -- (19) --
Administrative expenses.............................. 5 (27) (37) (31)
------- ------- -------
OPERATING PROFIT/(LOSS).............................. 5 161 (323) 153
Share of joint venture's operating profit/(loss)..... 4,12 27 (18) 39
Profit on disposal of fixed assets................... 4 41 40 --
Restructuring costs.................................. 4 -- (34) --
Interest receivable and similar income............... 7 52 52 41
Interest payable and similar charges................. 8 (70) (76) (75)
------- ------- -------
PROFIT/(LOSS) BEFORE TAXATION........................ 2 211 (359) 158
Taxation on profit/(loss) on ordinary activities..... 9 (57) (45) (106)
------- ------- -------
PROFIT/(LOSS) FOR THE YEAR........................... 154 (404) 52
Non equity minority interest......................... (6) -- --
Profit/(loss) for the year after minority
interests.......................................... 148 (404) 52
Preference dividends................................. 10 (12) (12) (12)
------- ------- -------
PROFIT/(LOSS) FOR THE YEAR ATTRIBUTABLE TO ORDINARY
SHAREHOLDERS....................................... 136 (416) 40
Ordinary dividends................................... 10 (34) (22) (22)
Retained profit/(loss) for the financial year before
preference share redemption costs.................. 102 (438) 18
Preference share redemption costs.................... 10 12 -- --
------- ------- -------
RETAINED PROFIT/(LOSS) FOR THE FINANCIAL YEAR........ 90 (438) 18
======= ======= =======
Basic earnings/(loss) per ordinary share............. 11 10.8p (43.7)p 4.2p
======= ======= =======
Diluted earnings/(loss) per ordinary share........... 11 10.7p (43.7)p 4.2p
======= ======= =======
Dividend per ordinary share.......................... 2.5p 2.3p 2.3p
======= ======= =======
Average number of ordinary shares outstanding during
the year (in millions)............................. 1,156.7 966.0 966.0
======= ======= =======
</TABLE>
IV-8
<PAGE> 122
LASMO plc AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
31 DECEMBER
-------------------
1998
NOTES 1999 (RESTATED)
----- ----- ----------
(L MILLION)
<S> <C> <C> <C>
FIXED ASSETS................................................ 12
Intangible assets...................................... 144 62
Tangible assets........................................ 1,949 1,474
Investment in joint venture:
Share of gross assets.................................. 144 127
Share of gross liabilities............................. (12) (9)
----- -----
132 118
Other investments......................................... 209 213
----- -----
2,434 1,867
----- -----
CURRENT ASSETS
Consumable stores......................................... 23 14
Debtors................................................... 13 291 432
Unlisted investments...................................... 6 9
Cash at bank in hand...................................... 378 450
----- -----
698 905
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR.............. 14
Bank loans, overdrafts and loan capital................... 58 79
Other creditors........................................... 317 294
----- -----
Net current assets........................................ 323 532
----- -----
TOTAL ASSETS LESS CURRENT LIABILITIES....................... 2,757 2,399
CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Bank loans................................................ 15 -- 203
Loan capital (includes convertible bonds)................. 1,002 1,036
Other creditors........................................... 187 136
PROVISIONS FOR LIABILITIES AND CHARGES...................... 17 100 111
----- -----
TOTAL NET ASSETS............................................ 2 1,468 913
===== =====
CAPITAL AND RESERVES
Called up share capital................................... 18 492 392
Share premium............................................. 19 928 556
Other reserves............................................ 19 90 90
Profit and loss account................................... 19 (103) (184)
----- -----
TOTAL SHAREHOLDERS' FUNDS (INCLUDING NON-EQUITY
INTERESTS)................................................ 1,407 854
Non-equity minority interests............................... 20 61 59
----- -----
Capital employed............................................ 1,468 913
===== =====
</TABLE>
IV-9
<PAGE> 123
LASMO plc AND SUBSIDIARY COMPANIES
CASH FLOW STATEMENT
<TABLE>
<CAPTION>
YEARS ENDED
31 DECEMBER
--------------------
NOTES 1999 1998 1997
----- ---- ---- ----
(L MILLION)
<S> <C> <C> <C> <C>
NET CASH INFLOW FROM OPERATING ACTIVITIES.................. 23 482 271 407
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE:
Interest paid.............................................. (110) (100) (83)
Dividends paid -- preference shares........................ (12) (12) (12)
-- minority interests..................... (5) -- --
Loan capital issue costs................................... -- -- (10)
Interest received.......................................... 34 33 41
---- ---- ----
(93) (79) (64)
---- ---- ----
TAXATION:
UK corporation tax paid.................................... (26) (17) (2)
Overseas tax paid.......................................... (55) (28) (62)
---- ---- ----
(81) (45) (64)
---- ---- ----
NET CASH INFLOW FROM OPERATIONS AFTER INTEREST AND
TAXATION................................................. 308 147 279
---- ---- ----
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT:
Capital expenditure: exploration and appraisal............ (63) (72) (95)
production and development......... (192) (239) (147)
other fixed assets................. (5) (12) (18)
Net receipt from joint venture............................. 22 6 17
Acquisition of oil and gas assets.......................... -- -- (272)
Disposal of oil and gas interests and other fixed assets... 189 76 --
---- ---- ----
NET CASH (OUTFLOW)/INFLOW FROM CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT..................................... (49) (241) (515)
---- ---- ----
ACQUISITIONS AND DISPOSALS:
Acquisition of subsidiary.................................. (13) -- --
Disposal of subsidiary..................................... 3 -- --
---- ---- ----
NET CASH INFLOW FROM ACQUISITIONS AND DISPOSALS............ (10) --
---- ---- ----
DIVIDENDS PAID -- ORDINARY SHARES.......................... (22) (22) (19)
---- ---- ----
Cash inflow/(outflow) before use of liquid resources and
Financing................................................ 227 (116) (255)
---- ---- ----
MANAGEMENT OF LIQUID RESOURCES............................. (213) 65 30
FINANCING.................................................. 24 454 (195) (287)
(DECREASE)/INCREASE IN CASH................................ (14) 14 2
---- ---- ----
227 (116) (255)
==== ==== ====
</TABLE>
IV-10
<PAGE> 124
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
<TABLE>
<CAPTION>
YEARS ENDED
31 DECEMBER
---------------------------
1999 1998 1997
---- ----------- ----
(L MILLION)
<S> <C> <C> <C>
Profit/(loss) for the year.................................. 148 (404) 48
Currency translation (losses)/gains on foreign currency net
investments............................................... (4) (4) 2
--- ---- --
Total recognized gains and losses relating to the year...... 144 (408) 50
==== ==
Prior year adjustment....................................... 24
---
Total gains and losses recognised since last annual
report.................................................... 168
===
</TABLE>
LASMO plc AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL INFORMATION
NOTE 1 -- ACQUISITION OF MONUMENT
The Company's recommended offer for Monument Oil and Gas plc ("Monument") was
declared unconditional in all respects on 14 June 1999 and the acquisition
method of accounting has been adopted. For accounting purposes the effective
date of acquisition was 30 June 1999. The consideration or the acquisition was
378.4 million new LASMO ordinary shares of 25p each. The fair value of the
consideration using the closing mid-market price on 10 June 1999 of L1.2175 per
share was L461 million. Costs of the acquisition amounted to L13 million. A
provisional fair value exercise has been carried out to allocate the
consideration between intangible and tangible fixed assets consistent with
industry practice. No goodwill arose on the acquisition.
The assets acquired are set out below:
<TABLE>
<CAPTION>
PROVISIONAL
BOOK ACCOUNTING OTHER FAIR VALUE
VALUE ALIGNMENT ADJUSTMENTS TO THE GROUP
----- ---------- ----------- ------------
(L MILLION)
<S> <C> <C> <C> <C>
Intangible assets........................... -- 48(a) 46(d) 94
Tangible assets............................. 414 (98)(a) 113(d) 429
Consumable stores........................... 6 -- -- 6
Debtors and prepayments..................... 138 (113)(b) (4)(e) 21
Cash at bank and in hand.................... 42 113(b) -- 155
Creditors falling due within one year....... (47) -- -- (47)
Creditors falling due after more than one
year...................................... (278) -- 107(f) (171)
Provisions for liabilities and charges...... (18) 5(c) -- (13)
---- ---- ---- ----
Net assets.................................. 257 (45) 262 474
==== ==== ==== ====
</TABLE>
(a) Restatement for oil and gas assets from 'full cost' method to 'successful
efforts' method of accounting.
(b) Reclassification of short-term interest bearing loan to third party as cash
at bank and in hand.
(c) Adjustment of provision for decommissioning.
(d) Attribution of provisional fair values to oil and gas assets acquired.
(e) Elimination of deferred tax asset.
(f) Elimination of deferred income.
IV-11
<PAGE> 125
Results prior to acquisition
Summarised profit and loss accounts and statements of total recognised gains and
losses of Monument are as follows:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
31 DECEMBER 14 JUNE
1998 1999
----------- ------------
(L MILLION)
<S> <C> <C>
Turnover.................................................... 81 41
Operating profit............................................ 18 1
Profit before taxation...................................... 8 --
Taxation.................................................... -- (4)
Profit after taxation....................................... 8 (4)
-- --
Profit for the period....................................... 8 (4)
Foreign exchange reserve movements.......................... (2) 3
-- --
Total recognised gains and losses for the period............ 6 (1)
== ==
</TABLE>
NOTE 2 -- SEGMENT INFORMATION
For the purposes of the Companies Act, the operations of the Group constitute
one class of business, the exploration for and production of hydrocarbon liquids
and gas.
The major areas of operation of the Group are the UK and Indonesia regions and,
in net asset terms, Venezuela. The UK region, for the purposes of providing
segment information, includes The Netherlands. All other operations are included
under Other International.
Analysis of turnover, profit and net assets by region
<TABLE>
<CAPTION>
PROFIT/(LOSS) BEFORE
TURNOVER BY SOURCE TAXATION NET ASSETS/(LIABILITIES)
-------------------- -------------------- --------------------------
YEAR ENDED 31 DECEMBER 31 DECEMBER
-------------------------------------------- --------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1999
---- ---- ---- ---- ---- ---- ------ ------ ------
(RESTATED) (RESTATED) (RESTATED)
(L MILLION)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
UK..................................... 395 332 405 112 12 101 623 640 851
Indonesia.............................. 117 118 189 51 41 94 305 284 397
Venezuela.............................. 46 4 -- 7 (1) -- 349 255 283
Other International.................... 36 30 45 -- (33) (28) 503 248 185
--- --- --- --- ---- --- ----- ----- -----
594 484 639 170 19 167 1,780 1,427 1,716
Share of joint venture -- Indonesia.... 53 52 83 27 16 39 132 118 155
Unallocated administrative expenses and
net assets........................... -- -- -- (9) (10) (14) 45 40 40
Exceptional items...................... -- -- -- 41 (360) -- -- -- --
Net interest expense and net debt...... -- -- -- (18) (24) (30) (489) (672) (614)
--- --- --- --- ---- --- ----- ----- -----
647 536 722 211 (359) 162 1,468 913 1,297
=== === === === ==== === ===== ===== =====
</TABLE>
In the UK region, turnover sourced in the United Kingdom was L386 million (1998
L320 million; 1997 L392 million) with the balance of L9 million (1998 L12
million; 1997 L13 million) sourced in The Netherlands. Profit before taxation
generated in The Netherlands was L2 million (1998 L5 million; 1997 L5 million).
Turnover by destination is not materially different from those reported above,
except for turnover sourced in Indonesia which is substantially all sold within
the Far East.
IV-12
<PAGE> 126
Analysis of turnover by category
<TABLE>
<CAPTION>
YEARS ENDED 31 DECEMBER
-------------------------
1999 1998 1997
----- ----- -----
(L MILLION)
<S> <C> <C> <C>
Production:................................................. 392 276 370
Oil and LPG............................................... 241 242 335
Natural gas............................................... 14 18 17
--- --- ---
Tariff income............................................... 647 536 722
=== === ===
</TABLE>
NOTE 3 -- COST OF SALES
<TABLE>
<CAPTION>
YEARS ENDED 31 DECEMBER
-------------------------
1999 1998 1997
----- ----- -----
(RESTATED)
(L MILLION)
<S> <C> <C> <C>
Operating costs............................................. 173 172 160
Depletion................................................... 169 210 212
Provision for decommissioning............................... 4 3 4
Royalties................................................... 12 7 20
PRT charge.................................................. 11 -- 5
--- --- ---
369 392 401
=== === ===
</TABLE>
The total figures in 1999 include the following amounts relating to Monument:
operating costs L18 million, depletion L27 million, decommissioning L1 million.
NOTE 4 -- EXCEPTIONAL ITEMS
<TABLE>
<CAPTION>
YEARS ENDED 31 DECEMBER
-------------------------
1999 1998 1997
----- ----- -----
(L MILLION)
<S> <C> <C> <C>
Operating items:
Write-down of tangible oil and gas assets(a)................ -- (307) --
Write-off of intangible exploration and appraisal
assets(a)................................................. -- (19) --
Write-down of tangible non-oil and gas assets(b)............ -- (6) --
-- ---- --
-- (332) --
Non-operating items:
Share of joint venture's exceptional item(a)................ -- (34) --
Profit on disposal of oil and gas assets(c)................. 41 40 --
Restructuring costs(d)...................................... -- (34) --
41 (28) --
-- ---- --
41 (360) --
== ==== ==
</TABLE>
(a) Write-off of tangible oil and gas assets in 1998 included L146 million for
fields in production and under development in the North Sea, L111 million
for fields in production in Indonesia (of which L34 million was dealt with
through the Group's interest in the Unimar joint venture) and L84 million
for fields under development in Venezuela. Write-off of intangible
exploration and appraisal assets of L19 million in 1998 related to the
Mariner project in the North Sea.
(b) In 1998 the carrying value of certain non-oil and gas assets located in the
United States of America was reduced by L6 million.
(c) In 1999 the Group disposed of its interest in certain Southern North Sea gas
fields to a subsidiary of Gaz de France for proceeds of L95 million giving
rise to a profit on disposal of L21 million, and
IV-13
<PAGE> 127
the Glenelg discovery in the Central North Sea was sold to Gaz de France for
a cash consideration of L6 million, generating a profit on disposal of L3
million. 1998 disposals related to the Group's interests in Colombia and
Italy.
(d) Restructuring costs in 1998 related to the restructuring of the Group's head
office in London and the closure of the Group's office in Rome.
NOTE 5 -- OPERATING PROFIT
i Administrative expenses:
<TABLE>
<CAPTION>
YEARS ENDED 31 DECEMBER
-----------------------
1999 1998 1997
----- ----- -----
(RESTATED)
(L MILLION)
<S> <C> <C> <C>
Administration costs........................................ 27 23 23
New business expenditure.................................... -- 8 8
---- ---- ----
27 31 31
==== ==== ====
</TABLE>
The total figure in 1999 includes L3 million relating to Monument. The Group is
set to achieve the anticipated L6 million per annum cost savings arising from
the Monument acquisition in 2000.
ii Operating profit for the year has been arrived at after charging:
<TABLE>
<CAPTION>
YEARS ENDED 31 DECEMBER
-----------------------
1999 1998 1997
----- ----- -----
(RESTATED)
(L MILLION)
<S> <C> <C> <C>
Depletion, depreciation and decommissioning................. 177 218 216
Staff costs:
Wages and salaries........................................ 29 40 35
Social security costs..................................... 2 2 3
Other pension costs....................................... 2 4 4
Operating lease rentals:
Land and buildings........................................ 6 5 4
Other..................................................... 11 22 7
</TABLE>
iii Fees paid to auditors and other accounting firms:
<TABLE>
<CAPTION>
YEARS ENDED 31 DECEMBER
-----------------------------------------------------
1999 1998 1997
--------------- --------------- ---------------
UK OVERSEAS UK OVERSEAS UK OVERSEAS
--- -------- --- -------- --- --------
(RESTATED) (RESTATED)
(L'000)
<S> <C> <C> <C> <C> <C> <C>
Audit of Group:
Ernst & Young..................... 374 132 319 21 331 23
Other accounting firms............ -- 10 -- 5 -- 18
Non audit fees:
Ernst & Young..................... 500 136 255 25 256 62
Other accounting firms............ 811 423 -- 27 -- 41
</TABLE>
Non-audit fees payable to Ernst & Young in the United Kingdom related primarily
to accounting due diligence work in support of the discussions with Enterprise
Oil plc and the acquisition of Monument and other compliance work. Non-audit
fees to other accounting firms in the UK relates to the provision of outsourcing
services and overseas mainly to project management activities. The audit fee in
respect of the audit of the parent company amounted to L10,000 (1998 L10,000;
1997 L10,000).
IV-14
<PAGE> 128
The average monthly number of employees (including directors) during the year
was as follows:
<TABLE>
<CAPTION>
YEARS ENDED 31 DECEMBER
-----------------------
1999 1998 1997
----- ----- -----
(NUMBER OF EMPLOYEES)
<S> <C> <C> <C>
UK.......................................................... 234 337 310
Overseas.................................................... 511 514 464
---- ---- ----
Total Group................................................. 745 851 774
==== ==== ====
</TABLE>
At 31 December 1999 the total number of employees was 759 (1998 803; 1997 832).
NOTE 6 -- DIRECTORS' EMOLUMENTS AND INTERESTS
Certain details of executive directors' emoluments and interests are described
in Appendix VI.
NOTE 7 -- INTEREST RECEIVABLE AND SIMILAR INCOME
<TABLE>
<CAPTION>
YEARS ENDED 31 DECEMBER
-----------------------
1999 1998 1997
---- ---- ----
(L MILLION)
<S> <C> <C> <C>
Bank interest receivable.................................... 28 30 25
Income from listed investments.............................. 11 14 13
Petroleum revenue tax interest.............................. 2 2 3
Other income................................................ 11 6 --
---- ---- ----
52 52 41
==== ==== ====
</TABLE>
Interest receivable in 1999 includes L9 million in respect of the release of an
accrual for interest payable on corporation tax for prior years following the
settlement of the tax position in 1999.
NOTE 8 -- INTEREST PAYABLE AND SIMILAR CHARGES
<TABLE>
<CAPTION>
YEARS ENDED 31 DECEMBER
-----------------------
1999 1998 1997
---- ---- ----
(L MILLION)
<S> <C> <C> <C>
Bank loans and overdrafts................................... 11 9 16
Loan capital................................................ 91 90 67
Other finance charges....................................... 2 7 3
FRS 12 unwinding of discount................................ 5 4 4
---- ---- ----
109 110 90
Less: capitalised interest.................................. (39) (34) (15)
---- ---- ----
70 76 75
==== ==== ====
</TABLE>
Loan capital includes amounts paid and payable to holders of Oil Production
Stock (OPS) units of L0.2 million (1998 L0.2 million; 1997 L0.3 million). These
payments are calculated on 8.75 per cent. of the sales value of production from
8.62608 per cent. of the Ninian field after deducting Government royalties and
operating costs incurred in extracting the oil and conveying and treating it at
Sullom Voe. The Group sold its interest in the Ninian field with effect from 1
January 1994. As part of the consideration, LASMO received unlisted securities
with identical terms to the OPS units. The income from these securities is equal
to the OPS payments and is included within interest receivable and similar
income.
IV-15
<PAGE> 129
NOTE 9 -- TAXATION
<TABLE>
<CAPTION>
YEARS ENDED 31 DECEMBER
-------------------------
1999 1998 1997
----- ----- -----
(RESTATED)
(L MILLION)
<S> <C> <C> <C>
UK corporation tax:.........................................
Current year charge....................................... 63 50 58
Less: double tax relief................................... (27) (25) (45)
Deferred taxation......................................... 2 2 1
Prior year items.......................................... (1) -- (1)
--- ---- ---
37 27 13
Overseas taxation:
Current year charge....................................... 32 29 67
Share of joint venture's tax charge....................... 17 14 32
--- ---- ---
49 43 99
--- ---- ---
86 70 112
Advance corporation tax written back........................ (29) (25) (6)
--- ---- ---
57 45 106
=== ==== ===
</TABLE>
NOTE 10 -- DIVIDENDS
<TABLE>
<CAPTION>
YEARS ENDED 31 DECEMBER
-------------------------
1999 1998 1997
----- ----- -----
(L MILLION)
<S> <C> <C> <C>
DIVIDENDS
Minority interest
Preference shares:
US$100 million series A 8.15 per cent Cumulative
Preference shares...................................... 6 -- --
Non-equity shares
Preference shares:
US$250 million Cumulative Dollar Preference Shares, Series
A...................................................... 12 12 12
--- --- ---
18 12 12
Equity shares
Ordinary shares:
Final 2.5 pence per share (1998 interim 2.3p; 1997 final
2.3p).................................................. 34 22 22
--- --- ---
52 34 34
--- --- ---
OTHER APPROPRIATIONS
Exceptional charge for preference share redemption........ 12 -- --
=== === ===
</TABLE>
On 17 December 1999 LASMO announced its intention to redeem all of the US $250
million Cumulative Dollar Preference Shares, Series A. The exceptional charge
reflects the premium payable on early redemption or approximately L6 million and
costs of L6 million.
NOTE 11 -- EARNINGS PER SHARE
The calculation of earnings per ordinary share is based on the profit for the
year after minority interests, preference dividends and other appropriations, of
L124 million (1998 loss of L416 million; 1997 profit of L40 million). Earnings
per ordinary share before exceptional items is based on a profit of L95 million
(1998 loss of L56 million; 1997 profit of L40 million). The weighted average
number of ordinary shares in issue for earnings per share was 1,156,702,255
shares (1998 965,966,362; 1997 965,895,800), ad-
IV-16
<PAGE> 130
justed by the weighted average number of own shares held of 13,657,450 shares
(1998 15,355,572; 1997 17,289,154), to give 1,143,044,805 (1998 950,610,790;
1997 948,606,646) shares used in the calculation of earnings per ordinary share.
There were 3,859,850 dilutive potential ordinary shares at the end of 1999 (1998
nil; 1997 2,659,880), which were added to the above number in calculating
dilutive earnings per share.
NOTE 12 -- FIXED ASSETS
i Intangible assets: exploration and appraisal expenditure
<TABLE>
<CAPTION>
OTHER
UK INDONESIA VENEZUELA INTERNATIONAL TOTAL
--- --------- --------- ------------- -----
(L MILLION)
<S> <C> <C> <C> <C> <C>
COST:
At 31 December 1997 (restated).......... 28 1 -- 28 57
Additions............................. 23 7 4 51 85
Amounts written off................... (19) (4) -- (29) (52)
Exceptional amounts written off....... (19) -- -- -- (19)
Transfers............................. -- -- -- (9) (9)
--- --- -- --- ---
At 31 December 1998 (restated).......... 13 4 4 41 62
Additions............................. 15 14 -- 34 63
Acquisition of subsidiary
undertaking........................ 18 -- -- 76 94
Amounts written off................... (5) (11) -- (18) (34)
Disposals............................. (14) -- -- (4) (18)
Transfers............................. -- -- -- (23) (23)
--- --- -- --- ---
At 31 December 1999..................... 27 7 4 106 144
=== === == === ===
</TABLE>
IV-17
<PAGE> 131
ii Tangible assets
<TABLE>
<CAPTION>
OIL AND GAS EXPENDITURE
--------------------------------------
OFFICE FIELDS FIELDS
FREEHOLD EQUIPMENT AND FIELDS IN UNDER AWAITING
LAND VEHICLES PRODUCTION DEVELOPMENT DEVELOPMENT TOTAL
-------- ------------- ---------- ----------- ----------- -----
(L MILLION)
<S> <C> <C> <C> <C> <C> <C>
COST:
At 1 January 1997 (restated)..... 39 34 2,430 65 38 2,606
Exchange adjustments........... 1 -- 25 -- (1) 25
Acquisitions................... -- -- 15 275 1 291
Additions...................... 3 19 63 108 9 202
Disposals...................... -- (6) (60) -- -- (66)
Transfers...................... -- -- 66 (59) 12 19
-- -- ----- --- --- -----
At 31 December 1997 (restated)... 43 47 2,539 389 59 3,077
Exchange adjustments........... -- -- (4) (2) 1 (5)
Additions...................... 2 7 64 158 27 258
Disposals...................... -- (5) (105) -- (30) (140)
Transfers...................... -- -- 74 (80) 15 9
-- -- ----- --- --- -----
At 31 December 1998 (restated)... 45 49 2,568 465 72 3,199
Exchange adjustments........... 1 -- 26 16 -- 43
Acquisition of subsidiary...... -- -- 331 38 60 429
Additions...................... 3 5 62 163 18 251
Disposals...................... -- (1) (167) -- (7) (175)
Transfers...................... -- -- 21 (21) 23 23
-- -- ----- --- --- -----
At 31 December 1999.............. 49 53 2,841 661 166 3,770
== == ===== === === =====
DEPLETION AND DEPRECIATION:
At 1 January 1997 (restated)..... 5 28 1,053 -- 2 1,088
Exchange adjustments........... -- -- 10 -- -- 10
Charge for the year............ -- 4 211 -- -- 215
Disposals...................... -- (6) (56) -- -- (62)
Transfers...................... -- -- -- 2 (2) --
-- -- ----- --- --- -----
At 31 December 1997 (restated)... 5 26 1,218 2 -- 1,251
Exchange adjustments........... -- -- (1) 2 -- 1
Charge for the year............ -- 6 212 -- -- 218
Exceptional charge for the
year......................... 6 6 164 143 -- 319
Disposals...................... -- (5) (59) -- -- (64)
-- -- ----- --- --- -----
At 31 December 1998 (restated)... 11 33 1,534 147 -- 1,725
Exchange adjustments........... -- -- 11 2 -- 13
Charge for the year............ -- 4 169 -- -- 173
Disposals...................... -- -- (90) -- -- (90)
-- -- ----- --- --- -----
At 31 December 1999.............. 11 37 1,624 149 -- 1,821
== == ===== === === =====
NET BOOK AMOUNTS:
At 31 December 1999.............. 38 16 1,217 512 166 1,949
== == ===== === === =====
At 31 December 1998 (restated)... 34 16 1,034 318 72 1,474
== == ===== === === =====
At 31 December 1997 (restated)... 38 21 1,321 387 59 1,826
== == ===== === === =====
Cost at 31 December 1999
includes capitalised interest
of:.......................... -- -- 152 77 -- 229
== == ===== === === =====
</TABLE>
IV-18
<PAGE> 132
iii Oil and gas expenditure: regional analysis
<TABLE>
<CAPTION>
OTHER
UK INDONESIA VENEZUELA INTERNATIONAL TOTAL
----- --------- --------- ------------- -----
(L MILLION)
<S> <C> <C> <C> <C> <C>
COST:
Fields in production................... 2,049 683 -- 109 2,841
Fields under development............... 62 -- 462 137 661
Fields awaiting development............ 3 -- -- 163 166
----- --- --- --- -----
At 31 December 1999.................... 2,114 683 462 409 3,668
===== === === === =====
DEPLETION:
At 31 December 1999.................... 1,227 412 100 34 1,773
===== === === === =====
NET BOOK AMOUNTS:
At 31 December 1999.................... 887 271 362 375 1,895
===== === === === =====
At 31 December 1998 (restated)......... 708 268 260 188 1,424
===== === === === =====
</TABLE>
iv Investment in joint venture
Unimar Company is a partnership which is 50 per cent. owned by LASMO Oil & Gas,
Inc., a company wholly-owned by the Group. Unimar Company owns Virginia
International Company and Virginia Indonesia Company, the operator of the Sanga
Sanga PSC, which between them own 11.56 per cent. of the Group's 37.81 per cent.
interest in the Sanga Sanga PSC.
A summary of the Group's share of Unimar Company's results and assets and
liabilities is set out below:
<TABLE>
<CAPTION>
YEARS ENDED AND AT 31 DECEMBER 1999 1998 1997
------------------------------ ---- ---- ----
(L MILLION)
<S> <C> <C> <C>
Turnover.................................................... 53 52 83
Profit before taxation and exceptional items................ 27 16 39
Exceptional provision for oil and gas assets (note 4)....... -- (34) --
Profit/(loss) before taxation............................... 27 (18) 39
Taxation.................................................... (17) (14) (32)
--- --- ---
Profit/(loss) after taxation................................ 10 (32) 7
=== === ===
Fixed assets................................................ 117 119 164
Current assets.............................................. 27 8 19
Current liabilities......................................... (9) (7) (25)
Noncurrent liabilities...................................... (3) (2) (3)
</TABLE>
v Other investments
<TABLE>
<CAPTION>
AUK LOAN OWN
NOTES (A) SHARES (B) OTHER TOTAL
--------- ---------- ----- -----
(L MILLION)
<S> <C> <C> <C> <C>
At 1 January 1997..................................... 187 32 1 220
Disposals............................................. -- (4) -- (4)
--- -- -- ---
At 31 December 1997................................... 187 28 1 216
Disposals............................................. -- (2) -- (2)
Amount written off.................................... -- -- (1) (1)
--- -- -- ---
At 31 December 1998................................... 187 26 -- 213
--- -- -- ---
Disposals............................................. -- (4) -- (4)
--- -- -- ---
At 31 December 1999................................... 187 22 -- 209
=== == == ===
</TABLE>
IV-19
<PAGE> 133
(a) The AUK Guaranteed Unsecured Floating Rate Notes 2003 (AUK Loan Notes) are
guaranteed by Elf Aquitaine and are listed on the Luxembourg Stock Exchange.
The investment is included in the balance sheet at cost which is equivalent
to par value as the directors currently intend to hold the AUK Loan Notes
until maturity. The AUK Loan Notes are pledged as collateral for certain
Group borrowings (Note 15).
(b) The Group held 12,765,839 LASMO plc ordinary shares as at 31 December 1999
(1998 14,549,061 shares) arising from its acquisition of Ultramar. The
market value of these shares at 31 December 1999, was L15 million (1998 L15
million). The historical cost of these shares at 31 December 1999 was L37
million (1998 L39 million). The directors consider that, having regard to
schedule 4 paragraph 19 of the Companies Act, there has not been a permanent
impairment in the value of these shares.
(c) Details of principal investments are given in note 27.
NOTE 13 -- DEBTORS
<TABLE>
<CAPTION>
31 DECEMBER
------------
1999 1998
---- ----
(L MILLION)
<S> <C> <C>
Trade debtors............................................... 150 290
Taxation recoverable........................................ 18 32
Other debtors............................................... 89 92
Prepayments................................................. 34 18
--- ---
291 432
=== ===
</TABLE>
Included in the above are the following amounts expected to be realised after
more than one year.
<TABLE>
<CAPTION>
31 DECEMBER
------------
1999 1998
---- ----
(L MILLION)
<S> <C> <C>
Taxation recoverable........................................ 12 18
Other debtors and prepayments............................... 29 36
-- --
41 54
== ==
</TABLE>
NOTE 14 -- CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
<TABLE>
<CAPTION>
31 DECEMBER
------------
1999 1998
---- ----
(L MILLION)
<S> <C> <C>
Bank loans and overdrafts................................... -- 79
Trade creditors............................................. 61 82
PRT and other taxation...................................... 38 33
Social security............................................. 1 1
Dividends................................................... 40 25
Accruals.................................................... 97 100
Other current liabilities................................... 80 53
--- ---
317 373
=== ===
</TABLE>
IV-20
<PAGE> 134
NOTE 15 -- CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
<TABLE>
<CAPTION>
31 DECEMBER
------------
1999 1998
---- ----
(L MILLION)
<S> <C> <C>
Bank loans.................................................. -- 203
</TABLE>
Loan capital
<TABLE>
<CAPTION>
31 DECEMBER
--------------
1999 1998
----- -----
(L MILLION)
<S> <C> <C>
US$93 million 10.13% Notes 2000............................. -- 56
US$200 million 7 1/8% Guaranteed Notes 2003................. 123 119
US$20 million 10.30% Notes 2005............................. 12 12
L81 million 7 3/4% Convertible Bonds 2005 (a)............... 80 80
US$300 million 7.50% Guaranteed Notes 2006.................. 184 178
US$200 million 6.75% Guaranteed Notes 2007.................. 124 120
L150 million 10 3/8% Debenture Stock 2009 (b)............... 149 149
US$150 million 8 3/8% Guaranteed Notes 2023................. 91 89
US$400 million 7.30% Guaranteed Debentures 2027............. 238 232
OPS units of 10p each (c)................................... 1 1
----- -----
1,002 1,036
===== =====
</TABLE>
(a) The L81 million 7 3/4% Convertible Bonds 2005 (initial issue L90 million)
are convertible at the option of the holder into ordinary shares of the
Company at a price of 541p per ordinary share on or before 27 September 2005
subject to adjustment in certain circumstances.
(b) Payment of principal and interest on the L150 million 10 3/8% Debenture
Stock 2009 is guaranteed by LASMO Securities (Jersey) Limited, a
wholly-owned subsidiary of the Company, and the guarantee is secured by a
charge over the AUK Loan Notes held by LASMO Securities (Jersey) Limited.
(c) Oil Production Stock
<TABLE>
<CAPTION>
(NUMBER
OF UNITS) (L'000)
--------- -------
<S> <C> <C>
At 1 January 1997 and 31 December 1998 and 1999............. 5,562,990 556
</TABLE>
The OPS is repayable at par on the earliest of:
- The date when the total quantity of petroleum won and saved from the 8.62608%
interest in the Ninian field to which the OPS relates reaches 120 million
barrels;
- the termination of production from the field; or
- 31 December 2010.
At 31 December 1999 cumulative production from the Ninian field attributable to
the interest on which OPS payments have become due amounted to 96.1 million
barrels (1998 94.8 million barrels).
IV-21
<PAGE> 135
<TABLE>
<CAPTION>
31 DECEMBER
------------------
1999 1998
---- ----------
(RESTATED)
(L MILLION)
<S> <C> <C>
Other creditors
Deferred income (a) (b)..................................... 182 132
Other accounts payable...................................... 5 4
--- ---
187 136
=== ===
</TABLE>
(a) On 10 December 1998 the Group agreed to renegotiate its gas sales agreement
with PowerGen UK plc. This had the effect of reducing the price of gas
delivered to PowerGen from 1 October 1998 by approximately 35 per cent. and
resulted in a payment to LASMO of L146 million, which was received on 5
January 1999. This has been deferred and is being released to income as gas
is delivered under the agreement, which terminates in 2013. On 19 October
1999 the Group modified the gas sales agreement with PowerGen UK plc. This
had the effect of reducing the gas price by approximately one third for gas
delivered from 1 June 1999 for a period of five years and resulted in a
payment to LASMO of L84 million, received in November 1999. This amount is
being released to income as the gas is delivered over the five year period.
At 31 December 1999, L31 million (1998 L11 million) is included in accruals
and deferred income due within one year, and L155 million (1998 L115
million) is included in deferred income due after more than one year in
respect of these arrangements.
(b) Interest is receivable by the Group on PRT refunds which have arisen from
the carryback of excess current UK North Sea expenditures against prior year
PRT payments. To the extent that such interest relates to PRT receipts,
which totalled L6 million (1998 L8 million) arising in respect of the Piper
field redevelopment, it has been deferred and is being released to income as
Piper production is received. Also included in deferred income is L8 million
(1998 L9 million) which relates to a prepayment received under a contract
for sale of gas. The income is being released to profits as deliveries are
made.
NOTE 16 -- FINANCIAL INSTRUMENTS
Short term debtors and creditors have been excluded from all disclosures other
than the currency profile.
Details of non-equity shares issued by the Group are given in notes 18 and 20.
i Maturity profile of financial liabilities
<TABLE>
<CAPTION>
1999
----------------------------------------
BANK
BORROWINGS
AND
DEBENTURES OTHER TOTAL
---------- ----------- -----------
(L MILLION)
<S> <C> <C> <C>
Due within one year..................................... 58 -- 58
Due within one to two years............................. -- 5 5
Due between two and five years.......................... 123 -- 123
Due between five and ten years.......................... 549 -- 549
Due after ten years..................................... 330 -- 330
----- ----- -----
Net financial liabilities............................... 1,060 5 1,065
===== ===== =====
</TABLE>
In the maturity analysis of Group financial liabilities "other" includes
liabilities shown as other creditors falling due after more than one year.
Bank borrowings and debentures are stated net of unamortised issue expenses
totalling L15 million.
IV-22
<PAGE> 136
The Company has issued guarantees or indemnities including those for loans and
obligations of various subsidiary companies amounting to L930 million.
At 31 December 1999 the Group had L225 million of committed bank facilities
which expire as follows:
<TABLE>
<CAPTION>
1999
-----------
(L MILLION)
<S> <C>
Expiring within one year.................................... 75
Expiring within two to three years.......................... 150
---
225
===
</TABLE>
ii Interest rate and currency profile
The interest rate and currency profile of the financial liabilities of the Group
as at 31 December was as follows:
<TABLE>
<CAPTION>
WEIGHTED
WEIGHTED WEIGHTED AVERAGE
AVERAGE AVERAGE PERIOD UNTIL
FIXED PERIOD FOR MATURITY OF
INTEREST WHICH RATE INTEREST-FREE
INTEREST- RATE IS FIXED LIABILITIES
CURRENCY TOTAL FIXED RATE FLOATING RATE FREE % YEARS YEARS
-------- ----------- ----------- ------------- ----------- -------- ---------- -------------
(L MILLION) (L MILLION) (L MILLION) (L MILLION)
<S> <C> <C> <C> <C> <C> <C> <C>
1999
Sterling............. 236 229 1 6 9.5 8.2 1.5
US dollar............ 829 400 429 -- 8.1 22.3 --
----- --- --- -- --- ---- ---
Total................ 1,065 629 430 6 8.6 17.2 1.5
===== === === == === ==== ===
</TABLE>
The floating rate liabilities bear interest based on six month LIBOR plus 0.8 to
2.1 base points.
Financial assets comprise L384 million of cash and short term investments, and
L12 million of other debtors. Of these items, L354 million is denominated in
sterling, L31 million is denominated in US dollars, and L11 million in other
currencies.
The cash balances bear interest at floating rates based approximately on LIBOR.
Other debtors are non interest bearing and are expected to be recovered within
three years.
IV-23
<PAGE> 137
iii. Fair values of financial instruments
The fair value of the Group's financial instruments is as follows:
<TABLE>
<CAPTION>
31 DECEMBER 1999
--------------------------
CARRYING ESTIMATED
AMOUNT FAIR VALUE
----------- -----------
(L MILLION) (L MILLION)
<S> <C> <C>
PRIMARY FINANCIAL INSTRUMENTS HELD OR ISSUED TO FINANCE THE
GROUP'S OPERATIONS
Bank loans and overdrafts................................... (58) (59)
Borrowings due after more than one year..................... (1,002) (1,014)
Other liabilities........................................... (5) (5)
Non equity shares........................................... (155) (161)
Non equity minority interest................................ (61) (61)
Other debtors............................................... 12 12
AUK loan note............................................... 187 187
Cash at bank and short term investments..................... 384 384
DERIVATIVE FINANCIAL INSTRUMENTS HELD TO MANAGE THE INTEREST
AND CURRENCY RATE PROFILE
Interest rate swaps......................................... -- (30)
Forward foreign currency agreements......................... -- (1)
</TABLE>
Market values have been used to determine the fair value of interest rate swaps,
forward foreign currency agreements and listed securities held. The fair value
of all other items have been calculated by discounting the expected future cash
flows at prevailing interest rates at the year end.
iv Hedging
The Group may, from time to time, use derivative financial instrument to hedge
its exposure to fluctuations in foreign currency exchange rates, interest rates
and crude oil prices. The Group does not become a party to derivatives for
trading purposes. Gains and losses on instruments used for hedging are not
recognised until the exposure that is being hedged is itself recognised.
Unrecognised gains and losses on instruments used for hedging, and the movements
therein, are as follows:
<TABLE>
<CAPTION>
1999
-----------------------------------------
TOTAL NET
GAINS/
GAINS LOSSES (LOSSES)
----------- ----------- -----------
(L MILLION) (L MILLION) (L MILLION)
<S> <C> <C> <C>
Unrecognised gains and losses at 1 January................. 5 -- 5
Gains and losses arising in previous years that were
recognised in the year................................... 1 -- 1
-- --- ---
Gains and losses arising before 1 January that were not
recognised in the year................................... 4 -- 4
Gains and losses arising in the year that were not
recognised in the year................................... (4) (31) (35)
-- --- ---
Unrecognised losses on hedges at 31 December............... -- (31) (31)
-- --- ---
Losses expected to be recognised in the next financial
year..................................................... -- (2) (2)
Losses which may be recognised after the next financial
year..................................................... -- (29) (29)
== === ===
</TABLE>
The extent, if any, to which losses on interest rate swaps will be recognised
beyond 2000 depends upon prevailing interest rates during the period to maturity
of the underlying borrowings, which ranges from 2003 to 2007.
IV-24
<PAGE> 138
v Currency profile
The main functional currencies of the Group are sterling and US dollars. In
total, at 31 December 1999 the Group's subsidiaries whose functional currency is
sterling had net monetary assets denominated in US dollars amounting to L38
million.
NOTE 17 -- PROVISIONS FOR LIABILITIES AND CHARGES
<TABLE>
<CAPTION>
DEFERRED DEFERRED DECOMMISSIONING OTHER
PRT TAXATION PROVISIONS PROVISIONS TOTAL
-------- -------- --------------- ---------- -----
(L MILLION)
<S> <C> <C> <C> <C> <C>
Balance at 1 January 1997........ 49 4 38 4 95
(Credit)/charge.................. (14) 1 8 -- (5)
Utilised......................... -- -- (1) -- (1)
--- -- -- --- ---
Balance at 31 December 1997...... 35 5 45 4 89
(Credit)/charge.................. (8) 2 11 34 39
Utilised......................... -- (2) -- (7) (9)
--- -- -- --- ---
Balance at 31 December 1998...... 27 5 56 31 119
Prior year adjustment............ -- -- (8) -- (8)
(Credit)/charge.................. (8) 2 -- 4 (2)
Utilised......................... -- (4) -- (26) (30)
Additions/revisions.............. -- -- 3 -- 3
Acquisitions..................... -- 3 10 -- 13
Unwinding discount............... -- -- 5 -- 5
--- -- -- --- ---
Balance at 31 December 1999...... 19 6 66 9 100
=== == == === ===
</TABLE>
Deferred PRT
The provision for tax on oil and gas activities is calculated on a unit of
production basis and represents liabilities expected to crystallise on certain
North Sea fields.
Decommissioning costs
The estimated cost of decommissioning at the end of the production lives of
North Sea fields is based upon engineering estimates and expert reports.
Provision is made for the estimated decommissioning costs at the balance sheet
date, discounted to the present value. These liabilities are expected to
crystallise between 2002 and 2019.
Deferred taxation
<TABLE>
<CAPTION>
31 DECEMBER
------------
1999 1998
---- ----
(L MILLION)
<S> <C> <C>
The potential liability for deferred taxation is:
Accelerated capital allowances and other timing
differences............................................ 122 60
Overseas deferred taxation................................ 2 8
--- ---
124 68
Deduct: advance corporation tax............................. (71) (39)
--- ---
53 29
=== ===
of which the following amounts have been recognised in the
financial statements:
Accelerated capital allowances and other timing
differences............................................... 6 5
--- ---
</TABLE>
IV-25
<PAGE> 139
The amount provided in respect of accelerated capital allowances and other
timing differences includes L5 million (1998 L6 million) relating to refunds of
petroleum revenue tax arising from the Piper redevelopment and which are
included in deferred petroleum revenue tax. The potential liability for deferred
taxation excludes revaluation surpluses on certain North Sea fields as these do
not constitute timing differences.
Deferred taxation is not provided in respect of liabilities which might arise on
the distribution of profits of overseas subsidiary companies, due to the
availability of foreign tax credits.
Other
Other provisions principally comprise provisions established in 1998 in respect
of the restructuring of the Group's head office in London and the closure of the
Group's office in Rome.
NOTE 18 -- SHARE CAPITAL OF THE COMPANY
<TABLE>
<CAPTION>
ALLOTTED, CALLED UP
AUTHORISED AND FULLY PAID
-------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
(L MILLION) (L MILLION) (L MILLION) (L MILLION)
<S> <C> <C> <C> <C>
Equity shares:
Ordinary shares: 1,704 million shares (1998
1,320 million shares) of 25p each (i)... 426 330 337 242
Non-equity shares:
Cumulative Redeemable Preference Shares of
L1 each................................. 100 100 -- --
US$250 million Cumulative Dollar Preference
Shares of $25 each (iii)................ 155 150 155 150
--- --- --- ---
681 580 492 392
=== === === ===
</TABLE>
During the year the Company's authorised ordinary share capital was increased by
L95,953,175 by the creation of 383,812,700 shares of 25p each.
Preference shares are classified as non-equity interests in shareholders' funds.
The Cumulative Dollar Preference Shares are stated at year end exchange rates.
i Ordinary shares
<TABLE>
<CAPTION>
1999 1998
-------------------------------- --------------------------------
NUMBER OF SHARES NOMINAL VALUE NUMBER OF SHARES NOMINAL VALUE
---------------- ------------- ---------------- -------------
(L MILLION) (L MILLION)
<S> <C> <C> <C> <C>
1,344,328,323 337 965,966,362 242
============= === =========== ===
</TABLE>
During 1999 the Company issued 378,361,961 ordinary shares in connection with
the acquisition of Monument.
ii Share options
At 31 December 1999 there were outstanding options under various employee share
option schemes, exercisable during the years 2000 to 2009, to acquire 12,436,886
ordinary shares of the Company at prices ranging from L1.00 to L4.75 per share.
In addition, at 31 December 1999 there were outstanding options, held by former
employees of Monument, under various employee share option schemes, exercisable
during the years 2000 to 2009 to acquire 4,750,712 ordinary shares of the
Company at prices ranging from L0.58 to L1.95 per share.
IV-26
<PAGE> 140
The Group has other stock option plans in which former employees of the Ultramar
Group participate. At 31 December 1999 there were outstanding options,
exercisable during the years 2000 to 2001, to acquire 185,659 ordinary shares of
the Company at prices ranging from L2.55 to L2.81 per share.
The Company also has a stock appreciation rights (SAR) plan under which SARs
have been granted to US residents who previously held options under the Ultramar
stock option plans. On valid exercise of a SAR, LASMO pays to the option holder
the difference between the calculated exercise price of equivalent LASMO
ordinary shares in the SAR and the market value of LASMO ordinary shares on the
date of exercise, either in cash or LASMO ordinary shares. At 31 December 1999
there were 1,950 SARs outstanding.
In addition there are options over 26,000 Ultramar shares which remain
outstanding.
iii Cumulative Dollar Preference Shares; Series A of US$25 each (Dollar
Preference Shares).
Dividends are payable on the Dollar Preference Shares, in US dollars, quarterly
in arrears at a rate to provide a gross return to the shareholder of 10 per cent
per annum of the nominal value of the shares.
On 16 February 2000 the Company redeemed all of the outstanding Dollar
Preference Shares at a premium of US$1.00 per share, resulting in an exceptional
charge to other appropriations. The charge comprises L6 million of unamortised
costs in addition to the premium of L6 million.
NOTE 19 -- RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS AND RESERVES
<TABLE>
<CAPTION>
1999 1998
---------------------------------------------------- ----------
PROFIT
SHARE SHARE OTHER AND LOSS TOTAL
CAPITAL PREMIUM RESERVES ACCOUNT TOTAL (RESTATED)
-------- -------- -------- -------- -------- ----------
(L (L (L (L (L (L
MILLION) MILLION) MILLION) MILLION) MILLION) MILLION)
<S> <C> <C> <C> <C> <C> <C>
At 1 January (restated)................. 392 556 90 (184) 854 1,296
Profit/(loss) for year.................. -- -- -- 154 154 (404)
Dividends and appropriations............ -- -- -- (64) (64) (34)
Issue of shares......................... 95 366 -- -- 461 --
Issue expenses.......................... -- 6 -- -- 6 --
Exchange adjustments.................... 5 -- -- (9) (4) (4)
--- --- -- ---- ----- -----
At 31 December.......................... 492 928 90 (103) 1,407 854
=== === == ==== ===== =====
</TABLE>
Share capital includes non-equity interests (note 18). Non-equity interests in
shareholders' funds, comprising preference share capital net of issue expenses,
total L149 million (1998 L144 million).
Other reserves include L28 million of merger reserve (1998 L28 million) and L60
million of capital redemption reserve (1998 L60 million).
Cumulative goodwill set off against reserves at 31 December 1999 is L30 million
(1998 L30 million).
Net exchange losses of L28 million on foreign currency loans have been offset
against exchange gains arising on the net investment in overseas subsidiaries.
The loss dealt with in the accounts of the Company was L54 million (1998 loss
L135 million)
NOTE 20 -- MINORITY INTEREST
In 1998, LASMO America (LAL) a wholly-owned subsidiary of LASMO plc and
registered in the United States of America issued 1,000,000 series A 8.15 per
cent cumulative perpetual preference shares, each having a par value of $0.01
and a liquidation preference of $100. The shares are redeemable in whole or in
part at the option of LAL at liquidation preference, plus accrued dividends,
after 1 March 2009, or earlier at the option of LAL in the event of certain US
federal income tax law changes. Holders of the shares have a right, in
preference to ordinary shareholders of the Company, to receive on a winding up
the liquidation preference plus any accrued dividends.
IV-27
<PAGE> 141
NOTE 21 -- PENSION COSTS
The LASMO Group operates a number of pension schemes. The principal scheme is
the LASMO Pension Plan (the Plan) which operates in the United Kingdom and which
is of the funded and defined benefits type. The Plan covers approximately 265
Group employees (1998 415) and its assets are held in trust in a separately
administered fund.
The latest actuarial valuation of the Plan was carried out as at 31 March 1998
and was prepared using the projected unit method. This valuation, which assumed
investment returns of 0.5 per cent. per annum in excess of salary increases and
3.5 per cent. per annum in excess of pension increases, disclosed a funding
level of 123 per cent. The market value of the Plan's assets at the valuation
date was L62 million.
The surplus disclosed by the valuation has been used to reduce the Company
contributions. The pension cost assessed on the basis of actuarial advice and
charged in the financial statements was L2 million (1998 L4 million).
NOTE 22 -- COMMITMENTS
i The following amounts, including information supplied by the
operators, were contracted for at 31 December:
<TABLE>
<CAPTION>
31 DECEMBER
------------
1999 1998
---- ----
(L MILLION)
<S> <C> <C>
Oil and gas expenditure..................................... 57 64
</TABLE>
ii At 31 December operating lease obligations existed which were
payable within one year in respect of leases expiring:
<TABLE>
<CAPTION>
31 DECEMBER
------------------------------------
1999 1998
--------------------------- -----
LAND AND
BUILDINGS OTHER TOTAL TOTAL
--------- ----- ----- -----
(L MILLION)
<S> <C> <C> <C> <C>
Within 1 year.............................................. -- -- -- 1
Within 2-5 years........................................... 2 19 21 11
After 5 years.............................................. 4 -- 4 5
-- -- -- --
6 19 25 17
== == == ==
</TABLE>
IV-28
<PAGE> 142
NOTE 23 -- RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
<TABLE>
<CAPTION>
YEAR ENDED 31 DECEMBER
-----------------------
1999 1998 1997
----- ----- -----
(RESTATED)
(L MILLION)
<S> <C> <C> <C>
Operating profit/(loss)..................................... 161 (323) 153
Exploration costs written off (net of provision release).... 34 71 54
Provision for decommissioning............................... 4 3 3
Depletion and depreciation.................................. 173 528 216
Provision for oil and gas assets............................ 3 -- --
Utilisation of provision for reorganisation costs........... (26) (1) (8)
Changes in PRT provisions and other balances................ (1) (12) (16)
Movement in consumable stores............................... (10) 1 (2)
Movement in debtors......................................... (87) 4 --
Movement in creditors....................................... 31 1 9
Deferred income............................................. 200 (1) (2)
---- ---- ----
Net cash inflow from operating activities................... 482 271 407
==== ==== ====
</TABLE>
NOTE 24 -- FINANCING CASHFLOW
<TABLE>
<CAPTION>
YEARS ENDED 31 DECEMBER
-----------------------
1999 1998 1997
----- ----- -----
(L MILLION)
<S> <C> <C> <C>
Borrowings raised........................................... -- (181) (659)
Borrowings repaid........................................... 454 45 372
---- ---- ----
Net cash outflow/(inflow) from change in debt............... 454 (136) (287)
Receipts from minority interest............................. -- (59) --
---- ---- ----
Net cash outflow/(inflow) from financing.................... 454 (195) (287)
==== ==== ====
</TABLE>
NOTE 25 -- RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN GROUP NET DEBT
<TABLE>
<CAPTION>
YEARS ENDED 31 DECEMBER
-------------------------
1999 1998 1997
----- ----- -----
(RESTATED)
(L MILLION)
<S> <C> <C> <C>
(Decrease)/increase in cash in the year..................... (14) 14 2
Cash outflow/(inflow) from increase/decrease in debt........ 454 (195) (287)
Cash (inflow)/outflow from increase/decrease in liquid
resources................................................. (213) 65 30
---- ---- ----
Changes resulting from cash flow............................ 227 (116) (255)
Exchange difference......................................... (25) (1) (23)
Liquid resources arising on acquisition..................... 152 -- --
Borrowings arising on acquisition........................... (171) -- --
Receipts from minority interest............................. -- 59 --
Other....................................................... -- -- 10
---- ---- ----
Movement in debt net of cash and liquid resources in the
year...................................................... 183 (58) (268)
---- ---- ----
Movement in Group net debt.................................. 183 (58) (268)
Group net debt at 1 January................................. (672) (614) (346)
---- ---- ----
Group net debt at 31 December............................... (489) (672) (614)
==== ==== ====
</TABLE>
IV-29
<PAGE> 143
NOTE 26 -- ANALYSIS OF MOVEMENT IN GROUP NET DEBT
<TABLE>
<CAPTION>
1 JANUARY EXCHANGE 31 DECEMBER EXCHANGE 31 DECEMBER
1998 CASHFLOW MOVEMENTS 1998 CASHFLOW ACQUISITION MOVEMENTS 1999
---------- -------- --------- ----------- -------- ----------- --------- -----------
(RESTATED)
(L MILLION)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash repayable on
demand............. 11 15 (5) 21 (20) 3 -- 4
Overdrafts........... (2) (1) -- (3) 3 -- -- --
------ ---- -- ------ ---- ---- --- ------
9 14 (5) 18 (17) 3 -- 4
Bank loans due after
1 year............. (69) (134) -- (203) 203 -- -- --
Loan capital due
after 1 year....... (1,098) 59 3 (1,036) 231 (171) (26) (1,002)
Bank loans and loan
capital due within
1 year............. (15) (61) -- (76) 20 -- (2) (58)
------ ---- -- ------ ---- ---- --- ------
(1,182) (136) 3 (1,315) 454 (171) (28) (1,060)
Liquid resources..... 372 65 1 438 (213) 152 3 380
------ ---- -- ------ ---- ---- --- ------
Debt net of cash and
liquid resources... (801) (57) (1) (859) 224 (16) (25) (676)
AUK Loan Notes....... 187 -- -- 187 -- -- -- 187
------ ---- -- ------ ---- ---- --- ------
Group net debt....... (614) (57) (1) (672) 224 (16) (25) 489
====== ==== == ====== ==== ==== === ======
</TABLE>
Liquid resources principally comprise short-term deposits.
27 -- PRINCIPAL INVESTMENTS
The following companies have businesses which are material in the context of
either the Group's profits or net assets. Direct subsidiaries of LASMO plc are
indicated by an asterisk. Unless otherwise stated all companies are wholly-owned
(all ordinary or common class shares) by the Group.
<TABLE>
<CAPTION>
COUNTRY OF COUNTRY OF
REGISTRATION OPERATION PRINCIPAL ACTIVITIES
--------------- ---------- --------------------------
<S> <C> <C> <C>
*LASMO International Limited... England Various(a) Exploration and production
LASMO Sanga Sanga Limited...... Bermuda Indonesia Exploration and production
*LASMO Securities (Jersey) Jersey Jersey Finance
Limited......................
LASMO (TNS) Limited............ Scotland UK Exploration and production
LASMO (ULX) Limited............ England UK Exploration and production
LASMO Venezuela B.V............ The Netherlands Venezuela Exploration and production
Unimar Company(b).............. USA Indonesia Exploration and production
</TABLE>
(a) LASMO International Limited's main interests are located in Algeria.
(b) The Group has a 50 per cent interest in Unimar, a general partnership. See
note 12 for further information.
IV-30
<PAGE> 144
3. FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 30 JUNE 2000
NATURE OF FINANCIAL INFORMATION
The financial information relating to LASMO set out below has been extracted
without material adjustment from the unaudited interim report of LASMO for the
six months ended 30 June 2000.
STATEMENT OF ACCOUNTING POLICIES
The unaudited interim report has been prepared on the basis of the accounting
policies set out in Part 2 of this Appendix IV. The Group taxation charge has
been calculated by applying the directors' best estimate of the annual effective
rate to the profit for the period.
LASMO plc AND SUBSIDIARY COMPANIES
ABBREVIATED PROFIT AND LOSS ACCOUNT
<TABLE>
<CAPTION>
FIRST HALF
(UNAUDITED)
--------------------------
2000 1999
----------- -----------
(RESTATED)
(L MILLION)
<S> <C> <C>
TURNOVER
Group and share of joint venture............................ 500 239
Less share of joint venture's turnover...................... (37) (23)
----- -----
463 216
Cost of sales............................................... (243) (164)
Provision for oil and gas assets............................ - -
----- -----
GROSS PROFIT................................................ 220 52
Exploration costs written off............................... (21) (12)
Administrative expenses..................................... (10) (10)
----- -----
OPERATING PROFIT............................................ 189 30
Share of joint venture's operating profit................... 26 10
(Loss)/profit on disposal of fixed assets................... (2) 16
Net interest payable........................................ (28) (5)
----- -----
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION............... 185 51
Taxation on profit on ordinary activities................... (61) (23)
----- -----
PROFIT FOR THE PERIOD....................................... 124 28
Minority interests.......................................... (2) (2)
----- -----
PROFIT ATTRIBUTABLE TO MEMBERS OF THE PARENT COMPANY........ 122 26
Dividends on preference shares.............................. (2) (7)
----- -----
PROFIT ATTRIBUTABLE TO ORDINARY SHAREHOLDERS................ 120 19
Dividends on ordinary shares................................ - -
RETAINED PROFIT FOR THE PERIOD.............................. 120 19
===== =====
Earnings per ordinary share*................................ 9.0p 2.0p
Diluted earnings per ordinary share*........................ 9.0p 2.0p
Dividend per ordinary share................................. - -
Weighted average number of shares in issue (millions)....... 1,333 952
===== =====
</TABLE>
* Preference dividends have been deducted in calculating earnings per share.
IV-31
<PAGE> 145
LASMO plc AND SUBSIDIARY COMPANIES
NOTES TO THE ABBREVIATED PROFIT AND LOSS ACCOUNT
<TABLE>
<CAPTION>
FIRST HALF
(UNAUDITED)
--------------------------
2000 1999
----------- -----------
(RESTATED)
(L MILLION)
<S> <C> <C>
NOTE 1 SEGMENTAL INFORMATION
TURNOVER BY SOURCE
UK.......................................................... 291 137
Indonesia................................................... 86 54
Venezuela................................................... 56 12
Other international......................................... 30 13
----- -----
463 216
Share of joint venture's turnover -- Indonesia.............. 37 23
----- -----
500 239
===== =====
PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION
UK.......................................................... 126 19
Indonesia................................................... 44 22
Venezuela................................................... 15 (2)
Other international......................................... 14 (1)
----- -----
199 38
Share of joint venture's profit before taxation --
Indonesia................................................. 26 10
Unallocated administrative expenses......................... (10) (8)
Exceptional items........................................... (2) 16
Net interest expense........................................ (28) (5)
----- -----
185 51
===== =====
NOTE 2 COST OF SALES
Operating costs............................................. 117 78
Depletion................................................... 98 75
Decommissioning............................................. 3 6
Royalties................................................... 13 3
PRT charge.................................................. 12 2
----- -----
243 164
===== =====
NOTE 3 NET INTEREST (PAYABLE)/RECEIVABLE
Interest on loans........................................... (47) (52)
Capitalised on development activities....................... 5 12
FRS 12 unwinding of discount................................ (3) (2)
----- -----
(45) (42)
Interest receivable......................................... 16 36
PRT interest................................................ 1 1
----- -----
(28) (5)
===== =====
</TABLE>
Both the first half and full year interest receivable in 1999 include L9 million
in respect of the release of an accrual for interest payable on corporation tax
for prior years.
IV-32
<PAGE> 146
<TABLE>
<CAPTION>
FIRST HALF
(UNAUDITED)
--------------------------
2000 1999
----------- -----------
(L MILLION)
<S> <C> <C>
NOTE 4 TAXATION
UK corporation tax charge................................... 23 5
Overseas taxation........................................... 38 18
----- -----
61 23
===== =====
The taxation charge relates to the following:
Parent and subsidiaries..................................... 48 16
Joint venture............................................... 13 7
----- -----
61 23
===== =====
</TABLE>
IV-33
<PAGE> 147
APPENDIX V
UNAUDITED PRO FORMA FINANCIAL INFORMATION AND PROJECTIONS
1. UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated balance sheet, pro
forma condensed consolidated statements of income and accompanying notes give
effect to the proposed business combination of Amerada Hess and LASMO using the
purchase method of accounting for business combinations. The pro forma financial
statements are based on the historical consolidated financial statements of
Amerada Hess and LASMO and should be read in conjunction with the historical
financial statements, including footnotes. Selected financial information, which
was extracted from the historical financial statements, is included in
Appendices III and IV.
The unaudited pro forma condensed consolidated balance sheet at 30 September
2000, is presented as if the business combination occurred on 30 September 2000.
The unaudited pro forma condensed statements of income for the year ended 31
December 1999, and the nine months ended 30 September 2000, are presented as if
the business combination had been completed on 1 January 1999.
The unaudited pro forma financial statements are presented for illustrative
purposes only. They are based on assumptions and do not purport to be indicative
of the results of operations or the financial position that would have actually
occurred if the combination had been consummated on the dates indicated or that
may be expected in the future.
The unaudited pro forma financial statements do not reflect any cost savings or
anticipated changes in expenses reflecting efficiencies resulting from combining
operations.
V-1
<PAGE> 148
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000
Millions of US dollars
<TABLE>
<CAPTION>
AMERADA HESS PRO FORMA
CORPORATION LASMO PLC ADJUSTMENTS PRO FORMA
------------ ---------- ----------- ----------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents....... $ 259 $ 460 $ (400)(a) $ 319
Accounts receivable............. 1,848 473 -- 2,321
Inventories..................... 367 31 -- 398
Other current assets............ 585 27 -- 612
---------- ---------- ---------- ----------
Total current assets......... 3,059 991 (400) 3,650
---------- ---------- ---------- ----------
INVESTMENTS AND ADVANCES
HOVENSA L.L.C................... 785 -- -- 785
Other........................... 236 500 244(b) 980
---------- ---------- ---------- ----------
Total investments and
advances................... 1,021 500 244 1,765
---------- ---------- ---------- ----------
PROPERTY, PLANT AND EQUIPMENT,
NET............................. 4,198 3,263 2,006(b) 9,467
---------- ---------- ---------- ----------
GOODWILL.......................... -- -- 255(c) 255
---------- ---------- ---------- ----------
NOTE RECEIVABLE................... 539 -- -- 539
---------- ---------- ---------- ----------
DEFERRED INCOME TAXES AND OTHER
ASSETS.......................... 252 -- -- 252
---------- ---------- ---------- ----------
TOTAL ASSETS...................... $ 9,069 $ 4,754 $ 2,105 $ 15,928
========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Accounts payable and accrued
liabilities.................. $ 2,312 $ 474 $ (49)(e) $ 2,737
Taxes payable................... 329 64 -- 393
Notes payable................... 2 -- -- 2
Current maturities of long-term
debt......................... 57 -- -- 57
---------- ---------- ---------- ----------
Total current liabilities.... 2,700 538 (49) 3,189
---------- ---------- ---------- ----------
LONG-TERM DEBT.................... 1,940 1,609 2,166(a) 5,715
---------- ---------- ---------- ----------
TOTAL DEFERRED LIABILITIES 1,069(d)
AND CREDITS..................... 886 541 (190)(e) 2,306
---------- ---------- ---------- ----------
MINORITY INTEREST................. -- 100 -- 100
---------- ---------- ---------- ----------
1,075(a)
TOTAL STOCKHOLDERS' EQUITY........ 3,543 1,966 (1,966)(f) 4,618
---------- ---------- ---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY............ $ 9,069 $ 4,754 $ 2,105 $ 15,928
========== ========== ========== ==========
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial
information.
V-2
<PAGE> 149
UNAUDITED PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED INCOME
FOR THE YEAR ENDED DECEMBER 31, 1999
Millions of US dollars, except per share data
<TABLE>
<CAPTION>
AMERADA HESS PRO FORMA
CORPORATION LASMO PLC ADJUSTMENTS PRO FORMA
------------ ---------- ----------- ----------
<S> <C> <C> <C> <C>
REVENUES
Sales (excluding excise taxes) and
other operating revenues............ $ 7,039 $ 962 $ -- $ 8,001
Non-operating income
Gains on asset sales................ 273 103 -- 376
Equity in income of HOVENSA
L.L.C............................. 7 -- -- 7
Other............................... 142 100 -- 242
---------- ---------- ---------- ----------
Total revenues.................... 7,461 1,165 -- 8,626
---------- ---------- ---------- ----------
COSTS AND EXPENSES
Cost of products sold.................. 4,241 -- -- 4,241
Production expenses.................... 487 300 -- 787
Marketing expenses..................... 387 -- -- 387
Other operating expenses............... 217 -- -- 217
Exploration expense, including dry
holes and lease impairment.......... 261 76 -- 337
General and administrative expenses.... 231 80 -- 311
Interest expense....................... 158 105 163(g) 426
Depreciation, depletion and
amortization........................ 649 273 204(h) 1,126
Impairment of assets and operating
leases.............................. 128 5 -- 133
Goodwill amortization.................. -- -- 17(i) 17
---------- ---------- ---------- ----------
Total costs and expenses.......... 6,759 839 384 7,982
---------- ---------- ---------- ----------
Income before income taxes............. 702 326 (384) 644
Provision for income taxes............. 264 184 (81)(j) 367
---------- ---------- ---------- ----------
INCOME BEFORE MINORITY INTEREST.......... 438 142 (303) 277
Minority interest...................... -- (10) -- (10)
---------- ---------- ---------- ----------
NET INCOME............................... 438 132 (303) 267
Preference dividends................... -- (19) -- (19)
---------- ---------- ---------- ----------
NET INCOME AVAILABLE TO COMMON
STOCKHOLDERS........................... $ 438 $ 113 $ (303) $ 248
========== ========== ========== ==========
NET INCOME PER SHARE AVAILABLE TO COMMON
STOCKHOLDERS
BASIC............................... $ 4.88 $ 0.10 $ 2.32
========== ========== ==========
DILUTED............................. $ 4.85 $ 0.10 $ 2.31
========== ========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING (in millions)
BASIC............................... 90 1,157 107
DILUTED............................. 90 1,143 107
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial
information.
V-3
<PAGE> 150
UNAUDITED PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
Millions of US dollars, except per share data
<TABLE>
<CAPTION>
AMERADA HESS PRO FORMA
CORPORATION LASMO PLC ADJUSTMENTS PRO FORMA
------------ ---------- ----------- ----------
<S> <C> <C> <C> <C>
REVENUES
Sales (excluding excise taxes) and
other operating revenues............ $ 8,308 $ 1,087 $ -- $ 9,395
Non-operating income
Gain (loss) on asset sales.......... -- (7) -- (7)
Equity in income of HOVENSA
L.L.C............................. 76 -- -- 76
Other............................... 87 69 -- 156
---------- ---------- ---------- ----------
Total revenues.................... 8,471 1,149 -- 9,620
---------- ---------- ---------- ----------
COSTS AND EXPENSES
Cost of products sold.................. 5,361 -- -- 5,361
Production expenses.................... 401 298 -- 699
Marketing expenses..................... 385 -- -- 385
Other operating expenses............... 168 -- -- 168
Exploration expense, including dry
holes and lease impairment.......... 217 56 -- 273
General and administrative expenses.... 152 27 -- 179
Interest expense....................... 119 88 122(g) 329
Depreciation, depletion and
amortization........................ 516 241 189(h) 946
Goodwill amortization.................. -- -- 13(i) 13
---------- ---------- ---------- ----------
Total costs and expenses.......... 7,319 710 324 8,353
---------- ---------- ---------- ----------
Income before income taxes............... 1,152 439 (324) 1,267
Provision for income taxes............... 469 181 (74)(j) 576
---------- ---------- ---------- ----------
INCOME BEFORE MINORITY INTEREST.......... 683 258 (250) 691
Minority interest...................... -- (6) -- (6)
---------- ---------- ---------- ----------
NET INCOME............................... $ 683 $ 252 $ (250) $ 685
========== ========== ========== ==========
NET INCOME PER SHARE
BASIC.................................. $ 7.63 $ .19 $ 6.41
========== ========== ==========
DILUTED................................ $ 7.57 $ .19 $ 6.38
========== ========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING (in millions)
BASIC.................................. 90 1,344 107
DILUTED................................ 90 1,333 107
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial
information.
V-4
<PAGE> 151
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
Millions of US dollars, except per share data
NOTE 1: PRO FORMA ADJUSTMENTS.
The unaudited pro forma financial statements reflect the proposed business
combination using the purchase method of accounting. Based on the purchase
method, assets acquired and liabilities assumed are valued at fair value. The
difference between the purchase price and the fair value of the assets acquired
less the liabilities assumed is recorded as goodwill. The purchase price of the
acquisition is as follows:
<TABLE>
<S> <C>
Amerada Hess common stock (17.1 million shares at $62.81 per
share).................................................... $ 1,075
Projected Amerada Hess cash paid at closing................. 400
Borrowing under credit facility, including transaction and
severance costs........................................... 2,166
----------
3,641
----------
Allocation of purchase price
Fair value of assets acquired............................. 7,004
Less fair value of liabilities assumed.................... 3,618
----------
3,386
----------
Excess of purchase price over fair value of net assets
acquired (goodwill)....................................... $ 255
==========
</TABLE>
The historical financial statements of LASMO are presented in accordance with
accounting principles generally accepted in the United States. The following pro
forma adjustments reflect estimates and assumptions made by Amerada Hess:
PRO FORMA BALANCE SHEET
(a) To record the projected Amerada Hess cash paid at closing, debt incurred and
common stock issued to acquire LASMO (see table above).
(b) To record acquired property, plant and equipment and investment in an oil
and gas corporate joint venture at fair value.
(c) To record excess of purchase price over fair value of net assets acquired
(goodwill).
(d) To record additional deferred income taxes of $1,069 resulting from
acquisition of assets.
(e) To eliminate LASMO's deferred income of $49 from current liabilities and
$190 from long-term deferred liabilities and credits.
(f) To eliminate LASMO's stockholders' equity accounts totalling $1,966.
PRO FORMA INCOME STATEMENT
(g) To record interest expense on the revolving credit line used to finance the
acquisition. The interest rate is assumed to be 7.5%. In calculating the pro
forma interest expense, Amerada Hess did not assume reductions in debt for
anticipated future cash flows. A change of 1/8 per cent. in the interest
rate would result in an annual change in interest expense of approximately
$3.
(h) To record additional depreciation, depletion and amortization.
(i) To record amortization of excess of purchase price over fair value of net
assets acquired (goodwill). Goodwill will be amortized over 15 years.
(j) To record income tax effects on the pro forma adjustments based on the
estimated statutory tax rates.
V-5
<PAGE> 152
The offer to LASMO Shareholders includes a loan note alternative to cash
consideration. The pro forma financial statements assume that shareholders do
not elect the loan note alternative. The impact of this alternative is not
expected to have a significant effect on the pro forma financial statements.
NOTE 2: COST SAVINGS.
Amerada Hess expects annual cost savings, in the years following integration of
the businesses, of $130 before income taxes and $90 after income taxes. The
unaudited pro forma financial statements do not reflect any anticipated cost
savings or efficiencies resulting from combining operations.
V-6
<PAGE> 153
2. PROJECTIONS
Prior to making the Offer, Amerada Hess received from LASMO certain information
which Amerada Hess believes was not publicly available, including certain
projected financial data (the "PROJECTIONS") for the fiscal years 2000 through
2002. These Projections are summarized below. LASMO does not publicly disclose
projections, and the Projections were not prepared with a view to public
disclosure.
LASMO PROJECTIONS
<TABLE>
<CAPTION>
SIX MONTHS
ACTUAL
ENDED 30 JUNE
------------- 2000 2001 2002
1999 2000 PROJECTION PROJECTION PROJECTION
----- ----- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Production (mboepd)*........................ -- -- 188 193 234
Turnover (Lmillion)*........................ -- -- 1,057 1,081 1,159
Profit after tax after exceptional items*... 28 124 297 332 358
Profit after tax after exceptional items
(Lmillion) current forecast**............. -- -- 290 -- --
Cashflow from operations (Lmillion)*........ -- -- 518 527 615
Total capital expenditures (Lmillion)*...... -- -- 367 491 509
</TABLE>
BASES
The basis of accounting of the Projections is consistent with the accounting
policies normally adopted by the LASMO Group. The Projections take account of:
(a) the results shown by the unaudited interim accounts for the six months ended
30 June 2000; and
(b) the results shown by unaudited management accounts for the three months
ended 30 September 2000.
ASSUMPTIONS
The principal assumptions on which the Projections for the year ending 31
December 2000 are based are:
(a) the Brent Price (in US$/barrel) for the fourth quarter of 2000 will be $31;
(b) the US$/L exchange rate (average) for the fourth quarter of 2000 will be
1.45;
(c) the average production (in millions of barrel of oil equivalents per day)
for the fourth quarter of 2000 will be 188;
(d) there will be no asset impairment provisions;
(e) there will be no significant change in interest rates from those currently
prevailing;
(f) there will be no material change in the rates or bases of taxation
affecting LASMO from those currently prevailing;
(g) there will be no material changes in general trading and economic conditions
in the countries in which LASMO operates or trades; and
(h) there will be no major disruptions to the business of LASMO for reasons such
as blow outs, pollution, fire and other hazards which may interrupt or
terminate production.
* As disclosed to Amerada Hess
** The difference between the profit after tax after exceptionals disclosed to
Amerada Hess on 30 October 2000 and the current forecast (revised as of 17
November 2000) represents revisions of operating assumptions on LASMO's
Liverpool Bay and Andrew assets, the deferral of disposals of assets into
2001 and adjustments to amounts expensed with respect to exploration
expenditure.
V-7
<PAGE> 154
CAUTIONARY STATEMENTS CONCERNING THE PROJECTIONS
AND FORWARD-LOOKING STATEMENTS
THE PROJECTIONS WERE PREPARED BY LASMO MANAGEMENT FOR INTERNAL PURPOSES AND NOT
WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH PUBLISHED GUIDELINES OF THE
SEC, THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC
ACCOUNTANTS FOR PROSPECTIVE FINANCIAL INFORMATION OR GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES. NEITHER AMERADA HESS' NOR LASMO'S AUDITORS NOR THEIR
FINANCIAL ADVISERS HAVE COMPILED ANY OF THE PROJECTIONS AND, ACCORDINGLY, ASSUME
NO RESPONSIBILITY FOR THE COMPILATION OF THE PROJECTIONS. THE PROJECTIONS ARE
INCLUDED HEREIN SOLELY IN ORDER TO COMPLY WITH US LEGAL REQUIREMENTS TO GIVE
LASMO SECURITYHOLDERS ACCESS TO INFORMATION WHICH WAS PROVIDED TO AMERADA HESS
AND WHICH IS BELIEVED BY AMERADA HESS TO BE NOT PUBLICLY AVAILABLE AND SHOULD
NOT BE DEEMED TO ESTABLISH OR EXPAND LIABILITY UNDER LAW.
CERTAIN MATTERS DISCUSSED HEREIN (INCLUDING, BUT NOT LIMITED TO, THE
PROJECTIONS) ARE FORWARD-LOOKING STATEMENTS THAT ARE SUBJECT TO CERTAIN RISKS
AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE
STATEMENTS INCLUDED HEREIN (INCLUDING THE PROJECTIONS) AND SHOULD BE READ WITH
CAUTION. LASMO HAS ADVISED AMERADA HESS THAT THE PROJECTIONS ARE SUBJECTIVE IN
MANY RESPECTS AND THUS SUSCEPTIBLE TO INTERPRETATIONS AND PERIODIC REVISIONS
BASED ON ACTUAL EXPERIENCE AND RECENT DEVELOPMENTS. WHILE PRESENTED WITH
NUMERICAL SPECIFICITY, THE PROJECTIONS WERE PREPARED BY LASMO BASED UPON A
VARIETY OF ASSUMPTIONS -- NOTED ABOVE UNDER THE HEADING "PROJECTIONS" AS WELL AS
A VARIETY OF OTHER ESTIMATES AND HYPOTHETICAL ASSUMPTIONS MADE BY MANAGEMENT OF
LASMO WITH RESPECT TO, AMONG OTHER THINGS, INDUSTRY PERFORMANCE, GENERAL
ECONOMIC, MARKET, INTEREST RATE AND FINANCIAL CONDITIONS, SALES, COST OF GOODS
SOLD, OPERATING AND OTHER REVENUES AND EXPENSES, CAPITAL EXPENDITURES AND
WORKING CAPITAL OF LASMO, AND OTHER MATTERS WHICH MAY NOT BE REALIZED AND ARE
INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES, ALL OF WHICH ARE DIFFICULT TO PREDICT AND MANY
OF WHICH ARE BEYOND LASMO'S CONTROL. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT
THE ASSUMPTIONS MADE IN PREPARING THE PROJECTIONS WILL PROVE ACCURATE, AND
ACTUAL RESULTS MAY BE MATERIALLY GREATER OR LESS THAN THOSE CONTAINED IN THE
PROJECTIONS. IN ADDITION, THE PROJECTIONS DO NOT TAKE INTO ACCOUNT THE OFFER.
FOR THESE REASONS, AS WELL AS THE BASES AND ASSUMPTIONS ON WHICH THE PROJECTIONS
WERE COMPILED, THE INCLUSION OF SUCH PROJECTIONS HEREIN SHOULD NOT BE REGARDED
AS AN INDICATION THAT LASMO OR AMERADA HESS OR ANY OF THEIR RESPECTIVE
DIRECTORS, AFFILIATES OR REPRESENTATIVES CONSIDERS SUCH INFORMATION TO BE AN
ACCURATE PREDICTION OF FUTURE EVENTS, AND THE PROJECTIONS SHOULD NOT BE RELIED
ON AS SUCH.
THE PROJECTIONS WERE NOT INTENDED TO CONSTITUTE A FORECAST OF PROFITS BY LASMO
OR ITS DIRECTORS AND SHAREHOLDERS SHOULD NOT RELY UPON SUCH PROJECTIONS IN
MAKING ANY DECISIONS ABOUT THEIR INVESTMENT IN LASMO IN CONNECTION WITH THE
OFFER OR FOR ANY OTHER REASON.
V-8
<PAGE> 155
APPENDIX VI
ADDITIONAL INFORMATION
1. RESPONSIBILITY
(a) The directors of Amerada Hess, whose names are set out in Schedule VIA to
this Appendix VI, accept responsibility for the information contained in
this Offer Document other than that relating to the LASMO Group, the
directors of LASMO and the members of their immediate families. To the best
of the knowledge and belief of the directors of Amerada Hess (who have taken
all reasonable care to ensure that such is the case) the information
contained in this document for which they are responsible is in accordance
with the facts and does not omit anything likely to affect the import of
such information.
(b) The directors of LASMO, whose names are set out in Schedule VIB to this
Appendix VI, accept responsibility for the information contained in this
Offer Document relating to the LASMO Group, the directors of LASMO and
members of their immediate families. To the best of the knowledge and belief
of the directors of LASMO (who have taken all reasonable care to ensure that
such is the case), the information contained herein for which they are
responsible is in accordance with the facts and does not omit anything
likely to affect the import of such information.
(c) The statements set out in paragraphs (a) and (b) above are included solely
to comply with Rule 19.2 of the City Code and shall not be deemed to
establish or expand liability under law, including under US securities laws
or under the laws of any state of the US. The statements set out in
paragraph (b) above, in so far as they apply to the Projections, should be
read subject to the matters contained in the section headed "Cautionary
statements concerning the Projections and forward-looking statements".
2. DIRECTORS, EXECUTIVE OFFICERS AND REGISTERED OR PRINCIPAL EXECUTIVE OFFICES
(a) Directors and executive officers of Amerada Hess:
(i) The directors of Amerada Hess are set forth in Schedule VIA to this
Appendix VI.
(ii) The executive officers of Amerada Hess are set forth in Schedule VIA
to this Appendix VI.
(iii) The principal executive office of Amerada Hess is located at 1185
Avenue of the Americas, 40th Floor, New York, New York, 10036.
(iv) During the last five years, none of Amerada Hess or, to the best of
its knowledge, any of the persons listed in Schedule VIA hereto (i)
has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanours) or (ii) was a party to any
judicial or administrative proceeding (except for matters that were
dismissed without sanction or settlement) that resulted in a
judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities laws
or finding any violation of such laws.
(v) Except as described in this document, none of Amerada Hess or, to the
best of its knowledge, any of the persons listed in Schedule VIA to
this document has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of
LASMO, including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or voting of
such securities, joint ventures, loan or option arrangements, puts or
calls, guarantees of loans, guarantees against loss or the giving or
withholding of proxies. Except as set forth in this document, during
the past two years, none of Amerada Hess or, to the best of its
knowledge, any of the persons listed on Schedule VIA hereto has had
any business relationship or transaction with LASMO or any of its
executive officers, directors or affiliates that is required to be
reported under the rules and regulations of the SEC applicable to the
Offer. Except as set forth in this document, during the past five
years,
VI-1
<PAGE> 156
there have been no contacts, negotiations or transactions between
Amerada Hess or any of its subsidiaries or, to the best knowledge of
Amerada Hess, any of the persons listed in Schedule VIA to this Offer
Document, on the one hand, and LASMO or its affiliates, on the other
hand, concerning a merger, consolidation or acquisition, tender offer or
other acquisition of securities, an election of directors or a sale or
other transfer of a material amount of assets.
(vi) Except as described in this document, (i) neither Amerada Hess nor,
to the best of Amerada Hess' knowledge, any of the persons listed in
Schedule VIA to this document, or any associate (as such term is
defined for the purposes of the Exchange Act) or majority-owned
subsidiary of Amerada Hess or, to the best of Amerada Hess'
knowledge, any associate (as such term is so defined) or
majority-owned subsidiary of any of the persons listed in Schedule
VIA to this document, beneficially owns or has any right to acquire,
directly or indirectly, any equity securities of LASMO and (ii)
neither Amerada Hess nor, to the best of Amerada Hess' knowledge, any
of the persons listed in Schedule VIA to this document has effected
any transaction in such equity securities during the past sixty days.
(b) Directors and executive officers of LASMO:
(i) The directors of LASMO are set forth in Schedule VIB to this
Appendix VI.
(ii) The executive officer of LASMO is set forth in Schedule VIB to this
Appendix VI.
(iii) The principal executive office of LASMO is located at 101
Bishopsgate, London EC2M 3XH.
3. COMPARATIVE STOCK EXCHANGE QUOTATIONS OF LASMO SECURITIES AND AMERADA HESS
SHARES; DIVIDENDS
Set out below are the Closing Prices for LASMO Shares and the closing sale
prices on the NYSE for LASMO ADSs and Amerada Hess Shares on:
(a) the first business day of each of the six months immediately before the date
of this document;
(b) 3 November 2000 (being the last business day prior to the commencement of
the Offer Period); and
(c) 11 December 2000 (being the latest practicable date prior to the posting of
this document).
<TABLE>
<CAPTION>
DATE LASMO SHARES LASMO ADSS AMERADA HESS SHARES
---- ------------ ---------- -------------------
(P) (US$) (US$)
<S> <C> <C> <C>
11 December 2000.......................... 174.75 7 7/16 60 1/2
1 December 2000........................... 175.25 7 3/8 61 13/16
3 November 2000........................... 141 6 1/4 62 13/16
1 November 2000........................... 144 6 1/2 63 3/4
2 October 2000............................ 135 6 1/8 66 11/16
1 September 2000.......................... 146 6 7/16 70
1 August 2000............................. 131 6 7/16 61 21/32
3 July 2000............................... 139.5 6 5/16 63 7/16
</TABLE>
LASMO Shares have been listed and traded on the London Stock Exchange since 8
July 1977 and LASMO ADSs have been listed and traded on the NYSE since 8 June
1993. Amerada Hess Shares have been listed and traded on the NYSE since June
1969. The following table sets out, for the periods indicated:
(a) the reported high and low closing prices for LASMO Shares on the London
Stock Exchange as reported in the Daily Official List;
(b) the high and low closing sales prices for LASMO ADSs on the NYSE as reported
on Bloomberg; and
VI-2
<PAGE> 157
(c) the high and low closing sales prices for Amerada Hess Shares on the NYSE
as reported on Bloomberg.
<TABLE>
<CAPTION>
AMERADA HESS
LASMO SHARES LASMO ADSS SHARES
--------------- ------------- --------------
PERIOD HIGH LOW HIGH LOW HIGH LOW
------ ------ ------ ---- --- ---- ---
(P) (US$) (US$)
<S> <C> <C> <C> <C> <C> <C>
CALENDAR YEAR 1998
First Quarter............................... 292 248 14 3/8 11 15/16 60 5/8 49 5/16
Second Quarter.............................. 297.5 232 14 5/16 11 15/16 50 15/16 50 5/16
Third Quarter............................... 242 151 12 1/4 7 3/4 59 1/2 47 3/8
Fourth Quarter.............................. 194 96 9 1/2 5 1/8 58 5/16 48 9/16
CALENDAR YEAR 1999
First Quarter............................... 138.5 87.5 6 7/8 4 5/8 52 15/16 43 15/16
Second Quarter.............................. 159.75 120 7 1/2 5 3/8 64 1/4 48 9/16
Third Quarter............................... 173 130.25 8 1/8 6 5/8 65 15/16 57 9/16
Fourth Quarter.............................. 154.5 115.5 7 1/4 5 9/16 62 15/16 53 7/8
CALENDAR YEAR 2000
First Quarter............................... 125 89.5 6 9/16 4 7/16 64 5/8 48 1/4
Second Quarter.............................. 142 105 6 3/4 5 1/8 70 1/8 61 3/4
May......................................... 126.75 105.50 6 5 1/8 70 1/8 62 1/2
June........................................ 142.00 124.00 6 15/16 5 11/16 67 3/4 61 3/4
July........................................ 140.75 128.50 6 1/2 5 3/4 63 15/16 57 5/8
August...................................... 152.00 126.00 6 3/4 5 13/16 71 5/8 61 11/16
September................................... 155.50 129.00 6 3/4 5 3/4 73 1/2 63 15/16
October..................................... 148.50 130.75 6 1/2 5 5/8 68 3/4 60 3/4
November.................................... 178.00 138.75 7 5/8 6 65 58 1/8
</TABLE>
FOR CURRENT PRICE INFORMATION, HOLDERS OF LASMO SHARES AND LASMO ADSS ARE URGED
TO CONSULT PUBLICLY AVAILABLE SOURCES.
The tables below set forth the aggregate per share amount of dividends declared
on Amerada Hess Shares and LASMO Shares during the periods indicated:
For Amerada Hess:
<TABLE>
<CAPTION>
PER SHARE DIVIDEND AMOUNT
-------------------------
<S> <C>
Fiscal Year ended 31 December 1997.......................... 60c
Fiscal Year ended 31 December 1998.......................... 60c
Fiscal Year ended 31 December 1999.......................... 60c
First Three Quarters Fiscal Year ended 31 December 2000
(through 30 September 2000)............................... 45c
</TABLE>
For LASMO:
<TABLE>
<CAPTION>
PER SHARE DIVIDEND AMOUNT
-------------------------
<S> <C>
Fiscal Year ended 31 December 1997.......................... 2.3p
Fiscal Year ended 31 December 1998.......................... 2.3p
Fiscal Year ended 31 December 1999.......................... 2.5p
</TABLE>
VI-3
<PAGE> 158
4. SHAREHOLDINGS AND DEALINGS
For the purposes of this paragraph 4:
"ARRANGEMENT" includes indemnity or option arrangements, and any agreement or
understanding, formal or informal, of whatever nature, relating to relevant
securities in relation to Amerada Hess or LASMO which may be an inducement to
deal or refrain from dealing;
an "ASSOCIATE" includes:
(a) Amerada Hess' or LASMO's subsidiaries and associated companies and companies
of which any such subsidiaries or associated companies are associated
companies;
(b) banks, financial and other professional advisers (including stockbrokers) to
Amerada Hess or LASMO or to any company covered in (a) above, including
persons controlling, controlled by or under the same control as such banks,
financial or other professional advisers;
(c) the directors of Amerada Hess and LASMO together with the directors of any
company covered in (a) above (together in each case with any member of
their immediate families and related trusts);
(d) the pension funds of Amerada Hess and LASMO or the pension funds of any
company covered in (a) above; and
(e) an investment company, unit trust or other person whose investments an
associate (as defined in this paragraph 4) manages on a discretionary basis,
in respect of the relevant investment accounts;
(f) a person who owns or controls five per cent. or more of any class of
relevant securities (as defined in paragraphs (a) to (d) in Note 2 on Rule
8 of the City Code) issued by LASMO or Amerada Hess, as the case may be,
including a person who as a result of any transaction owns five per cent.
or more; and
(g) a company having a material trading arrangement with LASMO or Amerada Hess,
as the case may be;
a "BANK" does not apply to a bank whose sole relationship with Amerada Hess or
LASMO or a company covered in (a) above is the provision of normal commercial
banking services or such activities in connection with the Offer as confirming
that cash is available, handling acceptances and other registration work;
For the purpose of this paragraph 4 of Appendix VI, ownership or control of 20
per cent. or more of the equity share capital of a company is regarded as the
test of associated company status and "CONTROL" means a holding, or aggregate
holdings, of shares carrying 30 per cent. or more of the voting rights
attributable to the share capital of a company which are currently exercisable
at a general meeting, irrespective of whether the holding or holdings give(s) de
facto control;
"DERIVATIVE" includes any financial product whose value in whole or in part is
determined directly or indirectly by reference to the price of an underlying
security but which does not include the possibility of delivery of such
underlying securities;
"DISCLOSURE PERIOD" means the period commencing on 6 November 1999 (the date
twelve months prior to the commencement of the Offer Period) and ending on 7
December 2000 (the latest practicable date prior to the publication of this
document); and
"RELEVANT SECURITIES" means LASMO Securities or Amerada Hess Shares, as the case
may be, or any securities convertible into, rights to subscribe for, options
(including traded options) in respect of, and derivatives referenced to LASMO
Securities or Amerada Hess Shares, as the case may be.
(a) Shareholdings in LASMO Securities
(i) As at the close of business on 7 December 2000 (being the latest
practicable date prior to the posting of this document), Amerada
Hess held no relevant securities of LASMO.
VI-4
<PAGE> 159
(ii) As at the close of business on 7 December 2000 (being the latest
practicable date prior to the posting of this document), the
following persons acting in concert with Amerada Hess owned or
controlled the following relevant securities of LASMO:
<TABLE>
<CAPTION>
NUMBER OF
NAME LASMO SHARES
---- ------------
<S> <C>
AHC Pension Restoration Plan*............................... 350
</TABLE>
* This number is estimated. Plan assets are invested in Vanguard Index
Funds which disclose fund holdings semi-annually (in June and
December). AHC had $2,250,000 invested in the Total International
Stock Index fund which allocated 0.03 per cent. to LASMO.
(iii) As at the close of business on 7 December 2000 (being the latest
practicable date prior to the posting of this document), the
following persons acting in concert with LASMO (including LASMO
Group companies and any pension funds of LASMO Group companies but
excluding LASMO advisers and directors) owned or controlled the
following relevant securities of LASMO:
<TABLE>
<CAPTION>
NUMBER OF
NAME LASMO SHARES
---- -----------------------
<S> <C>
Methodplan Limited, a subsidiary of LASMO................... 8,459,855
(all held beneficially)
</TABLE>
(iv) As at the close of business on 7 December 2000 (being the latest
practicable date prior to the posting of this document), the
following advisers of LASMO owned or controlled the following
relevant securities of LASMO:
<TABLE>
<CAPTION>
NAME
---------------------------------------------------------
REGISTERED BENEFICIAL NUMBER OF NUMBER OF
HOLDER HOLDER LASMO ADSS LASMO SHARES
------------------------------- ------------------------ ---------- ------------
<S> <C> <C> <C>
Smith Barney Fund CGCM International 57,725
Management LLC............... Equity
Citicorp....................... State Street Fund (2R58) 230,000
Smith Barney Inc............... Smith Barney Inc. 2
Smith Barney Portfolio Various Portfolios for 306
Management................... Retail Investors
UBS Warburg.................... UBS Warburg 5,731,000
</TABLE>
The above shareholding information does not include any holding of
Schroder Salomon Smith Barney's exempt market maker.
(v) As at the close of business on 7 December 2000 (being the latest
practicable date prior to the posting of this document), the
following persons who, prior to the posting of this document have
irrevocably committed to accept the Offer, owned or controlled the
following relevant securities of LASMO:
<TABLE>
<CAPTION>
NUMBER OF
NAME LASMO SHARES
---- ------------
<S> <C>
Schroder Investment Management Limited...................... 171,616,233
Electrafina S.A............................................. 98,336,161
</TABLE>
The Announcement stated that Amerada Hess had received irrevocable
undertakings from Schroder Investment Management Limited and Electrafina
S.A. to accept the Offer in respect of an aggregate of approximately
276,279,208 LASMO Shares, representing approximately 20.56 per cent. of
LASMO's issued share capital. Schroder Investment Management Limited,
VI-5
<PAGE> 160
being a fund manager, has given an undertaking to accept the Offer in
respect of 177,943,047 LASMO Shares insofar as the relevant clients have
not withdrawn or altered their mandate (in a manner inconsistent with
acceptance) at the time required for acceptance. Schroder Investment
Management Limited has notified Amerada Hess that its undertaking
applies to 171,616,233 LASMO Shares and not 177,943,047 LASMO Shares as
stated in the Announcement. Therefore, the irrevocable undertakings
received from the above institutions in fact represent an aggregate of
269,952,394 LASMO Shares, representing approximately 20.08 per cent. of
LASMO's issued share capital.
The directors of LASMO (but not Mr O'Brien) have also irrevocably
committed to accept the Offer in respect of their holdings of LASMO
Securities which are set out in (vi) below.
The number of LASMO Shares the subject of the irrevocable undertakings
has decreased to 270,276,705 since the Offer was announced.
(vi) As at the close of business on 7 December 2000, (being the latest
practicable date prior to the posting of this document), the
interests of the LASMO directors and the executive officer and
members of their immediate families and related trusts in relevant
securities of LASMO (all of which, unless otherwise stated, are
beneficial) which have (where required) been notified to LASMO
pursuant to sections 324 and 328 of the Companies Act and entered in
LASMO's register of directors' interests required to be kept under
Section 325 of the Companies Act, were as follows:
VI-6
<PAGE> 161
<TABLE>
<CAPTION>
HOLDINGS IN
SHARES HOLDINGS IN OPTIONS
------------ ----------------------------------------------
EXERCISE
NUMBER OF PRICE PER EXERCISE PERIOD
NUMBER OF LASMO SHARES LASMO -------------------
NAME LASMO SHARES UNDER OPTION SHARE (P) FROM TO
---- ------------ ------------ --------- -------- --------
<S> <C> <C> <C> <C> <C>
J Darby................ 119,458 49,996 375.38 11/03/94 11/03/01
26,040 238.09 28/01/95 28/01/02
52,079 154.57 02/04/96 02/04/03
108,870 147.00 25/04/97 25/04/04
53,000 166.00 24/05/98 24/05/05
10,884 89.00 26/05/03 26/11/03
-------
300,869
-------
P C Murray............. 65,300 20,832 182.41 06/04/95 06/04/02
31,247 154.57 02/04/96 02/04/03
50,000 147.00 25/04/97 25/04/04
20,000 166.00 24/05/98 24/05/05
18,960 89.00 26/05/05 26/11/05
-------
141,039
-------
A P Hichens............ 43,122
T P Brennand........... 16,807
H E Norton............. 12,442
R G Reynolds........... 16,465
THBJ de Rudder......... 18,275
N V Turnbull........... 32,442
A O'Brien,
Executive Officer.... 10,422 10,416 375.38 11/03/94 11/03/01
15,000 166.00 24/05/98 24/05/05
15,000 187.00 06/03/99 06/03/06
13,000 244.50 05/03/00 05/03/07
12,500 280.25 31/03/01 31/03/08
68,385 129.00 17/06/02 17/06/09
18,960 89.00 26/05/05 26/11/05
-------
153,261
-------
</TABLE>
As potential beneficiaries under the LASMO Equity Plan, Mr Darby, Mr
Murray and Mr O'Brien were each technically deemed to be interested in
1,616,663 LASMO Shares held by LASMO Trust Company (Jersey) Limited, the
independent trustee of the LASMO Employee Trust, at 7 December 2000
(being the latest practicable date prior to the posting of this
document).
The number of LASMO Shares notionally allocated to LASMO directors and
the executive officer or confirmed under LASMO's Equity Plan (the
"PLAN"), for the Plan years stated, were as follows:
<TABLE>
<CAPTION>
CONFIRMED
NOTIONAL ALLOCATIONS SHARES
---------------------------------------------- ---------
2000 1999 1998 1997 1996 1995
------ ------ ------ ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C>
J Darby................ 62,910 52,876 24,638 27,250 31,966 213,000
PC Murray.............. 39,842 33,524 14,200 12,386 11,720 80,939
A O'Brien.............. 13,173 -- -- -- -- --
</TABLE>
VI-7
<PAGE> 162
(b) Dealings in LASMO Securities
(i) Persons acting in concert with Amerada Hess have dealt for value in
the following relevant securities of LASMO during the disclosure
period:
Goldman Sachs
(aa) LASMO Shares*
<TABLE>
<CAPTION>
DATE NUMBER BOUGHT NUMBER SOLD PRICE (P)
---- ------------- ----------- ---------
<S> <C> <C> <C>
03/11/00.................................... 287,600 140.26
18/07/00.................................... 5,400 138.00
02/07/00.................................... 10,000 125.00
06/09/00.................................... 250,740 150.55
28/07/00.................................... 640,000 132.30
29/07/00.................................... 640,000 134.00
</TABLE>
(bb) LASMO ADSs*
<TABLE>
<CAPTION>
DATE NUMBER BOUGHT NUMBER SOLD PRICE ($)
---- ------------- ----------- ---------
<S> <C> <C> <C>
22/09/00.................................... 3,000 6 1/4
22/09/00.................................... 4,800 6 1/4
25/09/00.................................... 7,800 6 1/8
21/09/00.................................... 7,800 6 1/3
25/09/00.................................... 7,800 6 1/8
</TABLE>
* The following does not include any dealings by Goldman Sachs Equity
Securities (U.K.) which is an exempt market maker/principal trader,
GSAMI and CINMAN, which are exempt fund managers and GSAM (GS&Co) and
Commodities Corporation which are special exempt fund managers.
Dealings by Goldman Sachs acting as agent are also not included.
(ii) Persons acting in concert with LASMO (including LASMO Group companies
and pension funds of LASMO Group companies but excluding LASMO's
advisers) have dealt for value in the following relevant securities
of LASMO during the period from 6 November 2000 to 7 December 2000
(being the latest practicable date prior to the posting of this
document):
Methodplan Limited
<TABLE>
<CAPTION>
NUMBER OF
DATE TRANSACTION LASMO SHARES PRICE (P)
---- ----------- ------------ -------------
<S> <C> <C> <C>
13/11/00................................. Transfer 39,931 174.50
16/11/00................................. Transfer 4,387 177.75
17/11/00................................. Transfer 15,744 176.25
29/11/00................................. Transfer 23,570 177.00
01/12/00................................. Transfer 8,249 175.25
</TABLE>
(iii) Schroder Salomon Smith Barney (by Salomon Brothers International
Ltd) have dealt for value in the following relevant securities of
LASMO during the period from 6 November 2000 to 7 December 2000
(being the latest practicable date prior to the posting of this
document):
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
DATE LASMO SHARES BOUGHT LASMO SHARES SOLD PRICE (P)
---- -------------------- ----------------- ---------
<S> <C> <C> <C>
15/11/00........................ 30,000 99.50
</TABLE>
(iv) Persons (other than the directors of LASMO) who have irrevocably
committed to accept the Offer have dealt for value in the following
relevant securities of LASMO during the disclosure period:
VI-8
<PAGE> 163
Schroder Investment Management Limited
<TABLE>
<CAPTION>
DATE NUMBER BOUGHT NUMBER SOLD PRICE (P)
---- -------------- ----------- ---------
<S> <C> <C> <C>
Between 06/11/99 and 06/02/00.............. 5,383,640 640,098 105-263
Between 07/02/00 and 06/05/00.............. 6,454,010 4,167,020 90-128
Between 07/05/00 and 06/08/00.............. 5,881,517 2,014,840 113-142
Between 07/08/00 and 06/10/00.............. 8,704,843 1,193,128 131-270
10/10/00................................... 5,158 136
10/10/00................................... 244 136
12/10/00................................... 59,000 141
13/10/00................................... 150,000 150
13/10/00................................... 300,000 150
13/10/00................................... 150,000 150
13/10/00................................... 100,000 150
13/10/00................................... 50,000 150
17/10/00................................... 60,495 144
27/10/00................................... 60,000 147
01/11/00................................... 2,632 144
01/11/00................................... 49,720 144
07/11/00................................... 30,000 172
07/11/00................................... 2,000 172
21/11/00................................... 1,127 176
21/11/00................................... 2,863 177
24/11/00................................... 680 177
30/11/00................................... 400 175
</TABLE>
Electrafina S.A.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
LASMO SHARES LASMO SHARES
DATE BOUGHT SOLD PRICE (P)
---- ------------- ------------ ---------
<S> <C> <C> <C>
01/04/00.................................. 3,514 -- 98.50
</TABLE>
VI-9
<PAGE> 164
(v) The LASMO directors and the executive officer and members of their
immediate families and related trusts have dealt for value (including
the exercise of options under the LASMO Share Option Schemes) in the
following relevant securities of LASMO during the disclosure period:
<TABLE>
<CAPTION>
NUMBER OF
LASMO
NAME DATE TRANSACTION SHARES PRICE (P)
---- -------- ---------------- ------------ ---------
<S> <C> <C> <C> <C>
P C Murray..................... 18/11/99 Purchase 8,000 141.00
N V Turnbull................... 24/11/99 Purchase 10,000 130.25
R G Reynolds................... 16/12/99 Purchase 8,390 118.00
A O'Brien...................... 22/12/99 Sale 3,125 125.00
J Darby........................ 24/12/99 Purchase 20,000 119.00
T P Brennand................... 01/03/00 Acquisition(a) 2,777 98.50
A P Hichens.................... 01/03/00 Acquisition(a) 6,060 98.50
H E Norton..................... 01/03/00 Acquisition(a) 3,030 98.50
R G Reynolds................... 01/03/00 Acquisition(a) 2,626 98.50
N V Turnbull................... 01/03/00 Acquisition(a) 3,030 98.50
J Darby........................ 10/03/00 Transfer(b) 3,326 240.50
P C Murray..................... 10/03/00 Transfer(b) 2,274 240.50
J Darby........................ 06/04/00 Appropriation(c) 7,273 110.00
P C Murray..................... 06/04/00 Appropriation(c) 7,273 110.00
A O'Brien...................... 06/04/00 Appropriation(c) 7,273 110.00
P C Murray..................... 26/06/00 Purchase 32 139.00
</TABLE>
Notes:
(a) Acquisition formed part of director's fees in respect of the
period to 31 December 1999 under an arrangement with Cazenove &
Co.
(b) Release of Shares appropriated in 1997 in respect of the LASMO
Profit Sharing Scheme.
(c) Appropriation of Shares in respect of the LASMO Profit Sharing
Scheme.
(vi) Fund managers connected with LASMO have dealt for value in the
following relevant securities of LASMO during the period between 6
November 2000 and 7 December 2000 (being the latest practicable date
prior to the posting of this document):
<TABLE>
<CAPTION>
NUMBER OF
NAME DATE TRANSACTION LASMO SHARES/ADSS PRICE (P)
---- -------- ----------- ----------------- ---------
<S> <C> <C> <C> <C>
GAM UK Diversified Fund......... 06/11/00 Purchase 50,000.00 171
GAM Exempt -- UK
Opportunities Fund............ 06/11/00 Purchase 100,000.00 171
JRA/GAM Managed Life............ 06/11/00 Purchase 200,000.00 171
GRA/GAM Managed Pension......... 06/11/00 Purchase 50,000.00 171
</TABLE>
(c) Shareholdings in Amerada Hess Shares
(i) Save for the holding of 3 Amerada Hess Shares held by Oil Holdings
Limited, an indirect subsidiary of LASMO, as at the close of
business on 7 December 2000 (being the latest practicable date prior
to the posting of this document), no member of the LASMO Group held
any relevant securities of Amerada Hess.
(ii) As at the close of business on 7 December 2000 (being the latest
practicable date prior to the posting of this document), the
following directors of Amerada Hess and their immediate families and
related trusts were interested in the following relevant securities
of Amerada Hess:
VI-10
<PAGE> 165
<TABLE>
<CAPTION>
HOLDINGS IN
SHARES HOLDINGS IN OPTIONS
------------ ----------------------------------------------------
EXERCISE
NUMBER OF PRICE PER
NUMBER OF AMERADA SHARES AMERADA HESS
AMERADA HESS HELD UNDER SHARE
NAME SHARES OPTIONS (US$) FROM TO
---- ------------ -------------- ------------ --------- --------
<S> <C> <C> <C> <C> <C>
John B. Hess....................... 578,410 50,000 49.75 18/12/96 18/12/05
50,000(1) 33,000 54.75 18/12/96 18/12/05
12,556(2) 33,000 59.75 18/12/96 18/12/05
1,280,094(3) 33,000 64.62 18/12//96 18/12/05
62,249(4) 40,000 58.75 04/12/97 04/12/06
108,347(4) 65,000 64.62 04/12/97 04/12/06
190,000(4) 75,000 54.75 03/12/98 03/12/07
5,071,400(5) 75,000 53.00 05/01/99 05/01/08
3,197,206(6) 100,000 49.19 03/02/00 03/02/09
140,218(7) 150,000 58.13 01/12/00 01/12/09
2,145,627(8)
W.S.H. Laidlaw..................... 50,700 5,000 49.75 18/12/96 18/12/05
35,000(9) 20,000 54.75 18/12/96 18/12/05
40,000(1) 20,000 59.75 18/12/96 18/12/05
6,061(2) 20,000 64.75 18/12/96 18/12/05
25,000 58.75 04/12/97 04/12/06
45,000 64.62 04/12/97 04/12/06
60,000 54.75 03/12/98 03/12/07
60,000 53.00 05/01/99 05/01/08
15,000 49.19 03/02/00 03/02/09
100,000 58.13 01/12/00 01/12/09
J. Barclay Collins................. 3,501 10,000 59.75 18/12/96 18/12/05
25,000(1) 10,000 64.75 18/12/96 18/12/05
778(2) 10,000 58.75 04/12/97 04/12/06
18,000 64.62 04/12/97 04/12/06
37,500 54.75 03/12/98 03/12/07
27,500 53.00 05/01/99 05/01/08
40,000 49.19 03/02/00 03/02/09
60,000 58.13 01/12/00 01/12/09
John Y. Schreyer................... 23,000 15,000 49.75 18/12/96 18/12/05
25,000(1) 10,000 54.75 18/12/96 18/12/05
3,572(2) 10,000 59.75 18/12/96 18/12/05
5,071,400(5) 37,500 54.75 03/12/97 03/12/07
3,197,206(6) 10,000 64.75 18/12/96 18/05/00
140,218(7) 10,000 58.75 04/12/97 04/12/06
2,145,627(8) 18,000 64.62 04/12/97 04/12/06
37,500 53.00 05/01/99 05/01/08
40,000 49.19 03/02/00 03/02/09
60,000 58.13 01/12/00 01/12/09
Nicolas F. Brady................... 10,200 -- -- -- --
5,071,400(5)
3,197,206(6)
140,218(7)
Peter S. Hadley.................... 1,686(10) -- -- -- --
Edith E. Holiday................... 1,600 -- -- -- --
William R. Johnson................. 1,600 -- -- -- --
Thomas H. Kean..................... 2,600 -- -- -- --
5,071,400(5)
3,197,206(6)
140,218(7)
Frank A. Olson..................... 3,400 -- -- -- --
Roger B. Oresman................... 12,680 -- -- -- --
William I. Spencer................. 2,100 -- -- -- --
Robert N. Wilson................... 2,300 -- -- -- --
Robert F. Wright................... 120,689 -- -- -- --
</TABLE>
---------------
(1) These shares are held in escrow pursuant to Amerada Hess' Executive
Long-Term Incentive Compensation and Stock Ownership Plan. The
director has only voting power over these shares until the lapsing
of the period set by the Committee administering the plan at which
time the shares plus accrued dividends will be delivered to the
director if he is still an employee of Amerada Hess.
(2) Shares held in the Amerada Hess Corporation Employees' Savings and
Stock Bonus Plan as of 31 October 2000.
VI-11
<PAGE> 166
(3) Held by a family corporation, the preferred stock of which is held
by a trust of which Mr. Hess is trustee and 33 1/3 per cent. of the
common stock of which is owned by Mr. Hess. The preferred stock of
such corporation has 99 per cent. of the total voting power of all
classes of stock of such corporation. As trustee Mr. John B. Hess
has voting power and investment power with respect to such preferred
stock.
(4) Held by a trust which was established by the director for the
benefit of himself and his children. The director is trustee of the
trust.
(5) Shares held by a charitable lead annuity trust established under the
will of Leon Hess. John B. Hess has sole voting power over the stock
held by this trust and shares dispositive power over such stock with
Messrs. Schreyer, Brady, Kean and another individual, who are the
other trustees of this trust. Under certain circumstances, Mr. Hess
may have a remainder interest in a portion of these shares.
(6) Shares held by the estate of Leon Hess. John B. Hess, as an executor
of the estate, has sole voting power over this stock and shares
dispositive power with Messrs. Schreyer, Brady, Kean and another
individual, who are the other executors of the estate. Under certain
circumstances, Mr. Hess may have a remainder interest in a portion
of these shares.
(7) Shares held by four corporations of which the estate of Leon Hess
owns the voting preferred stock having at least 80 per cent. of the
total voting power of all classes of stock.
(8) Shares held by the Hess Foundation, Inc. of which Messrs. Hess and
Schreyer are directors and as to which they share voting and
dispositive power.
(9) Held by a corporation the stock of which is held by Mr. Laidlaw.
(10) 1,645 of these securities are held jointly with spouse.
(iii) As at the close of business on 7 December 2000 (being the latest
practicable date prior to the posting of this document), the
following advisers of LASMO owned or controlled the following
relevant securities of Amerada Hess:
<TABLE>
<CAPTION>
NAME NUMBER OF
---------------------------------------------------------------------------- AMERADA HESS
REGISTERED HOLDER BENEFICIAL HOLDER SHARES
------------------------------------- ------------------------------------- ------------
<S> <C> <C>
Smith Barney Inc..................... Smith Barney Inc 6,604
Smith Barney Portfolio Management.... Various Portfolios for Retail 50,349
Investors
Robinson-Humphrey Co LLC............. Various US Retail Clients 209
Phillip Brothers Inc................. Phillip Brothers Inc 50,000
Smith Barney Fund Management LLC..... Various Client Portfolio Accounts 1,144,024
</TABLE>
(iv) As at the close of business on 7 December 2000 (being the latest
practicable date prior to the posting of this document), the following
persons who, prior to the posting of this document have irrevocably
committed to accept the Offer in respect of their LASMO Securities,
owned or controlled the following relevant securities of Amerada Hess:
<TABLE>
<CAPTION>
NUMBER OF
AMERADA HESS
NAME SHARES
---- ------------
<S> <C>
Schroder Investment Management Limited...................... 5,300
</TABLE>
(v) As at the close of business on 7 December 2000 (being the latest
practicable date prior to the posting of this document), the following
persons acting in concert with Amerada Hess owned or controlled the
following relevant securities of Amerada Hess:
<TABLE>
<CAPTION>
NUMBER OF
AMERADA HESS
NAME SHARES
---- ------------
<S> <C>
Goldman, Sachs & Co*........................................ 4,839
</TABLE>
* Discretionary managed
VI-12
<PAGE> 167
(d) Dealings in Amerada Hess Shares
(i) The following dealings for value in the relevant securities of
Amerada Hess (including the exercise of options) have taken place during
the disclosure period by directors of Amerada Hess and members of their
immediate families and related trusts:
<TABLE>
<CAPTION>
NUMBER OF
AMERADA HESS
NAME DATE TRANSACTION SHARES PRICE (US$)
---- -------- --------------- ------------ -----------
<S> <C> <C> <C> <C>
W.S.H. Laidlaw................... 23/08/00 Option Exercise 25,000 49.19
23/08/00 Sale 25,000 69.75
15/09/00 Option Exercise 25,000 49.19
15/09/00 Sale 25,000 74.75
J. Barclay Collins............... 12/05/00 Option Exercise 15,000 49.75
12/05/00 Sale 15,000 69.75
23/08/00 Option Exercise 10,000 54.75
23/08/00 Sale 10,000 70.00
15/09/00 Option Exercise 10,000 53.00
15/09/00 Sale 10,000 73.00
Frank A. Olson................... 03/04/00 Purchase 2,000 65.78
</TABLE>
(ii) Persons acting in concert with Amerada Hess have dealt for value in
the following relevant securities of Amerada Hess during the disclosure
period:
Goldman Sachs*
<TABLE>
<CAPTION>
DATE NUMBER BOUGHT NUMBER SOLD PRICE (US$)
---- ------------- ----------- -----------------
<S> <C> <C> <C>
Between 13/11/99 and 12/02/00........ 75,800 29,475 53.75 - 62.69
Between 13/02/00 and 12/05/00........ 75 300 62.94 - 63.38
Between 13/05/00 and 12/08/00........ -- -- --
Between 13/08/00 and 12/10/00........ -- -- --
02/11/00............................. 600 62.75
02/11/00............................. 6,900 62.44
02/11/00............................. 7,500 63.50
02/11/00............................. 15,000 63.75
02/11/00............................. 72,900 63.75
03/11/00............................. 1,100 63.75
03/11/00............................. 3,500 63.75
03/11/00............................. 900 62.81
03/11/00............................. 1,000 63.00
06/11/00............................. 600 58.88
06/11/00............................. 4,400 58.88
06/11/00............................. 5,000 58.94
10/11/00............................. 100 61.38
10/11/00............................. 100 61.38
10/11/00............................. 100 61.38
10/11/00............................. 100 61.38
10/11/00............................. 100 61.38
10/11/00............................. 100 61.38
10/11/00............................. 100 61.38
10/11/00............................. 100 61.38
10/11/00............................. 100 61.38
10/11/00............................. 800 61.38
10/11/00............................. 800 61.38
10/11/00............................. 1,400 61.38
</TABLE>
VI-13
<PAGE> 168
<TABLE>
<CAPTION>
DATE NUMBER BOUGHT NUMBER SOLD PRICE (US$)
---- ------------- ----------- -----------------
<S> <C> <C> <C>
10/11/00............................. 1,800 61.38
10/11/00............................. 1,800 61.38
15/11/00............................. 500 62.50
15/11/00............................. 200 62.50
15/11/00............................. 500 62.50
15/11/00............................. 3,800 62.50
15/11/00............................. 1,000 62.56
15/11/00............................. 4,000 62.56
15/11/00............................. 6,300 62.75
15/11/00............................. 1,500 62.75
15/11/00............................. 2,200 62.75
17/11/00............................. 2,200 62.69
17/11/00............................. 500 62.63
17/11/00............................. 1,400 62.63
17/11/00............................. 100 62.63
17/11/00............................. 500 62.63
17/11/00............................. 100 62.63
17/11/00............................. 100 62.63
17/11/00............................. 700 62.50
17/11/00............................. 100 62.50
17/11/00............................. 800 62.50
17/11/00............................. 100 62.50
17/11/00............................. 600 62.50
17/11/00............................. 300 62.50
17/11/00............................. 200 62.50
17/11/00............................. 3,800 62.50
17/11/00............................. 100 62.50
17/11/00............................. 300 62.50
17/11/00............................. 300 62.50
17/11/00............................. 1,000 62.38
17/11/00............................. 1,300 62.38
17/11/00............................. 1,700 62.38
17/11/00............................. 6,500 62.38
</TABLE>
* The following does not include any dealings by Goldman Sachs Equity
Securities (U.K.) which is an exempt market maker/principal trader,
GSAMI and CINMAN, which are exempt fund managers and GSAM (GS&Co) and
Commodities Corporation which are special exempt fund managers.
Dealings by Goldman Sachs acting as agent are also not included.
Goldman Sachs Financial Markets, L.P. is included.
(iii) Advisers of LASMO have dealt for value in the following relevant
securities of Amerada Hess during the period from 6 November 2000 to 7
December 2000 (being the latest practicable date prior to the posting of
this document):
Schroder Salomon Smith Barney (by Salomon Brothers International
Limited)
<TABLE>
<CAPTION>
DATE NUMBER BOUGHT NUMBER SOLD PRICE (US$)
---- ------------- ----------- -----------
<S> <C> <C> <C>
09/11/00.................................... 250,000 60.88
13/11/00.................................... 100,000 62.11
21/11/00.................................... 100,000 63.02
27/11/00.................................... 50,000 64.88
01/12/00.................................... 750,000 61.81
</TABLE>
VI-14
<PAGE> 169
(iv) Fund managers connected with LASMO have dealt for value in the
following relevant securities of Amerada Hess during the period between
6 November 2000 and 7 December 2000 (being the latest practicable date
prior to the posting of this document):
<TABLE>
<CAPTION>
NUMBER OF
AMERADA HESS
NAME DATE TRANSACTION SHARES PRICE (US$)
---- -------- -------------- ------------ -----------
<S> <C> <C> <C> <C>
Smith Barney Fund Management
L.L.C........................... 07/11/00 Sale 50,000 61.75
07/11/00 Sale 10,000 61.47
10/11/00 Sale 18,000 61.44
10/11/00 Purchase 1,500 61.38
06/12/00 Sale 1,208 59.75
SAM Special Equity Fund
USD Class....................... 31/05/00 Purchase 3,000 66.45
20/06/00 Purchase 2,000 65.00
31/05/00 Sale of Option 30 5.50
20/06/00 Sale of Option 20 4.50
</TABLE>
(e) General
(i) Save as set out in this document, neither LASMO nor any:
(aa) director of LASMO, member of his immediate family or (so far as the
directors are aware having made due and careful enquiry) any
connected person;
(bb) subsidiary of LASMO;
(cc) pension fund of LASMO or any of its subsidiaries;
(dd) bank, stockbroker, financial or other professional adviser (other
than exempt market makers and exempt fund managers) to LASMO or any
person controlling, controlled by or under the same control as such
bank, stockbroker, financial or other professional adviser; or
(ee) person who has an agreement of a kind referred to in Note 6(b) on
Rule 8 of the City Code with LASMO or with any person who is an
associate of LASMO;
owns, controls or (in the case of the directors, their immediate
families and connected persons) is interested in any LASMO Securities
nor any securities convertible into, rights to subscribe for or options
(including traded options) in respect of, nor any derivatives referenced
to, LASMO Securities nor any Amerada Hess Shares nor any securities
convertible into, rights to subscribe for options (including traded
options) in respect of, nor any derivatives referenced to, Amerada Hess
Shares nor has any such person dealt for value therein, in the case of
LASMO and any LASMO director, in the disclosure period and, in any other
case, between 6 November 2000 and 7 December 2000 (being the latest
practicable date prior to the posting of this Offer Document).
(ii) Save as set out above, neither Amerada Hess nor any director of
Amerada Hess set forth on Schedule VIA, nor any member of his/her
immediate family nor (so far as the directors are aware having made due
and careful enquiry) any connected person nor any person acting in
concert with Amerada Hess nor any person who has an arrangement of a
kind referred to in Note 6(b) on Rule 8 of the City Code with Amerada
Hess or with any person acting in concert with Amerada Hess owns,
controls or (in the case of the directors, their immediate families and
connected persons) is interested in any LASMO Securities nor any
securities convertible into, rights to subscribe for or options
(including traded options) in respect of, nor derivatives referenced to,
LASMO Securities nor any Amerada Hess Shares nor any securities
converti-
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ble into, rights to subscribe for or options (including traded options)
in respect of, nor derivatives referenced to, Amerada Hess Shares nor
has any such person dealt for value therein during the disclosure
period.
5. PURPOSE OF THE OFFER; PLANS FOR LASMO
PURPOSE OF THE OFFER. The purpose of the Offer is to enable Amerada Hess to
acquire as many outstanding LASMO Securities as possible as a first step in
acquiring the entire equity interest in LASMO. If Amerada Hess receives
sufficient acceptances of the Offer or otherwise acquires sufficient LASMO
Shares, it will commence the compulsory acquisition procedure under the
Companies Act. Upon consummation of the compulsory acquisition procedure, LASMO
would become a wholly owned subsidiary of Amerada Hess.
PLANS FOR LASMO. Subject to certain matters described below, it is currently
expected that, initially following the consummation of the Offer, the business
and operations of LASMO will generally continue as they are currently being
conducted. Amerada Hess will continue to evaluate all aspects of the business,
operations, capitalisation and management of LASMO during the course of the
Offer and after the consummation of the Offer and will take such further actions
as it deems appropriate under the circumstances then existing. Amerada Hess
intends to seek additional information about LASMO during this period.
Thereafter, Amerada Hess intends to review such information as part of a
comprehensive review of LASMO's business, operations, capitalisation and
management.
As a result of the completion of the Offer, the interest of Amerada Hess in
LASMO's net book value and net earnings will be in proportion to the number of
LASMO Securities acquired in the Offer. If the compulsory acquisition is
consummated, Amerada Hess' interest in such items and in LASMO's equity
generally will equal 100 per cent. and Amerada Hess will be entitled to all
benefits resulting from such interest, including all income generated by LASMO's
operations and any future increase in LASMO's value. Similarly, Amerada Hess
will also bear the risk of losses generated by LASMO's operations and any future
decrease in the value of LASMO after the compulsory acquisition. Subsequent to
the compulsory acquisition, current LASMO Securityholders will cease to have any
direct equity interest in LASMO and will not have the right to vote on corporate
matters.
When the Offer becomes or is declared unconditional in all respects, Amerada
Hess intends to procure the making of an application by LASMO for the removal of
LASMO Shares from the Official List of the UK Listing Authority and for the
cancellation of trading in LASMO Shares on the London Stock Exchange's market
for listed securities and also for the de-listing of LASMO ADSs and LASMO Shares
(the LASMO Shares do not trade on the NYSE and are listed on the NYSE only in
connection with the ADS program) from the NYSE. It is anticipated that
cancellation of listing from the Official List and cancellation of trading on
the London Stock Exchange will take effect no earlier than 20 business days
after the Offer becomes or is declared unconditional in all respects. See
paragraph 24 of the Letter from Goldman Sachs and paragraph 13 of Appendix VI of
this Offer Document.
It is expected that, if the Offer is not consummated, LASMO's current
management, under the general direction of the current board of directors and
executive management, will continue to manage LASMO as an ongoing business.
Except as otherwise discussed in this Offer Document, Amerada Hess has no
present plans or proposals that would result in any extraordinary corporate
transaction, such as an acquisition, reorganization, liquidation involving LASMO
or any of its subsidiaries, or purchase, sale or transfer of a material amount
of assets of LASMO or any of its subsidiaries or in any other material changes
to LASMO's capitalisation, dividend policy, corporate structure, business or
composition of the board of directors of LASMO or the management of LASMO,
except that Amerada Hess intends to review the composition of the boards of
directors (or similar governing bodies) of LASMO and its subsidiaries and to
cause the election to such boards of directors (or similar governing bodies) and
appointment to executive management of certain of its representatives.
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6. MATERIAL CONTRACTS
(a) The following contracts (not being contracts entered into in the ordinary
course of business) have been entered into by members of the Amerada Hess
Group in the period since 6 November 1998 (the date two years prior to the
commencement of the Offer Period) and are or may be material:
(i) An agreement between Amerada Hess and LASMO dated 6 November 2000 as
an inducement to Amerada Hess to make the Offer. Under this agreement,
LASMO has agreed not to solicit a takeover offer from any third party
and to pay up to L24 million to Amerada Hess if, inter alia, the Offer
lapses or is withdrawn following an announcement, made during the Offer
Period, of any proposal involving a change of control of LASMO by a
third party or any acquisition or disposal of assets with a value in
excess of L100 million which, in either case, is completed at any time
in 2001 or if, while the Offer remains open, the directors of LASMO
cease to recommend it or qualify their recommendation or LASMO takes
action which will prevent a condition to the Offer from being fulfilled
in a material way. LASMO has also agreed with Amerada Hess that during
the Offer it will not grant any further subscription rights in respect
of new LASMO Shares and will not allot or issue new LASMO Shares, except
insofar as required under previously granted options or other rights to
acquire LASMO Shares which cannot be satisfied by the payment of cash or
the transfer of existing issued shares.
The agreement also contains certain confirmations from LASMO to Amerada
Hess regarding the ownership of Methodplan, the number of Methodplan
Shares and the ability to use Methodplan Shares to satisfy the exercise
of share options granted to employees of the LASMO Group under certain
LASMO Share Option Schemes. LASMO agrees to procure that Methodplan will
not sell or otherwise dispose of (including pursuant to the Offer) or
otherwise encumber any Methodplan Shares or acquire any further LASMO
Shares. LASMO agrees to procure that Methodplan will accept the Offer in
respect of such shares as Amerada Hess may direct no later than 5
business days after the date of this document. The agreement also
contains details regarding how the exercise of share options under the
LASMO Share Option Schemes and entitlements arising under the LASMO
Equity Plan are to be satisfied.
LASMO also provides certain confirmations to Amerada Hess regarding the
share capital of LASMO and the rights of holders under the various LASMO
Share Option Schemes and the LASMO Equity Plan. LASMO agrees to procure
that, during the Offer Period, no further awards or grants of options
will be made under the LASMO Share Option Schemes or the LASMO Equity
Plan and that LASMO will not allot or issue any further share capital
except as required by the LASMO Share Option Schemes. LASMO also agrees
not to grant any additional remuneration or benefits to any of its
senior executives.
A copy of the inducement agreement is filed as an exhibit to the
Registration Statement of which this Offer Document constitutes a part.
(ii) Under the terms of a letter dated 5 November 2000 from Amerada Hess
to LASMO, Amerada Hess has agreed to the following arrangements in
relation to employees including directors of LASMO.
Amerada Hess has confirmed that it will operate the existing LASMO Early
Retirement Policy and the LASMO Severance Policy, with its attendant
benefit continuation provisions, in accordance with their current terms
and discretions on any termination by the Company of a current LASMO
employee (other than for cause) within 12 months of the date on which
the Offer becomes or is declared unconditional in all respects. Amerada
Hess will honour all contractual notice provisions and will not seek to
mitigate cash settlement payments due to LASMO staff in respect of any
contractual notice period.
Amerada Hess has agreed to LASMO introducing a retention bonus of 25 per
cent. of basic salary payable to all UK based and expatriate employees
of LASMO (excluding certain senior
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executives) for a period commencing on 6 November 2000 and ending on the
date on which the Offer becomes or is declared unconditional in all
respects.
LASMO has agreed that the LASMO Remuneration Committee will review and
calculate the awards under the LASMO Equity Plan. Amerada Hess will
accept and implement the decisions of the LASMO Remuneration Committee
providing those decisions do not involve an annualisation calculation in
the overall determination of awards.
(iii) Under the terms of a letter agreement dated 1 June 2000 between
LASMO and Amerada Hess, Amerada Hess has agreed on behalf of itself and
its advisers that it and they will keep secret and confidential any
confidential information that LASMO provides to any of them in
connection with the Offer. Amerada Hess has also agreed that it will
return all records of confidential information that are capable of being
returned and will destroy all records of confidential information which
cannot be returned.
Amerada Hess has also agreed that neither it nor any companies under its
control, associates, concert parties, professional advisers or directors
will acquire any shares, or rights over shares, in LASMO without LASMO's
consent for a period of nine months from the date of the agreement
unless a third party makes an offer for LASMO.
(iv) The directors of LASMO, being Joseph Darby, Thierry Hughes Baudouin
Jean-Baptiste de Rudder, Paul Colbeck Murray, Roy Gregory Reynolds,
Nigel Victor Turnbull, Timothy Pienne Brennand, Hugh Edward Norton and
Antony Peverell Hichens, have given irrevocable undertakings to Amerada
Hess and Goldman Sachs (the "DIRECTOR UNDERTAKINGS") pursuant to which
each of the directors of LASMO has undertaken to Amerada Hess that they
will accept the Offer. Each director has also agreed that, until the
date on which the Offer ceases to be open for acceptances, each director
will exercise the voting rights attached to his LASMO Shares
(representing an aggregate of approximately 0.1 per cent. of the LASMO
Shares) in connection with certain resolutions relating to the Offer
only in accordance with Amerada Hess' directions. Each director has also
undertaken to use his best efforts to procure that LASMO and the LASMO
board of directors provide all reasonable assistance to Amerada Hess in
connection with the Offer.
The terms of the Director Undertakings are the same in all material
respects except for the amount of LASMO Shares involved and, in certain
instances, the directors have undertaken in respect of not only existing
LASMO Shares but LASMO Shares that will be derived from certain option
plans. Joseph Darby owns 119,458 LASMO Shares and is entitled to receive
300,869 LASMO Shares pursuant to option plans. Thierry Hughes Baudouin
Jean-Baptiste de Rudder owns a total of 18,275 LASMO Shares. Paul
Colbeck Murray owns a total of 65,300 LASMO Shares and is entitled to
receive 141,039 LASMO Shares pursuant to option plans. Roy Gregory
Reynolds owns a total of 16,465 LASMO Shares. Nigel Victor Turnbull owns
a total of 32,442 LASMO Shares. Timothy Pienne Brennand owns a total of
16,807 LASMO Shares. Hugh Edward Norton owns a total of 12,442 LASMO
Shares. Finally, Antony Peverell Hichens owns a total of 43,122 LASMO
Shares. The Director Undertakings have been filed as exhibits to the
Registration Statement of which this Offer Document constitutes a part
and are incorporated herein by reference.
(v) Two of LASMO's principal shareholders, Electrafina S.A. and Schroder
Investment Management Limited, have each given undertakings (the
"IRREVOCABLE UNDERTAKINGS") to Amerada Hess and Goldman Sachs pursuant
to which Electrafina S.A. and Schroder Investment Management Limited
have undertaken to Amerada Hess that they will accept the Offer except
as provided below and except, in the case of Schroder Investment
Management Limited, insofar as the relevant clients have not withdrawn
or altered their mandate (in a manner inconsistent with acceptance) at
the time required for acceptance. Electrafina S.A. and Schroder
Investment Management Limited have also agreed that, until the date on
which the Offer ceases to be open for acceptance, Electrafina S.A. and
Schroder Investment Manage-
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ment Limited will exercise the voting rights attached to their LASMO
Shares (such voting rights representing 7.3 per cent. of the entire
issued capital in the case of Electrafina S.A. and 12.8 per cent. of the
entire issued capital in the case of Schroder Investment Management
Limited) in connection with certain resolutions relating to the Offer
only in accordance with Amerada Hess' directions.
Electrafina S.A.'s and Schroder Investment Management Limited's
obligations to accept the Offer will lapse in the event of the
announcement of an offer by a third party for the fully diluted share
capital of LASMO which (on a per share basis) is more than one hundred
and ten per cent (110 per cent.) of the lower of (a) 180p and (b) the
value of the Offer as at the close of trading on the NYSE trading day
immediately preceding such announcement (translating the value of new
Amerada Hess Shares from U.S. dollars to sterling at the exchange rate
prevailing at the time).
Except as provided above, the terms of the Irrevocable Undertakings with
Electrafina S.A. and Schroder Investment Management Limited are the same
in all material respects except that the Irrevocable Undertaking with
Electrafina S.A. involves 98,336,161 LASMO Shares and the Irrevocable
Undertaking with Schroder Investment Management Limited involves
171,616,233 LASMO Shares. The irrevocable undertakings have been filed
as exhibits to the Registration Statement of which this Offer Document
constitutes a part and are incorporated by reference herein.
(b) The following contracts (not being contracts entered into in the ordinary
course of business) have been entered into by members of the LASMO Group
since 6 November 1998 (the date two years prior to the commencement of the
Offer Period) and are or may be material:
(i) an agreement between Amerada Hess and LASMO dated 6 November 2000 as
an inducement to Amerada Hess to make the Offer and relating to the
Methodplan Shares and the LASMO Share Option Schemes as referred to in
paragraph 6(a)(i) above; and
(ii) an agreement between Amerada Hess and LASMO dated 5 November 2000
relating to certain employee arrangements as referred to in paragraph
6(a)(ii) above.
7. FINANCING ARRANGEMENTS
It is estimated that full acceptance of the Offer (assuming no LASMO Shareholder
elects for the Loan Note Alternative) would require the payment by Amerada Hess,
under the terms of the Offer, of a maximum cash amount of approximately L1.7
billion. The funds required to make payment under the Offer will be provided by
Amerada Hess in accordance with the following arrangements.
Amerada Hess has entered into two loan agreements (the "CREDIT AGREEMENTS"),
dated 6 November 2000, amended and restated on 14 November 2000, to obtain funds
through two unsecured revolving loan facilities ("CREDIT FACILITY A" and "CREDIT
FACILITY B," hereinafter referred to as the "CREDIT FACILITIES"), to be provided
by the lenders party to the Credit Agreements and Goldman Sachs Credit Partners
L.P. as joint book runner, joint lead arranger and sole syndication agent, Chase
Securities, Inc. as joint book runner and joint lead arranger and The Chase
Manhattan Bank, N.A., as administrative agent. The total committed funds made
available under the Credit Facilities is $3,000,000,000. Prior to, or
contemporaneously with, borrowing under the Credit Facilities, Amerada Hess
shall have received acceptances for or acquired and/or agreed to acquire,
whether pursuant to the Offer or otherwise, LASMO Shares (including in ADS form)
carrying in aggregate at least 75% of each class of the voting shares of LASMO.
Amerada Hess may elect borrowings that will bear interest at a rate determined
by reference to the prime rate of a bank to be designated by Amerada Hess or at
a rate determined by reference to LIBOR. There is also a competitive bid loan
option which could result in other interest rates. The Credit Facilities shall
terminate on the earlier to occur of (i) in the case of Credit Facility A, 5
November 2001, and, in the case of Credit Facility B, 6 November 2005, (ii) the
date on which the Offer lapses (having not been declared unconditional in all
respects), is withdrawn, or is referred to
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specified European competition authorities or (iii) certain specified dates if
the documentation relating to the Offer has not been mailed prior to such date.
There are currently no alternative financing arrangements in the event the
Credit Facilities become unavailable. Amerada Hess has not concluded
arrangements to finance or repay the Credit Facilities but will repay the Credit
Facilities in accordance with the terms of the Credit Agreements. Following
completion of the compulsory acquisition procedures, Amerada Hess may utilise a
portion of LASMO's cash flow to repay indebtedness, including interest, incurred
under the Credit Facilities. The Credit Agreements have been filed as exhibits
to the Registration Statement of which this document constitutes a part and are
incorporated by reference herein.
Goldman Sachs has indicated that it is satisfied that sufficient resources are
available to Amerada Hess to satisfy full acceptance of the Offer.
8. SERVICE AGREEMENTS AND COMPENSATION OF THE DIRECTORS OF LASMO
The following are details of the service agreements of the directors of LASMO
which have more than 12 months to run from the date of this document:
Services of Joseph Darby
Mr. Darby is employed as Chief Executive of LASMO under a service agreement with
LASMO dated 1 July 1999.
The period of notice required to be given by the Company to terminate Mr.
Darby's employment was two years prior to 1 September 1999. Since that date the
period has been reducing by one month for every two months' service. After 30
June, 2001 the period will be 12 months and will not further reduce. Mr. Darby's
employment may also be terminated by six months' written notice from Mr. Darby.
His annual salary was increased to L385,000 per annum (from L360,000) with
effect from 1 April 2000.
Services of Paul Murray
Mr. Murray is employed as Group Finance Director of LASMO under a service
agreement with LASMO dated 1 July 1999.
The period of notice required to be given by the Company to terminate Mr.
Murray's employment was two years prior to 1 September 1999. Since that date the
period has been reducing by one month for every two months' service. After 30
June, 2001 the period will be 12 months and will not further reduce. Mr.
Murray's employment may also be terminated by six months' written notice from
Mr. Murray.
His annual salary was increased to L244,000 per annum (from L228,000) with
effect from 1 April 2000.
Mr. Darby, Mr. Murray and Mr. O'Brien are also entitled to a company car or to
receive a cash allowance in lieu of a car and to full membership of LASMO's
private health insurance scheme, which also covers their wives and any dependent
children.
Services of Antony Hichens
Mr. Hichens is engaged as Chairman of LASMO under an agreement with LASMO dated
5 May 2000. Under the terms of the agreement, the engagement of Mr. Hichens may
be terminated by the Company or Mr. Hichens giving not less than 12 months'
written notice.
Mr. Hichens receives fees of L200,000 per annum.
Save as disclosed in this paragraph 8, there are no service contracts between
any director of LASMO and LASMO or any subsidiary of LASMO having more than 12
months to run and no such contract has been entered into or amended or replaced
within 6 months preceding the date of this document.
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EQUITY PLAN
Mr. Darby, Mr. Murray and Mr. O'Brien participate, together with a restricted
population of the Company's most senior executives, in the Equity Plan. Mr.
Darby, Mr. Murray and Mr. O'Brien are entitled to acquire (for no consideration)
a number of LASMO Shares allocated to them under the Equity Plan. The allocation
has been based on a percentage of salary and calculated by reference to share
price.
Subject to the satisfaction of two performance targets, the actual number of
LASMO Shares (if any) which may be released to each participant in respect of
any Equity Plan year is determined after the end of the three year performance
period. The performance targets operate as follows: first, the number of LASMO
Shares notionally allocated to a participant will be adjusted so that, on a
sliding scale, 100 per cent. is carried forward if there is an increase in the
LASMO share price of 2.5 per cent. per annum over the percentage increase in the
Retail Prices Index (All items) over the performance period, with a further 100
per cent. for each additional 5 per cent. per annum increase over the percentage
increase in the Retail Prices Index (All items). The increased number is then
adjusted by a multiple which is determined by comparing the total shareholder
return of LASMO over the performance period (change in share price plus
re-invested dividends) relative to the total shareholder return of a comparator
group of 12 international oil and gas exploration and production companies (the
"Comparator Group") of LASMO over the performance period to LASMO ordinary
shareholders against the Comparator Group.
On a change of control of LASMO the performance period under the Plan is deemed
to end on the date of change of control or such other date as the Remuneration
Committee may decide. The calculation of entitlements under the Plan will be
based upon share price growth and relative performance against the peer group up
to the date of the change of control. Although individual entitlements, can only
be determined once that date is known, the Remuneration Committee's estimates of
the likely entitlements of Mr. Darby, Mr. Murray and Mr. O'Brien under the Plan
(which will be satisfied in cash, in accordance with the Rules of the Plan) are
1,224,556, 775,532 and 256,415 LASMO Shares respectively.
ANNUAL BONUS
Mr. Darby, Mr. Murray and Mr. O'Brien are eligible to receive a bonus under the
annual bonus scheme, which rewards the achievement of challenging targets set in
advance and related to the short term performance of the business and personal
objectives. Targets are set through the annual performance appraisal process and
include achievement of quantifiable performance elements. A maximum bonus of 60
per cent. of base salary may be paid where exceptional performance is achieved.
All annual bonus payments are non-pensionable.
SHARE OPTION SCHEMES
Options over ordinary shares in the Company have been granted to Mr. Darby, Mr.
Murray and Mr. O'Brien under the LASMO Share Option Scheme, formerly known as
the LASMO 1984 Executive Share Option Scheme (the "LASMO SCHEME") and the LASMO
International Share Option Scheme, formerly known as the LASMO International
Executive Share Option Scheme (the "INTERNATIONAL SCHEME"). Such options are
normally exercisable between three and ten years after grant. The LASMO Scheme
is an Inland Revenue approved scheme. The International Scheme is unapproved,
with UK and overseas executives eligible to participate. Options may be granted
at not less than the market value of an ordinary share of the Company on the
date of grant. The aggregate price payable by a participant on the exercise of
all options under the LASMO Scheme, the International Scheme and the closed
LASMO Executive Share Option Scheme established in 1980 (the "1980 SCHEME"), in
any ten year period, may not exceed four times such participant's annual
earnings. The Company's policy has been that, whilst higher awards may be given
to reward exceptional individual performance, the grant of options to an
individual at any one time should not normally exceed an amount equivalent to 40
per cent. of that individual's annual earnings.
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The exercise of options granted under the LASMO Scheme and the International
Scheme since April 1995, has been subject to the achievement of specified total
shareholder targets relative to the total shareholder return of a group of
comparator companies.
The performance target need not be satisfied where options are exercised
following a change of control in LASMO (as defined under the rules of the
relevant plan).
No options have been granted under the LASMO Share Option Schemes to Mr. Darby
and Mr. Murray since 1995 because they are eligible to participate in the LASMO
Equity Plan.
SAYE SHARE OPTION SCHEME
Mr. Darby, Mr. Murray and Mr. O'Brien are participants in the SAYE Share Option
Scheme and are invited to save up to L250 a month for three or five years to
acquire LASMO Shares at not less than 80 per cent. of the mid-market price of a
LASMO Share on the business day preceding the invitation date.
9. BACKGROUND TO THE OFFER
On 26 January 2000, John B. Hess, Chairman of the Board and Chief Executive
Officer of Amerada Hess, and W. S. H. Laidlaw, President and Chief Operating
Officer of Amerada Hess, met with Rudolph Agnew, then Chairman of LASMO, and
Joseph Darby, Chief Executive Officer of LASMO, to discuss the possible sale of
part of LASMO's interest in the Dacion project in Venezuela and LASMO's
properties in Algeria. During this meeting, the issue of possible broader
combinations, including the sale of all the share capital of LASMO to Amerada
Hess, was raised in general terms without being pursued further. This meeting
followed an earlier meeting on 22 December 1999 between Mr. Laidlaw and Mr.
Darby to discuss LASMO's Venezuelan and Algerian assets, during which Mr.
Laidlaw and Mr. Darby agreed that it would be appropriate for their respective
Chairmen, Mr. Hess and Mr. Agnew, to meet to discuss possibilities for the two
companies to work together.
During the period from February to April 2000, Amerada Hess personnel visited
LASMO data rooms and attended presentations relating to LASMO's Venezuelan and
Algerian assets. On 30 April 2000, Messrs. Hess and Laidlaw met again with
Messrs. Agnew and Darby. At this meeting, Amerada Hess made an indicative offer
for 50 per cent. of the Dacion asset and also discussed generally the
possibility of a broader combination of the two companies. The representatives
of LASMO indicated support for a broader combination in concept but noted that
Mr. Agnew was retiring.
On 21 May 2000, Messrs. Hess and Laidlaw met with LASMO's new Chairman, Antony
Hichens. Mr. Hichens indicated that the Dacion offer was not acceptable but
expressed interest in a combination of the two companies. He agreed to limited
due diligence for the purpose of permitting Amerada Hess to formulate a bid. On
1 June 2000, Amerada Hess signed a confidentiality agreement which included a
standstill agreement not to pursue an unsolicited bid for LASMO through 1
December 2000 (subsequently extended to 1 March 2001). Soon thereafter, Amerada
Hess personnel met with LASMO personnel to conduct limited due diligence.
On 6 June 2000, Amerada Hess received a letter on behalf of LASMO outlining the
terms that LASMO would expect to be addressed in a formal offer for LASMO. On 20
June 2000, Mr. Hess met with Mr. Hichens in London and submitted an offer for
the acquisition by Amerada Hess of the outstanding capital stock of LASMO for
approximately 2/3 cash and 1/3 Amerada Hess common stock. Mr. Hichens declined
the offer on the grounds of insufficient price.
On 28 June 2000, Mr. Hess telephoned Mr. Hichens and offered an increased price,
with the same percentage combination of cash and stock. Mr. Hichens responded
with a counter proposal which Amerada Hess deemed unacceptable as it would have
effectively increased the per share purchase price by a substantial amount.
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On 5 July 2000, Mr. Hess received a letter from Mr. Hichens restating the price
he would accept, which in Amerada Hess' view did not indicate any movement. On 7
July 2000, Mr. Hess made a final offer. On 12 July 2000, Mr. Hichens rejected a
final bid and discussions for the purchase of LASMO ended. However, each
chairman left open the possibility of continuing to explore the possibility of
Amerada Hess acquiring an interest in Dacion.
Throughout late July and August 2000, discussions continued concerning the
acquisition by Amerada Hess of a 50 per cent. interest in Dacion. Amerada Hess'
first offer, made on 10 August 2000, was rejected by LASMO. Amerada Hess
subsequently revised that offer to increase its bid, but on 29 September 2000,
Mr. Darby telephoned Mr. Laidlaw to say that the Dacion offer was unlikely to be
acceptable to the LASMO Board and that the LASMO Board was considering its
strategic alternatives. On 9 October, Mr. Darby confirmed to Mr. Laidlaw that
Amerada Hess' bid for the Dacion interest was not likely to be acceptable to
LASMO's Board. On 10 October 2000, Mr. Hess telephoned Mr. Hichens to express
his continuing hope that Amerada Hess' bid for the Dacion interest would be
accepted and his view that this joint venture would be the basis for the two
companies to work together.
On a telephone call on 12 October 2000, Mr. Hess and Mr. Hichens agreed to
re-open discussions on the acquisition of LASMO. Mr. Hess requested that Mr.
Hichens make a clear statement of LASMO's position which had the full support of
the LASMO Board. On 19 October 2000, Mr. Hichens, in a telephone call to Mr.
Hess, outlined a proposal which he stated the LASMO Board would find acceptable
for the purchase by Amerada Hess of all the outstanding shares of LASMO,
including a cash component and a share component based on a fixed exchange
ratio. Mr. Hess indicated that he would study the proposal and review it with
the Amerada Hess Board.
Following this call, Amerada Hess formulated a new bid. Amerada Hess' management
concluded that due principally to favourable movements in the dollar/sterling
exchange rate and increases in crude prices since 12 July 2000, the date at
which negotiations had previously ended, Amerada Hess was in a position to
increase its bid. Management concluded that it could further reduce the risk of
the higher bid price by hedging the foreign currency exchange exposure and could
hedge the risk to future cash flows by selling forward a substantial portion of
LASMO's anticipated crude oil production for 2001 at the current favourable
market prices.
Amerada Hess management reviewed the revised bid with its Board on 25 October
2000, and the Amerada Hess Board authorised Mr. Hess to make the proposal to
LASMO. On 26 October 2000, Mr. Hess presented a revised bid to Mr. Hichens of
180 pence per share, with a fixed exchange ratio of 1 share of Amerada Hess
stock for every 78.7 shares of LASMO stock using an Amerada Hess share closing
price on the date immediately preceding announcement, with the remainder of the
consideration to be paid in cash. Mr. Hess noted that the bid was subject to
final confirmatory due diligence. Mr. Hichens indicated that he approved the
revised bid and would recommend the offer to his Board. On 27 October 2000, Mr.
Darby notified Mr. Hess that the LASMO Board had unanimously approved the offer,
subject to satisfactory negotiation of final documentation.
Commencing the week of 30 October 2000, Amerada Hess conducted final due
diligence and, in consultation with LASMO, finalised documentation in
preparation for the Announcement on 6 November 2000. The transaction was given
final approval by the Amerada Hess Board on 5 November 2000. A committee of the
LASMO Board gave final approval to the Offer on 5 November 2000, having been
duly authorized to do so by the full Board.
10. RIGHTS ATTACHING TO NEW AMERADA HESS SHARES TO BE ISSUED AS CONSIDERATION
UNDER THE OFFER
The new Amerada Hess Shares will rank pari passu in all respects with existing
Amerada Hess common stock, including the right to any dividends and other
distributions declared, paid or made by reference to a record date after the
date on which they are issued. For the avoidance of doubt, LASMO Securityholders
will not be entitled to the dividend of Amerada Hess expected to be declared in
December 2000 and paid on or about 3 January 2001.
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The new Amerada Hess Shares will be delivered in accordance with the terms of
the Offer and will be fully paid and free from all liens, equities, charges,
equitable interests, encumbrances and other interests (other than those created
by a LASMO Securityholder) and together with all rights now or hereafter
attaching thereto.
The sterling value of any investment in Amerada Hess Shares and any dividend
income from that investment (payable in US dollars and subject to US withholding
tax) will be affected by the dollar to sterling exchange rate from time to time.
The new Amerada Hess Shares are expected to be authorised for listing, subject
to official notice of issuance, on the NYSE, but they will not be listed or
traded on the London Stock Exchange or any other stock exchange.
11. COMPULSORY ACQUISITION
If, within four months after the date of this document, as a result of the Offer
or otherwise, Amerada Hess acquires or contracts to acquire LASMO Securities
representing at least 90 per cent. in nominal value of LASMO Shares (including
LASMO Shares represented by LASMO ADSs) to which the Offer relates, then:
(i) Amerada Hess will be entitled and intends to effect the compulsory
acquisition procedures provided for in sections 428 to 430F of the
Companies Act (set out in Appendix VIII to this document) to compel
the purchase of any outstanding LASMO Securities on the same terms
as provided in the Offer in accordance with the relevant procedures
and time limits described in the Companies Act; and
(ii) a holder of LASMO Securities may require Amerada Hess to purchase
his LASMO Securities on the same terms as provided in he Offer in
accordance with the relevant procedures and time limits described in
section 430A of the Companies Act.
If, for any reason, the above mentioned compulsory acquisition procedures are
not invoked, Amerada Hess will evaluate other alternatives to obtain the
remaining LASMO Securities not purchased pursuant to the Offer or otherwise.
Such alternatives could include acquiring additional LASMO Securities in the
open market, in privately negotiated transactions, through another offer to
purchase, by means of a scheme of arrangement under the Companies Act or
otherwise. Any such additional acquisitions could be for a consideration greater
or less than, or equal to, the consideration for LASMO Securities under the
Offer. However, under the City Code, except with the consent of the Panel,
Amerada Hess may not acquire any LASMO Securities on better terms than those of
the Offer within six months of termination of the Offer if Amerada Hess,
together with any persons acting in concert with it (as defined by the City
Code), holds shares carrying more than 50 per cent. of the voting rights
normally exercisable at general meetings of LASMO.
Holders of LASMO Securities do not have appraisal rights as a result of the
Offer. However, in the event that the compulsory acquisition procedures referred
to above are available to Amerada Hess, holders of LASMO Securities whose LASMO
Securities have not been purchased pursuant to the Offer will have certain
rights to object under section 430C of the Companies Act.
12. REGULATORY APPROVALS
(A) UK MERGER CONTROL
Under the City Code, it is a mandatory term of a UK public offer that the
offer will lapse if the Secretary of State for Trade and Industry
("SECRETARY OF STATE") should refer the offer to the Competition Commission
prior to consummation of the offer. While notification to the Office of
Fair Trading ("OFT") is voluntary, the OFT may, of its own accord, initiate
a review into a transaction where it considers that the transaction will
qualify for investigation within the meaning of the Fair
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Trading Act 1973 ("FTA"). Such a review may be initiated at any time up to
four months following public announcement of a completed transaction.
As the Offer gives rise to a merger situation qualifying for investigation
within the meaning of the FTA, the Offer has been made conditional on it
being indicated, on terms satisfactory to Amerada Hess, that the Secretary
of State does not intend to refer the Offer to the Competition Commission.
Amerada Hess submitted a statutory merger notice to the OFT on 23 November
2000. The OFT has an initial period of 20 working days, which began on 24
November 2000, in which to review the transaction following which the
Secretary of State will issue his decision as to whether to refer the Offer
for investigation by the Competition Commission. This period is due to
expire at midnight on 21 December 2000. The OFT is entitled, however, to
extend this initial review period by a further 15 working days. If,
following the expiry of the relevant period, no decision has been taken to
refer the Offer to the Competition Commission, the Offer will be deemed to
have been cleared. In the event that the Offer is referred to the
Competition Commission, the Offer will lapse.
During the initial review period, the OFT may request further information
on the notified transaction, and will seek comments from third parties. The
OFT will also announce its review of the Offer on the London Stock
Exchange's Regulatory News Service and invite comments from third parties
within a specified period. The OFT may contact major customers and
competitors of the parties. Should the OFT conclude that the Offer gives
rise to substantive competition or other public interest concerns, it will
also seek the views of the Mergers Panel, a non-statutory body on which all
interested governmental departments are represented. In any event, the OFT
will, following its initial review of the Offer, submit a written
recommendation to the Secretary of State. The Secretary of State, who is
not obliged to follow the recommendation of the OFT, will then issue his
decision as to whether the Offer will be referred for an in-depth
investigation by the Competition Commission. While Amerada Hess does not
consider that the Offer will give rise to any substantive competition
issues, there can be no assurance that the Offer will not be referred to
the Competition Commission.
(B) US ANTITRUST
Under the HSR Act and the rules that have been promulgated thereunder by
the Federal Trade Commission ("FTC"), certain mergers and acquisitions may
not be consummated unless certain information has been furnished to the
Antitrust Division of the Department of Justice (the "ANTITRUST DIVISION")
and the FTC and certain waiting period requirements have been satisfied.
The acquisition of the LASMO Securities by Amerada Hess pursuant to the
Offer is subject to the HSR Act requirements.
Under the provisions of the HSR Act applicable to the purchase of the LASMO
Securities pursuant to the Offer, such purchase may not be made until the
expiration of a thirty calendar day waiting period following the required
filing of a Notification and Report Form under the HSR Act by Amerada Hess
submitted on 1 December 2000. Accordingly, the waiting period under the HSR
Act will expire at 11:59 PM, New York City time, on 31 December 2000 the
thirtieth calendar day following filing of the Notification and Report Form
by Amerada Hess unless early termination of the waiting period is granted
or Amerada Hess receives a request for additional information or
documentary material prior thereto. If either the FTC or the Antitrust
Division were to request additional information or documentary material
from Amerada Hess prior to the expiration of the thirty day waiting period,
the waiting period would be extended and would expire at 11:59 PM, New York
City time, on the twentieth calendar day after the date of substantial
compliance by Amerada Hess with such request. Thereafter, the waiting
period could be extended only by court order or by consent of Amerada Hess.
If the acquisition of the LASMO Securities is delayed pursuant to a request
by the FTC or the Antitrust Division for additional information or
documentary material pursuant to the HSR Act, the purchase of and payment
for the LASMO Securities pursuant to the Offer will be deferred until
twenty days after the request is substantially complied with unless the
waiting period
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is terminated sooner by the FTC or the Antitrust Division (and assuming all
of the other Offer conditions have been satisfied or waived). Only one
extension of such waiting period pursuant to a request for additional
information or documentary material is authorized by the rules promulgated
under the HSR Act, except by court order or by consent. Although LASMO is
required to file certain information and documentary material with the
Antitrust Division and the FTC in connection with the Offer, neither
LASMO's failure to make such filings nor a request to LASMO from the
Antitrust Division or the FTC for additional information or documentary
material will extend the waiting period. However, if the Antitrust Division
or the FTC raises substantive issues in connection with a proposed
transaction, the parties frequently engage in negotiations with the
relevant governmental agency concerning possible means of addressing these
issues and may agree to delay consummation of the transaction while such
negotiations continue.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of the
LASMO securities by Amerada Hess pursuant to the Offer. At any time before
or after Amerada Hess' purchase of the LASMO Securities, either the
Antitrust Division or the FTC could take such action under the antitrust
laws as it deems necessary or desirable in the public interest, including
seeking to enjoin the acquisition of the LASMO securities pursuant to the
Offer or seeking divestiture of the LASMO Securities acquired by Amerada
Hess or divestiture of substantial assets of Amerada Hess, LASMO or any of
their respective subsidiaries. State attorneys general may also bring legal
action under the antitrust laws, and private parties may bring such action
under certain circumstances. Amerada Hess believes that the acquisition of
the LASMO Securities by Amerada Hess will not violate the antitrust laws.
Nevertheless, there can be no assurance that a challenge to the Offer on
antitrust grounds will not be made or, if a challenge is made, what the
result will be. See Appendix I for certain conditions to the Offer,
including conditions with respect to litigation and certain governmental
actions.
13. CERTAIN CONSEQUENCES OF THE OFFER
(A) MARKET EFFECT
The past performance of the price of LASMO Shares and LASMO ADSs is no
guide to the future performance of LASMO Securities.
The purchase of LASMO Securities pursuant to the Offer will reduce the
number of holders of LASMO Securities and the number of LASMO Securities
that might otherwise trade publicly and, depending upon the number of LASMO
Securities so purchased, could adversely affect the liquidity and market
value of the remaining LASMO Securities held by the public. In addition,
when the Offer becomes or is declared unconditional in all respects,
Amerada Hess intends to procure the making of an application by LASMO for
the removal of LASMO Shares from the Official List of the UK Listing
Authority and for the cancellation of trading in LASMO Shares on the London
Stock Exchange's market for listed securities and also for the de-listing
of LASMO ADSs and LASMO Shares (the LASMO Shares do not trade on the NYSE
and are listed on the NYSE only in connection with the ADS program) from
the NYSE. It is anticipated that cancellation of listing from the Official
List and cancellation of trading on the London Stock Exchange will take
effect no earlier than 20 business days after the Offer becomes or is
declared unconditional in all respects. While it is anticipated that
cancellation of both listings will take place at the same time,
cancellation of the listing of the LASMO ADSs and LASMO Shares on the NYSE
could take effect earlier than cancellation of the listing of the LASMO
Shares on the London Stock Exchange. Amerada Hess also intends that LASMO
should terminate the LASMO ADR facility in accordance with the deposit
agreement relating thereto and terminate the registration of the LASMO ADSs
and LASMO Shares under the Exchange Act.
The value of all investments and the outcome from them can fall as well as
rise and not all the amount invested may be realised. LASMO Securityholders
accepting the Offer and electing to
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receive consideration in US dollars should be aware that they will be
exposed to foreign currency risk.
(B) PUBLIC AVAILABILITY OF INFORMATION
In the event that LASMO Shares continue to be listed on the Official List
of the UK Listing Authority following the Offer becoming or being declared
unconditional, holders of LASMO Shares who have not accepted the Offer will
continue to receive the same financial and other information from LASMO
that LASMO is presently required by the Listing Rules to send to such
holders. If LASMO Shares are no longer listed on the Official List of the
UK Listing Authority following the Offer, LASMO would no longer be required
by those rules to make publicly available such financial and other
information.
The LASMO ADSs and the LASMO Shares (not for trading but in support of the
LASMO ADSs) are currently registered under the Exchange Act. Registration
of such LASMO ADSs and LASMO Shares may be terminated upon application of
LASMO to the SEC if LASMO ADSs are neither listed on a national securities
exchange nor held by 300 or more beneficial owners in the US. Termination
of registration of LASMO ADSs and LASMO Shares under the Exchange Act would
substantially reduce the information required to be furnished by LASMO to
holders of LASMO ADSs and to the SEC and would make certain provisions of
the Exchange Act, such as the requirements of Rule 13e-3 thereunder with
respect to "going private" transactions, no longer applicable to LASMO.
Furthermore, "affiliates" of LASMO and persons holding "restricted
securities" of LASMO may be deprived of the ability to dispose of such
securities pursuant to Rule 144 promulgated under the Securities Act. If,
as a result of the purchase of LASMO ADSs pursuant to the Offer and prior
to completing the compulsory acquisition procedures referred to in
paragraph 11 above, LASMO is not required to maintain registration of LASMO
ADSs and LASMO Shares under the Exchange Act, Amerada Hess intends to cause
LASMO to apply for termination of such registration. If registration of
LASMO ADSs and LASMO Shares is not terminated prior to completion of the
aforementioned compulsory acquisition procedures, then, following
completion of the aforementioned compulsory acquisition procedures, LASMO
ADSs will cease trading on the NYSE and the registration of LASMO ADSs and
LASMO Shares under the Exchange Act would be terminated.
(C) MARGIN SECURITIES
LASMO ADSs and LASMO Shares are currently "margin securities" under the
regulations of the board of Governors of the US Federal Reserve System,
which status has the effect, among other things, of allowing US brokers to
extend credit on the collateral of LASMO ADSs and LASMO Shares for purposes
of buying, carrying and trading in securities ("PURPOSE LOANS"). Depending
on factors such as the number of holders of record LASMO ADSs and LASMO
Shares and the number and market value of publicly held LASMO ADSs and
LASMO Shares following the purchase of LASMO Securities pursuant to the
Offer, it is possible that LASMO ADSs and LASMO Shares would no longer be
eligible for listing on the NYSE. As a result, LASMO ADSs and LASMO Shares
might no longer constitute margin securities and, therefore, could no
longer be used as collateral for Purpose Loans made by US brokers.
14. UNITED KINGDOM TAXATION
The statements below summarise the opinion of Freshfields Bruckhaus Deringer, UK
counsel to Amerada Hess, received by the Directors of Amerada Hess in relation
to certain aspects of the UK tax treatment and consequences of the Offer for
LASMO Shareholders. They are intended only as a general guide to current UK tax
law and practice for LASMO Shareholders who are resident or ordinarily resident
in the UK for tax purposes, who are the beneficial owners of their LASMO Shares
and who hold them as investments. ANY PERSON WHO IS IN ANY DOUBT AS TO HIS TAX
POSITION OR WHO MAY BE SUBJECT TO TAX IN ANY JURISDICTION OUTSIDE THE UK SHOULD
CONSULT AN APPROPRIATE PROFESSIONAL ADVISER.
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(A) UK TAXATION OF CHARGEABLE GAINS ("CGT")
Liability to CGT will depend on the particular circumstances of LASMO
Shareholders and on the form of consideration received.
(i) Cash
An accepting LASMO Shareholder will generally, to the extent that he
receives cash under the Offer, be treated as effecting a disposal or part
disposal of his LASMO Shares for the purposes of CGT and may, depending on
his individual circumstances, incur a liability to CGT. Special rules apply
for the purposes of CGT where a holder of LASMO Shares receives cash and
new Amerada Hess Shares and/or Loan Notes, and the amount of cash received
is "small" compared with the value of his LASMO Shares. For these purposes
the receipt of an amount of cash of five per cent. or less of the market
value of the LASMO Shares will be treated as "small". The Inland Revenue
will also accept that an amount in cash is "small" if it is L3,000 or less,
even if it exceeds five per cent. of the market value of the LASMO Shares
in respect of which it is received. In such cases there will generally be
no disposal or part disposal of the holder's LASMO Shares in respect of the
receipt of cash. The amount of the cash received will instead be deducted
from the LASMO Shareholder's allowable expenditure in computing a
chargeable gain or allowable loss on a subsequent disposal of new Amerada
Hess Shares or Loan Notes.
(ii) Receipt of new Amerada Hess Shares and Loan Notes
A LASMO Shareholder not holding (either alone or together with persons
connected with him) more than five per cent. of LASMO Shares or any other
class of shares in or debentures of LASMO should not, to the extent that he
receives new Amerada Hess Shares or Loan Notes under the Offer, be treated
as having made a disposal of LASMO Shares for the purposes of taxation of
chargeable gains. Any chargeable gain or allowable loss which would
otherwise have arisen on a disposal of his LASMO Shares will, in the case
of an individual or other non-corporate shareholder, be "rolled-over" into
the new Amerada Hess Shares and the Loan Notes, and the new Amerada Hess
Shares and the Loan Notes, as the case may be, will be treated as the same
asset as his LASMO Shares acquired at the same time and for the same
consideration as he acquired his LASMO Shares.
To the extent that such a LASMO Shareholder which is within the charge to
corporation tax receives new Amerada Hess Shares, any chargeable gain or
allowable loss which would otherwise have arisen on a disposal of its LASMO
Shares will be "rolled-over" into the new Amerada Hess Shares and the new
Amerada Hess Shares will be treated as the same asset as its LASMO Shares
acquired at the same time and for the same consideration as it acquired its
LASMO Shares. To the extent that it receives Loan Notes, any chargeable
gain or allowable loss which would otherwise have arisen on a disposal of
its LASMO Shares for a consideration equal to market value at the time of
the exchange of the LASMO Shares for Loan Notes will be "held-over" and
deemed to accrue on a subsequent disposal (including on redemption or
repayment) of the Loan Notes.
Any LASMO Shareholder who holds (either alone or together with persons
connected with him) more than five per cent. of LASMO Shares or any other
class of shares in, or debentures of, LASMO is advised that an application
for clearance will be made to the Inland Revenue under Section 138 of the
Taxation of Chargeable Gains Act 1992 in respect of the Offer, although
receipt of such clearance is not a condition of the Offer. Provided such
clearance is given, any such shareholder will be treated in the manner
described in the preceding paragraphs.
(iii) Disposal of new Amerada Hess Shares or Loan Notes
A subsequent disposal of new Amerada Hess Shares or of Loan Notes
(including on redemption or repayment) may result in a liability to UK
taxation of chargeable gains.
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For a LASMO Shareholder who is an individual or other non-corporate
shareholder, the Loan Notes should not constitute qualifying corporate
bonds for the purposes of UK taxation of chargeable gains. Accordingly, any
chargeable gain or allowable loss on disposal (including on redemption or
repayment) of the Loan Notes should, in the same way as any chargeable gain
or allowable loss on the disposal of new Amerada Hess Shares, be calculated
taking into account the allowable original cost to the holder of acquiring
the relevant LASMO Shares. Indexation allowance on that cost should be
available (when calculating a chargeable gain but not an allowable loss) in
respect of the period of ownership of the LASMO Shares up to April 1998.
Thereafter, taper relief may be available to reduce the amount of
chargeable gain realised on the subsequent disposal. In broad terms it is
expected that the allowable original cost of the relevant LASMO Shares will
be apportioned to the new Amerada Hess Shares and/or the Loan Notes and/or
the cash received, according to their respective market values at the time
of the exchange of the LASMO Shares.
For a LASMO Shareholder within the charge to corporation tax, the Loan
Notes will be qualifying corporate bonds for the purposes of UK taxation of
chargeable gains. Accordingly, no indexation allowance will be available
for the period of ownership of the Loan Notes and, except to the extent
that any chargeable gain or allowable loss which would otherwise have
arisen on the disposal of its LASMO Shares was "held over" and crystallises
on the subsequent disposal as described above, no chargeable gain or
allowable loss shall arise. For a LASMO Shareholder within the charge to
corporation tax, any chargeable gain or allowable loss on the subsequent
disposal of new Amerada Hess Shares should be calculated taking into
account the original cost to the holder of acquiring the relevant LASMO
Shares and (when calculating a chargeable gain but not an allowable loss)
indexation allowance on that cost. In broad terms it is expected that the
allowable original cost of the relevant LASMO Shares will be apportioned to
the new Amerada Hess Shares and/or the Loan Notes and/or the cash received,
according to their respective market values at the time of the exchange of
the LASMO Shares.
(B) TAXATION OF DIVIDENDS PAID ON NEW AMERADA HESS SHARES
Holders will, in general, be subject to UK income tax or corporation tax on
the gross amount of dividends paid on the new Amerada Hess Shares. An
individual shareholder will generally be chargeable to income tax on such
dividends at the Schedule F ordinary rate (currently 10 per cent.) or, to
the extent that his or her income exceeds the threshold for higher rate
tax, at the Schedule F upper rate (currently 32.5 per cent.). Credit will
be available against income or corporation tax for any United States tax
required to be deducted or withheld from the dividends, provided that such
credit will not exceed the credit which would have been allowed had all
reasonable steps been taken (including any claims which could be made by
the holder under the terms of the double taxation agreement between the
United States and the United Kingdom) to minimise such United States tax.
In relation to any dividends paid on the new Amerada Hess Shares prior to 1
April 2001, where a person in the United Kingdom in the course of a trade
or profession either:
(i) acts as custodian of the new Amerada Hess Shares and receives such
dividends, or directs that such dividends be paid to another person,
or consents to such payment; or
(ii) collects or secures payment of or receives such dividends for a
holder; or
(iii) otherwise acts for another person in arranging to collect or secure
payment of such dividends for such a person;
except by means only of clearing a cheque or arranging for the clearing of
a cheque, that person (the "COLLECTING AGENT") is liable to account for
income tax at the Schedule F ordinary rate (currently 10 per cent.) on such
dividends (subject to giving credit for any United States tax required to
be deducted or withheld from the dividends) and is entitled to deduct an
amount in respect thereof unless an exemption from such liability is
applicable, including, for example, where:
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(i) the person beneficially entitled to the such dividends beneficially
owns the new Amerada Hess Shares and is not resident in the United
Kingdom; or
(ii) the dividends arise to trustees not resident in the United Kingdom
of certain discretionary or accumulation trusts (where, inter alia,
none of the beneficiaries of the trust is resident in the United
Kingdom); or
(iii) the person beneficially entitled to the dividends is eligible for
certain relief from tax in respect of the dividends (for example,
charities or pension funds).
In the case of each of the above exceptions (i) to (iii), conditions
imposed by regulations may have to be satisfied for the relevant
exception to be available. Where income tax is deducted it will be paid
to the Inland Revenue. The tax deducted will be credited against the
holder's liability to the UK income tax or corporation tax; in
appropriate cases, holders will be liable to a higher rate of income tax
in addition to the tax deducted, or will be entitled to a refund where
the amount deducted exceeds their liability to UK taxation.
The obligation on persons in the United Kingdom who pay or collect
dividends to account for withholding tax in certain circumstances as
described above will cease to apply in relation to payments made on or
after 1 April 2001.
Persons paying or receiving dividends on or after 6 April 2001 may be
required to provide certain information to the Inland Revenue, which
could include the name and address of the person beneficially entitled
to the dividends.
(C) LASMO SHARE OPTION SCHEMES
Special tax provisions may apply to LASMO Shareholders who acquired their
LASMO Shares by exercising options under the LASMO Share Option Schemes,
including provisions imposing a charge to income tax.
(D) TAXATION OF INTEREST ON THE LOAN NOTES
Holders will, in general, be subject to UK income tax or corporation tax on
interest paid on the Loan Notes. Individual shareholders whose total income
does not exceed the threshold for higher rate tax will generally be
chargeable to UK income tax on such interest at the lower rate (currently
20 per cent.). Credit will be available against UK income or corporation
tax for any United States tax required to be deducted or withheld from the
interest, provided that such credit will not exceed the credit which would
have been allowed had all reasonable steps been taken (including any claims
which could be made by the holder under the terms of the double taxation
agreement between the United States and the United Kingdom) to minimise
such United States tax.
On a transfer of Loan Notes by an individual, a charge to UK income tax may
arise under the "accrued income scheme" in respect of the interest on the
Loan Notes which has accrued since the preceding interest payment.
A holder of Loan Notes which is a company within the charge to UK
corporation tax in respect of the Loan Notes will generally bring into the
charge to tax as income interest on, and any profits and gains arising
from, the Loan Notes in each accounting period broadly in accordance with
the holder's authorised accounting treatment for this purpose.
Persons paying or receiving interest on or after 6 April 2001 may be
required to provide certain information to the Inland Revenue, which could
include the name and address of the person beneficially entitled to the
interest.
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(E) STAMP DUTY AND STAMP DUTY RESERVE TAX
No stamp duty or stamp duty reserve tax will be payable by LASMO
Shareholders in connection with acceptance of the Offer and/or the Loan
Note Alternative.
Any instrument effecting the disposition of an Amerada Hess Share might not
be admissible in evidence in any court proceedings in the United Kingdom
unless duly stamped.
No stamp duty or stamp duty reserve tax should be payable on the issue,
transfer or redemption of the Loan Notes.
The above statements are intended only as a general guide to the current
position. Special rules, imposing charges to stamp duty and/or stamp duty
reserve tax, may apply to the issue or transfer of shares to particular
categories of person, in particular to persons whose business is or
includes the provision of clearance services or the issuance of depositary
receipts, or nominees or agents of such persons.
15. UNITED STATES FEDERAL INCOME TAXATION
In the opinion of White and Case LLP, US counsel to Amerada Hess, the following
is a summary of the principal US federal income tax consequences that may be
relevant with respect to the exchange of LASMO Shares or LASMO ADSs for Amerada
Hess Shares, Loan Notes and/or cash pursuant to the Offer and the ownership and
disposition of Amerada Hess Shares, Loan Notes and/or cash acquired under the
Offer. For purposes of this summary, a "US holder" is a beneficial owner of
LASMO Shares, or LASMO ADSs, as the case may be, that, for US federal income tax
purposes, is: (i) a citizen or resident of the United States, (ii) a partnership
or corporation created or organized in or under the laws of the United States or
any State thereof (including the District of Columbia), (iii) an estate the
income of which is subject to US federal income taxation regardless of its
source or (iv) a trust if such trust validly elects to be treated as a United
States person for US federal income tax purposes or if (x) a court within the
United States is able to exercise primary supervision over its administration
and (y) one or more United States persons have the authority to control all of
the substantial decisions of such trust. A "Non-US holder" is a beneficial owner
of LASMO Shares, LASMO ADSs, Amerada Hess shares, or Loan Notes, as the case may
be, that is not a US holder.
This summary does not contain a comprehensive description of all of the tax
consequences of the exchange of LASMO Shares or LASMO ADSs for Amerada Hess
Shares, Loan Notes and/or cash pursuant to the Offer and the ownership and
disposition of Amerada Hess Shares, Loan Notes and/or cash. In particular, this
description applies only to holders who hold LASMO Shares or LASMO ADSs, as the
case may be, and will hold Amerada Hess Shares or Loan Notes, as the case may
be, as capital assets at all relevant times. This summary does not address tax
considerations applicable to holders that may be subject to special tax rules,
such as financial institutions, insurance companies, real estate investment
trusts, regulated investment companies, grantor trusts, dealers or traders in
securities or currencies, tax-exempt entities, persons that will hold Amerada
Hess Shares or Loan Notes as part of an "integrated", "hedging" or "conversion"
transaction or as a position in a "straddle" for US federal income tax purposes,
persons that have a "functional currency" other than the United States dollar or
holders that own (or are deemed to own) 10 per cent. or more (by voting power or
value) of the stock of LASMO or Amerada Hess. Moreover, except where
specifically stated, this summary does not address the US federal estate and
gift or alternative minimum tax consequences of the exchange of LASMO Shares or
LASMO ADSs for Amerada Hess Shares, Loan Notes and/or cash pursuant to the Offer
and the ownership and disposition of Amerada Hess Shares or Loan Notes.
This summary is based on the Internal Revenue Code of 1986, as amended (the
"CODE"), United States Treasury Regulations and judicial and administrative
interpretations thereof, in each case as in effect and available on the date of
this document. All of the foregoing are subject to change, which change could
apply retroactively and could affect the tax consequences described below.
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Each holder of LASMO Shares or LASMO ADSs should consult its own tax advisor
with respect to the US federal, state, local and foreign tax consequences of the
exchange of LASMO Shares or LASMO ADSs for Amerada Hess Shares, Loan Notes
and/or cash pursuant to the Offer and the ownership and disposition of Amerada
Hess Shares and Loan Notes.
(A) CONSEQUENCES OF THE EXCHANGE PURSUANT TO THE OFFER
(i) US Holders
Generally, a US holder will recognize gain or loss upon the receipt of
Amerada Hess Shares and cash in exchange for such holder's LASMO Shares
or LASMO ADSs pursuant to the Offer in an amount equal to the difference
between (a) the sum of (i) the fair market value of such Amerada Hess
Shares received and (ii) the US Dollar value on the date of receipt of
the pounds sterling that would have been received and (b) the US
holder's adjusted tax basis in the LASMO Shares or LASMO ADSs, as the
case may be. It is unclear whether the date of receipt for this purpose
is the date that cash is made available by Amerada Hess to the relevant
payment agent or the date that cash is received by a US holder. Such
gain or loss will be capital gain or loss. In the case of a noncorporate
US holder, the maximum marginal US federal income tax rate applicable to
such gain will be lower than the maximum marginal US federal income tax
rate applicable to ordinary income if such US holder's holding period
for such LASMO Shares or LASMO ADSs exceeds one year. Gain or loss, if
any, recognized by a US holder generally will be treated as US source
income or loss for US foreign tax credit purposes. The deductibility of
capital losses is subject to limitations. A US holder's initial tax
basis in the Amerada Hess Shares will be the fair market values of such
Amerada Hess Shares on the date such Amerada Hess Shares are received.
(ii) Non-US Holders
Subject to the discussion below under "Backup Withholding Tax and
Information Reporting Requirements," a Non-US holder generally will not
recognize gain or loss upon the receipt of Amerada Hess Shares, Loan
Notes and/or cash in exchange for such holder's LASMO Shares or LASMO
ADSs pursuant to the Offer unless (i) such gain is effectively connected
with the conduct by such Non-US holder of a trade or business in the
United States (in which case the branch profits are described under
"Distributions" below may also apply if the holder is a foreign
corporation) or (ii) in the case of any gain realized by an individual
Non-US holder, such holder is present in the United States for 183 days
or more in the taxable year of such sale or exchange and certain other
conditions are met.
(B) AMERADA HESS SHARES
(i) DISTRIBUTIONS. The gross amount of any distribution with respect to
Amerada Hess Shares, other than a distribution of Amerada Hess Shares
made to all shareholders, will be includible in a US holder's ordinary
income as dividends to the extent of Amerada Hess' current and
accumulated earnings and profits (as determined under US federal income
tax principles). Corporate US holders generally will be eligible for the
dividends received deduction. The dividends received deduction is
subject to certain limitations, though, and the benefit of such
deduction may be reduced by the corporate alternative minimum tax.
Accordingly, corporate US holders should consult their own tax advisors
regarding the availability of, and limitations on, the dividends
received deduction. Any distributions in excess of Amerada Hess' current
and accumulated earnings and profits will be treated first as a tax-free
return of capital to the extent of a US holder's adjusted tax basis and
thereafter as capital gain.
Dividends paid to a Non-US holder generally will be subject to
withholding of US federal income tax at a rate of 30 per cent. unless
such rate is reduced by an applicable US income tax treaty. Currently,
dividends paid to an address in a foreign country generally are pre-
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sumed to be paid to a resident of such country in determining the
applicability of a US income tax treaty. However, US Treasury
Regulations issued on October 6, 1997, as amended (the "New Treasury
Regulations"), would, for dividends paid after December 31, 2000,
require a Non-US holder to file certain forms (i.e., IRS Form W-8BEN) to
obtain the benefit of any applicable US income tax treaty. Non-US
holders are urged to consult their own tax advisors concerning the
effect, if any, of the New Treasury Regulations. Further, except as
otherwise provided in an applicable US income tax treaty, a Non-US
holder will be taxed at ordinary US federal income tax rates (on a net
income basis) on dividends that are effectively connected with the
conduct of a trade or business by such Non-US holder within the United
States, but such dividends (assuming applicable procedural requirements
are met) will not be subject to US withholding tax as described above.
If such Non-US holder is a foreign corporation, it may also be subject
to a 30 per cent. branch profits tax unless it qualifies for a lower
rate under an applicable US income tax treaty.
(ii) SALE OR EXCHANGE OF AMERADA HESS SHARES. Generally, upon the sale
or exchange of Amerada Hess Shares, a US holder will recognize gain or
loss equal to the difference between the amount realized on the sale or
exchange and its adjusted tax basis in such Amerada Hess Shares. For
non-corporate US holders, the maximum US federal income tax rate
applicable to such gain will be lower than the maximum US federal income
tax rate applicable to ordinary income if such US holder's holding
period for such Amerada Hess Shares exceeds one year.
Subject to the discussion below under "Backup Withholding Tax and
Information Reporting Requirements," a Non-US holder generally will not
be subject to US federal income tax in respect of gain recognized on the
sale or exchange of Amerada Hess Shares unless (i) such gain is
effectively connected with the conduct by such Non-US holder of a trade
or business in the United States (in which case the branch profits tax
described under "Distributions" above may also apply of the holder is a
foreign corporation), (ii) in the case of any gain realized by an
individual Non-US holder, such holder is present in the United States
for 183 days or more in the taxable year of such sale or exchange and
certain other conditions are met, or (iii) Amerada Hess is or has been a
"United States real property holding corporation" for US federal income
tax purposes and, in the event that the Amerada Hess Shares are
considered to be "regularly traded," the Non-US holder held, directly or
indirectly, at any time during the five-year period ending on the date
of such sale or exchange more than five per cent. of the Amerada Hess
Shares. Amerada Hess believes that it is not currently (and is not
likely to become) a United States real property holding corporation.
Generally, the rule for stock in a United States real property holding
corporation takes precedence over relief provided by US income tax
treaties.
(iii) UNITED STATES FEDERAL ESTATE TAX. Amerada Hess Shares that are
owned, or treated as being owned, at the time of death of a Non-US
holder who is not a citizen or resident (as defined for US federal
estate tax purposes) of the United States will be includable in such
holder's gross estate for US federal estate tax purposes, unless an
applicable US estate tax treaty provides otherwise.
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(C) LOAN NOTES
Subject to the discussion of backup withholding tax below, under current United
States federal income and estate tax law:
(i) payments of principal of, and interest on, any Loan Note to a Non-US
holder or foreign fiduciary will not be subject to withholding of US
federal income tax; provided the Non-US holder certifies that with
respect to payments of interest (including original issue discount,
if any), the Non-US holder is not (x) a "controlled foreign
corporation" (as such term is defined in the Code) which is related
to Amerada Hess through stock ownership and (y) a person owning
(actually or constructively) securities representing at least 10 per
cent. of the total combined outstanding voting power of all classes
of voting stock of Amerada Hess;
(ii) a Non-US holder will not be subject to US federal income or
withholding tax on gain recognized on the sale, exchange or
redemption of a Loan Note unless (aa) such gain is effectively
connected with the conduct by such Non-US holder of a trade or
business in the United States (in which case the branch profits tax
described under "Distributions" above may also apply if the holder
is a foreign corporation), (bb) in the case of any gain realized by
an individual Non-US holder, such holder is present in the United
States for 183 days or more in the taxable year of such sale or
exchange and certain other conditions are met; and
(iii) a Loan Note will not be subject to United States federal estate tax
as a result of the death of a holder who is not a citizen or
resident of the United States; provided that at the time of death
(aa) such holder did not actually or constructively own 10 per cent.
or more of the combined voting power of all classes of stock of
Amerada Hess and (bb) payments of interest on such Loan Note would
not have been effectively connected with the conduct by such holder
of a trade or business within the United States.
(D) BACKUP WITHHOLDING TAX AND INFORMATION REPORTING REQUIREMENTS
US backup withholding tax and information reporting requirements generally apply
to certain payments to certain noncorporate holders of securities. Information
reporting generally will apply to payments of: (i) dividends on Amerada Hess
Shares, (ii) payments of principal and interest on Loan Notes, and (iii)
proceeds from the sale or redemption of Amerada Hess Shares by a payor within
the United States to a holder thereof (other than an "exempt recipient,"
including a corporation, a payee that is not a United States person that
provides an appropriate certification and certain other persons). A payor within
the United States will be required to withhold 31 per cent. of any payments of
the proceeds from the sale or redemption of Amerada Hess Shares or Loan Notes
within the United States to a holder (other than an "exempt recipient") if such
holder fails to furnish its correct taxpayer identification number or otherwise
fails to comply with such backup withholding tax requirements. However,
dividends paid to a Non-US holder outside the United States that are subject to
the 30 per cent. or US income tax treaty-reduced rate of withholding tax
generally will be exempt from backup withholding tax.
Further, US information reporting and backup withholding tax will not apply to
payments on a Loan Note made outside the United States or dividends paid outside
the United States to the beneficial owner of a Loan Note or Amerada Hess Shares,
as the case may be, that is not a United States person; provided neither Amerada
Hess nor the paying agent has actual knowledge that the holder is a United
States person for information reporting and backup withholding tax purposes. In
addition, information reporting requirements and backup withholding tax will not
apply to any payment on a Note or any payment of dividends outside the United
States by a foreign office of a foreign custodian, foreign nominee or other
foreign agent of the beneficial owner of such Loan Note or Amerada Hess Shares,
as the case may be; provided that such custodian, nominee or agent (i) derives
less than 50 per cent. of its gross income for certain time periods from the
conduct of a trade or business in the United States and (ii) is not a
"controlled foreign corporation" for US federal income tax purposes. Payments on
a Loan Note or payments of dividends outside the United States to the beneficial
owner thereof by a foreign office of any other custodian, nominee or agent will
not be subject to backup withholding tax and information
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reporting unless such custodian, nominee or agent has documentary evidence in
its records that the beneficial owner is not a United States person for purposes
of such backup withholding tax and information reporting requirements and
certain other conditions are met, or the beneficial owner otherwise establishes
an exemption. Payments on a Note or payments of dividends by the United States
office of a custodian, nominee or other agent of the beneficial owner of such
Loan Note or Amerada Hess Shares, as the case may be, will be subject to
information reporting and backup withholding tax unless the beneficial owner
certifies its non-United States person status under penalty of perjury or
otherwise establishes an exemption.
Information reporting and backup withholding tax will not apply to any payment
of the proceeds of a sale of a Loan Note or Amerada Hess Shares, as the case may
be, made outside the United States by a foreign office of a foreign "broker;"
provided that such broker (i) derives less than 50 per cent. of its gross income
for certain time periods form the conduct of a trade or business in the United
States and (ii) is not a "controlled foreign corporation" for United States
federal income tax purposes. Payments of the proceeds of a sale of a Loan Note
or Amerada Hess Shares, as the case may be, effected outside the United States
by a foreign office of any other broker will not be subject to backup
withholding tax and information reporting unless such broker has documentary
evidence in its records that the beneficial owner is not a United States person
for purposes of such backup withholding tax and information reporting
requirements and certain other conditions are met, or the beneficial owner
otherwise establishes an exemption. Payments of the proceeds of a sale of a Loan
Note or Amerada Hess Shares, as the case may be, by the United States office of
a custodian, nominee or other agent of the beneficial owner of such Loan Note
will be subject to information reporting and backup withholding tax unless the
beneficial owner certifies its non-United States person status under penalty of
perjury or otherwise establishes an exemption.
The New Regulations would modify certain of the rules discussed above generally
with respect to payments on Amerada Hess Shares or Loan Notes made after 31
December 2000. In particular, a payor within the United States will be required
to withhold 31 per cent. of any payments of dividends on Amerada Hess Shares,
interest on Loan Notes, or proceeds from the sale of Amerada Hess Shares or Loan
Notes within the United States to a holder (other than an exempt recipient such
as a corporation or a payee that is not a United States person and that provides
an appropriate certification) if such holder fails to furnish its correct
taxpayer identification number or otherwise fails to comply with, or establish
an exemption from, such backup withholding tax requirements. In the case of such
payments by a payor or middleman within the United States to a foreign simple
trust, a foreign grantor trust or a foreign partnership (other than payments to
a foreign simple trust, a foreign grantor trust or a foreign partnership that
qualifies as a "withholding foreign trust" or a "withholding foreign
partnership" within the meaning of such United States Treasury Regulations and
payments to a foreign simple trust, a foreign grantor trust or a foreign
partnership that are effectively connected with the conduct of a trade or
business in the United States), the beneficiaries of the foreign simple trust,
the persons treated as the owners of the foreign grantor trust or the partners
of the foreign partnership, as the case may be, will be required to provide the
certification discussed above in order to establish an exemption from backup
withholding tax and information reporting requirements. Moreover, a payor or
middleman may rely on a certification provided by a payee that is not a United
States person only if such payor or middleman does not have actual knowledge or
a reason to know that any information or certification stated in such
certificate is incorrect.
16. FEES AND EXPENSES
Except as set forth below, Amerada Hess will not pay any fees or commissions to
any broker, dealer or other person for soliciting tenders of the LASMO
Securities pursuant to the Offer or acceptances of the Offer.
Pursuant to an engagement letter between Amerada Hess and Goldman Sachs, Goldman
Sachs has been retained to act as financial adviser to Amerada Hess in
connection with its effort to acquire LASMO. Goldman Sachs has agreed to make
the Offer on behalf of Amerada Hess outside of the
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United States. Amerada Hess has agreed to pay Goldman Sachs for its services a
financial advisory fee which is contingent, in part, upon the satisfaction of
the Acceptance Condition. Amerada Hess has also agreed to pay Goldman Sachs a
fee for arranging the Credit Facilities. Amerada Hess has also agreed to
reimburse Goldman Sachs for all reasonable out-of-pocket expenses incurred by
Goldman Sachs, including the reasonable fees and disbursements of its counsel.
In addition, Amerada Hess has agreed to indemnify Goldman Sachs and certain
related persons against certain liabilities and expenses.
Amerada Hess has retained Computershare Services PLC as the UK Receiving Agent
and as registrars for the Loan Notes. The UK Receiving Agent has not been
retained to make solicitations or recommendations in its role as UK Receiving
Agent. The UK Receiving Agent and Loan Note registrars will receive reasonable
and customary compensation for its services, will be reimbursed for certain
reasonable out-of-pocket expenses and will be indemnified against certain
liabilities and expenses in connection therewith.
Amerada Hess has also retained The Bank of New York as the US Depositary. The US
Depositary has not been retained to make solicitations or recommendations in its
role as US Depositary. The US Depository will receive reasonable and customary
compensation for its services, will be reimbursed for certain reasonable
out-of-pocket expenses and will be indemnified against certain liabilities and
expenses in connection therewith, including certain liabilities under the United
States federal securities laws.
In addition, Amerada Hess has retained D.F. King & Co., Inc. to act as the
Information Agent in connection with the Offer. The Information Agent will
receive reasonable and customary compensation for its services, will be
reimbursed for certain reasonable out-of-pocket expenses and will be indemnified
against certain liabilities and expenses in connection therewith, including
certain liabilities under the United States federal securities laws.
Brokers, dealers, commercial banks and trust companies will be reimbursed by
Amerada Hess for customary mailing and handling expenses incurred by them in
forwarding offering material to their customers.
17. SOURCES OF INFORMATION AND BASIS OF CALCULATION
Save as otherwise set out in this document, the following constitute the sources
of information and bases of calculation referred to in this document:
(a) The market value of an Amerada Hess Share is based on the NYSE closing price
of $62 13/16 on 3 November 2000, the last NYSE dealing day prior to the
date of the Announcement or, where applicable, based on the NYSE closing
price of US$60 1/2 on 11 December 2000, the latest practicable date prior
to posting this document.
(b) The value of LASMO's issued share capital (diluted for likely exercise of
outstanding options) is based upon 1,344,328,323 issued LASMO Shares and a
further 3,121,406 new LASMO Shares which in LASMO's opinion it is
reasonable to expect may be issued in the relevant period pursuant to the
exercise of options.
(c) The premium of the Offer value per LASMO Share over the price of a LASMO
Share on 3 November 2000 is calculated using the value of the Offer per
LASMO Share and the Closing Price of a LASMO Share on that date.
(d) The premium of the offer value per LASMO Share over the average Closing
Price of a LASMO Share over the 6 months preceding the Announcement is
based on the average of the Closing Prices on each London Stock Exchange
dealing day over the 6 months immediately preceding (and including) 3
November 2000.
(e) All currency conversions between pounds sterling and US dollars have been
made at an exchange rate of US$1.4484: L1.00, which was the noon buying
rate in The City of New York for cable transfers in pounds sterling as
certified for customs purposes by the Federal Reserve Bank of
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New York on 3 November 2000 (unless expressly stated otherwise) or the rate
of US$1.4554 : L1.00 being such rate on 11 December 2000, the latest
practicable date prior to the posting of this document.
18. GENERAL
(a) Except as disclosed in this document, no agreement, arrangement or
understanding (including any compensation arrangement) exists between
Amerada Hess or any party acting in concert with Amerada Hess for the
purposes of the Offer and any of the directors, recent directors,
shareholders or recent shareholders of LASMO having any connection with or
dependence on, or which is conditional on the outcome of, the Offer.
(b) Except as disclosed in this document, there is no agreement, arrangement or
understanding by which the beneficial ownership of any of the LASMO
Securities which are the subject of the Offer acquired by Amerada Hess will
be transferred to any other person, but Amerada Hess reserves the right to
transfer any such shares to any other member of Amerada Hess Group.
(c) Except as disclosed in this document, no proposal exists in connection with
the Offer for any payment or other benefit to be made or given by Amerada
Hess or any person acting in concert with it for the purposes of the Offer
to any director of the LASMO Group as compensation for loss of office or as
consideration for or in connection with his retirement from office.
(d) Goldman Sachs, Schroder Salomon Smith Barney and Ernst & Young have given
and not withdrawn their written consent to the issue of this document with
the references to their names in the form and context in which they appear.
In giving such consent, Schroder Salomon Smith Barney does not admit that
Schroder Salomon Smith Barney is an expert with respect to any part of this
document within the meaning of the term "expert" as used in, or that
Schroder Salomon Smith Barney comes within the category of persons whose
consent is required under, the Securities Act or the rules and regulations
of the SEC promulgated thereunder.
(e) Except as disclosed in this document, there has been no material change in
the financial or trading position of the Amerada Hess Group since 31
December 1999 (the date to which the latest audited accounts of the Amerada
Hess Group were prepared).
(f) Except as disclosed in this document, there has been no material change in
the financial or trading position of the LASMO Group since 31 December 1999
(the date to which the latest audited accounts of the LASMO Group were
prepared).
(g) The emoluments of the current directors of Amerada Hess will not be affected
by the acquisition of LASMO or by any other associated transaction.
(h) Goldman Sachs Equity Securities (U.K.), Hull Trading UK Limited and SLK
Global Markets Limited, which are affiliates of Goldman Sachs
International, may continue to effect purchases and sales in relevant
securities of LASMO during the Offer Period as exempt principal trader or
exempt market maker (as such terms are defined in the City Code). The City
Code requires publication of the aggregate number of such purchases and
sales and the highest and lowest prices paid and received on each business
day during the offer period by 12 noon (London time) on the following
business day. You can obtain this information from the Company
Announcements Office of the London Stock Exchange.
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19. DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents are available for inspection at the offices of
Freshfields Bruckhaus Deringer, 65 Fleet Street, London EC4Y 1HS, during normal
business hours on any weekday (public holidays excepted) while the Offer remains
open for acceptance:
(a) the re-stated certificate of incorporation and by-laws of Amerada Hess;
(b) the certificate of incorporation and memorandum and articles of association
of LASMO;
(c) the audited consolidated accounts of Amerada Hess for the last two
financial years ended 31 December 1999;
(d) the audited consolidated accounts of LASMO for the last two financial years
ended 31 December 1999;
(e) the service agreements referred to in paragraph 8 above;
(f) the irrevocable undertakings referred to in paragraph 6 of the Letter from
Goldman Sachs above;
(g) the written consents referred to in paragraph 18(d) above;
(h) the material contracts referred to in paragraph 6 above;
(i) the letter of valuation of the Loan Notes by Goldman Sachs dated 13
December 2000;
(j) the draft Loan Note Instrument (in substantially final form);
(k) the Amerada Hess Credit Agreement referred to in paragraph 7 above;
(l) the inducement agreement between Amerada Hess and LASMO referred to in
paragraphs 6(a)(i) and 6(b)(i) above; and
(m) this Offer Document and the Acceptance Form.
20. LEGAL MATTERS
The validity of the Amerada Hess Shares offered hereby will be passed upon for
Amerada Hess by White & Case LLP, New York.
21. EXPERTS
The consolidated financial statements and related financial statement schedule
of Amerada Hess included in Amerada Hess' Annual Report on Form 10-K for each of
the three years in the period ended 31 December 1999, have been audited by Ernst
& Young LLP, independent auditors, as indicated in their report with respect
thereto, and are incorporated by reference in the Registration Statement of
which this Offer Document forms a part, in reliance on the report of Ernst &
Young LLP, given on the authority of that firm as experts in accounting and
auditing.
The consolidated financial statements of LASMO included in LASMO's Annual Report
on Form 20-F for each of the three years in the period ended 31 December 1999,
have been audited by Ernst & Young, independent auditors, as indicated in their
reports with respect thereto, and are incorporated by reference in the
Registration Statement of which this Offer Document forms a part, in reliance on
the report of Ernst & Young, given on the authority of that firm as experts in
accounting and auditing.
22. MISCELLANEOUS
Amerada Hess is not aware of any jurisdiction where the making of the Offer is
prohibited by any administrative or judicial action pursuant to any valid state
statute of any State of the United States. If Amerada Hess becomes aware of any
valid US state statute prohibiting the making of the Offer or the acceptance of
the LASMO Securities pursuant thereto, Amerada Hess will make a good faith
effort to comply with such US state statute or seek to have such statute
declared inapplicable to the Offer. If, after such good faith effort, Amerada
Hess cannot comply with any such state statute, the Offer will not be made to
(and tenders will not be accepted from or on behalf of) holders in such state.
In any jurisdiction where the securities, blue sky or other laws require the
Offer to be made by a licensed
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broker or dealer, the Offer shall be deemed to be made on behalf of Amerada Hess
by one or more registered brokers or dealers which are licensed under the laws
of such jurisdiction. There is no material pending legal proceeding relating to
the Offer.
No person has been authorized to give any information or make any representation
on behalf of Amerada Hess not contained in this Offer Document or in the Form of
Acceptance or Letter of Transmittal and, if given or made, such information or
representation must not be relied upon as having been authorized.
In addition to the Registration Statement, Amerada Hess has filed with the SEC a
Schedule TO, together with exhibits, pursuant to Section 14(d)(1) of the
Exchange Act and Rule 14d-3 promulgated thereunder, furnishing certain
additional information with respect to the Offer, and may file amendments
thereto. The Schedule TO and any amendments thereto, including exhibits, may be
inspected at, and copies may be obtained from, the same places and in the manner
set forth in Part 1 of Appendix III.
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SCHEDULE VIA
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF AMERADA HESS
Set forth below is the name, present principal occupation or employment and
material occupations, positions, offices or employments for the past five years
of each member of the Board of Directors and each executive officer of Amerada
Hess. The principal address of Amerada Hess and, unless indicated below, the
current business address for each individual listed below is 1185 Avenue of the
Americas, 40th Floor, New York, NY 10036, telephone number +1 212 997-8500. Each
such person is, unless indicated below, a citizen of the United States.
Executive officers, as defined in the Exchange Act, are identified by an
asterisk.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---- --------------------------------------------------
<S> <C>
John B. Hess*............................. Chairman of the Board, Chief Executive Officer of Amerada
Hess since 1995; Director since 1978.
W.S.H. Laidlaw*(1)........................ President, Chief Operating Officer of Amerada Hess since
1995; Director since 1994.
J. Barclay Collins II*.................... Executive Vice President, General Counsel of Amerada Hess;
Director since 1986.
John Y. Schreyer*......................... Executive Vice President, Chief Financial Officer; Director
since 1990.
Alan A. Bernstein*........................ Senior Vice President.
F. Lamar Clark*........................... Senior Vice President.
John A. Gartman*(2)....................... Senior Vice President of Amerada Hess since 1997; Vice
President of Public Service Electric and Gas Company in the
area of energy marketing.
Neal Gelfand*............................. Senior Vice President.
Gerald A. Jamin*.......................... Senior Vice President and Treasurer.
Lawrence H. Ornstein*..................... Senior Vice President.
Robert P. Strode*(2)...................... Senior Vice President of Amerada Hess since 1999; Senior
Vice President for Exploration at Vastar Resources Inc.
from 1997 to 1999; Vice President, Exploration at Atlantic
Richfield Company from 1993 to 1997.
F. Borden Walker*(2)...................... Senior Vice President of Amerada Hess since 1996; General
Manager in areas of gasoline marketing, convenience store
development and advertising at Mobil Corporation.
Peter S. Hadley........................... Director of Amerada Hess since 1991; Former Senior Vice
President of Metropolitan Life Insurance Company.
William R. Johnson........................ Director of Amerada Hess since 1996; Chairman of the Board
since September 2000 and President and Chief Executive
Officer of H.J. Heinz Company since 1998 after serving in
various senior executive positions; Director of Cincinnati
Financial Corporation; PNC Bank.
</TABLE>
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<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---- --------------------------------------------------
<S> <C>
William I. Spencer........................ Director of Amerada Hess since 1982; Former President and
Chief Administrative Officer of Citicorp and Citibank, N.A.
Roger B. Oresman.......................... Consulting Partner, Milbank, Tweed, Hadley & McCloy LLP;
Director since 1969.
Nicholas F. Brady......................... Director of Amerada Hess since 1994; Chairman, Darby
Overseas Investments, Ltd.; Former Secretary of the United
States Department of the Treasury; Former Chairman of the
Board of Dillon, Read & Co., Inc.; Director of C2, Inc.;
Director of H.J. Heinz Company; Director or Trustee of
various Templeton mutual funds.
Thomas H. Kean............................ Director of Amerada Hess since 1990; President, Drew
University; Former Governor of the State of New Jersey;
Director of ARAMARK Corporation; Director of Bell Atlantic
Corporation; Director of the CIT Group, Inc.; Director of
United Healthcare Corporation.
Frank A. Olson............................ Director of Amerada Hess since 1998; Chief Executive
Officer of the Hertz Corporation in 1998; Retired as Chief
Executive Officer of the Hertz Corporation in 1999 and
continues as non-executive Chairman of the Board; Director
of Becton Dickinson and Company; Director of Fund America
Enterprises Holdings, Inc.
Edith E. Holiday.......................... Director of Amerada Hess since 1993; Attorney; Former
Assistant to the President of the United States and
Secretary of the Cabinet; Former General Counsel, United
States Department of the Treasury; Director of Beverly
Enterprises, Inc.; Director of Hercules, Incorporated;
Director of H.J. Heinz Company; Director of RTI
International Metals, Inc.; Director or trustee of various
Franklin Templeton mutual funds.
Robert N. Wilson.......................... Director of Amerada Hess since 1996; Vice Chairman of the
Board of Directors of Johnson & Johnson; Director of United
States Trust Corporation.
Robert F. Wright.......................... Director of Amerada Hess since 1981; Former President and
Chief Operating Officer of Amerada Hess.
</TABLE>
1 British citizen.
2 Except for Messrs. Walker, Gartman and Strode, each of the above officers
has been employed by Amerada Hess or its subsidiaries in various managerial
and executive capacities for more than five years.
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SCHEDULE VIB
INFORMATION CONCERNING THE DIRECTORS AND THE EXECUTIVE
OFFICER OF LASMO
Set forth below is the name, present principal occupation or employment and
material occupations, positions, offices or employments currently held of each
member of the Board of Directors and the executive officer of LASMO. The
principal address of LASMO and, unless indicated below, the current business
address for each individual listed below if 101 Bishopsgate, London, EC2M 3XH,
telephone number +44 20 7892 9000. Each such person is, unless indicated below,
a British citizen.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---- --------------------------------------------------
<S> <C>
Antony Peverell Hichens.......................... Appointed Chairman in May 2000. Joined the Board in
1995 and was appointed Deputy Chairman in April
1995. He is Chairman of David S. Smith (Holdings)
plc and is Deputy Chairman of Candover Investments
plc.
Joseph Darby..................................... Joined LASMO in 1989 following the acquisition of
Thomson North Sea where he was Chairman and Chief
Executive Officer. Appointed Chief Executive in
1993. He is a non-executive director of John Mowlem
& Company plc.
Paul Colbeck Murray.............................. Joined LASMO in 1989 following the acquisition of
Thomson North Sea. Appointed Corporate Development
Director on 1 January 1998 and Group Finance
Director on 1 January 1999.
Hugh Edward Norton............................... Senior Independent non-executive director since May
2000. Joined the Board in 1997. He spent 36 years
with British Petroleum, where he held the position
of Chief Executive, BP Exploration Company, before
being appointed to the BP Board as a Managing
Director. Other directorships include Inchcape plc
and Standard Chartered PLC.
Dr Timothy Pienne Brennand....................... Independent non-executive director. Joined the
Board in 1996. He spent some 33 years in Europe,
Africa and the Far East for Shell, most recently as
Chairman for Shell Hong Kong and China. On retiring
from Shell in 1993, he spent three years as a
director of Goal Petroleum plc.
</TABLE>
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<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---- --------------------------------------------------
<S> <C>
Dr Roy Gregory Reynolds CMG...................... Independent non-executive director. Joined the
Board in 1997. He spent 28 years with Shell, being
appointed Managing Director of Shell UK Oil in
1988, a position he held until the end of 1991.
From 1994 to end 1999, he was Chief Executive of
the Commonwealth Development Corporation, now CDC
Group plc. He is also a director of The Fleming
Emerging Markets Investment Trust plc.
Thierry Hughes Baudouin Jean-Baptiste de Independent non-executive director. Joined the
Rudder......................................... Board in 1999 following the acquisition of Monument
Oil and Gas plc, where he was a non-executive
director. He is Managing Director of Groupe
Bruxelles Lambert and Electrafina and is also a
director of Audiofina, Compagnie Nationale a
Portefeuille, Societe Generale de Belgique, Thodia,
Total Fina Elf and Tractebel. Belgian citizen.
Nigel Victor Turnbull............................ Independent non-executive director. Joined the
Board in 1995. He was Finance Director of the Rank
Group plc from 1987 to 1999. He is a Council Member
of The Institute of Chartered Accountants of
England & Wales.
Alan O'Brien..................................... Joined LASMO in 1990. Prior to being appointed
General Counsel and Company Secretary in April 1999
he worked in a number of LASMO offices, including
Colombia and Italy, as a commercial and legal
manager.
</TABLE>
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APPENDIX VII
ADVICE OF LASMO'S FINANCIAL ADVISER
The LASMO board retained Schroder Salomon Smith Barney to act as its financial
adviser with respect to the proposed offer. In connection with this engagement,
LASMO requested that Schroder Salomon Smith Barney be named in connection with
the LASMO board's recommendation of the Offer in the following terms:
"Your directors, who have been so advised by Schroder Salomon Smith Barney,
their financial adviser, consider the terms of the offer to be fair and
reasonable. In providing advice to the directors, Schroder Salomon Smith Barney
has taken into account the directors' commercial assessments."
In providing its advice to the LASMO board, Schroder Salomon Smith Barney:
-- reviewed the terms of the Offer;
-- held discussions with senior officers, directors and other
representatives and advisers of LASMO and held discussions with senior
officers and other representatives of Amerada Hess;
-- examined publicly available business and financial information relating
to LASMO and Amerada Hess;
-- examined financial forecasts and other information and data for LASMO
which were provided to or otherwise discussed with Schroder Salomon Smith
Barney by the management of LASMO;
-- reviewed the financial terms of the Offer in relation to, among other
things, current and historical market prices of LASMO, the financial
condition and historical and projected earnings and other operating data
of LASMO and the capitalisation of LASMO;
-- considered, to the extent publicly available, the financial terms of
other transactions recently effected which Schroder Salomon Smith Barney
considered relevant in evaluating the Offer;
-- analysed financial, stock market, and other publicly available
information relating to the businesses of other companies whose
operations Schroder Salomon Smith Barney considered relevant in
evaluating those of LASMO and Amerada Hess;
-- considered the commercial assessments of the LASMO board; and
-- conducted other analyses and examinations and considered other financial,
economic and market criteria as Schroder Salomon Smith Barney deemed
appropriate in providing its advice.
In rendering its advice, Schroder Salomon Smith Barney assumed and relied,
without independent verification, on the accuracy and completeness of all
financial and other information and data that it reviewed or considered. With
respect to financial forecasts and other information and data provided to or
otherwise reviewed by or discussed with Schroder Salomon Smith Barney, the
management of LASMO advised Schroder Salomon Smith Barney that they were
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the management of LASMO as to the future financial performance
of LASMO. Schroder Salomon Smith Barney did not make and, with the exception of
net asset valuations relating to LASMO prepared by the management of LASMO, was
not provided with an independent evaluation or appraisal of the assets or
liabilities, contingent or otherwise, of LASMO or Amerada Hess, and did not make
any physical inspection of the properties or assets of LASMO or Amerada Hess.
Schroder Salomon Smith Barney's advice does not address the relative merits of
the Offer as compared to any alternative business strategies that might exist
for LASMO or the effect of any other transaction in which LASMO might engage.
Schroder Salomon Smith Barney's advice was necessarily based on information
available, and financial, stock market and other conditions and circumstances
existing and disclosed to Schroder Salomon Smith Barney as of the date that it
provided its advice. Although Schroder Salomon Smith Barney evaluated the Offer
from a financial point of view, Schroder Salomon
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Smith Barney was not asked to and did not recommend the specific consideration
payable in the Offer, which was determined through negotiation between LASMO and
Amerada Hess. No other instructions or limitations were imposed by LASMO on
Schroder Salomon Smith Barney with respect to the investigations made or
procedures followed by Schroder Salomon Smith Barney in rendering its advice.
In preparing its advice, Schroder Salomon Smith Barney performed a variety of
financial and comparative analyses, including those described below. The
following discussion of these analyses is a summary description of the material
financial analyses underlying Schroder Salomon Smith Barney's advice. The
preparation of financial advice is a complex analytical process involving
various determinations as to the most appropriate and relevant methods of
financial analysis and the application of those methods to the particular
circumstances and, therefore, is not readily susceptible to summary description.
Accordingly, Schroder Salomon Smith Barney believes that its analyses must be
considered as a whole and that selecting portions of its analyses and factors,
without considering all analyses and factors, could create a misleading or
incomplete view of the processes underlying its analyses and advice.
In its analyses, Schroder Salomon Smith Barney considered industry performance,
general business, economic, market and financial conditions and other matters
existing as of the date of its advice, many of which are beyond the control of
LASMO and Amerada Hess. No company, transaction or business used in those
analyses as a comparison is identical to LASMO, Amerada Hess or the proposed
Offer, and an evaluation of those analyses is not entirely mathematical. Rather,
the analyses involve complex considerations and judgments concerning financial
and operating characteristics and other factors that could affect the
acquisition, public trading or other values of the companies, business segments
or transactions analysed.
The estimates contained in Schroder Salomon Smith Barney's analyses and the
valuation ranges resulting from any particular analysis are not necessarily
indicative of actual values or predictive of future results or values, which may
be significantly more or less favourable than those suggested by its analyses.
In addition, analyses relating to the value of businesses or securities do not
necessarily purport to be appraisals or to reflect the prices at which
businesses or securities actually may be sold. Accordingly, Schroder Salomon
Smith Barney's analyses and estimates are inherently subject to substantial
uncertainty.
Schroder Salomon Smith Barney's advice and analyses were only one of various
factors considered by the LASMO board in its evaluation of the Offer and should
not be viewed as determinative of the views of the LASMO board or management
with respect to the Offer or the consideration payable in the Offer. In
particular, the LASMO board's reasons for recommending the Offer are detailed in
the letter from the Chairman of LASMO contained on pages 7 to 9 of this
document.
The following is a summary of the material financial analyses performed by
Schroder Salomon Smith Barney with respect to its advice to the LASMO board at a
meeting of the LASMO board held on 19 October 2000 in connection with the LASMO
board's recommendation of the Offer. Schroder Salomon Smith Barney:
-- reviewed the premia paid in selected mergers and acquisitions
transactions in the exploration and production sector of the oil industry
effected from 1998 to October 2000 and applied these premia to LASMO's
share price over a range of periods. This analysis resulted in an implied
per share reference range for LASMO shares of approximately 158p to 181p
based on the average one trading day premium in the selected transactions
and approximately 171p to 196p based on the average one month premium in
the selected transactions;
-- considered the average premia paid in UK public recommended offers during
the five-year period ended October 18, 2000 and applied these premia to
LASMO's share price over a range of periods. This analysis resulted in an
implied per share reference range for LASMO shares of approximately 169p
to 193p based on the average one trading day premium in the recommended
offers and approximately 174p to 199p based on the average one month
premium in the recommended offers;
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<PAGE> 200
-- using publicly available information, reviewed the transaction values
implied by the multiples paid in selected merger and acquisition
transactions in the exploration and production sector of the oil industry
effected during the 12-month period prior to October 2000 in relation to
the target companies' proved reserves and annual production, cash flow
and EBITDA. This analysis indicated an implied per share reference range
for LASMO of approximately 142p to 207p;
-- using publicly available information, reviewed research analysts'
estimates as to the net asset value per LASMO share. Based on available
published estimates of research analysts as of 18 October 2000, this
analysis indicated an implied per share reference range for LASMO of
approximately 120p to 207p, with an average implied price per LASMO share
of approximately 171p;
-- analysed LASMO's implied net asset value per share using internal
valuation models and planning data as of 20 September 2000 prepared by
LASMO management. This analysis indicated an implied per share reference
range of approximately 132p to 235p, including potential exploration
value;
-- considered the commercial assessments of the LASMO board as described in
the letter from the Chairman of LASMO under the heading "Background to
and reasons for recommending acceptance of the offer" contained on pages
7 to 9 of this document; and
-- reviewed and considered other factors, including the performance of
LASMO's share price over the period since 1 January 1999 in the context
of movements in oil prices during the same period, Amerada Hess' stock
performance and trading multiples relative to the stock performance and
trading multiples of other selected companies in the oil industry and
research analysts' publicly available price targets for Amerada Hess
Shares.
MISCELLANEOUS
Under the terms of Schroder Salomon Smith Barney's engagement, LASMO has agreed
to pay Schroder Salomon Smith Barney an aggregate financial advisory fee based
on the total consideration payable in the offer. The fee payable to Schroder
Salomon Smith Barney is currently estimated to be approximately L7.5 million.
LASMO also has agreed to reimburse Schroder Salomon Smith Barney for reasonable
travel and other expenses, including reasonable fees and expenses of its legal
counsel, and to indemnify Schroder Salomon Smith Barney and related parties
against certain liabilities arising out of Schroder Salomon Smith Barney's
engagement.
In the ordinary course of business, Schroder Salomon Smith Barney and its
affiliates may actively trade or hold the securities of LASMO and Amerada Hess
for their own account or for the account of customers and, accordingly, may at
any time hold a long or short position in such securities. Schroder Salomon
Smith Barney in the past has provided services to LASMO and Amerada Hess
unrelated to the offer, for which services Schroder Salomon Smith Barney has
received compensation. In addition, Schroder Salomon Smith Barney and its
affiliates, including Citigroup Inc. and its affiliates, may maintain
relationships with LASMO, Amerada Hess and their respective affiliates.
Schroder Salomon Smith Barney is an internationally recognised investment
banking firm and was selected by LASMO based on its experience, expertise and
familiarity with LASMO and its business. Schroder Salomon Smith Barney regularly
engages in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive bids, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes.
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APPENDIX VIII
DESCRIPTION OF AMERADA HESS SHARES AND CHANGES
IN THE RIGHTS OF LASMO SECURITYHOLDERS
1. DESCRIPTION OF AMERADA HESS SHARES
As of 30 November 2000, 88,096,505 Amerada Hess Shares and 326,805 shares of
$1.50 Cumulative Convertible Preferred Stock were outstanding, out of a total
authorised share capital of 220,000,000 shares consisting of 200,000,000 Amerada
Hess Shares and 20,000,000 shares of preferred stock. All outstanding Amerada
Hess Shares are fully paid and non-assessable.
The following is a brief description of certain rights of holders of Amerada
Hess Shares. For a complete understanding of these rights, LASMO Securityholders
are referred to the laws and applicable regulations of the State of Delaware,
United States, the listing requirements of the NYSE and the restated certificate
of incorporation of Amerada Hess.
(a) General
Amerada Hess is incorporated in the State of Delaware, United States and
operates in accordance with the DGCL. The rights of Amerada Hess
stockholders are determined by the DGCL, the securities and other
legislation of the United States, Amerada Hess' restated certificate of
incorporation and Amerada Hess' by-laws. The Amerada Hess Shares are traded
on the NYSE.
(b) Certificates
Amerada Hess Shares are issued in registered form. Every holder of Amerada
Hess Shares is entitled to a share certificate.
(c) Dividends
Holders of Amerada Hess Shares are entitled, subject to the prior rights,
if any, of holders of shares of any series of preferred stock that the
Board of Directors may establish, to such dividends as may be declared by
the board of directors of Amerada Hess out of funds legally available for
this purpose.
Under the terms of the most restrictive agreements pursuant to which
indebtedness of Amerada Hess has been incurred, at 30 September 2000
Amerada Hess had $1,253,123,000 of retained earnings free of restrictions
relating to dividends.
(d) Meetings
Annual meetings of the Amerada Hess stockholders are held on the date
designated by the by-laws of Amerada Hess. Written notice must be mailed to
each stockholder entitled to vote not less than ten nor more than 50 days
before the date of the meeting. The presence in person or by proxy of the
holders of record of a majority of the issued and outstanding shares of
Amerada Hess entitled to vote at such meeting constitutes a quorum for the
transaction of business at meetings of the stockholders. Special meetings
of the stockholders may be called for any purpose only by the chairman of
the board or the president, and shall be called by the secretary pursuant
to resolutions approved by a majority of the entire board of directors.
(e) Voting rights
The holders of Amerada Hess Shares are entitled to one vote for each share
held on record. Holders of Amerada Hess Shares may vote by proxy. Except as
may be otherwise provided by applicable law, the restated certificate of
incorporation or the by-laws of Amerada Hess, all elec-
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tions shall be had and all questions decided by a plurality of the votes
cast by stockholders entitled to vote thereon at a duly held meeting of
stockholders at which a quorum is present.
(f) Liquidation, dissolution or winding-up
In the event of a liquidation, dissolution or winding-up of Amerada Hess,
the holders of Amerada Hess Shares are entitled to share rateably according
to the number of shares held by them in all remaining assets available for
distribution to the holders of Amerada Hess Shares after discharge of
outstanding liabilities and payment of such liquidation preference, if any,
of any series of preferred stock that the Amerada Hess board of directors
may establish.
(g) Transfers
The Amerada Hess by-laws do not allow the board of directors to refuse to
register transfers of shares. Registration is conditional upon surrender of
share certificates in respect of Amerada Hess Shares, or, if lost,
furnishing an affidavit and indemnity in lieu thereof.
(h) Takeover Provisions
Certain provisions of the restated certificate of incorporation and by-laws
of Amerada Hess may have the effect of delaying, deferring or preventing a
change of control of Amerada Hess in connection with certain extraordinary
corporate transactions. An article of the restated certificate of
incorporation requires that business combinations, which term is defined to
include certain mergers, asset sales, security issuances, recapitalisations
and liquidations, involving Amerada Hess or any of its subsidiaries and
certain acquiring persons (namely, a person, entity or specified group
which beneficially owns or controls at least 20 per cent. of the voting
stock of Amerada Hess) be approved by the holders of two-thirds of Amerada
Hess' voting stock (not including shares held by an acquiring person with
which or by or on whose behalf a business combination is proposed) unless
such business combination either: (i) has been authorised by the board of
directors prior to the time that the acquiring person involved in such
business combination became an acquiring person, or (ii) will result in the
receipt by the other stockholders of a specified minimum amount and form of
payment for their shares.
The restated certificate of incorporation and the by-laws of Amerada Hess
also provide for a board of directors divided as nearly equal as possible
into three classes. In addition, the restated certificate of incorporation
and the by-laws require (i) approval of holders of 80 per cent. of the
voting stock to remove directors or to amend, alter or repeal the
provisions as to the classified board and other related provisions, (ii)
advance notice of, and a specified procedure for, shareholder nominations
for director, (iii) the taking of stockholder action only at annual or
special meetings (to be called only by the chairman of the board, the
President or a majority of the board of directors) and prohibiting
stockholder action by written consent, and (iv) the filling of vacancies on
the board by remaining directors, though less than a quorum. Such
provisions of the restated certificate of incorporation and the by-laws may
make it more difficult for a person or entity to acquire and exercise
control of the company and remove incumbent directors and officers.
(i) Delaware Anti-Takeover Law
Amerada Hess is subject to the provisions of Section 203 of the DGCL. In
general, the law prohibits a public Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of
three years after the date of the transaction in which the person became an
interested stockholder, unless (i) the corporation has elected in its
certificate of incorporation not to be governed by Section 203 (Amerada
Hess has not made such an election), (ii) the business combination was
approved by the board of directors of the corporation before the other
party to the business combination became an "interested stockholder", (iii)
upon consummation of the transaction that made it an "interested
stockholder", the "interested stockholder" owned at least
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85 per cent. of the voting stock of the corporation outstanding at the
commencement of the transaction (excluding voting stock held by directors
who are also officers or held in employee benefit plans in which employees
do not have a confidential right to tender or vote stock held by the plan)
or (iv) the business combination was approved by the board of directors of
the corporation and ratified by at least two-thirds of the voting stock
which the "interested stockholder" did not own. The three year prohibition
also does not apply to certain business combinations proposed by the
"interested stockholder" during the previous three years or who becomes an
"interested stockholder" with the approval of a majority of the
corporation's directors.
"Business combination" is defined generally to include mergers or
consolidations between a Delaware corporation and an "interested
stockholder", transactions with an "interested stockholder" involving the
assets or stock of the corporation or its majority owned subsidiaries and
transactions which increase an "interested stockholder's" percentage
ownership of the stock. An "INTERESTED STOCKHOLDER" is defined as a person
who, together with affiliates and associates, owns (or within the prior
three years, did own) 15 per cent. or more of a corporation's voting stock.
The application of Section 203 may also have the effect of delaying,
deferring or preventing a change of control of the Amerada Hess.
(j) Other rights
Holders of Amerada Hess Shares have no pre-emption, redemption, conversion
or other subscription rights.
(k) Registrar and Transfer Agents
The Registrar for the Amerada Hess Shares is The Bank of New York in New
York, New York, and the transfer agents for the Amerada Hess Shares are The
Bank of New York (in New York, New York), First Union National Bank (in
Charlotte, North Carolina) and CIBC Mellon Trust Company (in Toronto,
Ontario).
2. DIFFERENCES BETWEEN AMERADA HESS SHARES AND LASMO SHARES
The following is a summary comparison of material differences between the rights
of an Amerada Hess stockholder and a LASMO Shareholder arising from the
differences between the corporate laws of Delaware and of England and Wales, the
governing instruments of the two companies, and the securities laws and
regulations governing the two companies. However, it is not intended to be a
complete description of the laws of Delaware or of England and Wales, nor of the
other rules or laws referred to in this summary. For information as to where the
governing instruments of Amerada Hess and LASMO may be obtained, see paragraph 1
of Appendix III and paragraph 1 of Appendix IV, respectively. You are encouraged
to obtain and read these documents.
VOTING RIGHTS
(i) Amerada Hess Stockholders
Under Delaware law, unless the certificate of incorporation provides
otherwise, each stockholder is entitled to one vote for each share of
capital stock held by the stockholder.
Except as described herein, the certificate of incorporation of Amerada
Hess does not alter the voting rights as provided under Delaware law.
Under Delaware law, a certificate of incorporation may provide that in
elections of directors and other specified circumstances, stockholders are
entitled to cumulative voting.
The certificate of incorporation of Amerada Hess does not provide for
cumulative voting.
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(ii) LASMO Shareholders
Under English law, unless the articles of association provide otherwise, a
shareholder entitled to vote at a shareholders' meeting is entitled to one
vote on a show of hands regardless of the number of shares he or she holds;
provided, however, that any group of five ordinary shareholders (or a
lesser number if provided in the articles of association) and any
shareholder representing at least ten per cent of the total voting rights
(or a lower percentage if provided in the articles of association) has the
statutory right to demand a vote by a poll, which means that each ordinary
shareholder would be entitled to one vote for each ordinary share held by
the shareholder. The articles of association of LASMO provide that two
shareholders present in person or by proxy and entitled to vote may demand
a poll.
Under English law, ordinary resolutions are decided on a show of hands and
must be approved by at least a majority of the shareholders present in
person, or by proxy if the memorandum and articles of association so
permit, and voting at a meeting. If a poll is demanded, the resolution
conducted on a poll must be approved by holders of at least a majority of
the votes cast at the meeting. Both special and extraordinary resolutions
require the affirmative vote of at least 75 per cent of the votes cast at
the meeting.
Under English law, two shareholders present in person constitute a quorum
for purposes of a general meeting, unless the company's articles of
association specify otherwise. LASMO's articles of association specify a
quorum of three shareholders, present in person or by proxy and entitled to
vote.
Under English law, the voting rights of shareholders are regulated by a
company's articles of association. LASMO's articles of association provide
that every shareholder present at a general meeting shall have one vote on
a show of hands. On a poll, every member who is present in person or by
proxy shall have one vote for every 25p nominal amount of ordinary share
capital of which he is the holder.
ACTION BY WRITTEN CONSENT
(i) Amerada Hess Stockholders
Under Delaware law, unless otherwise provided in the certificate of
incorporation, stockholders may take any action required or permitted to be
taken at a stockholders' meeting without a meeting if consented to in
writing by the same number of votes that would be required if the action
were to be taken at a meeting.
The Amerada Hess certificate of incorporation prohibits stockholder action
by written consent.
(ii) LASMO Shareholders
Under English law, unless the company's articles of association provide
otherwise, the consent in writing of all shareholders is required in order
to approve, without a meeting, a matter requiring shareholder approval.
LASMO's articles of association do not provide otherwise.
SHAREHOLDERS PROPOSALS AND SHAREHOLDER NOMINATIONS OF DIRECTORS
(i) Amerada Hess Stockholders
See "Special meetings of shareholders".
(ii) LASMO Shareholders
Under English law, shareholders may demand that a resolution be voted on at
a general meeting if the demand is made:
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(1) by shareholders holding at least five per cent of the total voting
rights at the meeting to which the requisition relates; or
(2) by at least 100 shareholders holding shares on which there has been
paid an average sum per shareholder of at least L100.
The shareholders must deposit the demand at the company's registered office
at least six weeks before the general meeting to which it relates.
In general, resolutions to appoint directors must be put to shareholders on
the basis of one resolution for each nominated director. A resolution
including more than one director may be presented to be voted upon at a
general meeting only if the shareholders have first unanimously approved so
doing.
SOURCES AND PAYMENT OF DIVIDENDS
(i) Amerada Hess Stockholders
Under Delaware law, the board of directors, subject to any restrictions in
the corporation's certificate of incorporation, may declare and pay
dividends out of:
(1) surplus of the corporation, which is defined as net assets less
statutory capital; or
(2) if no surplus exists, out of the net profits of the corporation for
the fiscal year in which the dividend is declared and/or the
preceding fiscal year;
provided, however, that if the capital of the corporation has been
diminished to an amount less than the aggregate amount of capital
represented by the issued and outstanding stock of all classes having
preference upon the distribution of assets, the board may not declare and
pay dividends out of the corporation's net profits until the deficiency in
the capital has been repaired.
(ii) LASMO Shareholders
Subject to the prior rights of holders of preferred shares, an English
company may pay dividends on its ordinary shares only out of its
distributable profits, defined as accumulated, realized profits less
accumulated, realized losses, and not out of share capital, which includes
share premiums, which are equal to the excess of the consideration for the
issue of shares over the aggregate nominal amount of such shares. Amounts
credited to the share premium account, however, may be used to pay up
unissued shares which may then be distributed to shareholders in proportion
to their holdings.
In addition, under English law, LASMO will not be permitted to make a
distribution if, at the time, the amount of its net assets is less than the
aggregate of its issued and paid-up share capital and undistributable
reserves.
RIGHTS OF PURCHASE AND REDEMPTION
(i) Amerada Hess Stockholders
Under Delaware law, any corporation may purchase, redeem and dispose of its
own shares, except that it may not purchase or redeem these shares if the
capital of the corporation is impaired at the time or would become impaired
as a result of the redemption, provided that if a corporation redeems its
stock, immediately following any such redemption, the corporation must have
outstanding one or more shares of one or more classes which shares together
must have full voting power.
However, at any time, a corporation may purchase or redeem any of its
shares which are entitled upon any distribution of assets to a preference
over another class of its stock if these shares will be retired upon
acquisition or redemption, thereby reducing the capital of the corporation.
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The NYSE requires that prompt publicity be given and prompt notice be sent
to the NYSE of action which will result in, or which looks toward, either
the partial or full call for redemption of a listed security. NYSE rules
provide that when a listed security is fully redeemed, trading is suspended
as soon as the redemption funds become available to the holders of the
security. When only a part of the listed securities are redeemed, the
amount authorised to be listed is reduced by the amount redeemed as soon as
the redemption funds become available to holders of the redeemed
securities.
(ii) LASMO Shareholders
Under English law, a company may issue redeemable shares if authorised by
its memorandum and articles of association, subject to any conditions
stated therein.
A company may purchase its own shares, including any redeemable shares, if
the purchase:
(1) is authorised by its memorandum and articles of association; and
(2) (a) in the case of an open-market purchase, authority to make the
market purchase has been given by any ordinary resolution of
its shareholders; or
(b) in all other cases, has been approved by a special resolution.
A company may redeem or repurchase shares only if the shares are fully paid
and, in the case of public companies, only out of:
(1) distributable profits; or
(2) the proceeds of a new issue of shares, made for the purpose of the
repurchase or redemption.
The UK Listing Authority requires that where a company has issued shares
which are listed on the Official List and are convertible into a class of
shares to be repurchased, the holders of the convertible shares must first
pass an extraordinary resolution approving any repurchase at a separate
class meeting.
The UK Listing Authority requires that purchases within a 12-month period
of 15 per cent. or more of a company's share capital must be made through
either a tender or partial offer to all shareholders, at a stated maximum
or fixed price.
Purchases within a 12-month period below the 15 per cent. threshold may be
made through:
(1) the open market, provided that the price is not more than five per
cent. above the average of the middle-market quotations taken from
the Official List for the five trading days before the purchase date;
or
(2) an off-market transaction negotiated with one or more shareholders
subject to prior approval of the transaction by special resolution.
LASMO's articles of association authorise the issue of redeemable shares,
subject to the Companies Act and with the sanction of a special resolution,
and the purchase of its own shares, subject to and in accordance with the
Companies Act and to any rights conferred on the holders of any class of
shares.
GENERAL MEETINGS OF SHAREHOLDERS
(i) Amerada Hess Stockholders
The by-laws of Amerada Hess provide that the annual meeting of stockholders
shall be held on a date and at a time fixed by the board of directors.
Under Delaware law the board of directors may also determine the place of
such meeting either within or without of the State of Delaware or may
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determine that such meeting shall not be held at any place and instead be
held by means of remote communication.
(ii) LASMO Shareholders
LASMO's articles of association provide that annual general meetings shall
be held at such time and place as the board of directors may determine,
subject to the provisions of the Companies Act which require an annual
general meeting to be held in each year and not more than 15 months to
elapse between the date of one annual general meeting of a company and that
of the next.
SPECIAL MEETINGS OF SHAREHOLDERS
(i) Amerada Hess Stockholders
Delaware law provides that special meetings of stockholders may be called
by:
(1) the board of directors; or
(2) any person or persons authorised by the corporation's certificate of
incorporation or by-laws.
The by-laws of Amerada Hess provide that special meetings of the holders of
any class or of all classes of Amerada Hess' capital stock may be called at
any time by the board of directors, and shall be called only by the
chairman of the board or the President, and shall be called by the
Secretary at the request of the Board of Directors pursuant to a resolution
approved by a majority of the entire Board of Directors.
The Amerada Hess by-laws provide that written notice of each meeting of the
stockholders, stating the date, hour, place and purpose or purposes
thereof, shall be given, personally or by mail, to each stockholder
entitled to vote at the meeting not less than ten days before the date of
the meeting, except that notice of any special meeting shall be delivered
or mailed not less than ten days before such meeting. If mailed, such
notice shall be deposited in the US mail, postage prepaid, directed to the
stockholder at his/her address as it appears on the records of Amerada
Hess.
(ii) LASMO Shareholders
Under English law, an extraordinary general meeting of shareholders may be
called by:
(1) the board of directors; or
(2) shareholders holding at least one-tenth of the paid-up capital of the
company carrying voting rights at general meetings.
The notice requirements for an ordinary resolution, an extraordinary
resolution and a special resolution are as follows:
(1) ordinary resolution -- 14 days' notice;
(2) extraordinary resolution -- 14 days' notice; and
(3) special resolution -- 21 days' notice.
Notwithstanding the foregoing notice requirements, 21 days' notice must be
given for an annual general meeting and any resolutions to be proposed
thereat.
LASMO's articles of association require 21 days' notice for a resolution
appointing a director.
In addition, general meetings may be called upon shorter notice if:
(1) in the case of an annual general meeting, all the shareholders who
are permitted to attend and vote agree to the shorter notice; or
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(2) in the case of an extraordinary general meeting, a majority of the
shareholders holding at least 95 per cent by nominal value of the
shares which can be voted at the meeting so agree.
LASMO's articles of association state that any notice shall be exclusive of
the day on which it is served, or deemed to be served, and of the day for
which it is given.
"Extraordinary resolutions" are relatively unusual and are confined to
matters out of the ordinary course of business, such as a proposal to wind
up the affairs of the company.
"Special resolutions" generally involve proposals to:
(1) change the name of the company;
(2) alter its capital structure;
(3) change or amend the rights of shareholders;
(4) permit the company to issue new shares for cash without applying the
shareholders' preemptive rights,
(5) amend the company's objects, or purpose, clause in its memorandum of
association;
(6) amend the company's articles of association; or
(7) carry out other matters for which the company's articles of
association or the Companies Act prescribe that a "special
resolution" is required.
Other proposals relating to the ordinary course of the company's business,
such as the election of directors and transactions such as mergers,
acquisitions and dispositions, are the subject of an "ordinary resolution".
APPRAISAL RIGHTS
(i) Amerada Hess Stockholders
Delaware law provides stockholders of a corporation involved in a merger
the right to demand and receive payment of the fair value of their stock in
certain mergers. However, appraisal rights are not available to holders of
shares:
(1) listed on a national securities exchange;
(2) designated as a national market system security on an interdealer
quotation system operated by the National Association of Securities
Dealers, Inc.; or
(3) held of record by more than 2,000 stockholders;
unless holders of stock are required to accept in the merger anything other
than any one of the following or a combination thereof:
(A) shares of stock or depositary receipts of the surviving corporation in
the merger;
(B) shares of stock or depositary receipts of another corporation that, at
the effective date of the merger, will be either:
(a) listed on a national securities exchange;
(b) designated as a national market system security on an interdealer
quotation system operated by the National Association of
Securities Dealers, Inc.; or
(c) held of record by more than 2,000 holders; or
(C) cash in lieu of fractional shares of the stock or depositary receipts
received.
In addition, appraisal rights are not available to the holders of shares of
the surviving corporation in the merger, if the merger does not require the
approval of the stockholders of that corporation.
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(ii) LASMO Shareholders
Under English law, shareholders do not generally have appraisal rights, as
the concept is understood under Delaware law, and LASMO's articles of
association do not contain any appraisal rights.
Certain limited rights exist where an offeror who, pursuant to a takeover
offer for a company, has acquired or contracted to acquire not less than 90
per cent. in value of the shares to which the offer relates, seeks to
acquire outstanding minority shareholdings pursuant to the compulsory
acquisition provisions under the Companies Act.
Similarly, under a scheme of reconstruction under Section 110 of the UK
Insolvency Act 1986, a shareholder can require the liquidator to abstain
from carrying the resolution into effect, or to purchase his/her interest
at a price agreed or determined by arbitration.
Additionally, any shareholder who complains that the affairs of the company
are being conducted, or that the directors' powers are being exercised, in
a manner unfairly prejudicial to him/her or some part of the shareholders
(including himself/herself), or in disregard of his/her proper interests as
a shareholder, may apply to the High Court in England for relief. If the
High Court finds the complaint to be justified, it may exercise its
discretion and order the purchase of the shares on such terms, including as
to price, as the High Court may determine.
PREEMPTIVE RIGHTS
(i) Amerada Hess Stockholders
Under Delaware law, a stockholder is not entitled to preemptive rights to
subscribe for additional issues of stock or any security convertible into
stock unless they are specifically granted in the certificate of
incorporation. Such rights are not provided in the Amerada Hess certificate
of incorporation.
(ii) LASMO Shareholders
Under English law, the issue for cash of:
(1) equity securities, being those which, with respect to dividends or
capital, carry a right to participate beyond a specified amount; or
(2) rights to subscribe for, or convert, into equity securities;
must be offered first to the existing equity shareholders in proportion to
the respective nominal value of their holdings, unless a special resolution
to the contrary has been passed by shareholders in a general meeting, or
the articles of association provide otherwise.
It is customary for many English companies listed on the Official List of
the UK Listing Authority to pass a resolution on an annual basis to
authorise the board of directors to disapply pre-emption rights in respect
of a specified amount of share capital, generally five per cent. of issued
share capital, without pre-emption rights.
AMENDMENT OF GOVERNING INSTRUMENTS
(i) Amerada Hess Stockholders
Under Delaware law, unless the certificate of incorporation requires a
greater vote, an amendment to the certificate of incorporation requires:
(1) the recommendation of the board of directors;
(2) the affirmative vote of a majority of the outstanding stock entitled
to vote thereon; and
(3) the affirmative vote of a majority of the outstanding stock of each
class entitled to vote thereon as a class.
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The certificate of incorporation of Amerada Hess provides that Amerada Hess
reserves the right to amend, alter, change or repeal any provision
contained in the certificate of incorporation, in the manner prescribed by
statute except that Article Fifth (relating to classification of directors,
removal of directors, shareholder action and certain related matters)
thereof may only be amended by the affirmative vote of holders of 80 per
cent. of the outstanding voting power of all the then outstanding shares of
capital stock entitled to vote and Article Ninth (relating to certain
business combinations) may be amended by the affirmative vote of holders of
two-thirds of the outstanding shares of capital stock entitled to vote. All
rights conferred upon stockholders in the certificate of incorporation are
granted subject to this reservation.
Under Delaware law, stockholders have the power to adopt, amend or repeal
by-laws unless the certificate of incorporation gives those powers to the
directors of the corporation.
The by-laws of Amerada Hess provide that any provision of the by-laws may
be altered or repealed at any regular or special meeting of the
stockholders or the board of directors if notice of the proposed alteration
or repeal is set forth in the notice of such meeting, by the affirmative
vote of a majority of the capital stock entitled to vote, except that
certain provisions may be altered and repealed only by the affirmative vote
of 80 per cent. of the holders of capital stock entitled to vote.
(ii) LASMO Shareholders
Under English law, shareholders have the power to amend:
(1) the objects, or purpose, clause in a company's memorandum of
association; and
(2) any provisions of the company's articles of association;
by special resolution, subject to, in the case of amendments to the objects
clause of the memorandum of association, the right of dissenting
shareholders to apply to the courts to cancel the amendments within 21 days
of the passing of the resolution.
Under English law, the board of directors is not authorised to change the
memorandum or articles of association.
Amendments affecting the rights of the holders of any class of shares may,
depending on the rights attached to the class and the nature of the
amendments, also require approval by extraordinary resolution of the
classes affected in separate class meetings.
LASMO's articles of association provide for the variation of class rights
if sanctioned in writing either by holders of not less than 75 per cent. in
nominal value of the issued shares in the class, or an extraordinary
resolution of the class affected in a separate class meeting.
STOCK CLASS RIGHTS
(i) Amerada Hess Stockholders
Under Delaware law, any change to the rights of holders of the Amerada Hess
Shares or any series of preferred stock would require an amendment to the
Amerada Hess certificate of incorporation.
Delaware law provides that the holders of shares of a class or series shall
be entitled to vote as a class upon a proposed amendment if the amendment
will:
(1) increase or decrease the authorised shares of the class or series;
(2) increase or decrease the par value of the shares of the class or
series; or
(3) alter or change the powers, preferences or special rights of the
shares of the class or series so as to affect them adversely.
Under its certificate of incorporation Amerada Hess has the right to issue
shares of common stock as well as shares of preferred stock.
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The shares of authorised common stock shall be identical in all respects
and have equal rights and privileges. Without action by the stockholders,
such shares of common stock may be issued by Amerada Hess from time to time
for such consideration as may be fixed by the board of directors; provided,
however, that such consideration shall not be less than par value. Any and
all shares so issued, the full consideration for which has been paid or
delivered shall be deemed fully paid stock non-assessable. No holder of
shares of common stock shall be entitled as a matter of right, preemptive
or otherwise, to subscribe for, purchase or receive any shares of the stock
of Amerada Hess of any class, now or hereafter authorised, or any options
or warrants for such stock or securities convertible into or exchangeable
for such stock, or any shares held in the treasury of Amerada Hess.
The board of directors shall have the authority to issue the shares of the
preferred stock from time to time on such terms and conditions as it may
determine, and to divide the preferred plan into one or more classes or
series and in connection with the creation of any such class or series to
fix by the resolution or resolutions providing for the issue of shares
thereof the designations, powers, preferences and relative participating,
optional or other special rights of such class or series, and the
qualifications, limitations, or restrictions thereof, to the full extent
now or hereafter permitted by law. The number of authorised shares of
preferred stock may be increased or decreased (but not below the number
then outstanding) by the affirmative vote of the holders of a majority of
the common stock, without a vote of the holders of the preferred plan,
unless a vote of any such holders is required pursuant to the certificate
or certificates establishing the series of preferred stock.
(ii) LASMO Shareholders
See "Amendment of governing instruments".
SHAREHOLDERS' VOTES ON CERTAIN TRANSACTIONS
(i) Amerada Hess Stockholders
Generally, under Delaware law, unless the certificate of incorporation
provides for the vote of a larger portion of the stock, completion of a
merger, consolidation, sale, lease or exchange of all or substantially all
of a corporation's assets or dissolution requires:
(1) the approval of the board of directors; and
(2) approval by the vote of the holders of a majority of the outstanding
stock or, if the certificate of incorporation provides for more or
less than one vote per share, a majority of the votes of the
outstanding stock of a corporation entitled to vote on the matter.
The Amerada Hess certificate of incorporation requires the affirmative vote
of not less than two-thirds of the capital stock having voting power to
authorize a sale, lease or exchange of all or substantially all of the
property and assets of Amerada Hess. Also, the certificate requires the
affirmative vote of two-thirds of the capital stock entitled to vote (other
than the shares held by certain defined acquiring persons) to approve
certain business combinations with such an acquiring person.
Under the rules of the NYSE, acquisitions involving the following require
shareholder approval:
(l) the issuance of stock to a substantial securityholder, a director or
an officer; or
(2) the issuance of additional shares of common stock of a listed company
if:
(a) the common stock has, or will have upon issuance, voting power
equal to or in excess of 20 per cent. of the voting power
outstanding before the issuance of such stock; or
(b) the number of shares of common stock to be issued is, or will be
upon issuance, equal to or in excess of 20 per cent. of the number
of shares of common stock outstanding before the issuance of such
stock.
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(ii) LASMO Shareholders
The Companies Act provides for schemes of arrangement, which are
arrangements or compromises between a company and any class of shareholders
or creditors and used in certain types of reconstructions, amalgamations,
capital reorganisations or takeovers. These arrangements require the
approval at a special meeting convened by order of the court, of:
(1) a majority in number of shareholders or creditors representing 75 per
cent. in value of the capital held by, or debt owed to, the class of
shareholders or creditors, or class thereof present and voting,
either in person or by proxy; and
(2) the court.
Once approved and sanctioned, all shareholders and creditors of the
relevant class are bound by the terms of the scheme. A scheme of
reconstruction under Section 110 of the UK Insolvency Act 1986 may be made
when a company is being wound-up voluntarily. Under the terms of such a
scheme and with the sanction of a special resolution of the shareholders,
the whole or part of the company's business or property is transferred to a
second company. Any dissenting shareholder can require the liquidator to
abstain from carrying the resolution into effect or to purchase his/her
interest at a price agreed or determined by arbitration.
The Companies Act also provides:
(1) that where a takeover offer is made for the shares of an English
company; and
(2) within four months of the date of the offer, the offeror has acquired
or contracted to acquire at least nine-tenths in value of the shares
of any class to which the offer relates;
the offeror may, within two months of reaching the nine-tenths level,
require shareholders who do not accept the offer to transfer their shares
on the terms of the offer. A dissenting shareholder may object to the
transfer or its proposed terms by applying to the court within six weeks of
the date on which notice of the transfer was given. In the absence of fraud
or oppression, the court is unlikely to order that the acquisition not take
effect, but it may specify terms of the transfer that it finds appropriate.
A minority shareholder is also entitled in these circumstances, in the
alternative, to require the offeror to acquire his/her shares on the terms
of the offer.
Under the Listing Rules, shareholder approval:
(1) is required for an acquisition or disposal by a listed company if,
generally, the size of the company or business to be acquired or
disposed of represents 25 per cent. or more of the size of the listed
company; and
(2) may also be required for an acquisition or disposal of assets between
a listed company and related parties, including:
(a) directors of the company or its subsidiaries;
(b) holders of ten per cent. or more of the nominal value of any class
of the company's, or any holding company's, or its subsidiary's
shares having the right to vote; or
(c) any of their affiliates.
RIGHTS OF INSPECTION
(i) Amerada Hess Stockholders
Delaware law allows any stockholder:
(1) to inspect:
(a) the corporation's stock ledger;
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(b) a list of its stockholders; and
(c) its other books and records; and
(2) to make copies or extracts of those materials during normal business
hours; provided, however, that:
(a) the stockholder makes a written request under oath stating the
purpose of his/her inspection; and
(b) the inspection is for a purpose reasonably related to the person's
interest as a stockholder.
The by-laws of Amerada Hess provide that the board of directors shall
determine from time to time whether, when and under what conditions and
regulations the accounts and books of Amerada Hess (except such as may by
statute be specifically open to inspection) or any of them shall be open to
the inspection of the stockholders and the stockholders' rights in this
respect are and shall be restricted and limited accordingly.
(ii) LASMO Shareholders
Except when closed under the provisions of the Companies Act, the register
and index of names of shareholders of an English company may be inspected
during business hours:
(1) without payment, by its shareholders; or
(2) for a fee by any other person.
In both cases, the documents may be copied for a fee.
The shareholders of an English public company may also inspect, without
charge, during business hours:
(1) minutes of meetings of the shareholders and obtain copies of the
minutes for a fee; and
(2) service contracts of the company's directors, if the contracts have
more than 12 months to run or require more than 12 months' notice to
terminate.
In addition, the published annual accounts of a public company are required
to be available for shareholders at a general meeting and a shareholder is
entitled to a copy of these accounts.
STANDARD OF CONDUCT FOR DIRECTORS
(i) Amerada Hess Stockholders
The DGCL does not contain specific provisions setting forth the standard of
conduct of a director. The scope of the fiduciary duties of directors is
generally determined by the courts of the State of Delaware. In general,
directors have a duty to act without self-interest, on a well-informed
basis and in a manner they reasonably believe to be in the best interest of
the shareholders.
(ii) LASMO Shareholders
Under English law, a director has a fiduciary duty to act in a company's
best interests. This duty includes obligations:
(1) not to create an actual or potential conflict between his/her duty to
the company and duties to any other person or his/her personal
interests; and
(2) to exercise his/her powers only in accordance with the memorandum and
articles of association of the company.
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In addition, a director must exercise reasonable care and skill. The
precise scope of this duty is unclear, but the test appears to be both
subjective (i.e., was the director's conduct that of a reasonably diligent
person who has the knowledge and experience of the director) and objective
(i.e., was the director's conduct that of a reasonably diligent person
having the knowledge and experience that a director should have).
The Companies Act contains restrictions on a company's power to make loans
and confer other benefits to directors and persons connected with them.
CLASSIFICATION OF THE BOARD OF DIRECTORS
(i) Amerada Hess Stockholders
Delaware law permits the certificate of incorporation or a
stockholder-adopted by-law to provide that directors be divided into one,
two or three classes, with the term of office of one class of directors to
expire each year.
The Amerada Hess certificate of incorporation provides for classification
of its board of directors into three classes, as nearly equal in number as
possible. Each class is elected to a term expiring at the annual meeting of
stockholders held in the third year following the year of such election.
(ii) LASMO Shareholders
There are no provisions under English law which govern the term of office
of directors, although shareholder approval is required if a director's
contract of employment is for a period of more than five years.
The Combined Code, which contains principles of good governance and a code
of best practice and is appended to the Listing Rules, recommends that the
notice period under directors' service contracts should ideally be set at
one year or less.
LASMO articles of association provide that at every general meeting one
third of the directors must retire. These retiring directors may be
re-appointed by the meeting.
REMOVAL OF DIRECTORS
(i) Amerada Hess Stockholders
Delaware law provides that a director may be removed with or without cause
by the holders of a majority in voting power of the shares entitled to vote
at an election of directors, except that:
(1) members of a classified board of directors may be removed only for
cause, unless the certificate of incorporation provides otherwise;
and
(2) directors may not be removed in certain situations in the case of a
corporation having cumulative voting.
Even though Amerada Hess has a classified board of directors, the by-laws
of Amerada Hess provide that any director may be removed at any time,
either for or without cause, but only by the affirmative vote of holders of
at least 80 per cent. of the voting power of the shares of capital stock
then entitled to vote.
Amerada Hess does not have cumulative voting.
(ii) LASMO Shareholders
Under the Companies Act, shareholders may remove a director without cause
by ordinary resolution, irrespective of any provisions of the company's
articles of association or service contract the director has with the
company, provided, however, that 28 clear days' notice of the resolution is
given to the company.
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VACANCIES ON THE BOARD OF DIRECTORS
(i) Amerada Hess Stockholders
Under Delaware law, unless otherwise provided in the certificate of
incorporation or the by-laws the following vacancies may be filled by a
vote of a majority of the directors then in office:
1. vacancies on a board of directors; and
2. newly created directorships resulting from an increase in the
authorized number of directors.
However, if the holders of any specific class of stock are entitled to
elect directors, vacancies and newly created directorships of the class may
only be filled by a majority of the directors elected by the class. In the
case of a classified board, directors elected to fill vacancies or newly
created directorships will hold office until the next election of the class
for which the directors have been chosen.
Except as otherwise provided in the rights of a class or series of
preferred stock having preference over common stock under specified
circumstances, the by-laws of Amerada Hess provide that vacancies created
by death, resignation, removal or disqualification and newly created
directorships resulting from any increase in the authorised number of
directors may be filled by the affirmative vote of a majority of the
directors remaining in office, although less than a quorum. Each director
so chosen shall hold office for the remainder of the full term of the class
of directors in which the new directorship was created or the vacancy
occurred and until such director's successor shall have been elected and
qualified.
(ii) LASMO Shareholders
Under English law, shareholders may by ordinary resolution, at a meeting at
which any director retires, appoint a person to be a director:
1. to fill a vacancy; or
2. to become an additional director, subject to any maximum provided in
the company's articles of association.
The board of directors has the power to appoint a director to serve until
the next general meeting of the company, whereupon the director concerned
is required to retire, but will be eligible for re-election. However, the
total number of directors shall not exceed any maximum number fixed in
accordance with the company's articles of association.
LASMO's articles of association provide that the minimum number of
directors shall be two and that there shall be no maximum, unless and until
otherwise determined by the company by ordinary resolution.
LIABILITY OF DIRECTORS AND OFFICERS
(i) Amerada Hess Stockholders
Delaware law permits a corporation's certificate of incorporation to
include a provision eliminating or limiting the personal liability of a
director to the corporation and its stockholders for damages arising from a
breach of fiduciary duty as a director. However, no provision can limit the
liability of a director for:
(1) any breach of his/her duty of loyalty to the corporation or its
stockholders;
(2) acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
(3) intentional or negligent payment of unlawful dividends or stock
purchases or redemptions; or
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(4) any transaction from which he/she derives an improper personal
benefit.
The Amerada Hess certificate of incorporation provides that a director of
Amerada Hess shall not be personally liable to Amerada Hess or its
shareholders for monetary damages for breach of fiduciary duty as a
director, except for liability which would otherwise exist under applicable
law (i) for any breach of the director's duty of loyalty to Amerada Hess
and its shareholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL (unlawful payment of dividend or unlawful stock
purchase or redemption) or (iv) for any transaction from which the director
derived any improper personal benefit.
If the DGCL is amended after approval by the stockholders of this provision
in the certificate of incorporation to authorise corporate action further
eliminating or limiting the personal liability of directors, then the
liability of a director of the corporation shall be eliminated or limited
to the fullest extent permitted by the DGCL, as so amended. The certificate
of incorporation also provide that any repeal or modification of this
provision in the certificate of incorporation shall not adversely affect
any right or protection of a director of the corporation existing at the
time of such repeal or modification.
(ii) LASMO Shareholders
English law does not permit a company to exempt any director, officer of
the company or any person employed by the company as an auditor, from any
liability arising from negligence, default, breach of duty or breach of
trust against the company.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
(i) Amerada Hess Stockholders
Delaware law provides that a corporation may indemnify any officer or
director who is made a party to any suit or proceeding on account of being
a director, officer or employee of the corporation against expenses,
including attorney's fees, judgments, fines and amounts paid in settlement
reasonably incurred by him/her in connection with the action, through,
among other things, a majority vote of a quorum consisting of directors who
were not parties to the suit or proceeding if the officer or director:
(1) acted in good faith and in a manner he/she reasonably believed to be
in the best interests of the corporation; and
(2) in a criminal proceeding, had no reasonable cause to believe his/her
conduct was unlawful.
The by-laws of Amerada Hess contain specific authority for indemnification
by the corporation of current and former directors, officers, employees or
agents of the corporation.
Amerada Hess maintains policies of insurance under which Amerada Hess and
its directors and officers are insured subject to specified exclusions and
deductibles and maximum amounts against loss arising from any claim which
may be made against Amerada Hess or any director or officer of Amerada Hess
by reason of any breach of duty, neglect, error, misstatement, omission or
act done or alleged to have been done while acting in their respective
capabilities.
(ii) LASMO Shareholders
English law does not permit a company to indemnify:
(1) a director or officer of the company; or
(2) any person employed by the company as an auditor;
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against any liability arising from negligence, default, breach of duty or
breach of trust against the company, except that indemnification is allowed
for liabilities incurred in proceedings in which:
(1) judgment is entered in favour of the director or officer, or the
director or officer is acquitted; or
(2) the director or officer is held liable, but the court finds that
he/she acted honestly and reasonably and that relief should be
granted.
The Companies Act enables companies to purchase and maintain insurance for
directors, officers and auditors against liabilities arising from
negligence, default, breach of duty or breach of trust against the company.
LASMO's articles of association authorise the company to purchase and
maintain such insurance for any directors, officers or auditors of the
company.
See also "Liability of directors and officers".
SHAREHOLDER SUITS
(i) Amerada Hess Stockholders
Under Delaware law, a stockholder may initiate a derivative action to
enforce a right of a corporation if the corporation fails to enforce the
right itself. The complaint must:
(1) state that the plaintiff was a stockholder at the time of the
transaction of which the plaintiff complains or that the plaintiffs
shares thereafter devolved on the plaintiff by operation of law; and
(2) (a) allege with particularity the efforts made by the plaintiff to
obtain the action the plaintiff desires from the directors and
the reasons for the plaintiff's failure to obtain the action;
or
(b) state the reasons for not making the effort.
Additionally, the plaintiff must remain a stockholder through the duration
of the derivative suit. The action will not be dismissed or compromised
without the approval of the Delaware Court of Chancery.
(ii) LASMO Shareholders
While English law only permits a shareholder to initiate a lawsuit on
behalf of the company in limited circumstances, the Companies Act permits a
shareholder whose name is on the register of shareholders of the company to
apply for a court order:
(1) when the company's affairs are being or have been conducted in a
manner unfairly prejudicial to the interests of all or some
shareholders, including the shareholder making the claim; or
(2) when any act or omission of the company is or would be so
prejudicial.
A court has wide discretion in granting relief, and may authorize civil
proceedings to be brought in the name of the company by a shareholder on
terms that the court directs. Except in these limited circumstances,
English law does not generally permit class action lawsuits by shareholders
on behalf of the company, or on behalf of other shareholders.
CERTAIN PROVISIONS RELATING TO SHARE ACQUISITIONS
(i) Amerada Hess Stockholders
Section 203 of the DGCL prohibits "business combinations", including
mergers, sales and leases of assets, issuances of securities and similar
transactions by a corporation or a subsidiary with an
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"interested stockholder" who beneficially owns 15 per cent. or more of a
corporation's voting stock, within three years after the person or entity
becomes an interested stockholder, unless:
(1) prior to the time at which the stockholder became an interested
stockholder, the business combination or the transaction that caused
the person to become an interested stockholder is approved by the
board of directors of the corporation;
(2) after completion of the transaction in which the person becomes an
interested stockholder, the interested stockholder holds at least 85
per cent. of the voting stock of the corporation not including (i)
shares held by officers and directors of interested stockholders and
(ii) shares held by specified employee benefit plans; or
(3) after the person becomes an interested stockholder, the business
combination is approved by the board and holders of at least two
thirds of the outstanding voting stock, excluding shares held by the
interested stockholder.
See "Description of Amerada Hess Shares -- Takeover Provisions."
(ii) LASMO Shareholders
In the case of a company listed on the Official List of the UK Listing
Authority, shareholder approval must be obtained for certain acquisitions
or disposals of assets involving directors, substantial shareholders or
their associates. In addition, takeovers of public companies, whether or
not listed on the Official List, are regulated by the City Code, which is:
(1) comprised of non-statutory rules unenforceable at law; and
(2) administered by the Panel, a body consisting of representatives of
City of London financial and professional institutions, which
oversees the conduct of takeovers.
The City Code provides that when:
(1) any person acquires, whether by a series of transactions over a
period of time or not, shares which, together with shares held or
acquired by persons acting in concert with him/her, represent 30 per
cent or more of the voting rights of a public company; or
(2) any person, together with persons acting in concert with him/her,
holds at least 30 per cent. but not more than 50 per cent. of the
voting rights and that person, or any person acting in concert with
him/her, acquires any additional shares which increase his/her
percentage of the voting rights;
the person must generally make an offer for all of the equity shares of the
company, whether voting or nonvoting, and any class of voting non-equity
shares of the company held by that person or any person acting in concert
with him/her, for cash, or accompanied by a cash alternative, at not less
than the highest price paid by the person or these persons for the relevant
shares during the 12 months preceding the date of the offer.
ANTI-TAKEOVER MEASURES
(i) Amerada Hess Stockholders
Under Delaware law, directors generally have a duty to act without
self-interest, on a well-informed basis and in a manner they reasonably
believe to be in the best interests of the stockholders.
Nevertheless, a Delaware court will generally apply a policy of judicial
deference to board of directors decisions to adopt anti-takeover measures
in the face of a potential takeover where the directors are able to show
that:
(1) they had reasonable grounds for believing that there was a danger to
corporate policy and effectiveness from an acquisition proposal; and
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(2) the board action taken was reasonable in relation to the threat
posed.
(ii) LASMO Shareholders
Under English law, directors of a company have a fiduciary duty to take
only those actions which are in the interests of the company. Generally,
anti-takeover measures are not actions which fall within this category.
Under the City Code, a company is prohibited from taking any action without
the approval of its shareholders at a general meeting after:
(1) a bona fide offer has been communicated to its board of directors; or
(2) its board of directors has reason to believe that a bona fide offer
might be imminent;
if that action could effectively result in the offer being frustrated or in
the shareholders being denied an opportunity to decide on its merits.
DISCLOSURE OF INTERESTS
(i) Amerada Hess Stockholders
Acquirers of common stock are subject to disclosure requirements under
Section 13(d)(1) of the Exchange Act and Rule 13d-1 thereunder, which
provide that any person who becomes the beneficial owner of more than five
per cent of the outstanding common stock of Amerada Hess must, within ten
days after such acquisition:
(1) file a Schedule 13D with the SEC disclosing specified information:
and
(2) send a copy of the Schedule 13D to Amerada Hess and to each
securities exchange on which the security is traded.
(ii) LASMO Shareholders
The Companies Act provides that anyone who acquires a material interest or
becomes aware that he/she has acquired a material interest in three per
cent. or more of any class of shares of a public company's issued share
capital carrying rights to vote at general shareholder meetings must notify
that company in writing of his/ her interest within two days. Thereafter,
any increase or decrease of a whole percentage or decrease which reduces
the interest to below three per cent. must be notified in writing to the
company.
In addition, the Companies Act provides that a public company may, by
notice in writing, require a person whom the company knows or reasonably
believes to be or to have been within the three preceding years, interested
in the company's issued voting share capital, to:
(1) confirm whether this is or is not the case; and
(2) if this is the case, to give further information that the company
requires relating to his/her interest and any other interest in the
company's shares of which he/she is aware.
The disclosure must be made within a reasonable period as specified in the
relevant notice, which may be as short as one or two days.
When the notice is served by a company on a person who is, or was,
interested in shares of the company and that person fails to give the
company any information required by the notice within the time specified in
the notice, the company may apply to the court for an order directing that
the shares in question be subject to restrictions prohibiting, among other
things:
(1) any transfer of the shares;
(2) the exercise of voting rights;
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(3) the issue of further shares; and
(4) other than a liquidation, dividends and other payments.
These restrictions may also void any agreement to transfer the shares.
LIMITATIONS ON ENFORCEABILITY OF CIVIL LIABILITIES UNDER US FEDERAL SECURITIES
LAWS
Ability to bring suits, enforce judgments and enforce US law
(i) Amerada Hess Stockholders
Amerada Hess is a US company incorporated under the laws of Delaware. All
but one of its directors and officers are residents of the United States,
and Amerada Hess has substantial assets located in the United States. As a
result, US investors generally can initiate lawsuits in the United States
against Amerada Hess and its directors and officers and can enforce
lawsuits based on US federal securities laws in US courts.
(ii) LASMO Shareholders
LASMO is an English company located in the United Kingdom. Many of the
directors and officers of LASMO are residents of the United Kingdom and not
the United States. A large portion of the assets of LASMO and its directors
and officers are located outside of the United States. As a result, US
investors may find it difficult, in a lawsuit based on the civil liability
provisions of the US federal securities laws, to:
(1) effect service within the United States upon LASMO and the directors
and officers of LASMO located outside the United States;
(2) enforce in US courts or outside the United States judgments obtained
against those persons in US courts;
(3) enforce in US courts judgments obtained against those persons in
courts in jurisdictions outside the United States; and
(4) enforce against those persons in the United Kingdom, whether in
original actions or in actions for the enforcement of judgments of US
courts, civil liabilities based solely upon the US federal securities
laws.
"Short swing" profits
(i) Amerada Hess Stockholders
Directors and officers of Amerada Hess are governed by rules under the
Exchange Act that may require directors and officers to forfeit to Amerada
Hess any "short swing" profits realized from purchases and sales, as
determined under the Exchange Act and the rules thereunder, of Amerada Hess
equity securities.
(ii) LASMO Shareholders
Directors and officers of LASMO are not subject to the Exchange Act's
"short swing" profit rules because LASMO is currently a foreign private
issuer under the Exchange Act, which is not subject to these rules.
However, directors of LASMO are currently subject to applicable UK
legislation prohibiting insider dealing. In addition, the directors have to
comply with the Model Code of the UK Listing Authority, which provides that
the considerations taken into account by directors when deciding whether or
not to deal in shares of the company of which they are a director, must not
be of a short-term nature. The Model Code also places additional
restrictions on trading during periods prior to announcement of a company's
results.
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PROXY STATEMENTS AND REPORTS
(i) Amerada Hess Stockholders
Under the Exchange Act proxy rules, Amerada Hess must comply with notice
and disclosure requirements relating to the solicitation of proxies for
stockholder meetings.
(ii) LASMO Shareholders
As a foreign private issuer, LASMO is not subject to the Exchange Act proxy
rules. However, LASMO is governed by the Companies Act and the Listing
Rules regulating notices of shareholder meetings, which provide that notice
of a shareholder meeting must be accompanied by:
(1) a shareholder circular containing an explanation of the purpose of
the meeting; and
(2) the recommendations of the board with respect to actions to be taken.
In addition, LASMO sends LASMO ordinary shareholders a copy of its annual
report and accounts, or a summary thereof.
In addition, under the Listing Rules, LASMO is required to send to
shareholders details relating to certain acquisitions, dispositions,
takeovers, mergers and offers, either made by, or in respect of, the
company, depending on their size and importance.
REPORTING REQUIREMENTS
(i) Amerada Hess Stockholders
As a US public company, Amerada Hess must file with the SEC, among other
reports and notices:
(1) an annual report on Form 10-K within 90 days after the end of each
fiscal year;
(2) quarterly reports on Form 10-Q within 45 days after the end of each
of the first three fiscal quarters of each year; and
(3) current reports on Form 8-K upon the occurrence of important
corporate events.
(ii) LASMO Shareholders
Under English law, LASMO must file the following documents, inter alia,
with Companies House:
(1) annual accounts and report, seven months after the end of the
relevant accounting period (this period is reduced to six months
under the Listing Rules);
(2) annual return, within 28 days after the date to which it is made up;
(3) forms 288 noting the resignation and appointment of directors and
secretary, within 14 days of the date of the change;
(4) auditors' notice of resignation, within 14 days of the company's
receipt of such notice; and
(5) copies of all special and extraordinary resolutions passed by the
company, within 15 days of the date the resolution was passed.
LASMO is also required to notify the London Stock Exchange of:
(1) any major new developments in its sphere of activity which are not
public knowledge and may lead to a substantial movement in its stock
price;
(2) notifications received by it from persons holding an interest in
three per cent. or more of any class of the company's share capital;
(3) any changes in its board of directors;
(4) any purchase or redemption by it of its own equity securities;
(5) interests of directors in its shares or debentures; and
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(6) changes in its capital structure.
The Listing Rules also require LASMO to publish an interim report within
ninety days of the end of each half year.
LASMO also has certain reporting obligations as a foreign private issuer
under US securities laws.
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APPENDIX IX
CERTAIN PROVISIONS OF THE COMPANIES ACT
Set out below is an extract from the Companies Act:
PART IXA
TAKEOVER OFFERS
428. TAKEOVER OFFERS
(1) In this Part of this Act "takeover offer" means an offer to acquire all
the shares, or all the shares of any class or classes, in a company
(other than shares which at the date of the offer are already held by the
offeror), being an offer on terms which are the same in relation to all
the shares to which the offer relates or, where those shares include
shares of difference classes, in relation to all the shares of each
class.
(2) In subsection (1) "shares" means shares which have been allotted on the
date of the offer but a takeover offer may include among the shares to
which it relates all or any shares that are subsequently allotted before
a date specified in or determined in accordance with the terms of the
offer.
(3) The terms offered in relation to any shares shall for the purpose of this
section be treated as being the same in relation to all the shares or, as
the case may be, all the shares of a class to which the offer relates
notwithstanding any variation permitted by subsection (4).
(4) A variation is permitted by this subsection where -
(a) the law of a country or territory outside the United Kingdom
precludes an offer of consideration in the form or any of the forms
specified in the terms in question or precludes it except after
compliance by the offeror with conditions with which he is unable to
comply or which he regards as unduly onerous; and
(b) the variation is such that the persons to whom an offer of
consideration in that form is precluded are able to receive
consideration otherwise than in that form but of substantially
equivalent value.
(5) The reference in subsection (1) to shares already held by the offeror
includes a reference to shares which he has contracted to acquire but
that shall not be construed as including shares which are the subject of
a contract binding the holder to accept the offer when it is made, being
a contract entered into by the holder either for no consideration and
under seal or for no consideration other than a promise by the offeror to
make the offer.
(6) In the application of subsection (5) to Scotland the words "and under
seal" shall be omitted.
(7) Where the terms of an offer make provision for their revision and for
acceptances on the previous terms to be treated as acceptances on the
revised terms, the revision shall not be regarded for the purposes of
this Part of this Act as the making of a fresh offer and references in
this Part of this Act to the date of the offer shall accordingly be
construed as references to the date on which the original offer was made.
(8) In this Part of this Act the "offeror" means, subject to section 430D,
the person making a takeover offer and the "company" means the company
whose shares are the subject of the offer.
429. RIGHT OF OFFEROR TO BUY OUT MINORITY SHAREHOLDERS
(1) If, in a case in which a takeover offer does not relate to shares of
different classes, the offeror has by virtue of acceptance of the offer
acquired or contracted to acquire not less than nine-tenths in
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value of the shares to which the offer relates he may give notice to the
holder of any shares to which the offer relates which the offeror has not
acquired or contracted to acquire that he desires to acquire those shares.
(2) If, in a case in which a takeover offer relates to shares of different
classes, the offeror has by virtue of acceptances of the offer acquired
or contracted to acquire not less than nine-tenths in value of the shares
of any class to which the offer relates, he may give notice to the holder
of any shares of that class which the offeror has not acquired or
contracted to acquire that he desires to acquire those shares.
(3) No notice shall be given under subsection (1) or (2) unless the offeror
has acquired or contracted to acquire the shares necessary to satisfy the
minimum specified in that subsection before the end of the period of four
months beginning with the date of the offer and no such notice shall be
given after the end of the period of two months beginning with the date
on which he has acquired or contracted to acquire shares which satisfy
that minimum.
(4) Any notice under this section shall be given in the prescribed manner;
and when the offeror gives the first notice in relation to an offer he
shall send a copy of it to the company together with a statutory
declaration by him in the prescribed form stating that the conditions for
the giving of the notice are satisfied.
(5) Where the offeror is a company (whether or not a company within the
meaning of this Act) the statutory declaration shall be signed by a
director.
(6) Any person who fails to send a copy of a notice or statutory declaration
as required by subsection (4) or makes such a declaration for the
purposes of that subsection knowing it to be false or without having
reasonable grounds for believing it to be true shall be liable to
imprisonment or a fine, or both, and for continued failure to send the
copy or declaration, to a daily default fine.
(7) If any person is charged with an offence for failing to send a copy of a
notice as required by subsection (4) it is a defence for him to prove
that he took reasonable steps for securing compliance with that
subsection.
(8) Where during the period within which a takeover offer can be accepted the
offeror acquires or contracts to acquire any of the shares to which the
offer relates but otherwise than by virtue of acceptances of the offer,
then, if -
(a) the value of the consideration for which they are acquired or
contracted to be acquired ("the acquisition consideration") does not
at that time exceed the value of the consideration specified in the
terms of the offer; or
(b) those terms are subsequently revised so that when the revision is
announced the value of the acquisition consideration, at the time
mentioned in paragraph (a) above, no longer exceeds the value of the
consideration specified in those terms,
the offeror shall be treated for the purposes of this section as having
acquired or contracted to acquire those shares by virtue of acceptances of
the offer; but in any other case those shares shall be treated as excluded
from those to which the offer relates.
430. EFFECT OF NOTICE UNDER SECTION 429
(1) The following provisions shall, subject to section 430C, have effect
where a notice is given in respect of any shares under section 429.
(2) The offeror shall be entitled and bound to acquire those shares on the
terms of the offer.
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(3) Where the terms of an offer are such as to give the holder of any shares
a choice of consideration the notice shall give particulars of the choice
and state:
(a) that the holder of the shares may within six weeks from the date of
the notice indicate his choice by a written communication sent to
the offeror at an address specified in the notice; and
(b) which consideration specified in the offer is to be taken as
applying in default of his indicating a choice as aforesaid;
and the terms of the offer mentioned in subsection (2) shall be determined
accordingly.
(4) Subsection (3) applies whether or not any time-limit or the other
conditions applicable to the choice under the terms of the offer can
still be complied with; and if the consideration chosen by the holders of
the shares:
(a) is not cash and the offeror is no longer able to provide it; or
(b) was to have been provided by a third party who is no longer bound or
able to provide it,
the consideration shall be taken to consist of an amount of cash payable
by the offeror which at the date of the notice is equivalent to the chosen
consideration.
(5) At the end of six weeks from the date of the notice the offeror shall
forthwith:
(a) send a copy of the notice to the company; and
(b) pay or transfer to the company the consideration for the shares to
which the notice relates.
(6) If the shares to which the notice relates are registered the copy of the
notice sent to the company under subsection (5)(a) shall be accompanied
by an instrument of transfer executed on behalf of the shareholder by a
person appointed by the offeror; and on receipt of that instrument the
company shall register the offeror as the holder of those shares.
(7) If the shares to which the notice relates are transferable by the
delivery of warrants or other instruments the copy of the notice sent to
the company under subsection (5)(a) shall be accompanied by a statement
to that effect, and the company shall on receipt of the statement issue
the offeror with warrants or other instruments in respect of the shares
and those already in issue in respect of the shares shall become void.
(8) Where the consideration referred to in paragraph (b) of subsection (5)
consists of shares or securities to be allotted by the offeror the
reference in that paragraph to the transfer of the consideration shall be
construed as a reference to the allotment of the shares or securities to
the company.
(9) Any sum received by a company under paragraph (b) of subsection (5) and
any other consideration received under that paragraph shall be held by
the company on trust for the person entitled to the shares in respect of
which the sum or other consideration was received.
(10) Any sum received by a company under paragraph (b) of subsection (5), and
any dividend or other sum accruing from any other consideration received
by a company under that paragraph, shall be paid into a separate bank
account, being an account the balance on which bears interest at an
appropriate rate and can be withdrawn by such notice (if any) as is
appropriate.
(11) Where after reasonable enquiry made at such intervals as are reasonable
the person entitled to any consideration held on trust by virtue of
subsection (9) cannot be found and twelve years have elapsed since the
consideration was received or the company is wound up the consideration
(together with any interest, dividend or other benefit that has accrued
from it) shall be paid into court.
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(12) In relation to a company registered in Scotland, subsections (13) and
(14) shall apply in place of subsection (11).
(13) Where after reasonable enquiry made at such intervals as are reasonable
the person entitled to any consideration held on trust by virtue of
subsection (9) cannot be found and twelve years have elapsed since the
consideration was received or the company is wound up:
(a) the trust shall terminate;
(b) the company or, as the case may be, the liquidator shall sell any
consideration other than cash and any benefit other than cash that
has accrued from the consideration; and
(c) a sum representing -
(i) the consideration so far as it is cash;
(ii) the proceeds of any sale under paragraph (b) above; and
(iii) any interest, dividend or other benefit that has accrued from
the consideration,
shall be deposited in the name of the Accountant of Court in a bank
account such as is referred to in subsection (10) and the receipt for the
deposit shall be transmitted to the Account of Court.
(14) Section 58 of the Bankruptcy (Scotland) Act 1985 (so far as consistent
with this Act) shall apply with any necessary modifications to sums
deposited under subsection (13) as that section applies to sums deposited
under section 57(1)(a) of that Act.
(15) The expenses of any such enquiry as is mentioned in subsection (11) or
(13) may be defrayed out of the money or other property held on trust for
the person or persons to whom the enquiry relates.
430A. RIGHT OF MINORITY SHAREHOLDER TO BE BOUGHT OUT BY OFFEROR
(1) If a takeover offer relates to all the shares in a company and at any
time before the end of the period within which the offer can be accepted:
(a) the offeror has by virtue of acceptances of the offer acquired or
contracted to acquire some (but not all) of the shares to which the
offer relates; and
(b) those shares, with or without any other shares in the company which
he has acquired or contracted to acquire, amount to not less than
nine-tenths in value of all the shares in the company, the holder of
any shares to which the offer relates who has not accepted the offer
may by a written communication addressed to the offeror require him
to acquire those shares.
(2) If a takeover offer relates to shares of any class or classes and at any
time before the end of the period within which the offer can be accepted:
(a) the offeror has by virtue of acceptances of the offer acquired or
contracted to acquire some (but not all) of the shares of any class
to which the offer relates; and
(b) those shares, with or without any other shares of that class which
he has acquired or contracted to acquire, amount to not less than
nine-tenths in value of all the shares of that class,
the holder of any shares of that class who has not accepted the offer may
by a written communication addressed to the offeror require him to acquire
those shares.
(3) Within one month of the time specified in subsection (1) or, as the case
may be, subsection (2) the offeror shall give any shareholder who has not
accepted the offer notice in the prescribed manner of the rights that are
exercisable by him under that subsection; and if the notice is given
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before the end of the period mentioned in that subsection it shall state
that the offer is still open for acceptance.
(4) A notice under subsection (3) may specify a period for the exercise of
the rights conferred by this section and in that event the rights shall
not be exercisable after the end of that period; but no such period shall
end less than three months after the end of the period within which the
offer can be accepted.
(5) Subsection (3) does not apply if the offeror has given the shareholder a
notice in respect of the shares in question under section 429.
(6) If the offeror fails to comply with subsection (3) he and, if the offeror
is a company, every officer of the company who is in default or to whose
neglect the failure is attributable, shall be liable to a fine and for
continued contravention, to a daily default fine.
(7) If an offeror other than a company is charged with an offence for failing
to comply with subsection (3) it is a defence for him to prove that he
took all reasonable steps for securing compliance with that subsection.
430B. EFFECT OF REQUIREMENT UNDER SECTION 430A
(1) The following provisions shall, subject to section 430C, have effect
where a shareholder exercises his rights in respect of any shares under
section 430A.
(2) The offeror shall be entitled and bound to acquire those shares on the
terms of the offer or on such other terms as may be agreed.
(3) Where the terms of an offer are such as to give the holder of shares a
choice of consideration the holder of the shares may indicate his choice
when requiring the offeror to acquire them and the notice given to the
holder under section 430A(3) -
(a) shall give particulars of the choice and of the rights conferred by
this subsection; and
(b) may state which consideration specified in the offer is to be taken
as applying in default of his indicating a choice;
and the terms of the offer mentioned in subsection (2) shall be determined
accordingly.
(4) Subsection (3) applies whether or not any time-limit or other conditions
applicable to the choice under the terms of the offer can still be
complied with; and if the consideration chosen by the holder of the
shares -
(a) is not cash and the offeror is no longer able to provide it; or
(b) was to have been provided by a third party who is no longer bound or
able to provide it,
the consideration shall be taken to consist of an amount of cash payable
by the offeror which at the date where the holder of the shares requires
the offeror to acquire them is equivalent to the chosen consideration.
430C. APPLICATIONS TO THE COURT
(1) Where a notice is given under section 429 to the holder of any shares the
court may, on an application made by him within six weeks from the date
on which the notice was given -
(a) order that the offeror shall not be entitled and bound to acquire
the shares; or
(b) specify terms of acquisition different from those of the offer.
(2) If an application to the court under subsection (1) is pending at the end
of the period mentioned in subsection (5) of section 430 that subsection
shall not have effect until the application has been disposed of.
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(3) Where the holder of any shares exercises his rights under section 430A
the court may, on an application made by him or the offeror, order that
the terms on which the offeror is entitled and bound to acquire the
shares shall be such as the court thinks fit.
(4) No order for costs or expenses shall be made against a shareholder making
an application under subsection (1) or (3) unless the court considers -
(a) that the application was unnecessary, improper or vexations; or
(b) that there has been unreasonable delay in making the application or
unreasonable conduct on his part in conducting the proceedings on
the application.
(5) Where a takeover offer has not been accepted to the extent necessary for
entitling the offeror to give notices under subsection (1) or (2) of
section 429 the court may, on the application of the offeror, make an
order authorising him to give notices under that subsection if satisfied
-
(a) that the offeror has after reasonable enquiry been unable to trace
one or more of the persons holding shares to which the offer
relates;
(b) that the shares which the offeror has acquired or contracted to
acquire by virtue of acceptances of the offer, together with the
shares held by the person or persons mentioned in paragraph (a),
amount to not less than the minimum specified in that subsection;
and
(c) that the consideration offered is fair and reasonable;
but the court shall not make an order under this subsection unless it
considers that it is just and equitable to do so having regard, in
particular, to the number of shareholders who have been traced but who
have not accepted the offer.
430D. JOINT OFFERS
(1) A takeover offer may be made by two or more persons jointly and in that
event this Part of this Act has effect with the following modifications.
(2) The conditions for the exercise of the rights conferred by sections 429
and 430A shall be satisfied by the joint offerors acquiring or
contracting to acquire the necessary shares jointly (as respects
acquisitions by virtue of acceptances of the offer) and either jointly or
separately (in other cases); and, subject to the following provisions,
the rights and obligations of the offeror under those sections and
sections 430 and 430B shall be respectively joint rights and joint and
several obligations of the joint offerors.
(3) It shall be a sufficient compliance with any provision of those sections
requiring or authorising a notice or other document to be given or sent
by or to the joint offerors that it is given or sent by or to any of
them; but the statutory declaration required by section 429(4) shall be
made by all of them and, in the case of a joint offeror being a company,
signed by a director of that company.
(4) In sections 428, 430(8) and 430E references to the offeror shall be
construed as references to the joint offerors or any of them.
(5) In sections 430(6) and (7) references to the offeror shall be construed
as references to the joint offerors or such of them as they may
determine.
(6) In sections 430(4)(a) and 430B(4)(a) references to the offeror being no
longer able to provide the relevant consideration shall be construed as
references to none of the joint offerors being able to do so.
(7) In section 430C references to the offeror shall be construed as
references to the joint offerors except that any application under
subsection (3) or (5) may be made by any of them and the reference in
subsection (5)(a) to the offeror having been unable to trace one or more
of the
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persons holding shares shall be construed as a reference to none of the
offerors having been able to do so.
430E. ASSOCIATES
(1) The requirement in section 428(1) that a takeover offer must extend to
all the shares, or all the shares of any class or classes, in a company
shall be regarded as satisfied notwithstanding that the offer does not
extend to shares which associates of the offeror hold or have contracted
to acquire; but, subject to subsection (2), shares which any such
associate holds or has contracted to acquire, whether at the time when
the offer is made or subsequently, shall be disregarded for the purposes
of any reference in this Part of this Act to the shares to which a
takeover offer relates.
(2) Where during the period within which a takeover offer can be accepted any
associate of the offeror acquires or contracts to acquire any of the
shares to which the offer relates, then, if the condition specified in
subsection 8(a) or (b) of section 429 is satisfied as respects those
shares they shall be treated for the purposes of that section as shares
to which the offer relates.
(3) In section 430(A)(1)(b) and (2)(b) the reference to shares which the
offeror has acquired or contracted to acquire shall include a reference
to shares which any associate of his has acquired or contracted to
acquire.
(4) In this clause "associate", in relation to an offeror, means -
(a) a nominee of the offeror;
(b) a holding company, subsidiary or fellow subsidiary of the offeror or
a nominee of such a holding company, subsidiary or fellow
subsidiary;
(c) a body corporate in which the offeror is substantially interested;
or
(d) any person who is, or is a nominee of, a party to an agreement with
the offeror for the acquisition of, or of an interest in, the shares
which are the subject of the takeover offer, being an agreement
which includes provisions imposing obligations or restrictions such
as are mentioned in section 204(2)(a).
(5) For the purposes of subsection (4)(b) a company is a fellow subsidiary of
another body corporate if both are subsidiaries of the same body
corporate but neither is a subsidiary of the other.
(6) For the purposes of subsection (4)(c) an offeror has a substantial
interest in a body corporate if -
(a) that body or its directors are accustomed to act in accordance with
his directions or instructions; or
(b) he is entitled to exercise or control the exercise of one-third or
more of the voting power at general meetings of that body.
(7) Subsections (5) and (6) of section 204 shall apply to subsection (4)(d)
above as they apply to that section and subsections (3) and (4) of
section 203 shall apply for the purposes of subsection (6) above as they
apply for the purposes of subsection (2)(b) of that section.
(8) Where the offeror is an individual his associates shall also include his
spouse and any minor child or step-child of his.
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430F. CONVERTIBLE SECURITIES
(1) For the purposes of this Part of this Act securities of a company shall
be treated as shares in the company if they are convertible into or
entitle the holder to subscribe for such shares; and references to the
holder of shares or a shareholder shall be construed accordingly.
(2) Subsection (1) shall not be construed as requiring any securities to be
treated -
(a) as shares of the same class as those into which they are convertible
or for which the holder is entitled to subscribe; or
(b) as shares of the same class as other securities by reason only that
the shares into which they are convertible or for which the holder
is entitled to subscribe are of the same class.
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APPENDIX X
DEFINITIONS
The following definitions apply throughout this Offer Document, unless the
context otherwise requires:
"ACCEPTANCE CONDITION" the Condition set out in paragraph (a) of Part A of
Appendix I to this document;
"ACCEPTANCE FORM" the Form of Acceptance and, with respect to LASMO
ADSs only, the Letter of Transmittal and the Notice
of Guaranteed Delivery;
"ADS" an American Depositary Share;
"AGENT'S MESSAGE" a message transmitted by a Book-Entry Transfer
Facility to, and received by, the US Depositary and
forming part of a Book-Entry Confirmation that
states that such Book-Entry Facility has received
an express acknowledgement from the participant in
such Book-Entry Facility tendering the interests in
LASMO ADSs that such participant has received and
agrees to be bound by the terms of the Letter of
Transmittal and that Amerada Hess may enforce such
agreement against the participant;
"AMERADA HESS" Amerada Hess Corporation, a Delaware corporation;
"AMERADA HESS GROUP" Amerada Hess and its subsidiary undertakings and,
where the context permits, each of them;
"AMERADA HESS SHARE" a share of common stock of Amerada Hess with par
value of $1.00;
"ANNOUNCEMENT" the press announcement relating to the Offer dated
6 November 2000;
"BOE" barrel of oil equivalent which is either a barrel
of oil or 6Mcf of natural gas;
"BOOK-ENTRY CONFIRMATION" the confirmation of a book-entry transfer of LASMO
ADSs into the US Depositary's account at a
Book-Entry Transfer Facility;
"BOOK-ENTRY TRANSFER
FACILITY" each of The Depositary Trust Company and any other
book-entry transfer facility, collectively referred
to as the "BOOK-ENTRY TRANSFER FACILITIES";
"BUSINESS DAY" any day, other than Saturday, Sunday or a UK public
holiday and shall consist of the time period from
12.01 am until and including 12.00 midnight (London
time);
"CASH FLOW PER SHARE" net income before capital gains plus minorities,
deferred tax, depreciation and amortisation on a
per share basis;
"CERTIFICATED" OR
"CERTIFICATED
FORM" in relation to a share or other security, a share
or other security title to which is recorded in the
relevant register of the share or other security as
being held in certificated form;
"CITY CODE" The City Code on Takeovers and Mergers;
"CLOSING DATE" 3:00 pm (London time), 10:00 am (New York City
time) on 12 January 2001 or any later time and/or
date which Amerada Hess may from time to time (at
its discretion in accordance with the City Code or
with the consent of the Panel and in accordance
with the Exchange Act) have announced as the time
and date at which the Offer
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will cease to be open for acceptance unless (a) all
the Conditions are at that time satisfied,
fulfilled or, to the extent permitted, waived or
(b) at or before that time and date Amerada Hess
specifies a later time and date for the
satisfaction, fulfilment or, to the extent
permitted, waiver of the Conditions;
"CLOSING PRICE" the closing middle market quotation of a LASMO
Share as derived from the Daily Official List or
the last reported sale price of an Amerada Hess
Share as reported on the New York Stock Exchange;
"COMPANIES ACT" the United Kingdom Companies Act 1985, as amended;
"CONDITIONS" the conditions of the Offer set out in Part A of
Appendix I to this document and "CONDITION" means
any one of them;
"CREST" the relevant systems (as defined in the
Regulations) operated by CRESTCo;
"CRESTCO" CRESTCo Limited;
"CREST MANUAL" the manual issued by CRESTCo from time to time;
"CREST MEMBER" a person who has been admitted by CRESTCo as a
system-member (as defined in the Regulations);
"CREST PARTICIPANT" a person who is, in relation to CREST, a
system-participant (as defined in the Regulations);
"CREST SPONSOR" a person who is, in relation to CREST, a sponsoring
system-
participant (as defined in the Regulations);
"CREST SPONSORED MEMBER" a CREST member admitted to CREST as a sponsored
member under the sponsorship of a CREST sponsor;
"DAILY OFFICIAL LIST" the Daily Official List of the London Stock
Exchange;
"DGCL" Delaware General Corporation Law;
"DIRECTOR UNDERTAKINGS" irrevocable undertakings given by each of the
directors of LASMO to Amerada Hess and Goldman
Sachs, as discussed in paragraph 6 of Appendix VI;
"DISTRIBUTOR" has the meaning set forth in Rule 902 under the
Securities Act;
"ELIGIBLE INSTITUTION" a financial institution which is a participant in
the Securities Transfer Agents Medallion Program,
the New York Stock Exchange Medallion Program, or
the Stock Exchange Medallion Program;
"EXCHANGE ACT" the US Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated
thereunder;
"FORM OF ACCEPTANCE" the form of acceptance relating to the Offer for
use by holders of LASMO Shares;
"GOLDMAN SACHS" Goldman Sachs International;
"GUARANTEED DELIVERY
PROCEDURES" has the meaning given to that term in paragraph
12(h) of Part B of Appendix I to this document;
"HOLDER OF LASMO ADSS" a holder of LASMO ADRs and/or a holder of LASMO
ADSs;
"HSR ACT" the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended;
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"INFORMATION AGENT" D.F. King & Co., Inc.;
"INITIAL OFFER PERIOD" the period during which a LASMO Securityholder who
has accepted or tendered into the Offer will be
able to withdraw his or her acceptance or tender,
being the period from the date of this document
until the earlier of (a) the time and date (not
being before 3.00pm (London time), 10.00am (New
York City time) on 12 January 2001) on which all
the Conditions are satisfied, fulfilled or, to the
extent permitted, waived and (b) the time and date
on which the Offer lapses;
"INTERNAL REVENUE CODE" The United States Internal Revenue Code of 1986, as
amended;
"IRREVOCABLE UNDERTAKINGS" undertakings given by Electrafina S.A. and Schroder
Investment Management Limited to Amerada Hess and
Goldman Sachs, as discussed in paragraph 6 of
Appendix VI;
"LASMO" LASMO plc;
"LASMO ADRS" American Depositary Receipts evidencing interests
in LASMO ADSs;
"LASMO ADSS" American Depositary Shares of LASMO, each
representing 3 LASMO Shares;
"LASMO EQUITY PLAN" the LASMO Equity Plan;
"LASMO GROUP" LASMO and its subsidiary undertakings and, where
the context permits, each of them;
"LASMO SECURITIES" LASMO Shares and LASMO ADSs;
"LASMO SECURITYHOLDERS" holders of LASMO Securities;
"LASMO SHAREHOLDERS" holders of LASMO Shares;
"LASMO SHARE OPTION
SCHEMES" the LASMO Share Option Scheme dated 1984, the
Monument 1996 Share Option Scheme, the LASMO
International Share Option Plan, the Monument Oil
and Gas Share Option Scheme dated 1987, the LASMO
Share Appreciation Rights Plan and the LASMO SAYE
Plan;
"LASMO SHARES" the ordinary shares of 25p each in the capital of
LASMO (including those represented by ADSs but not,
for the avoidance of doubt, such ADSs)
unconditionally allotted or issued at the date of
this document and any further such shares which are
unconditionally allotted or issued while the Offer
remains open for acceptances or on or before such
earlier time and/or date as Amerada Hess may,
subject to the City Code, US securities laws and/or
with the consent of the Panel, decide;
"LETTER OF TRANSMITTAL" the letter of transmittal relating to the Offer for
use by holders of LASMO ADSs;
"LIBOR" the London Interbank Offered Rate;
"LISTING RULES" the Listing Rules of the UK Listing Authority;
"LOAN NOTES" the floating rate unsecured loan notes of Amerada
Hess to be issued pursuant to the Loan Note
Alternative, having the rights and being subject to
the restrictions summarised in Appendix II;
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"LOAN NOTE ALTERNATIVE" the arrangements pursuant to which LASMO
Shareholders (other than US persons and certain
overseas shareholders) who validly accept the Offer
may elect to receive Loan Notes instead of some or
all of the cash consideration to which they would
otherwise be entitled under the Offer;
"LOAN NOTE INSTRUMENT" the loan note instrument constituting the Loan
Notes, the terms of which are summarised in
Appendix II to this document;
"LONDON STOCK EXCHANGE" the London Stock Exchange plc;
"MCF" one thousand cubic feet;
"MEMBER ACCOUNT ID" the identification code or number attached to any
member account in CREST;
"METHODPLAN" Methodplan Limited, a subsidiary of LASMO;
"METHODPLAN SHARES" LASMO Shares beneficially owned by Methodplan;
"MIX AND MATCH ELECTION" an election available to accepting LASMO
Securityholders to vary the proportion of new
Amerada Hess Shares and cash receivable in
consequence of or under the Offer to the extent
that other LASMO Securityholders make opposite
elections;
"NOTEHOLDER" a holder of Loan Notes;
"NOTICE OF GUARANTEED
DELIVERY" the Notice of Guaranteed Delivery relating to the
Offer for use by holders of LASMO ADSs;
"NYSE" The New York Stock Exchange;
"OFFER" the recommended offer made by Goldman Sachs, on
behalf of Amerada Hess, outside of the United
States and by Amerada Hess on its own behalf in the
United States, to acquire the LASMO Securities, on
the terms and conditions set out in this document
and the relevant Acceptance Form including, where
the context so requires, any subsequent revision,
variation, extension or renewal of, or election
available under, such offer;
"OFFER PERIOD" has the meaning set out in the City Code;
"OFFICIAL LIST" the Official List of the UK Listing Authority;
"PANEL" the Panel on Takeovers and Mergers, the body which
regulates takeover offers in the UK;
"PARTICIPANT ID" the identification code or membership number used
in CREST to identify a CREST member or other CREST
participant;
"REGISTRATION STATEMENT" the Registration Statement on Form S-4, of which
this Offer Document forms a part, relating to the
Amerada Hess Shares offered as consideration
pursuant to the Offer and filed by Amerada Hess
with the SEC under the Securities Act;
"REGULATION" has the meaning given to it in Appendix I, Part A
paragraph (c);
"REGULATIONS" the Uncertificated Securities Regulations 1995 (SI
1995 No. 95/ 3272);
"RELEVANT LASMO SHARES" has the meaning given to that term in paragraph
11(d) of Part B to Appendix I;
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<PAGE> 235
"SEC" the United States Securities and Exchange
Commission;
"SECURITIES ACT" the United States Securities Act of 1933, as
amended, and the rules and regulations promulgated
thereunder;
"SUBSEQUENT OFFER PERIOD" the period commencing immediately after the end of
the Initial Offer Period (being the date on which
all the Conditions are satisfied, fulfilled or, to
the extent permitted, waived) during which the
Offer will remain open for acceptance;
"SUBSIDIARY", "SUBSIDIARY
UNDERTAKING", "ASSOCIATED
UNDERTAKING" AND
"UNDERTAKING" shall have the meanings given by the Companies Act
(but for this purpose ignoring paragraph 20(1)(b)
of Schedule 4A thereof);
"TTE INSTRUCTION" a transfer to escrow instruction as defined by the
CREST Manual issued by CRESTCo;
"UK GAAP" UK generally accepted accounting practices and
principles;
"UK LISTING AUTHORITY" The Financial Services Authority in its capacity as
competent authority under the Financial Services
Act 1986;
"UK RECEIVING AGENT" Computershare Services PLC;
"UNCERTIFICATED" OR
"UNCERTIFICATED FORM" in relation to a share or other security, a share
or other security title to which is recorded in the
relevant register of the share or security as being
held in uncertificated form in CREST, and title to
which, by virtue of the Regulations, may be
transferred by means of CREST;
"US BUSINESS DAY" any day, other than Saturday, Sunday or a US
federal holiday and shall consist of the time
period from 12.01 am until and including 12.00
midnight (New York City time);
"US DEPOSITARY" The Bank of New York;
"US GAAP" US generally accepted accounting practices and
principles;
"US HOLDER" a holder of LASMO Securities that is (i) a citizen
or resident of the United States, (ii) a
partnership or corporation created or organized in
or under the laws of the United States or any State
thereof (including the District of Columbia), (iii)
an estate the income of which is subject to US
federal income taxation regardless of its source or
(iv) a trust if such trust validly elects to be
treated as a United States person for US federal
income tax purposes or if (x) a court within the
United States is able to exercise primary
supervision over its administration and (y) one or
more United States persons have the authority to
control all of the substantial decisions of such
trust. A "Non-US holder" is a beneficial owner of
LASMO Shares, LASMO ADSs, Amerada Hess shares, or
Loan Notes, as the case may be, that is not a US
holder.
"US PERSON" has the same meaning as set forth in Rule 902 under
the US Securities Act;
"WIDER AMERADA HESS
GROUP" Amerada Hess and its subsidiaries, subsidiary
undertakings and associated undertakings (including
any joint venture, partnership, firm or company in
which any member of the Amerada Hess Group is
interested) and any other undertaking in which
Amerada Hess and
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such subsidiaries, subsidiary undertakings and
associated undertakings (aggregating their
interests) have a substantial interest;
"WIDER LASMO GROUP" LASMO and its subsidiaries, subsidiary undertakings
and associated undertakings (including any joint
venture, partnership, firm or company in which any
member of the LASMO Group is interested) and any
other undertaking in which LASMO or any such
subsidiaries, subsidiary undertakings or associated
undertakings (aggregating their interests) have a
substantial interest;
"L" OR "POUNDS STERLING" OR
"PENCE" OR "P" the lawful currency of the United Kingdom;
"$" OR "US DOLLARS" OR
"CENTS" OR "C" the lawful currency of the United States.
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ACCEPTANCES IN RESPECT OF LASMO SHARES
Duly completed Forms of Acceptance, accompanied by certificates in respect of
LASMO Shares and/or other documents of title, should be sent or delivered to the
UK Receiving Agent or the US Depositary, as appropriate, at one of the addresses
set out below.
THE UK RECEIVING AGENT FOR THE OFFER IS:
COMPUTERSHARE SERVICES PLC
For information call:
0870 7030056
<TABLE>
<S> <C>
By mail or by hand: By hand
(during normal business hours only):
PO Box 859 7th Floor, Jupiter House
The Pavilions Triton Court
Bridgwater Road 14 Finsbury Square
Bristol BS99 1XZ London EC2A 1BR
</TABLE>
ACCEPTANCES IN RESPECT OF LASMO ADSS
Manually signed facsimile copies of the Letter of Transmittal will be accepted.
Duly completed Letters of Transmittal, accompanied by LASMO ADRs in respect of
LASMO ADSs and any other required documents should be sent or delivered by each
holder of LASMO ADSs to the US Depositary at one of the addresses set out below.
THE US DEPOSITARY FOR THE OFFER IS:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand or Overnight Courier:
Tender & Exchange (for Eligible Institutions Tender & Exchange
Department Only) Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York New York, New York 10286
10286-1248
</TABLE>
for Confirmation Only
Telephone:
(212) 815-6156
<PAGE> 238
FURTHER INFORMATION
Any questions or requests for assistance or additional copies of this Offer
Document, the Form of Acceptance, the Letter of Transmittal and the Notice of
Guaranteed Delivery may be directed to D.F. King & Co., Inc., the Information
Agent, at the addresses and telephone numbers listed below or to the US
Depositary or the UK Receiving Agent at their respective addresses and telephone
numbers mentioned above. You may also contact your local broker, dealer,
commercial bank or trust company or other nominee for assistance concerning the
Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
D.F. KING & CO., INC
<TABLE>
<S> <C>
UNITED KINGDOM UNITED STATES
2 London Wall Buildings, 77 Water Street,
2nd Floor 20th Floor
London Wall New York,
London EC2M 5PP New York 10005
Freephone: 0800 169 6962 Toll-Free: +1 (800) 628 8536
Collect: +44 (0)20 7920 9700 Collect: +1 (212) 269 5550
</TABLE>
<PAGE> 239
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Amerada Hess Corporation is a Delaware corporation subject to the
applicable provisions of the Delaware General Corporation Law (the "DGCL")
related to the limitation of director liability, indemnification of directors
and officers and insurance against director and officer liability maintained by
a corporation on behalf of directors and officers.
The DGCL permits a corporation's certificate of incorporation to eliminate
or limit the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director
provided that the relevant provision does not eliminate or limit the liability
of a director (a) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (b) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (c) for
unlawful payment of a dividend or approval of an unlawful stock purchase or
redemption or (d) for any transaction from which the director derived an
improper personal benefit.
The DGCL permits a corporation to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation), by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
the relevant conduct was unlawful.
In any threatened, pending or completed action or suit by or in the right
of a corporation, the DGCL permits a corporation to indemnify any person who was
or is a party or is threatened to be made a party to any such action or suit by
reason of the fact that such person acted in any of the capacities set forth
above against expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection with the defense or settlement of such
action if such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the corporation,
except that no indemnification may be made in respect of any claim or issue as
to which such person shall have been adjudged liable to the corporation unless
and only to the extent that the Court of Chancery or the court in which such
action was brought determines on application that, despite the adjudication of
liability but in view of all the circumstances of the case, the person is fairly
and reasonably entitled to indemnity for such expenses as the Court of Chancery
or such other court deems proper.
The DGCL requires a corporation to indemnify a director or officer who has
been successful on the merits or otherwise in the defense of any action, suit or
proceeding referred to in the previous two paragraphs or in defense of any
claim, issue or matter therein against expenses actually and reasonably incurred
in connection therewith. Corporations may pay expenses incurred by an officer or
director in defending any proceeding in advance of the final disposition of the
matter on receipt of an undertaking by or on behalf of such person to repay such
amount if it is ultimately determined that the person is not entitled to
indemnity. The indemnification provided for by the DGCL is not exclusive of any
other rights to which the indemnified party may be entitled under any bylaw,
agreement, vote of stockholders or disinterested directors or otherwise.
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Amerada Hess Corporation's Restated Certificate of Incorporation and
By-Laws provide for the indemnification by Amerada Hess Corporation of each
director and officer of Amerada Hess Corporation to the fullest extent permitted
by the DGCL.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
------- ------------------------
<S> <C>
3.1 Restated Certificate of Incorporation of Registrant.
Incorporated by reference to Exhibit 19 of Form 10-Q of
Registrant for the three months ended September 30, 1988.
3.2 By-Laws of Registrant. Incorporated by reference to Exhibit
3(2) of Form 10-K of Registrant for the fiscal year ended
December 31, 1985.
5 Opinion of White & Case LLP regarding the validity of the
securities being registered.*
8.1 Opinion of White & Case LLP regarding United States federal
income taxation.*
8.2 Opinion of Freshfields Bruckhaus Deringer regarding United
Kingdom taxation.*
23.1 Consent of Ernst & Young LLP, auditors for Amerada Hess
Corporation.
23.2 Consent of Ernst & Young, auditors for LASMO plc.
23.3 Consent of White & Case LLP (included in the opinion filed
as Exhibit 5 to this Registration Statement).*
24.1 Power of Attorney of certain officers and directors of
Amerada Hess Corporation (included on the signature pages
hereof).*
99.1 Long Form Press Release, dated as of November 6, 2000. The
Long Form Press Release was filed by Registrant on Form 8-K
on November 6, 2000 and is incorporated herein by reference.
99.2 Short Form Press Release, dated as of November 6, 2000. The
Short Form Press Release was filed by Registrant on Form 8-K
on November 6, 2000 and is hereby incorporated by reference.
99.3 Letter Agreement dated as of November 6, 2000 by and among
Registrant, Goldman Sachs International, LASMO plc and
Joseph Darby. Incorporated by reference to Exhibit 3 to the
Schedule 13D filed by Registrant on November 15, 2000.
99.4 Letter Agreement dated as of November 6, 2000 by and among
Registrant, Goldman Sachs International, LASMO plc and
Thierry Hughes Baudouin Jean-Baptiste de Rudder.
Incorporated by reference to Exhibit 4 to the Schedule 13D
filed by Registrant on November 15, 2000.
99.5 Letter Agreement dated as of November 6, 2000 by and among
Registrant, Goldman Sachs International, LASMO plc and Paul
Colbeck Murray. Incorporated by reference to Exhibit 5 to
the Schedule 13D filed by Registrant on November 15, 2000.
99.6 Letter Agreement dated as of November 6, 2000 by and among
Registrant, Goldman Sachs International, LASMO plc and Roy
Gregory Reynolds. Incorporated by reference to Exhibit 6 to
the Schedule 13D filed by Registrant on November 15, 2000.
99.7 Letter Agreement dated as of November 6, 2000 by and among
Registrant, Goldman Sachs International, LASMO plc and Nigel
Victor Turnbull. Incorporated by reference to Exhibit 7 to
the Schedule 13D filed by Registrant on November 15, 2000.
99.8 Letter Agreement dated as of November 6, 2000 by and among
Registrant, Goldman Sachs International, LASMO plc and
Timothy Pienne Brennand. Incorporated by reference to
Exhibit 8 to the Schedule 13D filed by Registrant on
November 15, 2000.
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
------- ------------------------
<S> <C>
99.9 Letter Agreement dated as of November 6, 2000 by and among
Registrant, Goldman Sachs International, LASMO plc and Hugh
Edward Norton. Incorporated by reference to Exhibit 9 to the
Schedule 13D filed by Registrant on November 15, 2000.
99.10 Letter Agreement dated as of November 6, 2000 by and among
Registrant, Goldman Sachs International, LASMO plc and
Antony Peverell Hichens. Incorporated by reference to
Exhibit 10 to the Schedule 13D filed by Registrant on
November 15, 2000.
99.11 Inducement Agreement dated as of November 6, 2000 by and
among Registrant and LASMO plc. Incorporated by reference to
Exhibit 11 to the Schedule 13D filed by Registrant on
November 15, 2000.
99.12 Letter Agreement dated as of November 6, 2000 by and among
Registrant, Goldman Sachs International and Electrafina S.A.
Incorporated by reference to Exhibit 12 to the Schedule 13D
filed by Registrant on November 15, 2000.
99.13 Letter Agreement dated as of November 6, 2000 by and among
Registrant, Goldman Sachs International and Schroder
Investment Management Limited. Incorporated by reference to
Exhibit 13 to the Schedule 13D filed by Registrant on
November 15, 2000.
99.14 Amended and Restated Credit Agreement dated as of November
14, 2000 among Amerada Hess Corporation, the Lenders Party
thereto and Goldman Sachs Credit Partners L.P. as joint book
runner, joint lead arranger and sole syndication agent,
Chase Securities, Inc. as joint book runner and joint lead
arranger and The Chase Manhattan Bank, N.A., as
administrative agent in respect of $1,000,000,000 Revolving
Credit Facility ("Facility A").*
99.15 Amended and Restated Credit Agreement dated as of November
14, 2000 among Amerada Hess Corporation, the Lenders Party
thereto and Goldman Sachs Credit Partners L.P. as joint book
runner, joint lead arranger and sole syndication agent,
Chase Securities, Inc. as joint book runner and joint lead
arranger and The Chase Manhattan Bank, N.A., as
administrative agent in respect of $2,000,000,000 Revolving
Credit Facility ("Facility B").*
99.16 Letter of Transmittal.
99.17 Form of Acceptance.
99.18 Notice of Guaranteed Delivery.
99.19 Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
99.20 Letter to Clients.
99.21 Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
99.22 Summary newspaper advertisement in The Wall Street Journal.
99.23 Newspaper advertisement in The Financial Times.
99.24 Consent of Schroder Salomon Smith Barney, financial advisor
to LASMO.
99.25 Consent of Goldman Sachs International, financial advisor to
Amerada Hess.
</TABLE>
---------------
*Previously filed.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
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<PAGE> 242
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) If the registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include any
financial statements required by Item 8.A. of Form 20-F at the start of any
delayed offering or throughout a continuous offering. Financial statements
and information otherwise required by Section 10(a)(3) of the Act need not
be furnished, provided, that the registrant includes in the prospectus, by
means of a post-effective amendment, financial statements required pursuant
to this paragraph (a)(4) and other information necessary to ensure that all
other information in the prospectus is at least as current as the date of
those financial statements. Notwithstanding the foregoing, with respect to
registration statements on Form F-3, a post-effective amendment need not be
filed to include financial statements and information required by Section
10(a)(3) of the Act or Rule 3-19 of this chapter if such financial
statements and information are contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the Form F-3.
(5) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(6) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request.
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<PAGE> 243
(7) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
(8) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.
(9) That every prospectus: (i) that is filed pursuant to paragraph (8)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to
the registration statement and will not be used until such amendment is
effective, and that, for purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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<PAGE> 244
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 13th day of December, 2000.
AMERADA HESS CORPORATION
By: /s/ J. BARCLAY COLLINS II
--------------------------------------
Name: J. Barclay Collins II
Title: Executive Vice President and
General Counsel
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ JOHN B. HESS* Director, Chairman of the Board and December 13, 2000
------------------------------------- Chief Executive Officer
John B. Hess (Principal Executive Officer)
/s/ W.S.H. LAIDLAW* Director, President and December 13, 2000
------------------------------------- Chief Operating Officer
W.S.H. Laidlaw
/s/ NICHOLAS F. BRADY* Director December 13, 2000
-------------------------------------
Nicholas F. Brady
/s/ J. BARCLAY COLLINS II* Director December 13, 2000
-------------------------------------
J. Barclay Collins II
/s/ PETER S. HADLEY* Director December 13, 2000
-------------------------------------
Peter S. Hadley
/s/ EDITH E. HOLIDAY* Director December 13, 2000
-------------------------------------
Edith E. Holiday
/s/ WILLIAM R. JOHNSON* Director December 13, 2000
-------------------------------------
William R. Johnson
/s/ THOMAS H. KEAN* Director December 13, 2000
-------------------------------------
Thomas H. Kean
/s/ FRANK A. OLSON* Director December 13, 2000
-------------------------------------
Frank A. Olson
/s/ ROGER B. ORESMAN* Director December 13, 2000
-------------------------------------
Roger B. Oresman
</TABLE>
II-6
<PAGE> 245
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ JOHN Y. SCHREYER* Director, Executive Vice President and December 13, 2000
------------------------------------- Chief Financial Officer (Principal
John Y. Schreyer Accounting and Financial Officer)
/s/ WILLIAM I. SPENCER* Director December 13, 2000
-------------------------------------
William I. Spencer
/s/ ROBERT N. WILSON* Director December 13, 2000
-------------------------------------
Robert N. Wilson
/s/ ROBERT F. WRIGHT* Director December 13, 2000
-------------------------------------
Robert F. Wright
</TABLE>
* By: /s/ J. BARCLAY COLLINS II
-----------------------------------------------------
J. Barclay Collins II
Attorney-in-fact
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<PAGE> 246
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
------- ------------------------
<S> <C>
3.1 Restated Certificate of Incorporation of Registrant.
Incorporated by reference to Exhibit 19 of Form 10-Q of
Registrant for the three months ended September 30, 1988.
3.2 By-Laws of Registrant. Incorporated by reference to Exhibit
3(2) of Form 10-K of Registrant for the fiscal year ended
December 31, 1985.
5 Opinion of White & Case LLP regarding the validity of the
securities being registered.*
8.1 Opinion of White & Case LLP regarding United States federal
income taxation.*
8.2 Opinion of Freshfields Bruckhaus Deringer regarding United
Kingdom taxation.*
23.1 Consent of Ernst & Young LLP, auditors for Amerada Hess
Corporation.
23.2 Consent of Ernst & Young, auditors for LASMO plc.
23.3 Consent of White & Case LLP (included in the opinion filed
as Exhibit 5 to this Registration Statement).*
24.1 Power of Attorney of certain officers and directors of
Amerada Hess Corporation (included on the signature pages
hereof).*
99.1 Long Form Press Release, dated as of November 6, 2000. The
Long Form Press Release was filed by Registrant on Form 8-K
on November 6, 2000 and is incorporated herein by reference.
99.2 Short Form Press Release, dated as of November 6, 2000. The
Short Form Press Release was filed by Registrant on Form 8-K
on November 6, 2000 and is hereby incorporated by reference.
99.3 Letter Agreement dated as of November 6, 2000 by and among
Registrant, Goldman Sachs International, LASMO plc and
Joseph Darby. Incorporated by reference to Exhibit 3 to the
Schedule 13D filed by Registrant on November 15, 2000.
99.4 Letter Agreement dated as of November 6, 2000 by and among
Registrant, Goldman Sachs International, LASMO plc and
Thierry Hughes Baudouin Jean-Baptiste de Rudder.
Incorporated by reference to Exhibit 4 to the Schedule 13D
filed by Registrant on November 15, 2000.
99.5 Letter Agreement dated as of November 6, 2000 by and among
Registrant, Goldman Sachs International, LASMO plc and Paul
Colbeck Murray. Incorporated by reference to Exhibit 5 to
the Schedule 13D filed by Registrant on November 15, 2000.
99.6 Letter Agreement dated as of November 6, 2000 by and among
Registrant, Goldman Sachs International, LASMO plc and Roy
Gregory Reynolds. Incorporated by reference to Exhibit 6 to
the Schedule 13D filed by Registrant on November 15, 2000.
99.7 Letter Agreement dated as of November 6, 2000 by and among
Registrant, Goldman Sachs International, LASMO plc and Nigel
Victor Turnbull. Incorporated by reference to Exhibit 7 to
the Schedule 13D filed by Registrant on November 15, 2000.
99.8 Letter Agreement dated as of November 6, 2000 by and among
Registrant, Goldman Sachs International, LASMO plc and
Timothy Pienne Brennand. Incorporated by reference to
Exhibit 8 to the Schedule 13D filed by Registrant on
November 15, 2000.
99.9 Letter Agreement dated as of November 6, 2000 by and among
Registrant, Goldman Sachs International, LASMO plc and Hugh
Edward Norton. Incorporated by reference to Exhibit 9 to the
Schedule 13D filed by Registrant on November 15, 2000.
99.10 Letter Agreement dated as of November 6, 2000 by and among
Registrant, Goldman Sachs International, LASMO plc and
Antony Peverell Hichens. Incorporated by reference to
Exhibit 10 to the Schedule 13D filed by Registrant on
November 15, 2000.
</TABLE>
II-8
<PAGE> 247
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
------- ------------------------
<S> <C>
99.11 Inducement Agreement dated as of November 6, 2000 by and
among Registrant and LASMO plc. Incorporated by reference to
Exhibit 11 to the Schedule 13D filed by Registrant on
November 15, 2000.
99.12 Letter Agreement dated as of November 6, 2000 by and among
Registrant, Goldman Sachs International and Electrafina S.A.
Incorporated by reference to Exhibit 12 to the Schedule 13D
filed by Registrant on November 15, 2000.
99.13 Letter Agreement dated as of November 6, 2000 by and among
Registrant, Goldman Sachs International and Schroder
Investment Management Limited. Incorporated by reference to
Exhibit 13 to the Schedule 13D filed by Registrant on
November 15, 2000.
99.14 Amended and Restated Credit Agreement dated as of November
14, 2000 among Amerada Hess Corporation, the Lenders Party
thereto and Goldman Sachs Credit Partners L.P. as joint book
runner, joint lead arranger and sole syndication agent,
Chase Securities, Inc. as joint book runner and joint lead
arranger and The Chase Manhattan Bank, N.A., as
administrative agent in respect of $1,000,000,000 Revolving
Credit Facility ("Facility A").*
99.15 Amended and Restated Credit Agreement dated as of November
14, 2000 among Amerada Hess Corporation, the Lenders Party
thereto and Goldman Sachs Credit Partners L.P. as joint book
runner, joint lead arranger and sole syndication agent,
Chase Securities, Inc. as joint book runner and joint lead
arranger and The Chase Manhattan Bank, N.A., as
administrative agent in respect of $2,000,000,000 Revolving
Credit Facility ("Facility B").*
99.16 Letter of Transmittal.
99.17 Form of Acceptance.
99.18 Notice of Guaranteed Delivery.
99.19 Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
99.20 Letter to Clients.
99.21 Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
99.22 Summary newspaper advertisement in The Wall Street Journal.
99.23 Newspaper advertisement in The Financial Times.
99.24 Consent of Schroder Salomon Smith Barney, financial advisor
to LASMO.
99.25 Consent of Goldman Sachs International, financial advisor to
Amerada Hess.
</TABLE>
---------------
*Previously filed.
II-9
