SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year ended DECEMBER 31, 1994
Commission file number 1-959
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
THE LOUISIANA LAND AND EXPLORATION COMPANY
Exact name of registrant as specified in its charter
MARYLAND 72-0244700
State or other jurisdiction of I.R.S. Employer
incorporation or organization Identification No.
909 POYDRAS STREET, NEW ORLEANS, LA. 70112
Address of principal executive offices Zip Code
Registrant's telephone number, including area code 504-566-6500
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE ON WHICH
TITLE OF EACH CLASS REGISTERED
Capital Stock, $.15 par New York Stock Exchange
value (including Capital London Stock Exchange
Stock Purchase Rights) The Stock Exchanges of Geneva,
Zurich and Basle
8-1/4% Notes due 2002 New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
(continued)
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Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months and
(2) has been subject to such filing requirements for the past 90
days. YES X . NO .
State the aggregate market value of the voting stock held by
non-affiliates of the registrant.
Aggregate Market Value
Class of Voting Stock at February 28, 1995
Capital Stock, $.15 par value $1,155,866,000
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest practicable
date.
Outstanding at
Class February 28, 1995
Capital Stock, $.15 par value 33,382,406 shares
DOCUMENTS INCORPORATED BY REFERENCE
Part III: The Registrant's Proxy Statement for its Annual Meeting
of Stockholders to be held on May 11, 1995
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INDEX
Page
Number
_________________________________________________________________
PART I
4 Items 1 and 2. Business and Properties.
4 The Company
4 Contributions of Principal Products
5 Petroleum Operations
6 General
7 Sales
8 Oil and Gas Properties
9 Oil and Gas Reserves
9 Exploration Activities
14 Development Activities
18 Drilling Activities at December 31, 1994
18 Oil and Gas Wells
20 Crude and Condensate, Plant Products and Natural Gas
Production and Prices Realized
21 Refining Operations
22 Regulation
22 Federal Energy Regulatory Commission
22 Environmental Matters
24 Item 3. Legal Proceedings.
24 Item 4. Submission of Matters to a Vote of Security
Holders.
25 Executive Officers of the Registrant
PART II
26 Item 5. Market for the Registrant's Common Equity
and Related Stockholder Matters.
26 Item 6. Selected Financial Data.
26 Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
27 Item 8. Financial Statements and Supplementary Data.
91 Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
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PART III
91 Item 10. Directors and Executive Officers of the Registrant.
91 Item 11. Executive Compensation.
91 Item 12. Security Ownership of Certain Beneficial Owners and
Management.
91 Item 13. Certain Relationships and Related Transactions.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K.
92 (a)(1) Financial Statements and Supplementary Data
92 (a)(2) Financial Statement Schedules
92 (a)(3) Index to Exhibits
92 (b) Reports on Form 8-K
96 Signatures
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ITEMS 1 AND 2. BUSINESS AND PROPERTIES.
The Company
The Louisiana Land and Exploration Company and subsidiaries
(LL&E or the Company) is engaged principally in the exploration for
and the development and production of petroleum natural resources.
The major portion of LL&E's petroleum operations are conducted in
the continental United States, the federal offshore area in the
Gulf of Mexico, the North Sea, Canada, Colombia and Indonesia. In
early 1995, the Company announced plans to sell certain non-
strategic assets, including remaining oil and gas assets in Canada,
which were not material to the Company's operations. LL&E also
owns a refinery in Alabama, and also processes natural gas. At
December 31, 1994, LL&E had 825 employees.
Contributions of Principal Products
The table below sets forth the principal products and their
contribution to the operating revenues of LL&E's petroleum
operations for the periods indicated. Reference is made to Note 16
of "Notes to Consolidated Financial Statements" for additional
information on LL&E's operations.
<TABLE>
<CAPTION>
Years ended December 31,
(Millions of dollars) 1994 19931 1992
_______________________________________________________________________________________
<S> <C> <C> <C>
Crude and condensate $ 235.8 210.0 215.1
Natural gas 169.9 146.0 92.0
Refined products2 361.4 400.2 441.9
Other petroleum products 15.4 14.1 16.8
_______________________________________________________________________________________
Total $ 782.5 770.3 765.8
_______________________________________________________________________________________
1 Includes NERCO Oil & Gas, Inc. since October 1, 1993.
2 After elimination of intercompany transfers to the Company's refinery. In 1994, 1993 and
1992, such transfers were valued at $24.8, $22.4 and $20.7, respectively.
</TABLE>
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Petroleum Operations
LL&E employs a staff of petrotechnical professionals to
initiate, evaluate, plan and execute LL&E's petroleum activities.
Typically, the actual tasks of exploration and development, such as
seismic surveys and drilling, are performed by independent
specialized contractors under the direction of LL&E's professional
staff. LL&E's principal domestic exploration activities at
December 31, 1994 were in the Gulf of Mexico, Louisiana and
Wyoming. Outside the United States, LL&E's principal exploration
activities were in the North Sea, Colombia, Algeria and Yemen.
In the United States, LL&E has working interests in
development and producing operations principally in Alabama,
Florida, Louisiana, Wyoming and the federal offshore area in the
Gulf of Mexico. Outside the United States, LL&E has working
interests in development and producing operations in the
Netherlands and United Kingdom sectors of the North Sea, Colombia
and Indonesia.
The majority of LL&E's working interest activities occur on
property leased from others, which leaseholds are acquired by
paying a signature bonus, delay rental and production royalty to
the owner of the mineral rights. In 1994, working interest
revenues accounted for 90% of LL&E's total oil and gas revenues.
LL&E receives income from royalties from production by others
of oil and gas from portions of the properties LL&E owns and leases
in south Louisiana. In addition, LL&E receives income from
geophysical options and the leasing of mineral rights to explore
undeveloped portions of these properties.
CLAM Petroleum Company (CLAM), a 50%-owned, unconsolidated
affiliate, is engaged in oil and gas exploration, development and
production activities in the Netherlands sector of the North Sea.
The tables on the following pages set forth LL&E's 50% equity
interest in the operations of CLAM.
LL&E Petroleum Marketing, Inc., a wholly owned subsidiary,
owns and operates a refinery in Mobile, Alabama. The refinery
utilizes various sources of feedstocks including Company-owned and
-controlled crude oil which is acquired on a competitive basis with
other domestic and foreign crudes from third parties.
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GENERAL
LL&E's petroleum operations are subject to all of the risks
and uncertainties normally incident to exploration for and
development of oil and gas. Significant capital expenditures are
required in connection with such operations, with capital
expenditures for offshore operations typically being substantially
greater than for similar operations onshore. LL&E's earnings and
the scope of its future exploration and development programs will
be affected by the extent to which state and federal legislation
and regulations applicable to the petroleum industry impact
incentives for exploration and production, and permit the recovery
of revenues sufficient to meet increasing costs and to expand
operations. The marketability of offshore production is limited by
the availability of marine transportation facilities, which are
barge or pipeline for oil, but only pipeline for gas. In instances
where there are no gas pipelines in an area of production, LL&E
must await the permitting, certification and construction of
pipeline facilities before deliveries of gas can commence. A
portion of LL&E's petroleum operations is conducted in foreign
countries where LL&E is also subject to regulation, risks of a
political nature and other risks. LL&E's oil and gas production is
from properties in jurisdictions in which well drilling and
production are regulated or subject to limitations by governmental
production and conservation authorities.
The oil and gas industry is highly competitive in all phases,
including the search for and development of new sources of supply
and the refining and marketing of crude oil and petroleum products.
The oil and gas industry also competes with other industries that
supply energy and fuel, and LL&E competes with a number of major
integrated oil companies and other companies having greater
resources. LL&E participates in bidding for federal leases on the
U.S. Outer Continental Shelf, as well as for leases (concessions)
in other countries; participation in the bidding for these leases
is extremely competitive.
The principal raw materials and supplies required directly by
LL&E for its petroleum operations, other than refining and natural
gas processing, are generally available through multiple sources
and acquired through specialized independent contractors. The
refinery and gas processing operations' principal raw materials are
crude oil and natural gas, a portion of which is Company-owned and
-controlled. Internally generated fuels and electricity are the
principal energy requirements for the petroleum operations and the
refinery, and electricity is the principal energy requirement at
the gas processing plants. No serious problems currently exist
with respect to the availability of any of these items.
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SALES
The availability of a ready market for oil and gas depends
upon numerous factors beyond the Company's control, including the
production of crude oil and gas by others, crude oil imports, the
marketing of competitive fuels, the proximity and capacity of oil
and gas pipelines, the availability of treatment facilities, the
regulation of allowable production by governmental authorities and
the regulation by the Federal Energy Regulatory Commission (FERC)
and various state agencies of the transportation and marketing of
natural gas transported or sold in interstate commerce (see
"Regulation").
Liquids
During 1994, LL&E's crude oil, condensate and plant products
production were sold into various domestic and international
markets at prices competitive for the area and for quality of
production. In some instances, crude oil, condensate and plant
products were traded from area to area and were then sold to third
parties or transferred to the Company's refinery. LL&E charged
transfers of proprietary production to its refinery at appropriate
market prices. The 1994 sales period has seen dramatic price
fluctuations with crude oil prices ranging between $14/BBL and
$21/BBL. Overall, crude oil prices averaged approximately $17/BBL
at Cushing, Oklahoma for West Texas Intermediate. This price was
approximately $1.50/BBL below the price averaged in 1993.
Natural Gas
Prior to FERC Orders 436/500 and 636, most of LL&E's sales of
natural gas were made to various interstate and intrastate gas
pipeline companies under long-term take-or-pay contracts subject to
the regulations of the FERC. With the implementation of the above-
referenced orders, the structure of the industry has changed
drastically. LL&E now has the ability, as other producers do, to
ship gas on the nationwide transportation grid and contract
directly with downstream customers. Development of this downstream
marketing activity has allowed LL&E to gain entry into markets not
previously available, reduced the Company's reliance on pipelines
to purchase natural gas and given the Company greater flexibility
and control of its natural gas reserves.
As of February 1, 1995, less than 5 percent of LL&E's natural
gas production was being sold to interstate pipeline companies.
The remainder of the Company's North American natural gas
production is sold primarily to local distribution companies,
industrials, electric utilities and aggregators under short- or
medium-term contracts at market-responsive prices. The vast
majority of the Company's North Sea gas production is sold to
distributors, electric generators and aggregators under long-term
contracts at prices based on various combinations of commodity and
inflation-based indices.
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Refined Products
LL&E's refinery products, which include three grades of
gasoline, naphtha, two grades of No. 2 fuel oil, turbine fuel,
vacuum gas-oil and vacuum residuum, are generally sold in the spot
market, wholesale markets, or under short-term contracts. Products
are either sold in local or Gulf Coast markets or exchanged in
return for products in pipeline markets.
OIL AND GAS PROPERTIES
Information regarding LL&E's productive and undeveloped
acreage is presented under the heading "Oil and Gas Properties" in
Part II, Item 8. - "Financial Statements and Supplementary Data."
Working Interest Properties
At December 31, 1994, LL&E had working interests in
approximately 626 thousand gross (287 thousand net) productive
acres and approximately 7.4 million gross (3 million net)
undeveloped acres. The total unamortized cost to LL&E of such
undeveloped acreage at December 31, 1994 was $51.7 million.
Through its affiliate, CLAM Petroleum Company, LL&E had working
interests in approximately 40 thousand gross (6 thousand net)
productive acres and approximately 772 thousand gross (177 thousand
net) undeveloped acres, all located in the Netherlands sector of
the North Sea.
Leaseholds held by LL&E in the United States on privately
owned lands generally reserve to the lessor a 12-1/2% to 25%
royalty interest in the production from such lands. Federal leases
offshore in the Outer Continental Shelf are acquired by sealed
bids, and generally provide for a royalty of 16-2/3% of the value
of production. Federal leases onshore generally are acquired by
payment of a filing fee and provide for a royalty of 16-2/3% of the
value of production. The primary terms of LL&E's leases vary
generally from 3 to 10 years (five years in the case of federal
offshore leases), but such leases are automatically extended by
production for as long thereafter as production continues.
Royalty Properties
At December 31, 1994, LL&E owned approximately 594 thousand
acres in fee lands in south Louisiana of which approximately 142
thousand acres were leased to various other companies for oil and
gas exploration, development and production. Of those leased to
others, approximately 97 thousand acres are productive and yielded
a weighted average royalty to LL&E of 25%. In addition, LL&E holds
State of Louisiana leases covering approximately 55 thousand pro-
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ductive acres which have been assigned to Texaco Inc. under a
contract (1928 Texaco Contract). Under the 1928 Texaco Contract,
which also covers certain fee lands owned by LL&E, LL&E is entitled
to receive a 25% royalty interest in the production from the
acreage subject to the lease. LL&E is obligated to pay to the
lessor of the leasehold interests subject to the 1928 Texaco
Contract a royalty which is, in most cases, 12-1/2% of the proceeds
from production for such property.
Of the approximately 452 thousand fee acres not leased to
others, LL&E conducts operations on approximately 1.1 thousand
productive acres; the balance of the fee acreage is classified as
undeveloped. From time to time, LL&E conducts exploratory
activities on this undeveloped fee acreage.
OIL AND GAS RESERVES
Information regarding LL&E's proved oil and gas reserves is
presented under the heading "Data on Oil and Gas Activities" in
Part II, Item 8. - "Financial Statements and Supplementary Data."
LL&E and its oil and gas subsidiaries are required to report, at
varying times, estimates of oil and gas reserve data with various
governmental authorities and agencies, including the Federal Energy
Regulatory Commission. The basis for reporting estimates of
reserves to these authorities and agencies may not be comparable to
that presented because of the nature of the various reports
required. The major sources of noncomparability include
differences in the times as of which such estimates are made and
differences in the definition of the reporting unit, such as,
gross, net, total operator, lease by lease, reservoir by reservoir.
EXPLORATION ACTIVITIES
Working Interest
The Company's exploration expenditures totaled $90 million in
1994: $17 million was spent on gathering and evaluating seismic
data, over $3 million was expended for unproved leases in the
United States and overseas, and $70 million was expended for
participation in 44 wells. Of this total, 27 wells were successful
completions: 5 oil and 22 gas.
South Louisiana
One of the Company's most significant gas discoveries in
recent years was announced in early 1994 following the successful
completion of an exploratory well in a deeper reservoir in the
Fresh Water Bayou Field in Vermilion Parish, Louisiana. The
Louisiana Furs C-16 well, drilled to a total depth of 19,260 feet
and completed, in a producing horizon below 17,500 feet, tested at
a rate of 30.3 million cubic feet of gas per day and 192 barrels of
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condensate per day. The Company owns a 35% gross working interest
in the field. A development plan was initiated based on the
results from this discovery well. The first development well, the
Louisiana Furs C-17, was drilled to a total depth of 20,600 feet
and was completed in August in the same producing sand as the C-16
well. The C-17 tested 45.7 million cubic feet of gas per day and
307 barrels of condensate per day. A third development well, the
Louisiana Furs C-19, was then drilled and tested 29 million cubic
feet of gas per day and 329 barrels of condensate per day. Total
gross production from the first two wells has been limited to 55
million cubic feet of gas per day due to pipeline constraints and
limited production facilities. Expanded facilities and a new
pipeline increased gross production volumes from the field to over
100 million cubic feet of gas per day in March of 1995. Production
capacity of approximately 200 million cubic feet of gas per day
will be completed by year end in anticipation of the completion of
the two new development wells.
A 3-D seismic survey was conducted in late 1994 to assist in
the further development of the field. Based on information derived
from this survey as well as production information from the wells
currently onstream, at least two more drilling locations have been
identified for drilling during 1995. A potential deeper gas
horizon found but not tested in the initial well has also been
identified on the 3-D survey and is expected to be tested by one of
the two 1995 wells.
Interest in 3-D survey acquisition and analysis continued to
surge in the mature producing areas of south Louisiana during 1994.
The Company was active in 3-D seismic acquisition, adding 267 miles
to its inventory. Another 425 square miles is in the execution or
planning stages for 1995. Leveraging the value of the Company's
600,000 acre fee land ownership has enabled the Company to
structure a variety of arrangements with its partners to maximize
data acquisition and drilling exposure while greatly reducing
project costs and risk.
The effort expended in the acquisition and interpretation of
this seismic data over the last two years began to yield meaningful
drilling results during 1994. Three successful exploratory wells
were drilled on the basis of 3-D seismic. At the Bastian Bay
Field, a mature field where the last successful well was drilled in
1981, two 3-D prospects, Mustang and Vino, were successfully
completed. Mustang is currently producing 4 million cubic feet of
gas per day and 122 barrels of condensate per day and Vino tested
3.5 million cubic feet of gas per day and will be connected for
production shortly. The Company owns a 33% working interest in
both wells. Due to the Company's fee land ownership in the field
and its related royalty interest, the Company's net revenue
interests in the two wells are 40.8% and 48.4%, respectively. A
second successful 3-D well was also drilled at the Lake Washington
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Field in late 1994 which recently tested 605 barrels of oil per day
and 1.3 million cubic feet of gas per day. The Company owns a 38%
working interest and a 47.5% net revenue interest in this well due
to its fee land ownership. The Company has successfully completed
four of its first seven 3-D exploratory wells drilled in south
Louisiana.
Gulf of Mexico
Acquisition, processing and interpretation of 3-D seismic
information on its substantial Gulf of Mexico lease inventory
continues to be a focus of activity. In 1994, new 3-D seismic was
acquired covering seven producing areas. Four of the surveys are
in-house and are being evaluated for drilling potential and the
remaining three are expected later this year. An area-wide, multi-
company survey begun in late 1993 has produced 110 blocks of data
so far and another 134 blocks are scheduled for 1995, the second
full year of the program. Total five-year participation in the
program will yield over 500 new blocks of 3-D data.
The Company is also identifying shallower gas targets on
exploratory leases that can be drilled with attractive economics
thereby holding the blocks for later evaluation of their deeper
subsalt potential. During 1994, four such shallow targets were
successfully drilled, thereby protecting those leases from
expiration. Also during 1994, the Company participated in drilling
its first subsalt well at South Timbalier 289. While the well was
plugged and abandoned, geologic information derived from drilling
beneath the salt will be valuable in testing future subsalt
prospects. The Company has identified a number of prospects on its
existing salt-related acreage and expects to participate in
drilling two subsalt wells in 1995.
Participation in the 1994 offshore Louisiana and Texas lease
sales resulted in the acquisition of five new leases covering
24,162 gross and 11,673 net acres.
Algeria
A number of sizeable oil discoveries in 1994 on blocks
immediately adjacent to the Company's Block 405 continue to enhance
the prospectiveness of the Company's acreage. During the year, 380
miles of seismic acquired over the block were processed and
interpreted. A number of prospects and leads were identified. The
site of the first well, the MLE-1, was selected and began drilling
near the end of 1994. A second well is planned for later this
year. In addition to its 712,910 acres on Block 405, the Company
also has a concession on 840,026 acres on Block 215. During 1994,
400 miles of seismic data was processed and interpreted on this
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block, yielding additional drilling opportunities. The first well
on Block 215 is expected to be drilled in 1996. Additional seismic
work is planned for Blocks 215 and 405 during 1995. The Company
owns a 65% working interest in both of these areas.
Yemen
Two exploration wells were drilled during 1994 on Block 9
where the Company owns a 17% working interest. Neither of the
wells encountered sufficient hydrocarbons to be commercially
producible. The Company and its partners are reviewing drilling
data from these two wells along with the seismic data acquired to
determine if any additional prospects on the block should be
drilled before the expiration of the concession.
Tunisia
Over 1,700 kilometers of seismic data were acquired in early
1994 over the Company's one million acre Ramla Block, about 80
miles offshore Tunisia in the Gulf of Gabes. Processing of the
data yielded several leads and prospects with the first well
scheduled for drilling by mid-1995. Additional seismic is planned
during the year to evaluate the remaining leads. The Company owns
a 50% working interest in the block.
Other Areas
In Colombia, an unsuccessful exploratory well drilled in 1994
in the Barzalosa Association Contract Area resulted in the Company
relinquishing its concession in that area. However, the general
region remains attractive for exploratory drilling and the Company
acquired a concession in the Bambuco Association Contract Area as
well as a 45% gross working interest in Block 10 in the Llanos
Basin. Seismic studies are planned in each of these areas during
1995 prior to any drilling.
The Company withdrew from three concession areas in Australia
in 1994 based on interpretation of geophysical and geological
studies done over the areas as well as participation in an
unsuccessful exploratory well in one of the blocks. In early 1994,
the Company formed a joint study group with an Australian
exploration company to explore selected areas in Papua New Guinea,
New Zealand as well as offshore Australia. The Company and its
joint group successfully bid a work program in Australia on Block
WA258P located in the Carnarvon Basin. The program commitment
includes seismic acquisition and drilling of one well over a two-
year period. The Company will have a 33.3% interest in the
project.
In Papua New Guinea, the Company is in the process of
improving its acreage position in the prospective highlands area of
the country by restructuring its concession ownership. The Company
awaits ratification of a 43.8% working interest in three contiguous
blocks in the region. Additional geological and geophysical
studies are scheduled for 1995. <PAGE>
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During the years 1992 through 1994, LL&E and CLAM participated
in the drilling of exploratory wells with the results set forth in
the table below.
<TABLE>
<CAPTION>
Net wells
Oil Gas Dry
1994 1993 1992 1994 1993 1992 1994 1993 1992
_______________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LL&E and Subsidiaries:
Domestic:
Offshore Gulf of
Mexico - .5 - 3.3 1.8 - 1.8 1.4 1.0
Colorado - - - - - - - - .5
Louisiana 1.2 .7 .4 1.7 1.1 2.2 2.9 1.8 2.5
Wyoming - - - - - - - - .7
North Sea:
United Kingdom .1 .1 - - - - - .1 .1
Other foreign:
Australia - - - - - - .3 .6 -
Canada .5 13.9 12.4 5.3 1.0 .3 2.9 7.4 7.3
Colombia - - .3 - - - 1.0 - -
Egypt - - - - - - - - .2
Yemen - - - - - - .3 - -
_______________________________________________________________________________________
Total 1.8 15.2 13.1 10.3 3.9 2.5 9.2 11.3 12.3
_______________________________________________________________________________________
CLAM (50%)
Netherlands-North Sea - - - - - - .2 .1 .1
_______________________________________________________________________________________
</TABLE>
Royalty Interest
During 1994, the following exploratory wells were drilled by
others on LL&E's fee and leasehold acreage.
<TABLE>
<CAPTION>
Gross wells
Oil Gas Dry
_______________________________________________________________________________________
<S> <C> <C> <C>
Domestic:
Gulf of Mexico 2 - -
Louisiana 5 3 1
Wyoming - 1 -
Other foreign - Canada 3 - 3
_______________________________________________________________________________________
Total 10 4 4
_______________________________________________________________________________________
</TABLE>
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DEVELOPMENT ACTIVITIES
Working Interest
Development of the Company's oil and gas properties in 1994
resulted in the expenditures of almost $108 million for
participation in 20 wells and the installation of platforms and
facilities in the United States and overseas. Successful
development drilling resulted in 7 oil and 12 gas wells. In
addition, $2 million was spent in the acquisition of additional
working interests in proved properties in the United States.
Jay Field
At the Jay Field in Florida, a depletion enhancement program
consisting of well workovers and debottlenecking projects has led
to increased production and recoverable reserves from this mature
field. Current gross production averages 16,200 barrels of liquids
per day. In 1995, field partners plan to expand the existing
nitrogen injection program to an area of the field that has not
previously been drained by enhanced recovery. The Company
currently owns a 46% working interest in this field.
Gulf of Mexico
At Eugene Island 217, the "C" platform was installed in
February 1994 and is currently producing 36 million cubic feet of
gas per day and 1,700 barrels of condensate per day from two
successful wells. Another step-out well is expected to add to
producing capacity. The Company owns a 65% working interest in the
property. At Eugene Island 110, a production structure was built,
and pipeline and facilities were installed four months after the
discovery well was drilled. The well tested at 10 million cubic
feet of gas per day and 400 barrels of condensate per day. The
Company owns a 42% working interest in the property. Eugene Island
364 #3, the Company's first operated subsea completion, was put
online in November 1994. Current production is 10 million cubic
feet of gas per day and 400 barrels of condensate per day. This
single well completion is owned 100% by the Company and is tied
back to the Company's Eugene Island 371 "B" platform. Garden Banks
235 #3, the Company's second 100% owned and operated subsea
completion, was also placed on production in November and is
currently producing 20 million cubic feet of gas per day. The well
is in 802 feet of water and is tied back to a platform in shallower
waters at Garden Banks 236. Significant cost savings were achieved
by coordinating the completion of both of these facilities
concurrently.
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Four field development projects are currently underway and
scheduled for completion over the next 12 months. At Vermilion
395, where the Company is the operator and owns a 50% working
interest, a new platform will be installed in 428 feet of water by
midyear which will have gross production capacity of 15 million
cubic feet of gas per day. At South Pass 34/47 and Vermilion
143/160, initial production is expected later this year from two
new facilities that will have combined gross production capacity of
70 million cubic feet of gas per day. The Company owns a 50% and
25% working interest in the two projects, respectively. Two
Company-operated platforms to produce four successful exploratory
wells drilled on neighboring blocks South Timbalier 229 and 231 and
Grand Isle 108 during 1994 are being designed with production
startup in early 1996.
Wyoming
Completion of the Lost Cabin Gas Plant will enable the Company
to initiate production in early 1995 from the deep Madison
Formation below 24,000 feet. The Company owns a 37% interest in
the facility. The gross cost of the plant was $83 million and it
initially will process over 50 million cubic feet of gas per day
from two previously-drilled wells to this formation, the Bighorn 1-
5 and the Bighorn 2-3. Plant products include natural gas, sulfur
and carbon dioxide. Production information from these two wells is
key to the further development of this prolific new producing
horizon which can add significant new gas production and reserves.
A third Madison Formation well, the Bighorn 4-36, is expected
to begin drilling in mid-1995. A significant portion of the
Company's cost to drill this well is covered by insurance proceeds
from the blowout of the Bighorn 3-36 well in early 1993. Expansion
of the Lost Cabin Gas Plant to process incremental production from
additional wells drilled to the Madison Formation is under study.
During 1994, sweet gas production from intervals between 5,500
and 18,000 feet averaged 73 million cubic feet of gas per day, the
highest annual average production in the 25-year history of the
field. Deliverability at year-end 1994 was in excess of 85 million
cubic feet of gas per day. This deliverability increase resulted
from the successful drilling of four infill wells and the
completion of 16 workovers of existing wells. Each of these new
wells cost approximately $1 million to drill and complete and
tested at an average rate of 3 million cubic feet of gas per day.
To accommodate this increasing level of production, the Madden gas
gathering system was expanded during 1994.
<PAGE>
<PAGE>
To assist in the further development of both shallow and deep
gas reserves as well as to generate potential prospects in
undrilled areas of the field, a 3-D seismic survey covering a 37
square mile area of the field was conducted in 1994. By year end,
all field data had been collected and the computer processing and
interpretation of the data had begun.
North Sea
In the U.K. North Sea, annual liquid production volumes from
the Brae complex reached a four-year high during 1994. East Brae,
the largest of the four Brae fields currently producing, went
onstream in late 1993 and reached a peak gross production volume of
110,000 barrels of oil per day in October of 1994. Also during
1994's fourth quarter, the Brae group initiated natural gas sales
at a gross rate 260 million cubic feet of gas per day. Prior to
that time, all gas produced from the complex was reinjected into
the reservoir to optimize liquids recovery. The sales gas is
transported to an onshore processing center at St. Fergus, Scotland
via the SAGE Pipeline System in which the Brae group owns a 50%
equity interest. The Company owns an average 6% working interest
in the Brae complex. The Company's net production of liquid and
gas from Brae ended this year in excess of 13,000 barrels of oil
equivalent per day, an all time high.
The plan of development submitted to the U.K. Department of
Energy for the Beinn gas/condensate field that partially underlies
the North Brae field was approved during 1994. Development costs
for these incremental reserves were reduced substantially because
of the existing Brae production infrastructure. All Beinn
producing wells were completed from the North Brae platform. A
third confirmation well, the 16/7a-B22, was completed in June and
tested 27.7 million cubic feet of gas per day and 3,103 barrels of
condensate per day. Beinn gross liquid production averaged 7,200
barrels of condensate per day during 1994.
The Company owns an 11.26% interest in another U.K. North Sea
producing complex, the T-Block, located just south of the Brae
Field. Two oil fields in the complex, Tiffany and Toni, went on
production from a single platform in late 1993 shortly after the
Company acquired its interest in the property. Production volumes
during 1994 fell below expectations due to continuing mechanical
problems at the Tiffany production platform. A number of these
problems were gradually resolved during the year and gross
production rose steadily, reaching 80,000 barrels of oil per day by
year-end 1994, about 10% below its originally forecast plateau
rate.
The plan of development for two additional T-Block fields,
Thelma and Southeast Thelma, is currently pending and is expected
to be approved during 1995. Using the same subsea technology
employed in the development of the Toni field, both of these new
fields will be tied back to the Tiffany platform utilizing subsea
completions. Initial oil and gas production from the Thelma fields
is expected in 1996. <PAGE>
<PAGE>
Indonesia
In the KAKAP Production Sharing Contract offshore in the
Republic of Indonesia, development of the new KG and KRA fields is
continuing. The first three of 14 planned development wells were
recently drilled and await installation of the platform. The
Company's share of KAKAP production will more than double by year-
end 1995 as a result of production sharing from the two new fields.
Development costs of additional reserves and production should be
minimized by utilizing the existing infrastructure in the complex.
During the years 1992 through 1994, LL&E and CLAM participated
in the drilling of development wells with the results set forth in
the table below.
<TABLE>
<CAPTION>
Net wells
Oil Gas Dry
1994 1993 1992 1994 1993 1992 1994 1993 1992
_______________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LL&E and Subsidiaries:
Domestic:
Offshore Gulf of
Mexico .8 1.5 .2 2.3 1.9 1.0 - .3 -
Louisiana - .5 1.6 - - - - - .5
Wyoming - - - .7 1.3 .3 - - -
North Sea:
Netherlands - - .1 .1 - - - - -
United Kingdom .2 .1 .2 - - - .1 - .2
Other foreign-
Colombia - - .3 .1 - - - - -
_______________________________________________________________________________________
Total 1.0 2.1 2.4 3.2 3.2 1.3 .1 .3 .7
_______________________________________________________________________________________
CLAM (50%)
Netherlands-North Sea - - .2 .1 .2 .1 - - -
_______________________________________________________________________________________
</TABLE>
Royalty Interest
During 1994, the following development wells were drilled by others on
LL&E's fee and leasehold acreage.
<TABLE>
<CAPTION>
Gross wells
Oil Gas Dry
_______________________________________________________________________________________
<S> <C> <C> <C>
Domestic-Louisiana - 1 -
_______________________________________________________________________________________
</TABLE>
<PAGE>
DRILLING ACTIVITIES AT DECEMBER 31, 1994
Working Interest
The table below sets forth the working interest wells in the
process of drilling at December 31, 1994 by LL&E and by CLAM.
<TABLE>
<CAPTION>
Wells drilling
Gross Net
_______________________________________________________________________________________
<S> <C> <C>
LL&E and Subsidiaries:
Domestic 7 3.2
North Sea 4 .6
Other foreign 2 1.0
_______________________________________________________________________________________
Total 13 4.8
_______________________________________________________________________________________
CLAM (50%) Netherlands-North Sea - -
_______________________________________________________________________________________
</TABLE>
Royalty Interest
No wells were being drilled by others at December 31, 1994 in
which LL&E has a royalty interest.
OIL AND GAS WELLS
Working Interest
The table below shows the number of productive oil and gas
wells in which working interests are held by LL&E and by CLAM as of
December 31, 1994.
<TABLE>
<CAPTION>
Oil wells Gas wells
Gross Net Gross Net
_______________________________________________________________________________________
<S> <C> <C> <C> <C>
LL&E and Subsidiaries:
Domestic 1,384 146.0 314 116.0
North Sea 59 7.6 - -
Other foreign 72 17.4 13 6.7
_______________________________________________________________________________________
Total 1,5151 171.0 3272 122.7
_______________________________________________________________________________________
CLAM (50%) Netherlands-North Sea - - 52 3.7
_______________________________________________________________________________________
1 Includes 44 dual completion wells.
2 Includes 32 dual completion wells.
</TABLE>
<PAGE>
<PAGE>
Royalty Interest
The table below shows the number of productive oil and gas
wells drilled by others in whose production LL&E had a royalty
interest as of December 31, 1994.
<TABLE>
<CAPTION>
Gross wells
Oil Gas
_______________________________________________________________________________________
<S> <C> <C>
Domestic 574 206
Other foreign 9 8
_______________________________________________________________________________________
Total 5831 2142
_______________________________________________________________________________________
1 Includes 20 dual completion wells.
2 Includes 9 dual completion wells.
</TABLE>
<PAGE>
<PAGE>
CRUDE AND CONDENSATE, PLANT PRODUCTS AND NATURAL GAS PRODUCTION
AND PRICES REALIZED
The production and average price information for the years
1992 through 1994 are presented under the heading "Oil and Gas
Operating Data" in Part II, Item 8. - "Financial Statements and
Supplementary Data."
Lifting Cost per Equivalent Barrel of Production
The table below presents the average annual production
(lifting) cost per equivalent barrel of production (excluding
royalty interest production) for LL&E and for CLAM for the periods
indicated. For the purpose of this calculation, natural gas and
plant products are converted to equivalent barrels of oil, based on
an estimate of their relative BTU content, at the ratios of 6:1 and
1.56:1, respectively.
<TABLE>
<CAPTION>
1994 1993 1992
_______________________________________________________________________________________
<S> <C> <C> <C>
LL&E and Subsidiaries:
Domestic $3.97 4.69 5.51
North Sea 5.89 9.20 7.62
Other foreign 5.59 5.64 5.43
_______________________________________________________________________________________
CLAM
Netherlands-North Sea $2.36 3.07 4.05
_______________________________________________________________________________________
</TABLE>
Production (lifting) cost, as defined by the Securities and
Exchange Commission, consists of costs incurred to operate and
maintain wells and related equipment and facilities, as well as
property and production taxes. It does not include depletion,
depreciation, and amortization of capitalized acquisition,
exploration and development costs, general and administrative
expenses, interest expense or income taxes. Accordingly,
production (lifting) cost reflected in the above table does not
represent the total cost involved in producing a barrel of oil.
<PAGE>
<PAGE>
REFINING OPERATIONS
General
The Company operates a crude oil refinery and terminal in
Mobile, Alabama. Refinery capability consists of the following
units: Atmospheric and Vacuum Distillation, Distillate
Hydrodesulfurization, Sulfur Recovery, Catalytic Reforming and
Light Naphtha Isomerization. This equipment is designed to handle
both high- and low-sulfur feedstocks. The Company's crude oil
terminal is located in Mobile Harbor and can accept vessels up to
35 feet draft. The terminal is connected to the refinery by
parallel crude and product lines (approximately seven miles each in
length) and can accept and load both crude oil and refined
products.
Of the $8.3 million in refinery capital expenditures during
1994, $4.6 million was associated with a vacuum tower upgrade
project and the remainder was related to miscellaneous capital
improvements, safety and environmental items. In 1995, $3 million
has been budgeted for capital projects including $1.5 million
toward profit enhancement and the balance to maintenance, safety
and environmental items.
In 1994, the refinery processed an average of 47,000 barrels
per day of crude oil and remained under the Independent Producers
status during the year. The low industry refinery margins
(excluding retail), which began in 1992, continued through 1994.
Efforts in 1994 were concentrated on cutting feedstock costs and
improving quality, which are expected to improve the refinery's
1995 competitive position.
Sales and Prices Realized
The sales and average price information for the years 1992
through 1994 are presented under the heading "Refining Operating
Data" in Part II, Item 8. - "Financial Statements and Supplementary
Data." <PAGE>
<PAGE>
Regulation
FEDERAL ENERGY REGULATORY COMMISSION
Natural gas prices were formerly subject to regulation by the
Federal Energy Regulatory Commission (FERC) pursuant to the Natural
Gas Act of 1938, as amended, and the Natural Gas Policy Act of 1978
(NGPA). Effective December 1, 1978, the NGPA defined certain
categories of natural gas and established price ceilings on all
first sales of gas, whether interstate or intrastate, for most
categories. Price controls on certain categories of gas were
removed on various dates through July 1, 1987.
On July 26, 1989, the Natural Gas Wellhead Decontrol Act of
1989 was enacted. This legislation amended the Natural Gas Policy
Act of 1978, effectively removing wellhead price controls on new
wells or wells not covered by a gas contract immediately and all
maximum lawful price controls by January 1, 1993. As a result of
these legislative acts, none of the Company's natural gas
production is currently subject to wellhead price regulation and
virtually all of it is priced at competitive market levels.
In the winter of 1993-94, FERC implemented its Order 636 on
the comparability of pipeline services. The order was designed to
eliminate certain competitive advantages interstate pipelines may
have had in selling gas and further move the industry toward a more
efficient, competitive market environment. Among other things,
Order 636 required pipelines to unbundle the various services that
they had provided in the past, such as gas supply, gathering,
transmission and storage, and offer these services individually to
their customers. For producers, the net result is expected to be
increased gas sales opportunities.
ENVIRONMENTAL MATTERS
The protection of our environment has always been a
consideration of LL&E and has involved additional operating and
facility costs. As federal, state and local environmental statutes
evolve, LL&E implements design changes and incorporates pollution
control devices at its facilities in response to environmental
considerations. This has impacted the cost of new facilities and
equipment and has been considered a normal, recurring cost of
LL&E's ongoing operations and not an extraordinary cost of
compliance with governmental regulations. LL&E believes that the
amount of presently known expenditures that will be incurred
primarily for environmental controls over the next two to three
years will not have a material adverse effect on its results of
operations, cash flow or financial position. However, as
additional laws or regulations regarding the protection of the
environment are adopted, become effective, or are hereafter
interpreted, there is no assurance that they will not have such an
effect.
<PAGE>
<PAGE>
As a result of anticipated new regulations promulgated under
the Clean Air Act Amendments of 1990 (CAAA), additional costs may
be incurred at the Company's refining operations and larger
production facilities. These regulations are expected to be
finalized over the next two to five years with implementation
taking effect on a regulatory schedule extending into future years.
Since the Company's operations are located in areas currently
classified as attainment areas for criteria air pollutants, and
most of the Company's operations are below the expected threshold
levels of hazardous air emissions to be regulated, at this time the
Company does not believe that the cost of compliance with the new
CAAA regulations will have a material adverse effect on its results
of operations, cash flow or financial position.
LL&E has received notice from the Environmental Protection
Agency (EPA) that the Company is one of many Potentially
Responsible Parties (PRP) under the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, with respect
to three National Priorities List sites in Abbeville, Louisiana
known as the "D.L. Mud," "Gulf Coast Vacuum" and "PAB Oil and
Chemical" sites. Additionally, in 1993, the Company acquired NERCO
Oil & Gas, Inc. (NERCO), which is also named a PRP at the Gulf
Coast Vacuum and the D.L. Mud sites. With respect to the Gulf
Coast Vacuum site, the Company has entered into a de minimis
Consent Agreement with EPA on behalf of itself and NERCO, which
resolves the Company's and NERCO's liability for remediation of the
site for cash consideration of an immaterial amount. With respect
to D.L. Mud and the PAB Oil and Chemical sites, based on the
Company's evaluation of the potential total cleanup costs, its
estimate of its potential exposure, and the viability of the other
PRPs, the Company believes that any costs ultimately required to be
borne by it at these sites will not have a material adverse effect
on its results of operations, cash flow or financial position.
In view of recent complaints against other oil and gas
companies under the Inventory Update Rule promulgated under the
Toxic Substances Control Act, the Company has investigated its
obligations to report the manufacture and distribution of certain
of its products with respect thereto. As a result of the Company's
investigation, the Company has notified and is meeting with the
appropriate regulatory authorities to resolve its liability, if
any. Based on currently available information, the Company
believes that sanctions, if any, will not have a material adverse
effect on its results of operations, cash flow or financial
position.
<PAGE>
<PAGE>
ITEM 3. LEGAL PROCEEDINGS.
Information regarding the Company's legal proceedings is
presented in Note 15 under the heading "Notes to Consolidated
Financial Statements" in Part II, Item 8. - "Financial Statements
and Supplementary Data."
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None. <PAGE>
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
NAME AGE POSITIONS
_________________________________________________________________
H. Leighton Steward (60)
Chairman of the Board, President
and Chief Executive Officer since
1989.
Richard A. Bachmann (50)
Director since 1989. Executive
Vice President, Finance and
Administration and Chief
Financial Officer since 1985.
John F. Greene (54)
Director since 1989. Executive
Vice President, Exploration and
Production since 1985.
Jerry D. Carlisle (49) Vice President and Controller
since 1984.
Robert J. Chebul (47) Vice President since 1991. Held
various managerial positions,
including District Manager from
1988 to 1991.
William N. Hahne (43) Vice President since December
1994. General Manager-Production
from September 1993 to December
1994. Vice President of NERCO
Oil & Gas, Inc. from 1991 to
September 1993. Held various
technical and managerial posi-
tions with Union Texas Petroleum
and Union Oil Company of
California from 1973 to 1991.
John O. Lyles (49)
Vice President since 1992.
Vice President and Treasurer
from 1984 to 1992.
Joel M. Wilkinson (59)
Vice President since 1988.
John A. Williams (50) Vice President since 1988.
Frederick J. Plaeger, II (41)
General Counsel and Corporate
Secretary since 1992. Corporate
Secretary and Senior Counsel from
1989 to 1992.
Louis A. Raspino (43)
Treasurer since 1992. Assistant
Treasurer from 1984 to 1992.
Each officer holds office until the first meeting of the Board
of Directors following the annual meeting of shareholders and
until his successor shall have been elected and qualified, or until
he shall have resigned or been removed as provided in the LL&E By-
Laws. No family relationship exists between any of the above
listed executive officers or between any such executive officer and
any Director of LL&E.<PAGE>
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
Information regarding the Company's Capital Stock is presented
under the heading "Capital Stock, Dividends and Other Market Data"
in Item 7. - "Management's Discussion and Analysis of Financial
Condition and Results of Operations." and under the heading "Market
Price and Dividend Data" in Item 8. - "Financial Statements and
Supplementary Data."
ITEM 6. SELECTED FINANCIAL DATA.
The information required hereunder is presented under the
heading "Selected Financial Data" in Item 8. - "Financial
Statements and Supplementary Data."
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The information required hereunder is presented under the
heading "Management's Discussion and Analysis" in Item 8. -
"Financial Statements and Supplementary Data."
<PAGE>
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The following consolidated financial statements and
supplementary data of the Company are included herein:
Page herein
Financial Statements:
Report of Management 28
Independent Auditors' Report 29
Consolidated Balance Sheets 30
Consolidated Statements of Earnings (Loss) 31
Consolidated Statements of Stockholders' Equity 32
Consolidated Statements of Cash Flows 33
Notes to Consolidated Financial Statements 34
Unaudited Supplemental Data:
Management's Discussion and Analysis 53
Data on Oil and Gas Activities 59
Oil and Gas Operating Data 67
Refining Operating Data 68
Oil and Gas Properties 69
Wells Drilled 70
Selected Financial Data 71
Market Price and Dividend Data 72
Quarterly Data 73
The following financial statements of 50% or less owned persons
required by Regulation S-X, Rule 3-09, are included herein:
Page herein
MaraLou Netherlands Partnership and its wholly owned
consolidated subsidiary, CLAM Petroleum Company:
Independent Auditors' Report 74
Consolidated Balance Sheets 75
Consolidated Statements of Income 76
Consolidated Statements of Partners' Capital 77
Consolidated Statements of Cash Flows 79
Notes to Consolidated Financial Statements 81
<PAGE>
<PAGE>
_________________________________________________________________
REPORT OF MANAGEMENT
_________________________________________________________________
The consolidated financial statements of The Louisiana Land and
Exploration Company and subsidiaries and the related information
included in this Annual Report have been prepared by Management in
accordance with generally accepted accounting principles and
include certain estimates and judgments which Management considers
appropriate. To meet its responsibilities for the fair
presentation of consolidated financial statements, Management
maintains a system of internal controls, including internal
accounting controls, considered appropriate in view of the costs
associated with the benefits to be derived. In addition, the Audit
Committee meets periodically with the Company's Management, the
internal auditors and KPMG Peat Marwick LLP, independent auditors,
to review and discuss audit activities and results, internal
control procedures and other matters relative to accounting and
financial reporting.
Based on the results of these procedures, Management is of the
opinion that the system of internal controls in effect during the
year ended December 31, 1994 provided reasonable assurance that all
transactions were executed in accordance with Management's
authorizations, that assets were safeguarded from loss and
unauthorized use and that the accounting records and financial
statements properly reflect the transactions of the Company.
H. Leighton Steward Richard A. Bachmann
Chairman, President and Executive Vice President and
Chief Executive Officer Chief Financial Officer
<PAGE>
<PAGE>
_________________________________________________________________
INDEPENDENT AUDITORS' REPORT
_________________________________________________________________
The Board of Directors and Stockholders
The Louisiana Land and Exploration Company:
We have audited the accompanying consolidated balance sheets of The
Louisiana Land and Exploration Company and subsidiaries as of
December 31, 1994 and 1993, and the related consolidated statements
of earnings (loss), stockholders' equity, and cash flows for each
of the years in the three-year period ended December 31, 1994.
These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of The Louisiana Land and Exploration Company and
subsidiaries as of December 31, 1994 and 1993, and the results of
their operations and their cash flows for each of the years in the
three-year period ended December 31, 1994 in conformity with
generally accepted accounting principles.
As discussed in Notes 12 and 13 to the consolidated financial
statements, in 1993 the Company adopted the methods of accounting
for income taxes and postretirement benefits other than pensions
prescribed by Statements of Financial Accounting Standards Nos. 109
and 106, respectively. In addition, as discussed in Note 2 to the
consolidated financial statements, in 1994 the Company changed its
methods of assessing the impairment of the capitalized costs of
proved oil and gas properties and other long-lived assets.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
New Orleans, Louisiana
February 3, 1995<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
CONSOLIDATED BALANCE SHEETS The Louisiana Land and Exploration
Company and Subsidiaries
December 31, 1994 and 1993
(Millions of dollars)
ASSETS 1994 1993
_________________________________________________________________________________________
<S> <C> <C>
CURRENT ASSETS:
Cash, including cash equivalents (1994-$8.6; 1993-$15.5) $ 12.5 33.3
Accounts and notes receivable 126.4 109.7
Income taxes receivable 1.9 5.2
Inventories 31.8 26.8
Prepaid expenses 8.9 12.7
Deferred income taxes 2.6 2.6
_________________________________________________________________________________________
Total current assets 184.1 190.3
_________________________________________________________________________________________
Investments in affiliates 23.4 23.5
Net property, plant and equipment, at cost, under the
successful efforts method of accounting for oil
and gas properties 1,240.4 1,561.0
Other assets 30.2 63.9
_________________________________________________________________________________________
$ 1,478.1 1,838.7
_________________________________________________________________________________________
LIABILITIES AND STOCKHOLDERS' EQUITY
_________________________________________________________________________________________
CURRENT LIABILITIES:
Accounts payable and accrued expenses 187.7 170.9
Income taxes payable 2.8 3.8
_________________________________________________________________________________________
Total current liabilities 190.5 174.7
_________________________________________________________________________________________
Deferred income taxes 40.0 151.2
Long-term debt 739.5 734.5
Other liabilities 155.7 178.5
STOCKHOLDERS' EQUITY:
Capital stock of $.15 par value. Authorized-100,000,000
shares; issued-38,004,537 shares 5.7 5.7
Additional paid-in capital 87.3 82.9
Retained earnings 424.2 684.4
_________________________________________________________________________________________
517.2 773.0
Loans to ESOP (5.2) (8.8)
Cost of capital stock in treasury-4,624,729 shares in
1994 and 4,831,574 shares in 1993 (159.6) (164.4)
_________________________________________________________________________________________
TOTAL STOCKHOLDERS' EQUITY 352.4 599.8
_________________________________________________________________________________________
$ 1,478.1 1,838.7
_________________________________________________________________________________________
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) The Louisiana Land and Exploration
Company and Subsidiaries
Years ended December 31, 1994, 1993 and 1992
(Millions, except per share data)
<CAPTION>
1994 1993 1992
_________________________________________________________________________________________
<S> <C> <C> <C>
REVENUES:
Oil and gas $ 421.2 370.1 323.9
Refined products 361.3 400.2 441.9
Gain on sales of oil and gas properties 6.8 23.5 -
Other (interest, 1994-$1.6; 1993-$3.4; 1992-$3.6) 12.2 21.6 21.6
_________________________________________________________________________________________
801.5 815.4 787.4
_________________________________________________________________________________________
COSTS AND EXPENSES:
Lease operating and facility expenses 116.1 106.8 98.5
Refinery cost of sales and operating expenses 354.5 403.4 424.3
Dry holes and exploratory charges 69.7 48.8 41.5
Depletion, depreciation and amortization 202.2 129.8 106.5
Taxes, other than on earnings 25.4 24.7 24.4
General, administrative and other expenses 44.6 49.0 42.3
Interest and debt expenses 25.6 28.3 24.6
Restructuring charges - - 52.4
Reversal of litigation accrual (10.0) - (25.0)
Write-down of petroleum assets 319.0 - -
_________________________________________________________________________________________
1,147.1 790.8 789.5
_________________________________________________________________________________________
Earnings (loss) before income taxes (345.6) 24.6 (2.1)
Income tax expense (benefit) (118.7) 11.9 (.9)
_________________________________________________________________________________________
Earnings (loss) before extraordinary
item and cumulative effect of changes
in accounting principles (226.9) 12.7 (1.2)
Extraordinary item: loss on early retirement
of debt - (3.3) (5.6)
Cumulative effect on years prior to 1993
of change in accounting principle for
income taxes - 13.7 -
Cumulative effect on years prior to 1993
of change in accounting principle for
postretirement benefits other than
pensions - (13.5) -
_________________________________________________________________________________________
NET EARNINGS (LOSS) $ (226.9) 9.6 (6.8)
_________________________________________________________________________________________
Primary and fully diluted earnings (loss) per
share before extraordinary item and cumulative
effect of changes in accounting principles (6.80) 0.43 (0.04)
Extraordinary item: loss on early retirement
of debt - (0.11) (0.20)
Change in accounting principle for income taxes - 0.47 -
Change in accounting principle for post-
retirement benefits - (0.46) -
_________________________________________________________________________________________
PRIMARY AND FULLY DILUTED EARNINGS (LOSS) PER SHARE $ (6.80) 0.33 (0.24)
_________________________________________________________________________________________
AVERAGE SHARES 33.4 29.5 28.4
_________________________________________________________________________________________
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
________________________________________________________________________________________
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY The Louisiana Land and Exploration
Company and Subsidiaries
Years ended December 31, 1994, 1993 and 1992
(Millions of dollars, except per share data)
<CAPTION>
Additional Treasury stock
paid-in Retained Loans to Number of
capital earnings ESOP shares Cost
_________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1991 $41.3 $739.6 $(14.8) 9,718,025 $(325.3)
Net loss - (6.8) - - -
Cash dividends ($1.00 per
share) - (28.3) - - -
Repayment of loans to ESOP - - 3.0 - -
Other .2 - - (61,858) 2.0
_________________________________________________________________________________________
Balance at December 31, 1992 41.5 704.5 (11.8) 9,656,167 (323.3)
Net earnings - 9.6 - - -
Sale of treasury stock 40.7 - - (4,400,000) 148.1
Cash dividends ($1.00 per
share) - (29.8) - - -
Repayment of loans to ESOP - - 3.0 - -
Purchase of treasury stock - - - 40,247 (1.5)
Other .7 .1 - (464,840) 12.3
_________________________________________________________________________________________
Balance at December 31, 1993 82.9 684.4 (8.8) 4,831,574 (164.4)
Net loss - (226.9) - - -
Cash dividends ($1.00 per
share) - (33.3) - - -
Repayment of loans to ESOP - - 3.6 - -
Other 4.4 - - (206,845) 4.8
_________________________________________________________________________________________
Balance at December 31, 1994 $87.3 $424.2 $ (5.2) 4,624,729 $(159.6)
_________________________________________________________________________________________
Capital stock of $.15 par value was unchanged during the three-year period ended December
31, 1994.
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
CONSOLIDATED STATEMENTS OF CASH FLOWS The Louisiana Land and Exploration
Company and Subsidiaries
Years ended December 31, 1994, 1993 and 1992
(Millions of dollars)
<CAPTION>
1994 1993 1992
_________________________________________________________________________________________
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $(226.9) 9.6 (6.8)
Adjustments to reconcile to cash flows from
operations:
Write-down of petroleum assets 319.0 - -
Changes in accounting principles, net - (.2) -
Gain on sales of oil and gas properties (6.8) (23.5) -
Restructuring charges - - 52.4
Extraordinary item: loss on early
retirement of debt - 3.3 5.6
Depletion, depreciation and amortization 202.2 129.8 106.5
Deferred income taxes (111.2) 9.2 5.0
Dry holes and impairment charges 36.4 21.8 19.2
Other 2.2 22.2 5.8
_________________________________________________________________________________________
214.9 172.2 187.7
Changes in operating assets and liabilities,
net of acquisitions:
Net (increase) decrease in receivables (9.0) 4.3 44.8
Net increase in inventories (5.0) (4.9) (1.8)
Net (increase) decrease in prepaid items 3.8 (5.0) 3.4
Net increase (decrease) in payables .7 2.7 (52.0)
Other 6.7 9.6 (3.4)
_________________________________________________________________________________________
Net cash flows from operating activities 212.1 178.9 178.7
_________________________________________________________________________________________
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions - (547.9) -
Capital expenditures (236.8) (171.7) (153.8)
Proceeds from asset sales 15.6 43.7 48.5
Other (16.3) (46.4) (11.0)
_________________________________________________________________________________________
Net cash flows from investing activities (237.5) (722.3) (116.3)
_________________________________________________________________________________________
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of treasury stock - 188.8 -
Additions to long-term debt 239.7 492.0 100.0
Repayments of long-term debt (234.7) (104.6) (116.8)
Dividends (33.3) (29.8) (28.3)
Advances against cash surrender value 34.4 - -
Repayment of loans to ESOP 3.6 3.0 3.0
Purchase of treasury stock - (1.5) -
Other (5.1) (11.7) (6.5)
_________________________________________________________________________________________
Net cash flows from financing activities 4.6 536.2 (48.6)
_________________________________________________________________________________________
Increase (decrease) in cash and cash equivalents $ (20.8) (7.2) 13.8
_________________________________________________________________________________________
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<PAGE>
_________________________________________________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Louisiana Land
and Exploration
Company and
Subsidiaries
December 31, 1994, 1993 and 1992
_________________________________________________________________
1. Summary of Significant Accounting Policies
a. Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolidation.
Investments in affiliates are accounted for under the equity
method. Certain amounts have been reclassified to conform to the
current period's presentation.
b. Petroleum Operations
The Company uses the successful efforts method of accounting for
its oil and gas operations. The costs of unproved leaseholds are
capitalized pending the results of exploration efforts.
Significant unproved leasehold costs are assessed periodically, on
a property-by-property basis, and a loss is recognized to the
extent, if any, that the cost of the property has been impaired.
The costs of individually insignificant unproved leaseholds
estimated to be nonproductive are amortized over estimated holding
periods based on historical experience. The Company assesses the
impairment of capitalized costs of proved oil and gas properties by
comparing net capitalized costs to undiscounted future net cash
flows after estimated income taxes on a field-by-field basis using
period-end prices. For measurement purposes, future net cash flows
are determined using period-end prices adjusted for changes in
prices as of the date of the auditors' report on the Company's
consoli-dated financial statements. Exploratory dry holes and
geological and geophysical charges are expensed. Depletion of
proved leaseholds and amortization and depreciation of the costs of
all development and successful exploratory drilling are provided
by the unit-of-production method based upon estimates of proved and
proved-developed oil and gas reserves, respectively, for each
property. The estimated costs of dismantling and abandoning
offshore and significant onshore facilities are provided currently
using the unit-of-production method; such costs for other onshore
facilities are insignificant and are expensed as incurred. The
costs of refining and processing equipment and facilities are
depreciated on a straight-line basis over their estimated useful
lives.
The Company uses the entitlement method for recording natural gas
sales revenues. Under the entitlement method of accounting,
revenue is recorded based on the Company's net working interest in
field production. Deliveries of natural gas in excess of the
Company's working interest are recorded as liabilities while under-
deliveries are recorded as receivables. Such amounts are
immaterial.
<PAGE>
<PAGE>
c. Financial Instruments and Hedging Activities
The Company's anticipated refinery purchases of crude oil and sales
of refined petroleum products and its committed British pound
currency expenditures are periodically hedged against market risks
through the use of forward/futures contracts. The gains and losses
on these contracts are included in the valuation of the
transactions being hedged. The Company also manages the interest
rate components of its debt portfolio through the use of swap
agreements. Gains and losses on swap agreements are accrued to
interest expense on a monthly basis over the terms of the
agreements.
d. Functional Currency
The foreign exploration and production operations of the Company's
subsidiaries and its foreign affiliate, CLAM Petroleum Company, are
considered an extension of the parent company's operations. The
assets, liabilities and operations of these companies are therefore
measured using the United States dollar as the functional currency.
As a result, foreign currency translation/transaction adjustments
(which were not material) are included in net earnings.
e. Income Taxes
The Company and its domestic subsidiaries file a consolidated
federal income tax return. In 1993, Statement of Financial
Accounting Standards No. 109 (SFAS No. 109) - "Accounting for
Income Taxes" was adopted effective as of January 1, 1993. The
Company applied the provisions of the SFAS No. 109 without
restating prior years' financial statements. For the Company, the
most significant change in SFAS No. 109 is that deferred tax assets
are initially recognized (i) for differences between the financial
statement carrying amounts and tax bases of assets and liabilities
that will result in future deductible amounts and (ii) for
operating loss and tax credit carryforwards. A valuation allowance
would then be established to reduce that deferred tax asset if it
is more likely than not that the related tax benefits will not be
realized. Previously, the recognition of deferred tax benefits was
limited to benefits that would offset deferred tax liabilities and
benefits that could be realized through carryback to recover taxes
paid for the current year or prior years.
f. Earnings (Loss) Per Share
Primary earnings (loss) per share are calculated on the weighted
average number of shares outstanding during each period for capital
stock and, when dilutive, capital stock equivalents, which assumes
exercise of stock options. Fully diluted earnings (loss) per share
are calculated on the same basis, but also assumes conversion, when
dilutive, of the convertible subordinated debentures for the period
outstanding prior to the call for redemption on September 25, 1992,
and elimination of the related interest expense, net of income
taxes.
<PAGE>
<PAGE>
2. Write-down of Petroleum Assets
In the fourth quarter of 1994, the Company changed its method of
periodically assessing the impairment of capitalized costs of
proved oil and gas properties. Historically, this assessment has
been determined by comparing the total capitalized costs of oil and
gas properties less accumulated depletion, depreciation and
amortization and related deferred income taxes (net capitalized
costs) to undiscounted future net cash flows of proved oil and gas
reserves after estimated income taxes. Under the revised method,
the Company assesses impairment by comparing net capitalized costs
to undiscounted future net cash flows after estimated income taxes
on a field-by-field basis using period-end prices. For measurement
purposes, future net cash flows are determined using period-end
prices adjusted for changes in prices as of the date of the
auditors' report on the Company's consolidated financial
statements. Prices utilized for measurement purposes and expected
costs are held constant. As a result of the change in method, the
Company reduced the capitalized costs of its oil and gas properties
by a fourth quarter charge against earnings of approximately $280
million (before income tax benefits of $95 million).
In addition, the Company changed its method of measuring the
impairment of other long-lived assets, specifically facilities,
from a measurement based upon undiscounted future net cash flows to
a measurement based upon fair value for assets where it is
determined that net capitalized costs exceed undiscounted future
net cash flows. As a result of this change, the Company reduced
the capitalized costs of its refinery assets by a fourth quarter
charge against earnings of $39 million (before income tax benefits
of $13.7 million).
The Company believes that the changes discussed above are
preferable because they better reflect, on a more current basis,
the impact of changes in the financial components inherent in the
calculation of the impairment of capitalized costs of proved
petroleum properties and other long-lived assets. Because the
above are changes in accounting estimates recognized in whole or in
part by changes in accounting principles, the effects are reported
as part of earnings (losses) before income taxes.
3. Property Acquisitions and Dispositions
Acquisitions
In September 1993, the Company completed the acquisition of all of
the issued and outstanding common stock of NERCO Oil & Gas, Inc.
(NERCO) for a cash purchase price of approximately $354 million
plus associated expenses. The acquisition was financed initially
through the credit facility discussed in Note 10. The cost of the
acquisition was allocated under the purchase method of accounting
based on the fair value of the assets acquired and liabilities
assumed.
<PAGE>
<PAGE>
The results of NERCO's operations were consolidated with the
Company's effective October 1, 1993. Pro forma combined results of
operations of the Company and NERCO, including appropriate purchase
accounting adjustments for the years ending December 31, 1993 and
1992, as though the acquisition had taken place on January 1 of the
respective years, are as follows:
<TABLE>
<CAPTION>
(Millions of dollars, except per share data) 1993 1992
________________________________________________________________________________________
<S> <C> <C>
Revenues $ 907.1 926.1
________________________________________________________________________________________
Earnings (loss) before extraordinary items and cumulative effect
of changes in accounting principles (.3) (11.5)
________________________________________________________________________________________
Net earnings (loss) (3.4) (17.1)
________________________________________________________________________________________
Primary and fully diluted earnings (loss) per share $ (0.09) (0.53)
________________________________________________________________________________________
</TABLE>
In December 1993, the Company acquired an 11.26% working interest
in Block 16/17 in the U.K. North Sea (T-Block) from British Gas
Exploration and Production Limited for approximately $187 million
in cash. The purchase was financed initially through the credit
facility discussed in Note 10. Initial production from T-Block
came onstream in late 1993 and had an insignificant impact on
results of operations.
Dispositions
In 1994, the Company sold various domestic oil and gas producing
properties for approximately $15 million resulting in a gain of
$6.8 million (before income taxes of $2.3 million).
In December 1993, the Company completed the sale of certain oil and
gas producing properties, undeveloped acreage and seismic data
located in southern Alberta, Canada for approximately $42.8 million
resulting in a gain, net of associated expenses, of approximately
$23.5 million (before income taxes of $10.3 million). The
properties sold generated revenues of $12.1 million and $15.3
million and pretax earnings of $1.2 million and $1.6 million in
1993 and 1992, respectively.
4. Cash Flows
All of the Company's cash investments are liquid short-term debt
instruments and are considered to be cash equivalents. These cash
investments are carried in the accompanying balance sheets at cost
plus accrued interest, which approximates fair value. Cash flows
related to hedging activities through forward/futures contracts are
classified in the same categories as that from the items being
hedged.
In 1992, the Company acquired certain proved properties for
approximately $36 million and incurred a short-term liability which
was outstanding at year end, the settlement of which is included in
1993 cash flows from investing activities. <PAGE>
<PAGE>
5. Restructuring and Other Nonrecurring Charges/Credits
As reported in prior years, the State of Louisiana had asserted
claims against the Company in its capacity as sublessor to Texaco
of certain State leases, based upon Texaco's alleged royalty
miscalculations. In February 1994, a settlement was agreed to by
all parties. The amounts previously provided in the financial
statements for this litigation exceeded the cash payment required
by $10 million, which was reversed during the first quarter of
1994. In the first quarter of 1992, the Company had similarly
reduced its litigation accrual for the State of Louisiana gas
royalty claim by $25 million. These adjustments to the litigation
accrual are included in "Net increase (decrease) in payables" in
the accompanying Consolidated Statements of Cash Flows.
In the first quarter of 1992, the Company recorded a charge of
$52.4 million (before income tax benefits of approximately $17.8
million) against earnings to provide for the restructuring of its
oil and gas operations. This charge included provisions for
estimated losses on the disposition of selected domestic properties
of $47.6 million (both developed and undeveloped) and costs
associated with staff retirements, reductions and related
transition expenses of $4.8 million. These charges were reduced by
the aforementioned $25 million reduction in a litigation accrual.
The Company completed the sale of substantially all of the selected
properties for a purchase price of $48.1 million in the third
quarter of 1992 resulting in a gain of approximately $8 million
which was applied against the restructuring charges.
6. Inventories
<TABLE>
<CAPTION>
(Millions of dollars) 1994 1993
_________________________________________________________________________________________
<S> <C> <C>
Refinery inventories at lower of (last-in,
first-out) cost or market $30.8 24.1
Repair parts, supplies and other, at lower of
average cost or market 1.0 2.7
_________________________________________________________________________________________
$31.8 26.8
_________________________________________________________________________________________
</TABLE>
At December 31, 1993, the LIFO cost of refinery inventories
exceeded their current market values which resulted in a non-cash
charge to earnings of $6.5 million (before income tax benefits of
$2.3 million) which is included in "Refinery cost of sales and
operating expenses" in the accompanying Consolidated Statements of
Earnings (Loss).
<PAGE>
<PAGE>
<TABLE>
7. Investments in Affiliates
<CAPTION>
Investment
% (Millions of dollars)
Investee Industry Location Owned 1994 1993
_________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
MaraLou (CLAM
Petroleum Oil &
Company) Gas North Sea 50% $18.9 20.8
Other Various U.S. Various 4.5 2.7
_________________________________________________________________________________________
$23.4 23.5
_________________________________________________________________________________________
</TABLE>
The Company's equity in earnings of affiliates, which is included
in "Other revenues" in the accompanying Consolidated Statements of
Earnings (Loss), amounted to $4.2 million, $2.4 million and $6.9
million in 1994, 1993 and 1992, respectively. Cash dividends
received from MaraLou/CLAM in 1994, 1993 and 1992 totaled $6
million, $10 million and $7.5 million, respectively.
The consolidated financial position of MaraLou and its wholly owned
subsidiary, CLAM, as of December 31, 1994 and 1993 and the results
of their operations for each of the years in the three-year period
ended December 31, 1994 are summarized below.
<TABLE>
<CAPTION>
(Millions of dollars) 1994 1993
_________________________________________________________________________________________
<S> <C> <C>
Current assets $ 24.0 28.0
_________________________________________________________________________________________
Noncurrent assets 175.3 170.8
_________________________________________________________________________________________
Current liabilities 15.8 30.2
_________________________________________________________________________________________
Noncurrent liabilities 145.7 127.0
_________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
(Millions of dollars) 1994 1993 1992
_________________________________________________________________________________________
<S> <C> <C> <C>
Gross revenues $ 68.7 61.1 82.9
_________________________________________________________________________________________
Operating profit 36.2 30.1 42.4
_________________________________________________________________________________________
Earnings before cumulative effect of
change in accounting principle 8.2 10.9 13.8
_________________________________________________________________________________________
Net earnings 8.2 4.9 13.8
_________________________________________________________________________________________
</TABLE>
MaraLou applied the provisions of SFAS No. 109 as of January 1,
1993 without restating prior years' financial statements. Upon
adoption, MaraLou recorded a non-cash charge to earnings of $6
million ($3 million net to the Company's interest).
The common stock of CLAM is pledged as collateral under a revolving
credit agreement between MaraLou and a group of banks. The credit
agreement is nonrecourse to the partners of MaraLou.
<PAGE>
<PAGE>
8. Property, Plant and Equipment
<TABLE>
<CAPTION>
(Millions of dollars) 1994 1993
_________________________________________________________________________________________
<S> <C> <C>
Petroleum properties:
Proved $2,530.3 2,507.2
Unproved 170.6 127.5
Refining and marketing 276.6 242.8
_________________________________________________________________________________________
2,977.5 2,877.5
Other properties 72.4 69.0
_________________________________________________________________________________________
3,049.9 2,946.5
Less accumulated depletion, depreciation and amortization 1,809.5 1,385.5
_________________________________________________________________________________________
$1,240.4 1,561.0
_________________________________________________________________________________________
</TABLE>
9. Financial Instruments and Hedging Activities
The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. They are
used solely to manage well-defined interest rate, foreign currency
and commodity price risks.
At December 31, 1994, the Company had $100 million of notional
value interest rate swap agreements terminating in 1997; none were
in place at the end of 1993 (see Note 11). These agreements allow
the Company to manage fixed- and variable-rate interest exposure by
converting a portion of the Company's fixed-rate exposure to
variable rate. The fair value of the interest rate swap agreements
at December 31, 1994 amounted to $4.7 million, which represents the
Company's cost to terminate the agreements. The Company also had
$11.7 million of British pound currency forward contracts maturing
from 1995 through 1997. Such contracts totaled $24.6 million at
December 31, 1993. These contracts lock-in the exchange rate for
a portion of the British pounds needed to fund the Company's future
expenditures in the North Sea. British pound currency forward
contracts are valued at the net benefit or cost to the Company to
unwind its forward position, which was estimated to be a benefit of
$.7 million and a cost of $1 million at December 31, 1994 and 1993,
respectively.
The carrying amounts of cash and cash equivalents and long-term,
variable-rate debt approximate fair value. The Company estimates
the fair value of its long-term, fixed-rate debt as $353 million
and $546 million at December 31, 1994 and 1993, respectively, based
upon quoted market prices for the same or similar issues. Such
debt was recorded at carrying values of $400 million and $533
million, resulting in an unrealized gain of $47 million and an
unrealized loss of $13 million for the respective periods.
The Company also used futures, forwards, options and swap contracts
to reduce price volatility of refinery feedstock and the sale of
refined products produced therefrom. Although generally settled in
cash, these contracts permit settlement by delivery of commodities.
At December 31, 1994, the Company had contracts maturing monthly
<PAGE>
<PAGE>
through November 1995 covering the net purchase of 1.4 million
barrels of feedstock totaling $25.5 million and the net sale of 1.4
million barrels of refined products totaling $30.1 million. Gains
or losses resulting from market changes will be offset by losses or
gains on the Company's hedged inventory or production. The Company
processed over 17 million barrels of crude oil and sold more than
19 million barrels of refined products in 1994 and had
approximately 1.9 million barrels of crude oil and petroleum
products in its refinery inventories at December 31, 1994.
These financial instruments are generally executed on the New York
Mercantile Exchange or with major financial or commodities trading
institutions which, along with cash and cash equivalents and
accounts receivable, expose the Company to acceptable levels of
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.
10. Long-term Debt
<TABLE>
<CAPTION>
(Millions of dollars) 1994 1993
_________________________________________________________________________________________
<S> <C> <C>
Revolving Credit Facility $ 64.0 160.0
7-5/8% Debentures due 2013 100.0 100.0
7.65% Debentures due 2023 200.0 200.0
Term Loan with banks - 133.5
8-1/4% Notes due 2002 100.0 100.0
Commercial paper notes 271.7 32.0
Notes payable to bank for financing of leveraged ESOP 3.5 8.8
Other issues .3 .2
_________________________________________________________________________________________
Total long-term debt $739.5 734.5
_________________________________________________________________________________________
</TABLE>
Debt maturities for the next five years follows:
<TABLE>
<CAPTION>
(Millions of dollars)
_________________________________________________________________________________________
<S> <C>
1995 $ -
_________________________________________________________________________________________
1996 29.2
_________________________________________________________________________________________
1997 80.0
_________________________________________________________________________________________
1998 80.0
_________________________________________________________________________________________
1999 80.0
_________________________________________________________________________________________
</TABLE>
To finance the aforementioned NERCO and T-Block acquisitions (see
Note 3), refinance certain existing indebtedness and fund general
corporate activities, the Company entered into a $790 million
credit facility with a syndicate of banks in September 1993.
Commitments under the agreement originally consisted of (i) a $540
million revolving credit facility and (ii) a $250 million term loan
facility (which was utilized and repaid and is no longer available
<PAGE>
<PAGE>
to the Company). The revolving credit facility, which was
subsequently reduced to $450 million, was renegotiated in 1994 and
converted to a reducing revolving loan. The commitments will be
reduced by $20 million quarterly from June 1995 through September
2000. Amounts outstanding under the revolving credit facility bear
interest at fluctuating rates subject to certain options chosen in
advance by the Company. Borrowings under the facility in 1994 were
at an average interest rate of 4.8%. Borrowings under the
revolving credit facility and the term loan facility during 1993
were at average interest rates of 5%. Fees ranging from .125% to
.30%, based upon financial tests, debt ratings and subject to
certain options chosen by the Company, are charged on the facility.
In June 1992, the Company registered under the Securities and
Exchange Commission's shelf registration rules $300 million of
senior unsecured debt securities to be issued from time to time on
terms to be then determined. In June 1992, the Company sold $100
million of 8-1/4% Notes due 2002. In April 1993, the Company
completed its second $100 million public offering of debt
securities under the existing shelf registration filed in 1992 with
the issuance of 7-5/8% Debentures due 2013. In November 1993, the
Company registered up to $500 million of senior unsecured debt
securities under the Securities and Exchange Commission's shelf
registration rules, which included the $100 million available under
the shelf registration filed in 1992. In December 1993, the
Company completed a $200 million public offering with the issuance
of 7.65% Debentures due 2023.
In 1987 and 1988, the Company borrowed $10.2 million and $14
million, respectively, from a bank (unsecured) and loaned the
proceeds to the leveraged employee stock ownership plan (ESOP) to
fund its purchases of 836,368 shares of Company capital stock. The
loans to the ESOP are secured by the Company's capital stock owned
by the ESOP. The interest rates vary with time and market
conditions and are determined by the bank subject to certain
options chosen in advance by the Company. The average interest
rates for both loans in 1994 and 1993 were 4% and 3.1%,
respectively.
During 1994, the average monthly balance of commercial paper notes
outstanding was $118 million; the maximum amount outstanding during
that period was $301 million. Commercial paper borrowings during
1994 and 1993 were at average interest rates of 4.6% and 3.3%,
respectively. The commercial paper program is supported by the
unused portion of the aforementioned revolving credit facility.
The Term Loan with banks, which was retired in January 1994, was
unsecured and was payable in July 1994. The balance was excluded
from current liabilities as the Company refinanced the balance due
on a long-term basis utilizing the revolving credit facility. The
early retirement, completed at a price of 102.4% of principal, and
the premium, along with unamortized discount, resulted in an
extraordinary loss of $3.3 million, after income tax benefits of
<PAGE>
<PAGE>
$1.7 million. In September 1992, the Company announced the call
for early retirement of the 8-1/2% Convertible Subordinated
Debentures due September 2000. The redemption, completed at a
price of 101.66% of principal, and the premium, along with
unamortized discount, resulted in an extraordinary loss of $5.6
million, after income tax benefits of $2.8 million.
11. Interest and Debt Expenses
For the years ended December 31, 1994, 1993 and 1992, interest
costs incurred, which were essentially the same as interest
payments, were $47.9 million, $47 million and $37.5 million,
respectively, of which $22.3 million, $18.7 million and $12.9
million, respectively, were capitalized as part of the cost of
property, plant and equipment.
In connection with the credit facility discussed in Note 10, bank
fees and other costs totaled $8.1 million of which $6.7 million was
charged to interest and debt expenses in the fourth quarter of
1993.
In 1992 and 1993, the Company participated in interest rate swaps
(which were to terminate in 1994 and 1996, respectively) having a
notional principal amount totaling $200 million. Under the
agreements, the Company received an annual fixed rate and paid a
variable rate based on the six-month London Interbank Offered Rate.
In September 1993, the Company terminated both agreements and
deferred a gain of approximately $3.6 million which will be
recognized over the remaining terms of the respective agreements as
reductions of interest expense.
12. Income Taxes
As explained in Note 1(e), the Company adopted SFAS No. 109
effective January 1, 1993. Upon adoption, the Company recorded a
non-cash credit to earnings in the first quarter of 1993 of $13.7
million which represented the recognition of deferred tax assets
existing at December 31, 1992.
With the enactment of the Budget Reconciliation Act of 1993, the
Federal statutory corporate income tax rate was increased from 34%
to 35% retroactive to January 1, 1993. As a result, the Company
increased its deferred income tax liabilities as of January 1, 1993
with a non-cash charge to income tax expense of $3 million in the
third quarter of 1993.
The components of earnings (loss) before income taxes were taxed
under the following jurisdictions:
<TABLE>
<CAPTION>
(Millions of dollars) 1994 1993 1992
_________________________________________________________________________________________
<S> <C> <C> <C>
Domestic $(322.0) 9.7 (15.9)
Foreign (23.6) 14.9 13.8
_________________________________________________________________________________________
$(345.6) 24.6 (2.1)
_________________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
Components of income tax expense (benefit) are as follows:
<TABLE>
<CAPTION>
(Millions of dollars) 1994 1993 1992
_________________________________________________________________________________________
<S> <C> <C> <C>
Current tax expense (benefit):
Federal $ (3.5) (3.5) (7.3)
State (.7) (.3) .1
Foreign (3.3) 6.5 1.3
_________________________________________________________________________________________
(7.5) 2.7 (5.9)
_________________________________________________________________________________________
Deferred tax expense (benefit):
Federal (109.2) 9.2 3.8
Foreign (2.0) - 1.2
_________________________________________________________________________________________
(111.2) 9.2 5.0
_________________________________________________________________________________________
$(118.7) 11.9 (.9)
_________________________________________________________________________________________
</TABLE>
Tax expense (benefit) differs from the amounts computed by applying
the U.S. Federal tax rate (1994-93 - 35%; 1992 - 34%) to earnings
(loss) before income tax. The reasons for the differences are as
follows:
<TABLE>
<CAPTION>
(Millions of dollars) 1994 1993 1992
_________________________________________________________________________________________
<S> <C> <C> <C>
Computed "expected" tax expense (benefit) $(121.0) 8.6 (.7)
Increases (reductions) in taxes resulting from:
Increase in Federal income tax rate - 3.0 -
Equity in earnings of foreign affiliates 4.5 (7.4) (1.3)
Foreign income taxes, net of Federal income tax
benefit (2.0) 8.4 3.1
Employee benefit plans (1.1) (.9) (1.2)
Percentage depletion (.2) (.1) (.3)
Other 1.1 .3 (.5)
_________________________________________________________________________________________
$(118.7) 11.9 (.9)
_________________________________________________________________________________________
</TABLE>
As a result of the prospective adoption of SFAS No. 109 effective
January 1, 1993, the following additional disclosures are presented
as of and for the years ended December 31, 1994 and 1993.
Total income tax expense (benefit) was allocated as follows:
<TABLE>
<CAPTION>
(Millions of dollars) 1994 1993
_________________________________________________________________________________________
<S> <C> <C>
Income (loss) before extraordinary item and changes in
accounting principles $(118.7) 11.9
Loss on early retirement of debt - (1.7)
Change in accounting principle for income taxes - (13.7)
Change in accounting principle for postretirement benefits - (7.0)
Stockholders' equity for compensation expense for tax purposes
in excess of amount recognized for financial reporting purposes (1.0) (1.8)
_________________________________________________________________________________________
$ (119.7) (12.3)
_________________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
The significant components of income tax expense (benefit) attri-
butable to income from continuing operations are as follows:
<TABLE>
<CAPTION>
(Millions of dollars) 1994 1993
_________________________________________________________________________________________
<S> <C> <C>
Current tax expense (benefit) $ (7.5) 2.7
Deferred tax expense (benefit) (exclusive of the effects
of other components listed below) (2.5) 6.2
Deferred tax benefits related to write-down of petroleum
assets (108.7) -
Adjustments to deferred tax assets and liabilities for increase in
Federal income tax rate - 3.0
_________________________________________________________________________________________
$(118.7) 11.9
_________________________________________________________________________________________
</TABLE>
The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax
liabilities are as follows:
<TABLE>
<CAPTION>
(Millions of dollars) 1994 1993
_________________________________________________________________________________________
<S> <C> <C>
Deferred tax assets:
Deferred foreign tax credits $ 32.3 22.8
Foreign tax credit carryforwards 11.7 10.2
Federal net operating loss carryforwards 36.4 -
Alternative minimum tax credit carryforward 1.9 5.2
Employee benefits 19.0 18.7
Other 10.3 12.8
_________________________________________________________________________________________
Total gross deferred tax assets 111.6 69.7
Less valuation allowance (28.3) (17.8)
_________________________________________________________________________________________
Net deferred tax assets 83.3 51.9
_________________________________________________________________________________________
Deferred tax liabilities:
Property, plant and equipment, principally due to differences in
depreciation and capitalized interest (90.7) (178.7)
Other (30.0) (21.8)
_________________________________________________________________________________________
Total gross deferred tax liabilities (120.7) (200.5)
_________________________________________________________________________________________
$ (37.4) (148.6)
_________________________________________________________________________________________
</TABLE>
The net changes in the valuation allowance for the years ended
December 31, 1994 and 1993 were increases of $10.5 million and $3
million, respectively. These changes were made to provide for
uncertainties surrounding the realization of certain foreign tax
credit carryforwards. The remaining balance of the deferred tax
assets should be realized through future operating results and the
reversal of taxable temporary differences.
<PAGE>
<PAGE>
Deferred tax expense (benefit) included the following components,
the disclosure of which was prescribed by the prior standard:
<TABLE>
<CAPTION>
(Millions of dollars) 1992
_________________________________________________________________________________________
<S> <C>
Restructuring and other special charges/credits $ (1.8)
Intangible development and exploration costs 10.1
Interest 2.2
Depreciation (9.8)
Depletion .7
Foreign taxes 1.2
Equity in earnings of affiliates (.4)
Alternative minimum tax credit carryforward 2.2
Employee benefit plans .1
Partnerships -
Other .5
_________________________________________________________________________________________
$ 5.0
_________________________________________________________________________________________
</TABLE>
For the years ended December 31, 1994, 1993 and 1992, the Company's
net cash payments (refunds) of income taxes totaled $(1.1) million,
$7.1 million and $(.6) million, respectively.
At December 31, 1994, the Company has foreign tax credit
carryforwards for Federal income tax purposes of $11.7 million
which are available through 1997 to offset future Federal income
taxes, if any. The Company has Federal net operating loss
carryforwards totaling $103.9 million which are available to offset
future Federal taxable income through 2009. The Company also has
alternative minimum tax credit carryforwards of $1.9 million which
are available to reduce Federal regular income taxes, if any, over
an indefinite period.
13. Retirement Benefits
The Company has a noncontributory defined benefit pension plan
covering all eligible employees, with benefits based on years of
service and the employee's highest three-year average monthly
earnings. The Company's funding policy is intended to provide for
both benefits attributed to service to-date and for those expected
to be earned in the future. Plan assets consist primarily of
stocks, bonds and short-term cash investments, including 51,971
shares of Company capital stock as of December 31, 1994 and 1993
with market values of $1.9 million and $2.1 million, respectively.
Since the spin-off of the pension plan of a discontinued subsidiary
in 1985 and the contribution of excess assets remaining after
purchasing annuities for affected employees, the pension plan did
not require funding through the year ended December 31, 1992.
Funding requirements for the years ended December 31, 1994 and 1993
amounted to $5.5 million and $4.2 million, respectively.
<PAGE>
<PAGE>
The following tables set forth the plan's funded status and amounts
recognized in the statements of financial position and results of
operations at December 31:
<TABLE>
<CAPTION>
(Millions of dollars) 1994 1993
_________________________________________________________________________________________
<S> <C> <C>
Accumulated benefit obligation, including vested benefits
of $16.1 and $16.8 $ 16.8 17.6
_________________________________________________________________________________________
Projected benefit obligation (25.5) (27.1)
Plan assets at fair market value 17.5 13.0
_________________________________________________________________________________________
Plan assets under projected benefit obligation (8.0) (14.1)
Additional minimum liability - (2.8)
Unrecognized net loss from past experience different
from that assumed and effects of changes in assumptions 9.3 13.5
Unrecognized net asset being recognized over 15 years (1.0) (1.2)
_________________________________________________________________________________________
Prepaid (accrued) pension cost $ .3 (4.6)
_________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
(Millions of dollars) 1994 1993 1992
_________________________________________________________________________________________
<S> <C> <C> <C>
Service cost $ 3.4 1.8 1.6
Interest cost 2.0 1.4 1.3
Actual (gain) loss on plan assets .4 (1.3) (1.1)
Net amortization and deferral (1.1) .1 (.6)
_________________________________________________________________________________________
Net pension expense $ 4.7 2.0 1.2
_________________________________________________________________________________________
Discount rate 8% 7-1/4% 9%
_________________________________________________________________________________________
Compensation increase 5% 5% 5%
_________________________________________________________________________________________
_________________________________________________________________________________________
Return on assets 9% 9% 9%
_________________________________________________________________________________________
</TABLE>
The Company has postretirement medical and dental care plans for
all eligible retirees and their dependents with eligibility based
on age and years of service upon retirement. The Company also
maintains a Medicare Part B reimbursement plan and life insurance
coverage for a closed group of retirees of a former subsidiary for
which estimated benefits of approximately $4.7 million were accrued
at December 31, 1992. Effective January 1, 1993, the Company
adopted Statement of Financial Accounting Standards No. 106 (SFAS
No. 106) - "Employers' Accounting for Postretirement Benefits Other
than Pensions," which changed the Company's practice of accounting
for postretirement benefits on a pay-as-you-go (cash) basis by
requiring accrual, during the years that the employee renders the
necessary service, of the expected cost of providing those benefits
to an employee and the employee's beneficiaries and covered
dependents. Upon adoption, the Company recorded a transition
liability of approximately $20.5 million ($13.5 million after
income taxes) as a one-time, non-cash charge against earnings in
the first quarter of 1993.
<PAGE>
<PAGE>
The postretirement benefit plans are unfunded and the Company
continues to fund claims on a cash basis. The following tables set
forth the amounts recognized in the statements of financial
position and results of operations at December 31:
<TABLE>
<CATION>
(Millions of dollars) 1994 1993
_________________________________________________________________________________________
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ (21.3) (20.6)
Employees eligible to retire (2.4) (2.7)
Other employees (4.3) (5.0)
_________________________________________________________________________________________
(28.0) (28.3)
Unrecognized net loss 1.1 2.3
_________________________________________________________________________________________
Accrued postretirement benefit cost $ (26.9) (26.0)
_________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
(Millions of dollars) 1994 1993 1992
_________________________________________________________________________________________
<S> <C> <C> <C>
Service cost $ 1.3 .8 -
Interest cost 2.1 2.1 -
Pay-as-you-go cost - - .9
_________________________________________________________________________________________
Net postretirement benefit cost $ 3.4 2.9 .9
_________________________________________________________________________________________
</TABLE>
Assumptions utilized to measure the accumulated postretirement
obligation at December 31, 1994 and 1993 were: discount rates of
8% and 7.25%, respectively; a health care cost trend rate of 14%
declining over 10 years to 5% and held constant thereafter. A 1%
increase in the assumed trend rates would have resulted in
increases in the accumulated postretirement benefit obligation at
December 31, 1994 and 1993 of $1.7 million and $2.6 million,
respectively; the aggregate of service cost and interest cost for
the years ended December 31, 1994 and 1993 would have increased by
$.5 million and $.4 million, respectively.
14. Capital Stock, Options and Rights
In November 1993, the Company completed a public offering of 4.4
million shares of capital stock at a price of $44.625 per share.
The capital stock was taken from the Company's treasury at an
average cost of $33.125 per share. The excess of net proceeds over
the cost of treasury stock issued was credited to additional paid-
in capital. The net proceeds of the offering, after underwriting
commissions and expenses, were approximately $188.8 million.
<PAGE>
<PAGE>
Under the 1988 Long-term Stock Incentive Plan, the Company may
grant to officers and key employees stock options, stock
appreciation rights, performance shares, performance units,
restricted stock or restricted stock units for up to 2.8 million
shares of the Company's capital stock. Stock options are
exercisable at the market price on the date of the grant, generally
over a two-year period at the rate of 50% each year commencing on
the first anniversary of the date of grant; all options expire ten
years from the date of grant. In 1994 and 1993, options for
250,100 shares and 257,700 shares were granted, respectively. The
restricted stock and performance shares awarded under the plan
entitle the grantee to the rights of a shareholder, including the
right to receive dividends and to vote such shares, but the shares
are restricted as to sale, transfer or encumbrance. Restricted
stock is released to the grantee over varying periods after a one-
year waiting period has expired. In 1994 and 1993, awards were
granted for 9,000 shares and 34,250 shares of restricted stock,
respectively. In 1994, 12,081 shares were released to grantees;
none were released in 1993. The performance cycle consists of a
three-year period, beginning with the year of grant, at the end of
which certain performance goals must be attained by the Company for
the unrestricted performance shares to be issued to the grantee.
Awards granted in 1994 and 1993 for performance shares amounted to
19,500 shares and 18,900 shares, respectively. Performance shares
issued in 1994 and 1993 amounted to 10,496 shares and 15,257
shares, respectively. Restricted stock and performance share
awards are "compensatory" awards and the Company accrued
compensation expense of $.1 million, $.7 million and $1 million in
1994, 1993 and 1992, respectively.
Under the 1990 Stock Option Plan for Non-Employee Directors, which
expired in May 1994, the Company could grant stock options to non-
employee directors for up to 150,000 shares of the Company's
capital stock. As prescribed by the plan, the options are
exercisable at the market price at the date of grant over a two-
year period at the rate of 50% each year commencing on the first
anniversary of the date of grant; all options expire ten years from
the date of grant. Awards for 22,500 shares and 20,000 shares were
granted in 1994 and 1993, respectively.
At December 31, 1994, 919,372 shares of capital stock were reserved
for future grants under all plans.
<PAGE>
<PAGE>
Total grants outstanding under the plans and the changes therein
for the periods indicated follows:
<TABLE>
<CAPTION>
Number Option
of shares price range
__________________________________________________________________________________________
<S> <C> <C> <C> <C><C>
Outstanding at December 31, 1992 1,719,353 $27 1/8 - 45 1/2
Granted 330,850 44 3/8 - 45 7/16
Cancelled (6,354) 29 3/4 - 45 7/16
Exercised (453,085) 27 1/8 - 39 11/16
__________________________________________________________________________________________
Outstanding at December 31, 1993 1,590,764 27 1/8 - 45 7/16
Granted 301,100 36 - 41 1/4
Cancelled (25,627) 29 3/4 - 45 1/2
Exercised (226,952) 29 3/4 - 39 11/16
__________________________________________________________________________________________
Outstanding at December 31, 1994 1,639,285 27 1/8 - 45 1/2
__________________________________________________________________________________________
Exercisable at December 31, 1994 1,178,850 27 1/8 - 45 1/2
__________________________________________________________________________________________
Weighted average prices:
Outstanding at December 31, 1994 36 3/16
Exercisable at December 31, 1994 35 1/8
__________________________________________________________________________________________
</TABLE>
In 1986, the Company's Board of Directors declared a dividend to
shareholders consisting of one Capital Stock Purchase Right on each
outstanding share of capital stock. A Right will also be issued
with each share of capital stock that becomes outstanding prior to
the time the Rights become exercisable or expire. If a person or
group acquires beneficial ownership of 20% or more, or announces a
tender offer that would result in beneficial ownership of 20% or
more, of the shares of outstanding capital stock, the Rights become
exercisable ten days thereafter and each Right will entitle its
holder to purchase one share of capital stock for $90.
If the Company is acquired in a business combination transaction,
each Right not owned by the 20% holder will entitle its holder to
purchase, for $90, common shares of the acquiring company having a
market value of $180. Alternatively, if a 20% holder were to
acquire the Company by means of a reverse merger in which the
Company and its capital stock survive or were to engage in certain
"self-dealing" transactions, or if a person or group were to
acquire 30% or more of the outstanding capital stock (other than
pursuant to a cash offer for all shares), each Right not owned by
the acquiring person would entitle its holder to purchase, for $90,
capital stock of the Company having a market value of $180. Each
Right can be redeemed by the Company for $.05, subject to the
occurrence of certain events and other restrictions, and expires in
1996. These Rights may cause substantial ownership dilution to a
person or group who attempts to acquire the Company without
approval of the Company's Board of Directors. The Rights should
not interfere with a business combination transaction that has been
approved by the Board of Directors.
<PAGE>
<PAGE>
15. Contingencies
The Company has been notified by the U.S. Environmental Protection
Agency that it is one of many Potentially Responsible Parties (PRP)
at three National Priorities List sites. Based on its evaluation
of the potential total cleanup costs, its estimate of its potential
exposure, and the viability of the other PRP's, the Company
believes that any costs ultimately required to be borne by it at
these sites will not have a material adverse effect on its results
of operations, cash flow or financial position.
The Company is subject to other legal proceedings, claims and
liabilities which arise in the ordinary course of its business. In
the opinion of Management, the amount of ultimate liability with
respect to these actions will not have a material adverse effect on
results of operations, cash flow or financial position of the
Company.
<PAGE>
<PAGE>
<TABLE>
16. Petroleum Segment Information*
<CAPTION>
(Millions of dollars) 1994 1993 1992
_________________________________________________________________________________________
<S> <C> <C> <C>
Sales to unaffiliated customers:
Domestic $ 678.1 692.9 686.2
North Sea 92.9 40.3 46.4
Other foreign 18.3 60.6 33.2
_________________________________________________________________________________________
789.3 793.8 765.8
Interest and other income 12.2 21.6 21.6
_________________________________________________________________________________________
Total revenues $ 801.5 815.4 787.4
_________________________________________________________________________________________
Earnings (loss) before income taxes:
Operating profit (loss):
Domestic (265.7) 79.2 39.7
North Sea 5.5 (7.7) 13.1
Other foreign (30.7) 16.5 (2.9)
_________________________________________________________________________________________
(290.9) 88.0 49.9
Other income (expense), net (54.7) (63.4) (52.0)
_________________________________________________________________________________________
Earnings (loss) before income taxes $ (345.6) 24.6 (2.1)
_________________________________________________________________________________________
Identifiable industry assets:
Domestic 793.9 1,089.6 705.1
North Sea 518.8 523.2 280.3
Other foreign 92.6 99.5 107.6
_________________________________________________________________________________________
1,405.3 1,712.3 1,093.0
Other assets 72.8 126.4 116.1
_________________________________________________________________________________________
Total assets $1,478.1 1,838.7 1,209.1
_________________________________________________________________________________________
Depletion, depreciation and amortization:
Petroleum 196.7 123.4 101.6
Other 5.5 6.4 4.9
_________________________________________________________________________________________
$ 202.2 129.8 106.5
_________________________________________________________________________________________
Capital expenditures:
Exploration:
Domestic 55.3 31.2 22.7
North Sea 1.6 1.8 3.2
Other foreign 16.5 10.0 12.7
_________________________________________________________________________________________
73.4 43.0 38.6
_________________________________________________________________________________________
Development:
Domestic 75.4 58.0 47.9
North Sea 18.2 37.6 27.9
Other foreign 16.0 3.1 30.5
_________________________________________________________________________________________
109.6 98.7 106.3
_________________________________________________________________________________________
Refining and marketing 31.1 18.4 27.6
_________________________________________________________________________________________
214.1 160.1 172.5
Capitalized interest 22.3 18.7 12.9
Other 3.8 3.5 4.4
_________________________________________________________________________________________
$ 240.2 182.3 189.8
_________________________________________________________________________________________
* Includes nonrecurring charges/credits as follows:
1994 - see Notes 2, 3 and 5.
1993 - see Notes 3, 6, 7, 11 and 12.
1992 - see Note 5.
/TABLE
<PAGE>
<PAGE>
UNAUDITED SUPPLEMENTAL DATA
_________________________________________________________________
MANAGEMENT'S DISCUSSION AND ANALYSIS
_________________________________________________________________
REVIEW OF OPERATIONS (1994 vs 1993)
The Company reported a $226.9 million net loss in 1994 primarily
as a result of fourth quarter nonrecurring charges totaling $319
million ($210.3 million after tax). The non-recurring charges were
related to a change in the procedure for assessing impairment of
the capitalized costs of the Company's assets which resulted in a
$280 million ($185 million after tax) write-down of oil and gas
properties and the write-down of the Company's refinery assets by
$39 million ($25.3 million after tax). In 1993, the Company
reported net earnings of $9.6 million, which included nonrecurring
and extraordinary items as discussed below.
Before inclusion of the write-down of these assets and certain
nonrecurring gains, the Company's net loss totaled $27.6 million in
1994 reflecting lower gross revenues and higher costs and expenses.
Gross revenues, which fell $14 million from the 1993 level, was
significantly impacted by declining worldwide crude oil prices and
domestic natural gas and refined product prices. Costs and
expenses increased due to higher lease operating, depletion,
depreciation and amortization and exploration expenses. Partially
offsetting the adverse effect of these items were a $10 million
pretax gain ($6.5 million after tax) on the reversal of a
previously established provision for the settlement of the Texaco
litigation and a $6.8 million pretax gain ($4.4 million after tax)
on the sale of oil and gas properties.
<PAGE>
<PAGE>
Oil and Gas Operations
Revenues from oil and gas operations were up $51 million from 1993.
Liquids revenues were up almost $26 million due to increased crude
oil volumes ($38 million), and natural gas revenues were up $23
million primarily due to higher domestic deliveries ($41 million).
The higher revenues from increased crude oil and natural gas
production exceeded the effect of declining worldwide crude oil
prices ($12 million) and lower domestic natural gas prices ($20
million).
Crude oil volumes were higher in 1994 due to an 8,200 barrel per
day (BPD) increase in North Sea operations and an 800 BPD increase
in domestic operations. North Sea volumes were up primarily due to
the late-1993 T-Block acquisition and new wells onstream at Brae
Field. Domestic volumes were up primarily due to the late-1993
acquisition of NERCO and new domestic wells onstream. These
production increases at domestic and North Sea properties were
partially offset by natural declines at mature producing
properties. Volumes from other foreign operations were down 3,000
BPD primarily due to the sale of certain Canadian properties in
late 1993.
Natural gas deliveries were up 57 million cubic feet per day
(MMCFD) in 1994. An improvement in domestic deliveries, which
accounted for 49 MMCFD of the increase, was due to the acquisition
of NERCO, new wells onstream and the return to production of wells
which were shut-in for repairs and maintenance during the prior
year. North Sea natural gas sales volumes, which were 5 MMCFD
higher due to the completion of the SAGE Pipeline System during
1994, also contributed to the increase. These increases were
partially offset by the effects of natural declines at mature
producing properties, the sales of a limited number of domestic
properties in 1994 and certain Canadian properties in late 1993,
and the voluntary curtailment of some domestic sales volumes in the
second half of 1994 in response to low prices.
Lease operating and facility expenses increased $9 million during
the current year primarily due to additional operating expenses for
properties acquired in late 1993 and higher repair and maintenance
costs on older properties. These costs were partially offset by
lower operating expenses and workover costs on existing properties.
Depletion, depreciation and amortization (DD&A) was $72 million
higher in 1994 than in the prior year due primarily to DD&A on
properties and working interests acquired in late 1993 and new
producing wells onstream in 1994. The increase was partially
offset by the reduction in DD&A for the Canadian properties sold in
1993. Dry holes and exploratory charges were up $21 million in
1994 due to the write-off of unsuccessful wells and higher domestic
seismic costs incurred and lease impairment. Interest and debt
expenses were down $3 million primarily due to increased interest
capitalized on qualifying projects and the inclusion in the prior
year of the aforementioned $6.7 million write-off of debt-issue
costs.
<PAGE>
<PAGE>
Refining Operations
Refining operations resulted in a pretax operating profit of $2
million in 1994 (before the $39 million write-down of refinery
assets), compared to a $10 million pretax operating loss in the
prior year. The favorable impact of lower crude oil feedstock
costs ($50 million) due to lower prices ($32 million) and volumes
($12 million) and the inclusion in the prior year's costs of the $6
million inventory write-down more than offset the effect of higher
operating expenses ($4 million) and revenue declines ( $36
million). Revenues were down as a result of lower sales volumes
($12 million) and product prices ($24 million).
REVIEW OF OPERATIONS (1993 vs 1992)
Gross revenues in 1993 were up $28 million as an increase in oil
and gas revenues of $46 million and a $24 million pretax gain on
the sale of certain Canadian oil and gas assets more than offset a
$40 million decline in refining revenues and reduced equity in the
earnings of CLAM. CLAM's reduced earnings for 1993 reflect the
adverse effect of reduced gas prices, lower gas deliveries and a
one-time non-cash charge of $6 million to income taxes ($3 million
net to the Company) for the adoption of SFAS No. 109.
Before inclusion of nonrecurring after-tax items netting to a
charge of $1.3 million, an extraordinary loss on early retirement
of debt of $3.3 million and the favorable effect of two accounting
changes amounting to $.2 million, the Company generated earnings of
$14 million in 1993. This represents a decline from the comparable
1992 earnings of $18.9 million, which was also exclusive of
nonrecurring after-tax items totaling $20.1 million and an
extraordinary loss of $5.6 million on the early retirement of debt
in 1992. The nonrecurring items in 1993 consisted of the
aforementioned $23.5 million ($13.2 million after tax) gain on the
sale of certain oil and gas properties, undeveloped acreage and
seismic data located in southern Alberta, Canada reduced by a $6.5
million ($4.2 million after tax) charge for the write-down of
refinery inventories to market value, a $6.7 million ($4.3 million
after tax) charge for the write-off of costs associated with the
interim financing provided by banks for the acquisitions of NERCO
and T-Block, a $3 million income tax charge to recognize the
retroactive rate change enacted in the Budget Reconciliation Act of
1993 and the effect of the aforementioned non-cash charge of $6
million ($3 million net to the Company) to the earnings of CLAM.
The inclusion of the nonrecurring and extraordinary items resulted
in net earnings of $9.6 million in 1993, as compared to the $6.8
million net loss incurred in the prior year.
<PAGE>
<PAGE>
Oil and Gas Operations
Revenues from oil and gas operations were up $46 million from 1992.
Natural gas revenues, up almost $55 million as a result of higher
domestic gas prices ($29 million) and deliveries ($25 million),
accounted for much of the increase. Liquids revenues, however,
were down $5 million. Although crude oil volumes increased in 1993
($22 million), this revenue gain was more than offset by declining
worldwide crude oil prices ($26 million).
Domestic natural gas deliveries were up almost 40 MMCFD from the
prior year period. The improvement in domestic natural gas
deliveries was due to the acquisition of NERCO, new domestic wells
coming onstream and the return to production of wells previously
shut-in for repairs and maintenance. These increases were
partially offset by the effects of natural declines at mature
producing properties.
Crude oil volumes in 1993 were higher due to a 2,400 BPD increase
in domestic operations, a 300 BPD increase in North Sea operations
and an 800 BPD increase in other foreign operations. The increase
in domestic operations resulted primarily from the acquisition of
NERCO, the purchase of additional working interests in producing
properties, new domestic wells coming onstream, and increased
production from domestic wells that were shut-in for repairs and
maintenance during the prior year. Volumes were up in the North Sea
primarily as a result of the purchase of additional working
interests in producing properties and the production from T-Block
beginning in mid-December 1993. The year-end 1992 acquisition of
a working interest in the KAKAP Field in Indonesia resulted in
higher volumes from other foreign areas. These production
increases were partially offset by natural declines at domestic and
foreign properties.
Lease operating and facility expenses increased $8 million during
1993 primarily due to operating expenses associated with properties
and increased working interests acquired in late 1992 and in 1993
and higher operating and repair and maintenance costs on older
properties. These were partially offset by lower workover charges
and the inclusion in 1992 of a $3 million nonrecurring charge for
the uninsured costs associated with a gas well blowout. Depletion,
depreciation and amortization was $23 million higher in 1993 than
in the prior year due primarily to DD&A on properties and increased
working interests acquired in late 1992 and in 1993. Dry holes and
exploratory charges were up over $7 million in the current year due
to increases in seismic costs incurred, lease impairment and
unsuccessful exploratory wells. General, administrative and other
expenses increased over $6 million from the prior year primarily
due to the initial accrual of current year costs associated with
postretirement benefits other than pensions and increased personnel
costs. Interest and debt expenses increased over $3 million due to
higher interest expense associated with the increased debt level
and the aforementioned write-off of debt-issue costs. These
additional costs were partially offset by interest capitalized on
a greater investment in qualifying projects. <PAGE>
<PAGE>
Refining Operations
Refining operations resulted in a loss in 1993. Lower revenues
from a decline in product prices ($49 million), a write-down of
refinery inventories of over $6 million and higher operating
expenses ($4 million) more than offset the favorable impact of
higher sales volumes ($9 million) and lower feedstock prices ($30
million) resulting in a $10 million pretax operating loss. The
refinery had generated a pretax operating profit of $10 million in
the prior year.
LIQUIDITY AND CAPITAL RESOURCES
In 1994, the Company generated approximately $212 million in cash
from operations which, along with advances against cash surrender
value of life insurance policies ($34 million), proceeds from asset
sales ($15 million) and available cash, was utilized for capital
projects ($237 million) and dividends ($33 million). The only
significant long-term debt due in 1994, the $133.5 million balance
of the Term Loan with banks which was due in July 1994, was
refinanced in January 1994 with the proceeds of a revolving credit
facility drawdown.
The Company expects that its 1995 capital and exploration program,
presently estimated at approximately $214 million, will be financed
substantially by internally generated funds, reduced dividend
expenditures and the proceeds from sales of nonstrategic assets.
The Company does not expect to realize any significant losses from
these sales. The Company's expenditures are continually reviewed,
and revised as necessary, based on perceived current and long-term
economic conditions.
In February 1995, the Company announced its plans to sell its
remaining oil and gas assets in Canada. In 1994, these operations
produced 500 barrels of liquids and 3,000 cubic feet of gas per day
and generated revenues of $5.2 million and an operating loss of
$4.7 million.
As explained in Note 15, the Company has been notified by the U.S.
Environmental Protection Agency that it is one of many Potentially
Responsible Parties at three National Priorities List sites. In
the opinion of Management, the ultimate liability with respect to
these matters will not have a material adverse effect on the
results of operations, cash flow or financial position of the
Company.
As explained in Note 9, the Company has only limited involvement
with derivative financial instruments and does not use them for
trading purposes. They are used solely to manage well-defined
interest rate, foreign currency and commodity price risks.
<PAGE>
<PAGE>
CAPITAL STOCK, DIVIDENDS AND OTHER MARKET DATA
The Company's capital stock is listed and traded on the New York
Stock Exchange, the London Stock Exchange and the Swiss Stock
Exchanges (Basle, Geneva and Zurich). As of February 28, 1995,
there were 7,569 holders of record. The quarterly market prices
for the past two years and the cash dividends paid in each period
are presented in the table on page 72.
In January 1995, the Company announced that its quarterly dividend
of $0.25 per share was being reduced to $0.06 per share with the
savings being redirected to the capital and exploration program.
In November 1993, 4.4 million of the Company's treasury shares were
issued in a public offering. (See Note 14 of "Notes to
Consolidated Financial Statements.") The remaining 4.6 million
shares being held as treasury shares continued to afford the
Company financial flexibility to respond to financing and other
opportunities that might arise.
In 1986, the Company's Board of Directors declared a dividend to
shareholders consisting of one Capital Stock Purchase Right on each
outstanding share of capital stock. These rights may cause
substantial ownership dilution to a person or group who attempts to
acquire the Company without approval of the Company's Board of
Directors. The rights should not interfere with a business
combination transaction that has been approved by the Board of
Directors. (See Note 14 of "Notes to Consolidated Financial
Statements.")
The Company has reserved 2,558,657 shares of its capital stock for
future grants and exercises of stock options. (See Note 14 of
"Notes to Consolidated Financial Statements.")
NOTE:
The accompanying consolidated financial statements and notes
thereto and the unaudited supplemental data are an integral
part of this discussion and analysis and should be read in
conjunction herewith.
<PAGE>
<PAGE>
_________________________________________________________________
DATA ON OIL AND GAS ACTIVITIES (Unaudited)
_________________________________________________________________
Proved Reserves and Changes Therein
The tables below set forth estimates of the proved reserves
attributable to the working and royalty interests of the Company
(net of royalties payable to other parties) along with a summary of
the changes in the quantities of proved reserves during the periods
indicated. Also set forth is the Company's 50% equity interest in
the proved reserves of CLAM Petroleum Company. The Company
emphasizes that the volumes of reserves shown below are estimates
which, by their nature, are subject to revision. The estimates are
made using all available geological and reservoir data as well as
production performance data. These estimates are reviewed annually
and revised, either upward or downward, as warranted by additional
performance data. There have been no significant changes in the
estimates of proved reserves since December 31, 1994.
<TABLE>
<CAPTION>
Liquids (Millions of barrels)
North Other
Domestic Sea CLAM Foreign Total
_________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Proved reserves at December 31, 1991 47.0 25.5 .4 11.4 84.3
Revisions of previous estimates 5.3 (.6) - - 4.7
Purchase of reserves in place 2.6 - - 5.8 8.4
Extensions, discoveries and
other additions 3.0 2.8 - .6 6.4
Production (7.9) (2.5) - (2.1) (12.5)
Sales of reserves in place (.6) - - - (.6)
_________________________________________________________________________________________
Proved reserves at December 31, 1992 49.4 25.2 .4 15.7 90.7
Revisions of previous estimates (2.8) (.2) - 2.5 (.5)
Purchase of reserves in place 11.9 17.5 - - 29.4
Extensions, discoveries and
other additions 1.7 - - .8 2.5
Production (8.8) (2.5) - (2.4) (13.7)
Sales of reserves in place (.2) - - (5.1) (5.3)
_________________________________________________________________________________________
Proved reserves at December 31, 1993 51.2 40.0 .4 11.5 103.1
Revisions of previous estimates 2.8 (2.6) (.1) (.1) -
Extensions, discoveries and
other additions 8.6 2.3 - - 10.9
Production (9.1) (5.6) - (1.2) (15.9)
Sales of reserves in place (1.0) - - - (1.0)
_________________________________________________________________________________________
Proved reserves at December 31, 1994 52.5 34.1 .3 10.2 97.1
_________________________________________________________________________________________
Proved-developed reserves at December 31,
_________________________________________________________________________________________
1992 46.8 6.1 .3 10.4 63.6
_________________________________________________________________________________________
1993 47.0 36.9 .3 5.7 89.9
_________________________________________________________________________________________
1994 48.1 32.7 .2 4.4 85.4
_________________________________________________________________________________________
/TABLE
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Gas (Billions of cubic feet)
North Other
Domestic Sea CLAM Foreign Total
_________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Proved reserves at December 31, 1991 520.9 123.4 188.5 10.6 843.4
Revisions of previous estimates 9.7 (4.6) (6.6) (.2) (1.7)
Purchase of reserves in place 3.2 - - - 3.2
Extensions, discoveries and
other additions 14.7 15.8 - .6 31.1
Production (51.3) (.1) (14.8) (1.8) (68.0)
Sales of reserves in place (53.1) - - - (53.1)
_________________________________________________________________________________________
Proved reserves at December 31, 1992 444.1 134.5 167.1 9.2 754.9
Revisions of previous estimates 20.5 (3.2) (.6) 1.0 17.7
Purchase of reserves in place 221.6 11.5 - - 233.1
Extensions, discoveries and
other additions 12.2 - - 2.6 14.8
Production (65.6) (.1) (12.6) (1.9) (80.2)
Sales of reserves in place (1.2) - - (3.2) (4.4)
_________________________________________________________________________________________
Proved reserves at December 31, 1993 631.6 142.7 153.9 7.7 935.9
Revisions of previous estimates 16.6 (4.5) (2.8) (1.7) 7.6
Purchase of reserves in place 3.4 - - - 3.4
Extensions, discoveries and
other additions 116.4 26.0 1.0 5.2 148.6
Production (83.6) (1.8) (14.6) (1.1) (101.1)
Sales of reserves in place (10.7) - - - (10.7)
_________________________________________________________________________________________
Proved reserves at December 31, 1994 673.7 162.4 137.5 10.1 983.7
_________________________________________________________________________________________
Proved-developed reserves at December 31,
1992 270.9 35.3 112.7 9.2 428.1
_________________________________________________________________________________________
1993 405.9 132.9 118.9 7.7 665.4
_________________________________________________________________________________________
1994 493.5 146.4 116.1 10.1 766.1
_________________________________________________________________________________________
</TABLE>
The table below sets forth estimates of the domestic sulphur
reserves attributable to the Company's interests as of December 31:
<TABLE>
<CAPTION>
Proved-
(Thousands of long tons) Proved developed
_________________________________________________________________________________________
<S> <C> <C>
1992 608.3 242.6
_________________________________________________________________________________________
1993 583.6 226.1
_________________________________________________________________________________________
1994 670.3 670.3
_________________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
_________________________________________________________________
Standardized Measure of Discounted Future Net Cash Flows and
Changes Therein Relating to Proved Oil and Gas Reserves
The following supplemental data on the Company's oil and gas
activities were prepared in accordance with the Financial
Accounting Standards Board's (FASB) Statement of Financial
Accounting Standards No. 69 - "Disclosures About Oil and Gas
Producing Activities." Estimated future net cash flows are
determined by: (1) applying the respective year-end oil and gas
prices to the Company's estimates of future production of proved
reserves; (2) deducting estimates of the future costs of
development and production of proved reserves based on the assumed
continuation of the cost levels and economic conditions existing at
the respective year-end; and (3) deducting estimates of future
income taxes based on the respective year-end and future statutory
tax rates. Present value is determined using the FASB-prescribed
discount rate of 10% per annum.
Although the information presented is based on the Company's best
estimates of the required data, the methods and assumptions used in
preparing the data were those prescribed by the FASB. Although
unrealistic, they were specified in order to achieve uniformity in
assumptions and to provide for the use of reasonably objective
data. It is important to note here that this information is
neither fair market value nor the present value of future cash
flows and it does not reflect changes in oil and gas prices
experienced since the respective year-end. It is primarily a tool
designed by the FASB to allow for a reasonable comparison of oil
and gas reserves and changes therein through the use of a
standardized method. Accordingly, the Company cautions that this
data should not be used for other than its intended purpose.
<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
STANDARDIZED MEASURE AT DECEMBER 31, 1994:
<CAPTION>
North Other
(Millions of dollars) Domestic Sea Foreign Total
_________________________________________________________________________________________
<S> <C> <C> <C> <C>
Future cash inflows $1,898.9 1,011.5 181.4 3,091.8
Future production and development costs (889.8) (254.9) (102.5) (1,247.2)
Future income tax expenses (165.2) (234.2) (18.9) (418.3)
_________________________________________________________________________________________
Future net cash flows 843.9 522.4 60.0 1,426.3
10% annual discount for estimated timing
of cash flows (292.6) (179.1) (26.7) (498.4)
_________________________________________________________________________________________
Standardized measure of discounted future
net cash flows $ 551.3 343.3 33.3 927.9
_________________________________________________________________________________________
CLAM $ - 40.7 - 40.7
_________________________________________________________________________________________
Note: If the post year-end prices utilized by the Company in the write-down of its oil and
gas properties (see Note 2 of "Notes to Consolidated Financial Statements") were
applied, the undiscounted and discounted Standardized Measure would have been
reduced to $1,287 million and $846 million, respectively.
</TABLE>
<TABLE>
PRINCIPAL SOURCES OF CHANGE DURING 1994:
<CAPTION>
(Millions of dollars)
_________________________________________________________________________________________
<S> <C>
Sales and transfers, net of production costs $(274.2)
Net change in prices and production costs (81.2)
Extensions, discoveries and improved recovery,
less related costs 164.6
Net change in future development costs (27.4)
Previously estimated development costs
incurred during the year 107.6
Revisions of previous reserve estimates 5.9
Purchase of reserves in place 2.0
Sales of reserves in place (12.6)
Accretion of discount 113.8
Net change in income taxes 27.2
Other (21.2)
_________________________________________________________________________________________
Net change $ 4.5
_________________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
STANDARDIZED MEASURE AT DECEMBER 31, 1993:
<CAPTION>
North Other
(Millions of dollars) Domestic Sea Foreign Total
_________________________________________________________________________________________
<S> <C> <C> <C> <C>
Future cash inflows $2,153.6 933.2 160.1 3,246.9
Future production and development costs (996.1) (287.3) (110.2) (1,393.6)
Future income tax expenses (228.1) (149.8) (9.6) (387.5)
_________________________________________________________________________________________
Future net cash flows 929.4 496.1 40.3 1,465.8
10% annual discount for estimated timing
of cash flows (347.6) (180.9) (13.9) (542.4)
_________________________________________________________________________________________
Standardized measure of discounted future
net cash flows $ 581.8 315.2 26.4 923.4
_________________________________________________________________________________________
CLAM $ - 51.8 - 51.8
_________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SOURCES OF CHANGE DURING 1993:
(Millions of dollars)
_________________________________________________________________________________________
<S> <C>
Sales and transfers, net of production costs $(225.9)
Net change in prices and production costs (209.6)
Extensions, discoveries and improved recovery,
less related costs 25.6
Net change in future development costs (14.6)
Previously estimated development costs
incurred during the year 56.6
Revisions of previous reserve estimates 10.1
Purchase of reserves in place 414.7
Sales of reserves in place (24.1)
Accretion of discount 101.3
Net change in income taxes 100.6
Other (12.7)
_________________________________________________________________________________________
Net change $ 222.0
_________________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
STANDARDIZED MEASURE AT DECEMBER 31, 1992:
<CAPTION>
North Other
(Millions of dollars) Domestic Sea Foreign Total
_________________________________________________________________________________________
<S> <C> <C> <C> <C>
Future cash inflows $1,794.9 779.0 276.6 2,850.5
Future production and development costs (715.7) (261.0) (145.0) (1,121.7)
Future income tax expenses (292.4) (241.4) (38.2) (572.0)
_________________________________________________________________________________________
Future net cash flows 786.8 276.6 93.4 1,156.8
10% annual discount for estimated timing
of cash flows (313.9) (113.6) (27.9) (455.4)
_________________________________________________________________________________________
Standardized measure of discounted future
net cash flows $ 472.9 163.0 65.5 701.4
_________________________________________________________________________________________
CLAM $ - 65.1 - 65.1
_________________________________________________________________________________________
</TABLE>
<TABLE>
PRINCIPAL SOURCES OF CHANGE DURING 1992:
<CAPTION>
(Millions of dollars)
_________________________________________________________________________________________
<S> <C>
Sales and transfers, net of production costs $(203.3)
Net change in prices and production costs (9.2)
Extensions, discoveries and improved recovery,
less related costs 57.9
Net change in future development costs 12.3
Previously estimated development costs
incurred during the year 70.5
Revisions of previous reserve estimates 47.6
Purchase of reserves in place 61.7
Sales of reserves in place (52.2)
Accretion of discount 69.1
Net change in income taxes 3.3
Other (47.1)
_________________________________________________________________________________________
Net change $ 10.6
_________________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
RESULTS OF OPERATIONS FOR OIL AND GAS ACTIVITIES
<CAPTION>
Years ended December 31:
North Other
19941 (Millions of dollars) Domestic Sea Foreign Total
_________________________________________________________________________________________
<S> <C> <C> <C> <C>
Revenues $ 316.82 92.9 18.3 428.0
Production costs (90.5) (36.9) (9.4) (136.8)
Exploration expenses (44.8) (2.6) (22.3) (69.7)
DD&A (142.6) (41.9) (8.9) (193.4)
Write-down of oil and gas properties (265.6) (6.0) (8.4) (280.0)
_________________________________________________________________________________________
(226.7) 5.5 (30.7) (251.9)
Income tax (expense) benefit 79.0 (9.0) 13.6 83.6
_________________________________________________________________________________________
Earnings (loss)3 $(147.7) (3.5) (17.1) (168.3)
_________________________________________________________________________________________
CLAM4 $ - 3.9 - 3.9
_________________________________________________________________________________________
19931 (Millions of dollars)
_________________________________________________________________________________________
Revenues 292.72 40.3 60.6 393.6
Production costs (83.8) (24.9) (17.8) (126.5)
Exploration expenses (31.4) (3.8) (13.6) (48.8)
DD&A (86.2) (19.3) (12.7) (118.2)
_________________________________________________________________________________________
91.3 (7.7) 16.5 100.1
Income tax (expense) benefit (32.0) 1.5 (6.8) (37.3)
_________________________________________________________________________________________
Earnings (loss)3 $ 59.3 (6.2) 9.7 62.8
_________________________________________________________________________________________
CLAM4 $ - 2.3 - 2.3
_________________________________________________________________________________________
19921(Millions of dollars)
_________________________________________________________________________________________
Revenues 244.32 46.4 33.2 323.9
Production costs (79.5) (20.0) (18.2) (117.7)
Exploration expenses (30.5) (4.1) (6.9) (41.5)
DD&A and restructuring charge (104.1) (9.2) (11.0) (124.3)
_________________________________________________________________________________________
30.2 13.1 (2.9) 40.4
Income tax (expense) benefit (9.6) (8.4) .9 (17.1)
_________________________________________________________________________________________
Earnings (loss)3 $ 20.6 4.7 (2.0) 23.3
_________________________________________________________________________________________
CLAM4 $ - 6.4 - 6.4
_________________________________________________________________________________________
1 Includes nonrecurring charges/credits as explained in "Notes to Consolidated Financial
Statements" as follows:
1994 - see Notes 2 and 3.
1993 - see Note 3.
1992 - see Note 5.
2 Includes intercompany transfers to the Company's refinery of $24.8, $22.4 and $20.7 in
1994, 1993 and 1992, respectively.
3 Excludes other income, general and administrative expenses, and interest and debt
expenses.
4 Represents the Company's equity in CLAM's net earnings after U.S. income taxes. See
Note 7 of "Notes to Consolidated Financial Statements."
</TABLE>
<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
COSTS INCURRED IN OIL AND GAS ACTIVITIES
<CAPTION>
Years ended December 31:
North Other
1994 (Millions of dollars) Domestic Sea Foreign Total
_________________________________________________________________________________________
<S> <C> <C> <C> <C>
Property acquisition:
Proved $ 2.0 - - 2.0
Unproved 2.3 - 1.1 3.4
Exploration 69.5 2.5 20.0 92.0
Development 73.4 18.3 15.9 107.6
_________________________________________________________________________________________
147.2 20.8 37.0 205.0
Capitalized interest 7.3 14.7 .3 22.3
_________________________________________________________________________________________
$ 154.5 35.5 37.3 227.3
_________________________________________________________________________________________
CLAM $ - 10.5 - 10.5
_________________________________________________________________________________________
1993 (Millions of dollars)
_________________________________________________________________________________________
Property acquisition:
Proved 364.2 159.4 - 523.6
Unproved 4.5 40.8 1.2 46.5
Exploration 39.1 2.1 17.7 58.9
Development 52.2 24.2 3.1 79.5
_________________________________________________________________________________________
460.0 226.5 22.0 708.5
Capitalized interest 3.9 14.8 - 18.7
_________________________________________________________________________________________
$ 463.9 241.3 22.0 727.2
_________________________________________________________________________________________
CLAM $ - 5.2 - 5.2
_________________________________________________________________________________________
1992 (Millions of dollars)
_________________________________________________________________________________________
Property acquisition:
Proved 8.3 - 27.5 35.8
Unproved 2.5 - 8.1 10.6
Exploration 29.8 3.5 7.8 41.1
Development 39.5 27.9 3.1 70.5
_________________________________________________________________________________________
80.1 31.4 46.5 158.0
Capitalized interest 4.0 8.9 - 12.9
_________________________________________________________________________________________
$ 84.1 40.3 46.5 170.9
_________________________________________________________________________________________
CLAM $ - 10.7 - 10.7
_________________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
OIL AND GAS OPERATING DATA1
<CAPTION>
Years ended December 31:
1994 19932 1992 1991 1990
_________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
CRUDE AND CONDENSATE3
Production (barrels per day):
Domestic:
Working interest 18,833 17,586 15,308 16,439 17,085
Royalty interest 3,678 4,161 4,070 4,070 4,041
_________________________________________________________________________________________
22,511 21,747 19,378 20,509 21,126
North Sea (working interest) 14,769 6,529 6,258 8,352 10,283
Other foreign (working interest) 3,496 6,509 5,674 5,896 6,652
_________________________________________________________________________________________
40,776 34,785 31,310 34,757 38,061
_________________________________________________________________________________________
Average price received (per barrel):
Domestic $ 16.26 17.33 19.85 22.13 21.38
North Sea 16.01 16.20 19.11 19.96 23.13
Other foreign 12.63 14.40 14.98 14.53 18.89
Consolidated 15.86 16.57 18.82 20.32 21.42
_________________________________________________________________________________________
NATURAL GAS
Production (thousands of cubic feet
per day):
Domestic:
Working interest 203,700 155,917 119,050 124,592 126,610
Royalty interest 24,957 23,861 21,146 25,666 24,771
_________________________________________________________________________________________
228,657 179,778 140,196 150,258 151,381
North Sea (working interest) 5,302 156 236 283 349
Other foreign (working interest) 3,018 5,316 4,871 4,388 4,918
CLAM Petroleum Company 40,003 34,608 40,485 48,772 46,330
_________________________________________________________________________________________
276,980 219,858 185,788 203,701 202,978
_________________________________________________________________________________________
Average price received (per MCF):
Domestic $ 1.95 2.19 1.75 1.53 1.74
North Sea 2.20 1.51 1.92 1.91 2.48
Other foreign 1.63 1.27 0.84 1.03 1.13
CLAM Petroleum Company 2.27 2.35 2.73 3.08 2.76
Consolidated 2.00 2.19 1.94 1.89 1.96
_________________________________________________________________________________________
PLANT PRODUCTS
Production (barrels per day):
Domestic (working interest) 2,475 2,377 2,294 2,145 2,197
North Sea (working interest) 552 352 461 510 612
Other foreign (working interest) 6 29 39 33 29
_________________________________________________________________________________________
3,033 2,758 2,794 2,688 2,838
_________________________________________________________________________________________
Average price received (per barrel):
Domestic $ 10.66 11.26 13.07 14.89 14.31
North Sea 11.28 12.62 14.47 16.93 15.36
Other foreign 7.84 11.97 12.68 13.12 13.70
Consolidated 10.28 11.44 13.29 15.26 14.53
_________________________________________________________________________________________
1 Includes the Company's 50% equity interest in its unconsolidated affiliate,
CLAM Petroleum Company.
2 Includes NERCO Oil & Gas, Inc. since October 1, 1993.
3 Before the elimination of intercompany transfers.
/TABLE
<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
REFINING OPERATING DATA
<CAPTION>
Years ended December 31:
(Millions of dollars) 1994 1993 1992 1991 1990
_________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Refining operating profit (loss):
Revenues:
Refined products* $ 386.1 422.6 462.6 451.5 453.8
Other 2.1 1.9 .3 .2 .7
_________________________________________________________________________________________
388.2 424.5 462.9 451.7 454.5
_________________________________________________________________________________________
Costs and expenses:
Cost of sales* 340.1 390.6 413.6 401.4 396.9
Operating expenses 39.2 35.2 31.4 32.4 33.1
Depreciation 3.3 5.2 5.0 4.7 4.5
Taxes, other than income 3.5 3.5 3.3 2.7 3.4
Write-down of refinery assets 39.0 - - - -
_________________________________________________________________________________________
425.1 434.5 453.3 441.2 437.9
_________________________________________________________________________________________
(36.9) (10.0) 9.6 10.5 16.6
_________________________________________________________________________________________
*Before the elimination of
intercompany transfers to
the Company's refinery $ 24.8 22.4 20.7 18.7 22.3
_________________________________________________________________________________________
Sales (barrels per day):
No. 2 fuel oil 11,572 11,471 12,471 11,079 13,162
Unleaded gasoline 22,571 22,747 23,640 21,675 21,618
Jet fuel 7,166 6,488 5,415 5,102 5,595
Naphtha 4,090 5,477 4,922 4,045 6,260
Other 7,505 8,347 6,880 6,987 8,272
_________________________________________________________________________________________
52,904 54,530 53,328 48,888 54,907
_________________________________________________________________________________________
Average price received (per
barrel) $ 20.00 21.24 23.70 25.30 22.65
_________________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
OIL AND GAS PROPERTIES
<CAPTION>
December 31, 1994
Productive acreage Undeveloped acreage
(Thousands of acres) Gross Net Gross Net
_________________________________________________________________________________________
<S> <C> <C> <C> <C>
LEASEHOLDS AND OPTIONS
Domestic:
Offshore Gulf of Mexico 329.7 160.0 381.5 247.8
Louisiana 118.8 76.4 38.6 17.2
Alabama/Florida 9.2 8.0 .6 .6
Colorado/Utah/New Mexico .8 .1 146.5 92.8
Wyoming 43.9 12.5 226.6 99.1
Other 47.9 5.8 71.4 9.7
_________________________________________________________________________________________
550.3 262.8 865.2 467.2
_________________________________________________________________________________________
North Sea:
Netherlands 2.7 1.0 103.3 36.0
United Kingdom 19.1 1.2 147.2 12.0
_________________________________________________________________________________________
21.8 2.2 250.5 48.0
_________________________________________________________________________________________
Other foreign:
Algeria - - 1,552.9 1,009.4
Australia - - 1,389.0 365.8
Canada 36.2 19.5 190.0 111.2
Colombia 11.7 1.6 216.1 119.4
France - - 113.4 56.7
Indonesia 5.9 .9 489.7 66.2
Papua New Guinea - - 168.4 67.4
Tunisia - - 1,021.0 510.5
Yemen - - 1,167.9 198.5
_________________________________________________________________________________________
53.8 22.0 6,308.4 2,505.1
_________________________________________________________________________________________
FEE LANDS 98.0 98.0 496.0 496.0
_________________________________________________________________________________________
CLAM PETROLEUM COMPANY (50%)
Netherlands-North Sea 39.7 5.6 771.7 176.6
_________________________________________________________________________________________
763.6 390.6 8,691.8 3,692.9
_________________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
<TABLE>
_______________________________________________________________________________________
WELLS DRILLED
<CAPTION>
Years ended December 31:
1994 1993 1992 1991 1990
_______________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
GROSS WELLS DRILLED (BY LOCATION)
Working interest
Domestic:
Offshore Gulf of Mexico 20 23 5 18 13
Louisiana 14 10 17 30 28
Oklahoma - - - 25 25
Texas - - - 3 -
Wyoming 4 6 2 9 7
Other - - 1 - 1
_______________________________________________________________________________________
38 39 25 85 74
_______________________________________________________________________________________
North Sea:
Netherlands 3 4 5 10 14
United Kingdom 6 5 8 4 8
_______________________________________________________________________________________
9 9 13 14 22
_______________________________________________________________________________________
Other foreign:
Canada 14 38 33 44 44
Colombia 2 - 3 2 4
Other 3 2 1 2 2
_______________________________________________________________________________________
19 40 37 48 50
_______________________________________________________________________________________
Total working interest 66 88 75 147 146
Royalty interest 19 35 26 28 31
_______________________________________________________________________________________
Total wells 85 123 101 175 177
_______________________________________________________________________________________
</TABLE>
<TABLE>
Gross (Net) Wells Drilled (by type)
<CAPTION>
Exploratory:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oil 15 (1.8) 34 (15.2) 26 (13.1) 33 (15.1) 28 (14.4)
Gas 26 (10.3) 18 (3.9) 10 (2.5) 34 (12.4) 40 (15.1)
Dry 22 (9.4) 31 (11.4) 28 (12.4) 74 (29.5) 77 (28.1)
_______________________________________________________________________________________
63 (21.5) 83 (30.5) 64 (28.0) 141 (57.0) 145 (57.6)
_______________________________________________________________________________________
Development:
Oil 7 (1.0) 17 (2.1) 22 (2.6) 23 (2.4) 14 (2.5)
Gas 14 (3.3) 21 (3.4) 6 (1.4) 9 (1.5) 17 (1.7)
Dry 1 (.1) 2 (.3) 9 (.7) 2 (.6) 1 (-)
_______________________________________________________________________________________
22 (4.4) 40 (5.8) 37 (4.7) 34 (4.5) 32 (4.2)
_______________________________________________________________________________________
Total wells 85 (25.9) 123 (36.3) 101 (32.7) 175 (61.5) 177 (61.8)
_______________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
SELECTED FINANCIAL DATA
<CAPTION>
Years ended December 31:
(Millions of dollars, except per share data)
1994* 1993* 1992* 1991 1990
_________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Revenues $ 801.5 815.4 787.4 825.3 874.7
Operating profit (loss) $ (290.9) 88.0 49.9 75.2 142.1
Net earnings (loss) $ (226.9) 9.6 (6.8) 20.9 54.9
Primary and fully diluted
earnings (loss) per share $ (6.80) 0.33 (0.24) 0.74 1.94
Average shares (millions) 33.4 29.5 28.4 28.3 28.3
_________________________________________________________________________________________
Cash flows from operations $ 212.1 178.9 178.7 209.2 251.9
Working capital (deficit):
End of year $ (6.4) 15.6 (20.2) 24.2 27.2
Current ratio .97 1.09 .88 1.15 1.17
_________________________________________________________________________________________
Total assets $ 1,478.1 1,838.7 1,209.1 1,252.8 1,226.0
Long-term debt $ 739.5 734.5 343.0 347.3 346.1
Stockholders' equity $ 352.4 599.8 416.6 446.5 448.7
Cash dividends per share $ 1.00 1.00 1.00 1.00 1.00
_________________________________________________________________________________________
*
Includes nonrecurring charges/credits as explained in "Notes to Consolidated Financial
Statements" as follows:
1994 - see Notes 2, 3 and 5.
1993 - see Notes 3, 6, 7, 11 and 12.
1992 - see Note 5.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
MARKET PRICE AND DIVIDEND DATA
<CAPTION>
Quarter ended
March 31 June 30 Sept. 30 Dec. 31
_________________________________________________________________________________________
<S> <C> <C> <C> <C>
1994:
Capital stock price:
High $43 3/8 45 45 3/8 47 1/8
Low 35 1/8 35 7/8 40 7/8 36 3/8
Cash dividends per share 0.25 0.25 0.25 0.25
_________________________________________________________________________________________
1993:
Capital stock price:
High 47 47 7/8 49 47 1/2
Low 31 40 1/2 40 7/8 37 7/8
Cash dividends per share 0.25 0.25 0.25 0.25
_________________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
QUARTERLY DATA*
<CAPTION>
Quarter ended
(Millions, except per share data) March 31 June 30 Sept. 30 Dec. 31
_________________________________________________________________________________________
<S> <C> <C> <C> <C>
1994:
Revenues $206.7 190.7 197.9 206.2
Costs and expenses 197.8 188.5 216.5 544.3
_________________________________________________________________________________________
Earnings (loss) before income taxes 8.9 2.2 (18.6) (338.1)
Income tax expense (benefit) 2.7 1.6 (7.3) (115.7)
_________________________________________________________________________________________
Net earnings (loss) $ 6.2 .6 (11.3) (222.4)
_________________________________________________________________________________________
Earnings (loss) per share $ 0.19 0.02 (0.34) (6.64)
_________________________________________________________________________________________
Average shares 33.3 33.4 33.4 33.4
_________________________________________________________________________________________
1993:
Revenues 186.9 194.7 193.5 240.3
Costs and expenses 181.9 184.7 190.9 233.3
_________________________________________________________________________________________
Earnings before income taxes 5.0 10.0 2.6 7.0
Income tax expense 2.3 4.4 4.4 .8
_________________________________________________________________________________________
Earnings (loss) before extraordinary
item and accounting changes 2.7 5.6 (1.8) 6.2
Loss on early retirement of debt - - - (3.3)
Changes in accounting principles .2 - - -
_________________________________________________________________________________________
Net earnings (loss) $ 2.9 5.6 (1.8) 2.9
_________________________________________________________________________________________
Earnings (loss) per share before
extraordinary item and
accounting changes 0.09 0.20 (0.06) 0.19
Loss on early retirement of debt - - - (0.10)
Changes in accounting principles 0.01 - - -
_________________________________________________________________________________________
Earnings (loss) per share $ 0.10 0.20 (0.06) 0.09
_________________________________________________________________________________________
Average shares 28.5 28.8 28.9 31.7
_________________________________________________________________________________________
*
Includes nonrecurring charges/credits as explained in "Notes to Consolidated Financial
Statements" as follows:
1994 - see Notes 2, 3 and 5.
1993 - see Notes 3, 6, 7, 11 and 12.
</TABLE>
<PAGE>
<PAGE>
Independent Auditors' Report
The Partners
MaraLou Netherlands Partnership:
We have audited the accompanying consolidated balance sheets of MaraLou
Netherlands Partnership and subsidiary as of December 31, 1994 and 1993, and
the related consolidated statements of income, partners' capital, and cash
flows for each of the years in the three-year period ended December 31,
1994. These consolidated financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of MaraLou
Netherlands Partnership and subsidiary as of December 31, 1994 and 1993, and
the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 1994 in conformity with
generally accepted accounting principles.
As discussed in note 4 to the consolidated financial statements, the
Partnership adopted the provisions of the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" in 1993.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Houston, Texas
February 8, 1995
<PAGE>
<PAGE>
<TABLE>
MARALOU NETHERLANDS PARTNERSHIP
Consolidated Balance Sheets
December 31, 1994 and 1993
(Expressed in U.S. Dollars)
<CAPTION>
ASSETS 1994 1993
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,120,901 $ 11,476,689
Accounts receivable 15,596,130 12,538,332
Accounts receivable - net profits 385,371 327,160
Income tax receivable 3,708,460 3,553,873
Materials and supplies 197,812 6,910
Other current assets 6,606 51,913
Total current assets 24,015,280 27,954,877
Long-term receivable 5,774,218 5,619,856
Property, plant and equipment, at cost, based on
the successful efforts method of accounting for
oil and gas properties 370,624,832 349,664,531
Less accumulated depletion, amortization
and depreciation 201,248,670 184,677,406
Net property, plant and equipment 169,376,162 164,987,125
Deferred charges 182,991 249,523
$ 199,348,651 $ 198,811,381
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliated companies $ 63,109 $ 63,960
Accrued liabilities 11,188,175 8,912,609
Amounts due to operator of joint venture 1,315,712 3,667,149
Government royalties payable 1,387,035 1,408,245
Income taxes payable 1,893,523 16,170,883
Total current liabilities 15,847,554 30,222,846
Long-term debt 96,000,000 87,800,000
Deferred income taxes 28,725,590 18,772,886
Deferred liability - platform abandonment 21,011,173 20,432,039
Minority interest 2,263,549 2,229,013
Partners' capital:
Marathon Petroleum Netherlands, Ltd. 10,748,498 12,675,404
LL&E (Netherlands), Inc. 10,748,498 12,675,404
Foreign currency translation adjustment 14,003,789 14,003,789
Total partners' capital 35,500,785 39,354,597
$ 199,348,651 $ 198,811,381
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
MARALOU NETHERLANDS PARTNERSHIP
Consolidated Statements of Income
Years Ended December 31, 1994, 1993 and 1992
(Expressed in U.S. Dollars)
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Revenues:
Sales $ 68,663,916 $ 61,152,082 $ 82,902,883
Interest income 1,259,380 4,465,502 2,722,500
Total revenues 69,923,296 65,617,584 85,625,383
Costs and expenses:
Costs and operating expenses 11,079,073 12,349,387 17,514,115
Exploration expenses, including dry
hole costs 4,344,427 3,336,263 3,981,650
Depletion, amortization and
depreciation 16,571,265 14,100,833 15,424,731
General and administrative expenses 5,691,285 4,950,135 5,522,838
Royalty expense 996,651 960,585 2,419,101
Net profits interest 96,232 336,356 1,202,888
Interest expense 5,467,221 7,222,385 7,983,685
Foreign exchange loss/(gain) 543,705 (763,957) (53,951)
Reimbursement of exploration costs,
including interest - - 263,056
Total costs and expenses 44,789,859 42,491,987 54,258,113
Income before income taxes 25,133,437 23,125,597 31,367,270
Provision for income taxes 16,940,713 12,192,472 17,524,381
Income after income taxes 8,192,724 10,933,125 13,842,889
Minority interest 1,126,536 797,688 1,665,693
Income before cumulative effect of
change in accounting principle 7,066,188 10,135,437 12,177,196
Cumulative effect of change in
accounting principle for income
taxes - 6,003,589 -
Net income $ 7,066,188 $ 4,131,848 $ 12,177,196
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE> MARALOU NETHERLANDS PARTNERSHIP
Consolidated Statements of Partners' Capital
Years Ended December 31, 1994, 1993 and 1992
(Expressed in U.S. Dollars)
<CAPTION>
Marathon
Petroleum L.L.&E.
Netherlands, Inc. (Netherlands), Inc. Total
<S> <C> <C> <C>
Capital, January 1, 1994 $12,675,404 $12,675,404 $25,350,808
Net income 3,533,094 3,533,094 7,066,188
Distribution to Partners (5,460,000) (5,460,000) (10,920,000)
Capital before adjustments $10,748,498 $10,748,498 21,496,996
Foreign currency translation
adjustment 14,003,789
Capital, December 31, 1994 $35,500,785
</TABLE>
<TABLE>
<CAPTION>
Marathon
Petroleum L.L.&E.
Netherlands, Inc. (Netherlands), Inc. Total
<S> <C> <C> <C>
Capital, January 1, 1993 $19,709,480 $19,709,480 $39,418,960
Net income 2,065,924 2,065,924 4,131,848
Distribution to Partners (9,100,000) (9,100,000) (18,200,000)
Capital before adjustments $12,675,404 $12,675,404 $25,350,808
Foreign currency translation
adjustment 14,003,789
Capital, December 31, 1993 $39,354,597
</TABLE>
(Continued)
<PAGE>
<PAGE>
<TABLE>
MARALOU NETHERLANDS PARTNERSHIP
Consolidated Statements of Partners' Capital (Continued)
Years Ended December 31, 1994, 1993 and 1992
(Expressed in U.S. Dollars)
<CAPTION>
Marathon
Petroleum L.L.&E.
Netherlands, Inc. (Netherlands), Inc. Total
<S> <C> <C> <C>
Capital, January 1, 1992 $20,470,882 $20,470,882 $ 40,941,764
Net income 6,088,598 6,088,598 12,177,196
Distribution to Partners (6,850,000) (6,850,000) (13,700,000)
Capital before adjustments $19,709,480 $19,709,480 39,418,960
Foreign currency translation
adjustment 14,003,789
Capital, December 31, 1992 $ 53,422,749
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
MARALOU NETHERLANDS PARTNERSHIP
Consolidated Statements of Cash Flows
Years Ended December 31, 1994, 1993 and 1992
(Expressed in U.S. Dollars)
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Cash flows from operating activities:
Net income accruing to MaraLou partners $ 7,066,188 $ 4,131,848 $ 12,177,196
Net (loss)/income accruing to minority
shareholders, net of cash distributions 34,536 (1,022,312) 295,694
Adjustments to reconcile net income to
net cash provided by operating activities:
Depletion, amortization, depreciation
and abandonment 16,571,265 14,100,833 16,280,290
Dry hole costs 3,860,175 1,892,456 2,523,479
Deferred income taxes 9,021,323 (7,951,542) 2,511,807
Exchange loss (gain) 374,213 (175,868) (127,738)
Interest on EBN repayment 281,812 665,428 1,076,991
Cumulative effect of change in accounting
principle - 6,003,589 -
Decrease (increase) in accounts
receivable (2,041,325) 2,175,071 943,544
Increase in accounts receivable - net
profits (19,222) (326,001) -
Decrease (increase) in materials and
supplies (190,902) (65) 69
Decrease (increase) in other current
assets 206,155 (161,390) (380,539)
Decrease (increase) in deferred charges 64,096 18,201 (240,457)
(Decrease) increase in accounts
payable-affiliates (3,255) (6,535) 5,077
(Decrease) increase in accounts
payable-net profits - (228,091) 20,517
Increase (decrease) in accrued
liabilities 1,483,332 677,612 (123,115)
Increase (decrease) in amounts due to
operator of joint venture (2,558,160) 4,676,131 (2,462,784)
(Decrease) increase in government
royalties payable (131,600) (865,267) (869,050)
(Decrease) increase in income taxes
payable (15,179,834) 8,415,273 (3,489,638)
Net cash provided by operating
activities $ 18,838,797 $ 32,019,371 $ 28,141,343
Cash flows from investing activities:
Capital expenditures $ (24,241,343)$ (9,973,617) $(20,034,768)
Net cash used in investing activities (24,241,343) (9,973,617) (20,034,768)
</TABLE>
(Continued)
<PAGE>
<PAGE>
<TABLE>
MARALOU NETHERLANDS PARTNERSHIP
Consolidated Statements of Cash Flows (Continued)
Years Ended December 31, 1994, 1993 and 1992
(Expressed in U.S. Dollars)
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Cash flows from financing activities:
Borrowing under revolving credit
agreement $ 8,200,000 $ - $ -
Repayments under revolving credit
agreement - (10,000,000) (6,000,000)
Reduction of note receivable by minority
shareholders in CLAM - - 5,629,000
Cash distribution to partners (10,920,000) (18,200,000) (13,700,000)
Net cash used in financing activities (2,720,000) (28,200,000) (14,071,000)
Effect of exchange rate on cash 766,758 (854,829) 1,010,031
Net decrease in cash and cash equivalents (7,355,788) (7,009,075) (4,954,394)
Cash and cash equivalents at beginning of
year $ 11,476,689 $ 18,485,764 $ 23,440,158
Cash and cash equivalents at end of year $ 4,120,901 $ 11,476,689 $ 18,485,764
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ 4,487,259 $ 5,543,844 $ 5,224,193
Foreign taxes 23,621,088 13,746,175 17,125,660
Federal taxes (518,116) (1,155,157) 2,345,247
Supplemental schedule of noncash investing and financing activities:
Long-term receivable for EBN
reimbursement $ 154,362 $ (321,870) $ 1,327,240
Accrued liability established for
repayment to EBN (732,141) (191,527) (2,334,052)
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
MARALOU NETHERLANDS PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1994, 1993 and 1992
1. Organization and summary of significant accounting policies
Organization and ownership:
MaraLou Netherlands Partnership (MaraLou), a Texas general
partnership, was formed on March 27, 1985 by LL&E
(Netherlands), Inc. (LL&E Netherlands) and Marathon Petroleum
Netherlands, Ltd. (Marathon Netherlands) for the purpose of
owning their interests in CLAM Petroleum Company (CLAM) and
for the purpose of purchasing the outstanding shares of CLAM
held by Netherlands-Cities Services, Inc. On March 27, 1985
both partners agreed to contribute their respective ten
thousand shares of CLAM to MaraLou. These shares were
transferred to MaraLou on June 21, 1985. The remaining shares
held by Netherlands-Cities Services, Inc. were acquired by
MaraLou for $85,381,881 on March 29, 1985. The acquisition
has been accounted for using the purchase method of accounting
effective January 1, 1985.
On December 6, 1991 an agreement was concluded whereby LL&E
Netherlands Petroleum Company, an affiliated company to LL&E
Netherlands - both of which are wholly owned subsidiaries of
The Louisiana Land and Exploration Company, contributed
Netherlands North Sea license interests and other assets
valued at $11,629,000 for five hundred newly issued shares of
CLAM stock. For financial reporting purposes, the
contribution made by LL&E Netherlands Petroleum Company in
excess of its calculated minority interest is reflected in
Partners' capital as an addition to the LL&E Netherlands
capital balance. MaraLou made a cash contribution of
$11,629,000 for an additional five hundred newly issued shares
of CLAM stock. The contributed cash is to be used to develop
the North Sea license interest contributed by LL&E Netherlands
Petroleum Company. MaraLou subsequently sold all of its newly
issued shares of CLAM stock to Marathon Netherlands, a partner
in MaraLou, which purchased the shares with a note valued at
$11,629,000, on which $6,000,000 was paid in 1991 and
$6,000,000, inclusive of interest, was paid in 1992. These
newly issued shares of CLAM stock have been pledged as
security for MaraLou and CLAM's revolving credit agreement
(see Note 6).
CLAM Petroleum Company, a Delaware Corporation, was formed in
October 1975 by LL&E Netherlands, Marathon Netherlands and
Netherlands-Cities Service, Inc. (stockholders) for the
purpose of owning their interest in certain licenses and
agreements covering hydrocarbon operations in The Netherlands
and for the purpose of entering into agreements with lending
institutions to finance such interest. Effective May 24, 1976
the stockholders assigned their interests and obligations
under the licenses and related agreements to CLAM. CLAM has
no operations outside the oil and gas industry or in areas
other than The Netherlands North Sea.<PAGE>
<PAGE>
The financial statements reflect the consolidation of CLAM
Petroleum Company (the Company) with MaraLou for the period
from January 1, 1985. The financial statements also reflect
the interests and earnings of the minority shareholders, LL&E
Netherlands Petroleum Company and Marathon Netherlands.
Currently, MaraLou has no interests other than in the
operation of CLAM.
Cash equivalents:
Cash equivalents of $-0-, $11,133,745 and $18,721,023 at
December 31, 1994, 1993 and 1992, respectively, consist of
Eurodollar and Euroguilder investments. For purposes of the
statements of cash flows, MaraLou considers all highly liquid
debt instruments with original maturities of three months or
less to be cash equivalents.
Joint venture agreements:
CLAM, together with unrelated parties, has interests in
certain prospecting and production licenses and related
operating agreements which provide for the joint conduct of
seismic, geological, exploration and development activities on
the continental shelf of The Netherlands. The accompanying
financial statements include CLAM's share of operations as
reported to it by the operator of the joint venture. The
amounts reported by the operator of the joint venture are
subject to an annual audit by the non-operators. The audit
for the year 1993 has been conducted with the non-operators
awaiting the operator's initial response to the audit report.
Petroleum exploration and development costs:
CLAM follows the successful efforts method of accounting for
oil and gas properties. Exploration expenses, including
geological and geophysical costs, prospecting costs, carrying
costs and exploratory dry hole costs are charged against
income as incurred. The acquisition costs of unproved
properties are capitalized with appropriate provision for
impairment based upon periodic assessments of such properties.
All development costs, including development dry hole costs,
are capitalized. Capitalized costs are adjusted annually for
cash adjustments relating to changes in CLAM's share in gas
reserve estimates (see Note 7).
Depletion, amortization and depreciation:
Depletion is provided under the unit-of-production method
based upon estimates of proved-developed reserves.
Depreciation is based on estimated useful life. Reserve
determinations are management's best estimates and generally
are related to economic and operating conditions. Depletion
and depreciation rates are adjusted for future estimated
salvage values.
CLAM property, plant and equipment retirements:
Upon sale or retirement of property, plant and equipment, the
cost and related accumulated depletion, amortization and
depreciation are eliminated from the accounts and the gain or
loss is reflected in income.
<PAGE>
<PAGE>
CLAM platform abandonment amortization:
Platform abandonment amortization is provided under the unit-
of-production method based upon estimates of proved-developed
reserves. Amortization rates are adjusted for future
estimated abandonment costs. Platform abandonment
amortization is charged to operating expense.
2. Related party transactions
CLAM transactions with related parties consisted of charges
for geological, geophysical and administrative services
rendered by an affiliate under two service contracts and
administrative services rendered by another affilate. Such
charges were approximately $2,183,002, $2,512,536 and
$2,530,608 for 1994, 1993 and 1992, respectively. Salaries
and related social charges included therein amounted to
$1,449,062, $1,685,046 and $1,858,876 for 1994, 1993 and 1992,
respectively.
MaraLou transactions with related parties consisted of charges
for administrative services rendered by an affiliate amounting
to $59,880, $55,800 and $58,200 in 1994, 1993 and 1992,
respectively.
3. Property, plant and equipment
Changes in property, plant and equipment for the years ended
December 31, 1994, 1993 and 1992 are as follows (in thousands
of U.S. dollars):
<TABLE>
<CATION>
Balance Additions Dry Hole Balance
12/31/93 (Reductions) Costs 12/31/94
<S> <C> <C> <C> <C>
Concession $ 11,678 $ (3,403) $ - $ 8,275
Wells and platforms 262,139 18,689 - 280,828
Incomplete construction 3,278 2,448 - 5,726
Uncompleted wells 17,640 (1,482) 122 16,280
Pipelines 48,439 3,431 - 51,870
Gas processing facilities 5,374 1,145 - 6,519
Furniture and fixtures 1,116 11 - 1,127
$ 349,664 $ 20,839 $ 122 $ 370,625
Depletion and amortization $ 183,645 $ 16,499 $ - $ 200,144
Depreciation-furniture and
fixtures 1,032 73 - 1,105
$ 184,677 $ 16,572 $ - $ 201,249
Net property, plant
and equipment $ 164,987 $ 169,376
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Balance Additions Dry Hole Balance
12/31/92 (Reductions) Costs 12/31/93
<S> <C> <C> <C> <C>
Concession $ 12,231 $ (553) $ - $ 11,678
Well and platforms 246,086 16,053 - 262,139
Incomplete construction 11,985 (8,707) - 3,278
Uncompleted wells 17,245 1,720 (1,325) 17,640
Pipelines 48,403 36 - 48,439
Gas processing facilities 3,952 1,422 - 5,374
Furniture and fixtures 1,113 3 - 1,116
$ 341,015 $ 9,974 $ (1,325) $ 349,664
Depletion and amortization $ 169,631 $ 14,014 $ - $ 183,645
Depreciation-furniture and
fixtures 945 87 - 1,032
$ 170,576 $ 14,101 $ - $ 184,677
Net property, plant
and equipment $ 170,439 $ 164,987
</TABLE>
<TABLE>
<CAPTION>
Balance Additions Dry Hole Balance
12/31/91 (Reductions) Costs 12/31/92
<S> <C> <C> <C> <C>
Concession $ 12,231 $ - $ - $ 12,231
Wells and platforms 233,339 12,747 - 246,086
Incomplete construction 15,039 (3,054) - 11,985
Uncompleted wells 15,228 4,540 (2,523) 17,245
Pipelines 42,847 5,556 - 48,403
Gas processing facilities 3,751 201 - 3,952
Furniture and fixtures 1,070 43 - 1,113
$ 323,505 $ 20,033 $ (2,523) $ 341,015
Depletion and amortization $ 154,292 $ 15,339 $ - $ 169,631
Depreciation-furniture and
fixtures 860 85 - 945
$ 155,152 $ 15,424 $ - $ 170,576
Net property, plant
and equipment $ 168,353 $ 170,439
</TABLE>
<PAGE>
<PAGE>
4. Federal and foreign income taxes
MaraLou is a partnership and, therefore, does not pay income
taxes. Since CLAM (wholly owned by MaraLou) is a corporation,
income taxes included in the accompanying consolidated
financial statements have been determined utilizing applicable
domestic and foreign tax rates.
The FASB has issued Statement of Financial Accounting Standard
(SFAS) No. 109, "Accounting for Income Taxes" which superseded
SFAS No. 96, "Accounting for Income Taxes."
SFAS 109 was adopted on January 1, 1993 and requires a change
from the deferred method of accounting for income taxes to the
asset and liability method. Under the new method, deferred
tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statements carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates applicable to
those years in which the temporary differences between
financial statement carrying amounts and tax bases are
expected to be recovered or settled. The effect of a change
in tax rates on deferred tax assets and liabilities is
recognized in income in the period when the change is enacted.
Dutch investment incentive premiums (WIR) are credited to
foreign income tax in the year in which they are claimed.
CLAM incurred WIR premium expense of $301,355, $60,331 and
$371,771 in 1994, 1993 and 1992, respectively.
Details of federal and foreign income taxes (in thousands of
U.S. dollars) are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Current tax expense:
Federal $ (860) $ (2,471) $ 1,063
Foreign 8,779 22,615 13,950
Deferred tax expense (benefit):
Federal 2,673 (2,544) (2,800)
Foreign 6,349 (5,408) 5,311
Total provision for income taxes $16,941 $ 12,192 $17,524
</TABLE>
<PAGE>
<PAGE>
Total income tax expense differed from the amounts computed by
applying the U.S. Federal income tax rate of 35% for 1994 and
1993 and 34% for 1992, respectively, to income before income
taxes of CLAM as a result of the following (in thousands of
U.S. dollars):
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Computed "expected" tax expense $ 10,267 $ 9,440 $12,188
Increase (reduction) in income taxes
resulting from:
Foreign tax greater than federal
income tax 4,178 (10,024) 2,668
Increase in deferred tax valuation
allowance 2,852 12,152 2,328
Other (356) 624 340
Provision for income taxes $ 16,941 $ 12,192 $17,524
</TABLE>
Temporary differences between the financial statement carrying
amounts and tax bases of assets and liabilities that give rise
to significant portions of the deferred tax assets and
liabilities at December 31, 1994 and 1993 relate to the
following (in thousands of U.S. dollars):
<TABLE>
<CAPTION>
U.S. - Deferred 1994 1993
<S> <C> <C>
Deferred Tax Assets:
Foreign tax credit carryover $ - $ 3,805
Benefit for foreign deferred taxes 13,415 6,199
Abandonment accrual 7,354 7,151
Valuation allowance (14,281) (8,860)
Total deferred tax assets $ 6,488 $ 8,295
Deferred Tax Liabilities:
Property, plant and equipment differences
in depreciation and amortization $21,798 $ 20,932
Total deferred tax liabilities $21,798 $ 20,932
Total U.S. - deferred $15,310 $ 12,637
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Foreign State Profit Share - Deferred 1994 1993
<S> <C> <C>
Deferred Tax Assets:
Abandonment accrual $ 2,809 $ 4,769
Morgan loan currency revaluation 270 5,287
Valuation allowance (723) (3,292)
Total deferred tax assets $ 2,356 $ 6,764
Deferred Tax Liabilities:
Property, plant and equipment differences
in depreciation and amortization $15,771 $ 12,899
Total deferred tax liabilities $15,771 $ 12,899
Total Foreign State Profit Share - deferred $13,415 $ 6,135
</TABLE>
The Company's 1994 and 1993 current tax liability was
determined on a regular tax basis. A minimum tax carryforward
of $339,175 remains at December 31, 1994.
5. CLAM foreign currency translation adjustment
As of January 1, 1983 CLAM adopted Statement of Financial
Accounting Standards No. 52, "Foreign Currency Translation"
(SFAS No. 52), under which the functional currency is deemed
to be the Dutch guilder. Effective January 1, 1987 CLAM
changed its functional currency from the Dutch guilder to the
U.S. dollar. The change was precipitated by the significant
effect on CLAM's operation of a new dollar-driven gas sales
contract which was effective January 1, 1987 and the Tax
Reform Act of 1986. In accordance with SFAS No 52, there is
no restatement of prior years' financial statements and the
translated amounts for nonmonetary assets as of December 31,
1986 have become the accounting basis for those assets in the
year of the change.
6. Debt
On July 25, 1985 MaraLou and CLAM entered into a revolving
credit agreement, which was amended and restated as of June
19, 1992, with a syndicate of major international banks to
fund the purchase by MaraLou of CLAM shares previously owned
by Netherlands-Cities Service, Inc. and to provide working
capital for CLAM. The banks' total commitment as of
December 31, 1994 and December 31, 1993 was $110,000,000.
Interest is paid, at the borrower's option, based on the prime
rate, the London Interbank Offered Rate (LIBOR), or an
adjusted CD rate. A contractual margin is added to LIBOR and
CD based borrowings. The all-in interest rates for CLAM for
December 31, 1994 and December 31, 1993 were 6.9375% and
3.9375%, respectively. During the revolving credit period,
the borrowers are obligated to pay a commitment fee of 1/4% on
the unused committed portion of the facility. All of the CLAM
<PAGE>
<PAGE>
common stock held by MaraLou has been pledged as security for
the facility. In addition, under certain circumstances
MaraLou can exercise an option to purchase the shares held by
LL&E Netherlands Petroleum Company and Marathon Petroleum
Netherlands, Ltd. for a nominal amount. The option agreement
has been assigned to the banks as security for the facility.
The credit agreement permits CLAM and MaraLou to incur total
debt up to an agreed borrowing base which at December 31, 1994
and December 31, 1993 was $132,000,000 and $145,000,000. The
agreement provides that the borrowing base is reduced
periodically over the term of the facilty which is currently
scheduled to expire on December 31, 2000. The borrowing base
and the scheduled reductions may be adjusted based on a
redetermination of the net present value of the projections of
certain cash flows included in an Engineering Report prepared
by petroleum engineers.
The outstanding balances for MaraLou and CLAM, respectively,
were $-0- and $96,000,000, at December 31, 1994 of which $-0-
was due within one year. The outstanding balances for MaraLou
and CLAM, respectively, were $-0- and $87,800,000 at
December 31, 1993. At December 31, 1994, the required
reductions to the borrowing base in each of the next five
years are $-0- in 1995, $-0- in 1996, $8,000,000 in 1997,
$29,000,000 in 1998, $30,000,000 in 1999 and $29,000,000 in
2000.
CLAM has an unsecured combined short-term loan and overdraft
facility of Dfl. 80,000,000 ($46,101,539 at year-end exchange
rate). On December 31, 1994 and December 31, 1993 the
outstanding balances relating to this facility were $-0-.
Interest rates are determined at the time borrowings are made.
7. Annual evaluation of gas reserves
Under the provisions of the Joint Development Operating
Agreement to which CLAM is a party, an annual estimate of gas
reserves is to be made and agreed upon by the Area Management
Committee. Based upon such estimate, each participant's
investment in the area properties, as defined, is to be
adjusted so that a participant's investment is in proportion
to its interest in the remaining reserves. Adjustments to the
investments are made in cash in the year following the date
the reserve revision is agreed upon.
In 1992, the Area Management Committee agreed to freeze each
participant's interest through 1994, at the level agreed upon
in 1992. However, in 1994 new entitlements were agreed upon,
effective January 1, 1994. CLAM made a cash payment of
$15,382,204 to equalize past investment. New entitlement
estimates will be agreed upon in 1995.
8. Reserves of oil and gas (unaudited)
CLAM's share of proven gas reserves at January 1, 1995 and
1994 are 261,990 MMCF and 317,737 MMCF, respectively.
<PAGE>
<PAGE>
9. Major customer
CLAM has one major customer from which it derives 97% of its
sales revenue. CLAM was required under its production license
to offer its production first to this customer, which is
partially owned by The Netherlands government. Production is
sold to this customer under five contracts representing
various partnership interests and gas qualities.
10. Net profits interest agreement
CLAM entered into an agreement dated November 1, 1981 which
requires CLAM to pay a portion of its net profits ("net
profits interest") to an unrelated party in exchange for a
7-1/2% participation interest in certain blocks. The "net
profits interest" is equal to one twenty-fourth (1/24) of
CLAM's revenues from the contract area, after various
deductions, as defined in the agreement.
11. Issuance of production licenses
In March 1990, a production license was granted by the
Minister of Economics Affairs of the Netherlands covering the
L12a and L12b/L15b blocks. As a result, the Dutch Government,
through Energie Beheer Nederland (EBN) (a Dutch company wholly
owned by the Dutch Government) exercised its option to
participate 40% in the L12a block and 50% in the L12b/L15b
block. CLAM was subsequently reimbursed $10,628,572 during
1990, all of which was included in income because there were
costs associated with these blocks which had been written-off
in prior years. Components of the reimbursement were:
Exploration well cost (previously
written off as dry wells) $ 5,595,076
Exploration administrative expense 1,818,220
Interest 3,215,276
Total reimbursement $10,628,572
In 1991, it was determined that the portion of the above noted
reimbursement allocable to trapping unit L12-FC, within blocks
L12b/L15b, would be refunded to EBN as production on this
trapping unit is not expected to commence within the 48-month
requirement stipulated by the contractual agreement with EBN
(the Agreement). The refundable amount, which CLAM expected
to repay in 1994, was recorded as a long-term receivable of
$3.6 million, interest expense of $1.5 million and an accrued
liability of $5.1 million. The Agreement calls for EBN to
reimburse the funds to CLAM net of interest upon first
production from trapping unit L12-FC, which is expected to
occur in 1997.
<PAGE>
<PAGE>
In 1992, it was determined that the portion of the above noted
reimbursement allocable to trapping units L12-FA and L12-FB,
within blocks L12a and L12b/L15b, would be refunded to EBN as
production on these trapping units are not expected to
commence within the 48-month requirement stipulated by the
Agreement. The refundable amount for L12-FA and L12-FB, which
CLAM expected to repay in 1994, was recorded as a long-term
receivable of $0.5 and $1.6 million, respectively, interest
expense $0.2 million and $0.6 million, respectively and an
accrued liability of $0.7 million and $2.2 million,
respectively. The Agreement calls for EBN to reimburse the
respective funds to CLAM net of interest upon first production
from trapping units L12-FA and L12-FB, which is expected to
occur in 2000 and 1998, respectively.
In 1994, the contractual agreement with EBN (the Agreement)
was renegotiated with the result being that the refundable
amounts for the L12-FB and L12-FC trapping units will have to
be repaid by December 31, 1999 unless production has commenced
prior to this date. Additionally, it was agreed there is no
repayment obligation for the L12-FA trapping unit, and
resulting in a reversal of the associated long-term
receivable, interest expense and accrued liability.
12. Disclosures about fair value of financial instruments
Cash and Cash Equivalents, Receivables, Due from Operator of
Joint Venture, Due to Affiliated Company, Accounts Payable,
and Due to Operator of Joint Venture
- The carrying amount approximates fair value because of
the short maturity of these instruments.
Long-Term Receivable
- The estimated fair value of the Company's long-term
receivable is as follows (in thousands of U.S. dollars):
At December 31, 1994
Carrying Estimated
Amount Fair Value
Long-term receivable $5,774 $3,631
The fair value of the long-term receivable was based on
discounted cash flows.
Long-Term Debt Due to Banks
- The carrying amount approximates fair value because of
the variable rate of interest associated with this debt.
Derivatives
- MaraLou has no derivative financial instruments.
<PAGE>
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information relating to directors of the Registrant will be
contained in the definitive Proxy Statement for its Annual Meeting
of Stockholders to be held on May 11, 1995, which the Registrant
will file pursuant to Regulation 14A not later than 120 days after
December 31, 1994, and such information is incorporated herein by
reference in accordance with General Instruction G(3) of Form 10-K.
Information relating to executive officers of the Registrant
appears at page 25 of this Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION.
Information relating to the compensation of the Registrant's
executive officers and directors will be contained in the
definitive Proxy Statement referred to above in Item 10. -
"Directors and Executive Officers of the Registrant," and such
information is incorporated herein by reference in accordance with
General Instruction G(3) of Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
Information relating to beneficial ownership of securities
will be contained in the definitive Proxy Statement referred to
above in Item 10. - "Directors and Executive Officers of the
Registrant," and such information is incorporated herein by
reference in accordance with General Instruction G(3) of Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information relating to transactions with management and
others and certain business relationships regarding directors will
be contained in the definitive Proxy Statement referred to above in
Item 10. - "Directors and Executive Officers of the Registrant,"
and such information is incorporated herein by reference in
accordance with General Instruction G(3) of Form 10-K.
<PAGE>
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORMS 8-K.
(a)(1) Financial Statements - the information
required hereunder is included in Item 8. -
"Financial Statements and Supplementary Data."
(a)(2) Financial Statement Schedules - all financial
statement schedules are omitted as the
required information is inapplicable or the
information is presented in the consolidated
financial statements or related notes.
(a)(3) Index to Exhibits - the information required
hereunder is included herein.
(b) Reports on Form 8-K - no reports on Form 8-K
were filed during the quarter ended December
31, 1994.
<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
AND SUBSIDIARIES
Index to Exhibits
The following Exhibits have been filed with the Securities and
Exchange Commission:
Exhibit 3(a) Certificate of Incorporation (Incorporated by
reference to Exhibit 1-3(a) to the Registrant's
Registration Statement No. 2-45541 on Form S-1.);
Articles Supplementary pursuant to Section 3-
603(d)(4) of the Maryland General Corporation Law
(Incorporated by reference to Exhibit 3(b) to the
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1983 - Commission File No.
1-959.); Articles of Amendment of Charter dated May
30, 1985 (Incorporated by reference to Exhibit 3(b)
to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1985 - Commission File
No. 1-959.); Articles of Amendment of Charter dated
May 12, 1988 (Incorporated by reference to Exhibit
3(c) to the Registrant's Form 8 dated April 24,
1989 - Commission File No. 1-959.).
Exhibit 3(b) By-Laws (Incorporated by reference to Exhibit (1)
to the Registrant's Current Report on Form 8-K
dated October 1, 1989 - Commission File No. 1-
959.).
Exhibit 4(a) Rights Agreement dated as of May 25, 1986 among the
Registrant and The Bank of New York (as Rights
Agent) - (Incorporated by reference to Exhibit 4(a)
to the Registrant's Current Report on Form 8-K
dated May 25, 1986 - Commission File No. 1-959.).
Exhibit 4(b) Indenture dated as of June 15, 1992 among the
Registrant and Texas Commerce Bank National
Association (as Trustee) - (Incorporated by
reference to Exhibit 4.1 to the Registrant's
Registration Statement No. 33-50991 on Form S-3, as
amended.).
Exhibit 10(a) Form of Termination Agreement with Senior
Management Personnel (Incorporated by reference to
Exhibit 10(b) to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1982 -
Commission File No. 1-959.).
(continued)<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
AND SUBSIDIARIES
Index to Exhibits
Exhibit 10(b) The Louisiana Land and Exploration Company 1982
Stock Option Plan as adopted (Incorporated by
reference to Exhibit A to the Registrant's
definitive Proxy Statement dated March 26, 1982.)
and the amendment thereto dated December 8, 1982
(Incorporated by reference to Exhibit 10(c) to the
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1982 - Commission File No.
1-959.).
Exhibit 10(c) The Louisiana Land and Exploration Company 1988
Long-Term Stock Incentive Plan as amended
(Incorporated by reference to Exhibit A to the
Registrant's definitive Proxy Statement dated March
22, 1993.).
Exhibit 10(d) Deferred Compensation Plan for Directors
(Incorporated by reference to Exhibit 10(d) to the
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1982 - Commission File No.
1-959.).
Exhibit 10(e) Pension Agreement dated December 27, 1994.
Exhibit 10(f) The Louisiana Land and Exploration Company 1990
Stock Option Plan for Non-Employee Directors as
adopted (Incorporated by reference to Exhibit A to
the Registrant's definitive Proxy Statement dated
March 26, 1990.).
Exhibit 10(g) Form of The Louisiana Land and Exploration Company
Deferred Compensation Arrangement for Selected Key
Employees (Incorporated by reference to Exhibit
10(i) to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1990 -
Commission File No. 1-959.).
Exhibit 10(h) Retirement Plan for Directors of The Louisiana Land
and Exploration Company dated March 1, 1987
(Incorporated by reference to Exhibit 10(j) to the
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1990 - Commission File No.
1-959.).
(continued)<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
AND SUBSIDIARIES
Index to Exhibits
Exhibit 10(i) The LL&E Special Termination Benefit Plan
(Incorporated by reference to Exhibit 10(j) to the
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1992 - Commission File No.
1-959.).
Exhibit 10(j) The LL&E Supplemental Excess Plan (Incorporated by
reference to Exhibit 10(k) to the Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1992 - Commission File No. 1-959.).
Exhibit 10(k) Form of Compensatory Benefits Agreement
(Incorporated by reference to Exhibit 10(l) to the
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1992 - Commission File No.
1-959.).
Exhibit 10(l) Amended and Restated Credit Agreement dated as of
August 19, 1994 (the Credit Agreement) among the
Registrant, the Banks listed therein, Morgan
Guaranty Trust Company of New York, as Agent, and
Texas Commerce Bank National Association and
NationsBank of Texas, N.A., as Co-Agents.
Exhibit 10(m) Amendment No. 1 to the Credit Agreement dated as of
January 23, 1995 among the Registrant, the Banks
listed on the signature pages thereof and Morgan
Guaranty Trust Company of New York, as Agent.
Exhibit 11 Computation of Primary and Fully Diluted Earnings
(Loss) Per Share.
Exhibit 21 Subsidiaries of the Registrant.
Exhibit 23 Consent of Experts.
Exhibit 24 Powers of Attorney.
Exhibit 27 Financial Data Schedule.
Certain debt instruments have not been filed. The Company agrees
to furnish a copy of such agreement(s) to the Commission upon
request.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
THE LOUISIANA LAND AND EXPLORATION
COMPANY
(Registrant)
Date: March 9, 1995 By /s/ Frederick J. Plaeger, II
__________________________________
Frederick J. Plaeger, II
General Counsel and Corporate
Secretary
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Date: March 9, 1995 *H. Leighton Steward
_____________________________________
H. Leighton Steward
Director, Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
Date: March 9, 1995 *Leland C. Adams
_____________________________________
Leland C. Adams
Director
Date: March 9, 1995 *Richard A. Bachmann
_____________________________________
Richard A. Bachmann
Director, Executive Vice President,
Finance and Administration
(Principal Financial Officer)
Date: March 9, 1995 *John F. Greene
_____________________________________
John F. Greene
Director, Executive Vice President,
Exploration and Production
Date: March 9, 1995 *Eamon M. Kelly
_____________________________________
Eamon M. Kelly
Director
<PAGE>
<PAGE>
Date: March 9, 1995 *Kenneth W. Orce
_____________________________________
Kenneth W. Orce
Director
Date: March 9, 1995 *Victor A. Rice
_____________________________________
Victor A. Rice
Director
Date: March 9, 1995 *Orin R. Smith
_____________________________________
Orin R. Smith
Director
Date: March 9, 1995 *Arthur R. Taylor
_____________________________________
Arthur R. Taylor
Director
Date: March 9, 1995 *W. R. Timken, Jr.
_____________________________________
W. R. Timken, Jr.
Director
Date: March 9, 1995 *Carlisle A.H. Trost
_____________________________________
Carlisle A.H. Trost
Director
Date: March 9, 1995 *E. L. Williamson
_____________________________________
E. L. Williamson
Director
Date: March 9, 1995 *Jerry D. Carlisle
_____________________________________
Jerry D. Carlisle
Vice President and Controller
(Principal Accounting Officer)
*/s/ Frederick J. Plaeger, II
_________________________________________
Frederick J. Plaeger, II
General Counsel and Corporate Secretary
(As attorney-in-fact for each of the
persons indicated)
<PAGE>
<PAGE>
________________________________________________________________
________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
__________________________
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
__________________________
THE LOUISIANA LAND AND EXPLORATION COMPANY
(Exact name of registrant as specified in its charter)
EXHIBITS
________________________________________________________________
________________________________________________________________
<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
AND SUBSIDIARIES
Index to Exhibits
(Item 14(a)(3))
The following Exhibits have been filed with the Securities and
Exchange Commission:
Exhibit 3(a) Certificate of Incorporation (Incorporated by
reference to Exhibit 1-3(a) to the Registrant's
Registration Statement No. 2-45541 on Form S-1.);
Articles Supplementary pursuant to Section 3-
603(d)(4) of the Maryland General Corporation Law
(Incorporated by reference to Exhibit 3(b) to the
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1983 - Commission File No.
1-959.); Articles of Amendment of Charter dated May
30, 1985 (Incorporated by reference to Exhibit 3(b)
to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1985 - Commission File
No. 1-959.); Articles of Amendment of Charter dated
May 12, 1988 (Incorporated by reference to Exhibit
3(c) to the Registrant's Form 8 dated April 24,
1989 - Commission File No. 1-959.).
Exhibit 3(b) By-Laws (Incorporated by reference to Exhibit (1)
to the Registrant's Current Report on Form 8-K
dated October 1, 1989 - Commission File No. 1-
959.).
Exhibit 4(a) Rights Agreement dated as of May 25, 1986 among the
Registrant and The Bank of New York (as Rights
Agent) - (Incorporated by reference to Exhibit 4(a)
to the Registrant's Current Report on Form 8-K
dated May 25, 1986 - Commission File No. 1-959.).
Exhibit 4(b) Indenture dated as of June 15, 1992 among the
Registrant and Texas Commerce Bank National
Association (as Trustee) - (Incorporated by
reference to Exhibit 4.1 to the Registrant's
Registration Statement No. 33-50991 on Form S-3, as
amended.).
Exhibit 10(a) Form of Termination Agreement with Senior
Management Personnel (Incorporated by reference to
Exhibit 10(b) to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1982 -
Commission File No. 1-959.).
(continued)
<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
AND SUBSIDIARIES
Index to Exhibits (continued)
(Item 14(a)(3))
Exhibit 10(b) The Louisiana Land and Exploration Company 1982
Stock Option Plan as adopted (Incorporated by
reference to Exhibit A to the Registrant's
definitive Proxy Statement dated March 26, 1982.)
and the amendment thereto dated December 8, 1982
(Incorporated by reference to Exhibit 10(c) to the
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1982 - Commission File No.
1-959.).
Exhibit 10(c) The Louisiana Land and Exploration Company 1988
Long-Term Stock Incentive Plan as amended
(Incorporated by reference to Exhibit A to the
Registrant's definitive Proxy Statement dated March
22, 1993.).
Exhibit 10(d) Deferred Compensation Plan for Directors
(Incorporated by reference to Exhibit 10(d) to the
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1982 - Commission File No.
1-959.).
Exhibit 10(e) Pension Agreement dated December 27, 1994.
Exhibit 10(f) The Louisiana Land and Exploration Company 1990
Stock Option Plan for Non-Employee Directors as
adopted (Incorporated by reference to Exhibit A to
the Registrant's definitive Proxy Statement dated
March 26, 1990.).
Exhibit 10(g) Form of The Louisiana Land and Exploration Company
Deferred Compensation Arrangement for Selected Key
Employees (Incorporated by reference to Exhibit
10(i) to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1990 -
Commission File No. 1-959.).
Exhibit 10(h) Retirement Plan for Directors of The Louisiana Land
and Exploration Company dated March 1, 1987
(Incorporated by reference to Exhibit 10(j) to the
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1990 - Commission File No.
1-959.).
(continued)
<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
AND SUBSIDIARIES
Index to Exhibits (continued)
(Item 14(a)(3))
Exhibit 10(i) The LL&E Special Termination Benefit Plan
(Incorporated by reference to Exhibit 10(j) to the
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1992 - Commission File No.
1-959.).
Exhibit 10(j) The LL&E Supplemental Excess Plan (Incorporated by
reference to Exhibit 10(k) to the Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1992 - Commission File No. 1-959.).
Exhibit 10(k) Form of Compensatory Benefits Agreement
(Incorporated by reference to Exhibit 10(l) to the
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1992 - Commission File No.
1-959.).
Exhibit 10(l) Amended and Restated Credit Agreement dated as of
August 19, 1994 (the Credit Agreement) among the
Registrant, the Banks listed therein, Morgan
Guaranty Trust Company of New York, as Agent, and
Texas Commerce Bank National Association and
NationsBank of Texas, N.A., as Co-Agents.
Exhibit 10(m) Amendment No. 1 to the Credit Agreement dated as of
January 23, 1995 among the Registrant, the Banks
listed on the signature pages thereof and Morgan
Guaranty Trust Company of New York, as Agent.
Exhibit 11 Computation of Primary and Fully Diluted Earnings
(Loss) Per Share.
Exhibit 21 Subsidiaries of the Registrant.
Exhibit 23 Consent of Experts.
Exhibit 24 Powers of Attorney.
Exhibit 27 Financial Data Schedule.
Certain debt instruments have not been filed. The Company agrees
to furnish a copy of such agreement(s) to the Commission upon
request.
EXHIBIT 10(e)
<PAGE>
<PAGE>
Exhibit 10(e)
December 27, 1994
Mr. H. Leighton Steward
Chairman of the Board, President and Chief
Executive Officer
The Louisiana Land and Exploration Company
909 Poydras Street
New Orleans, Louisiana 70112
Dear Mr. Steward:
This letter will confirm our agreement relating to the payment to
you of certain supplemental pension benefits to which The Louisiana
Land and Exploration (the "Company") has agreed in order to induce
you to remain in the employment of the Company. The terms of the
agreement are as follows:
1. You shall be entitled to participate in The LL&E Pension Plan,
the Compensatory Benefits Agreement, and The LL&E Supplemental
Excess Plan (collectively, the "Pension Plans") to the full
extent permissible under the terms of the Pension Plans.
2. If your employment with the Company terminates for any reason
(including, without limitation, by reason of retirement, death
or termination for any reason), you will be entitled to
receive the benefits that would have been provided under the
Pension Plans calculated as if you had been employed by the
Company from December 3, 1962 (including, without limitation,
any early retirement benefits to which you would have been
entitled if your employment by the Company had commenced on
December 3, 1962), less the actuarial value of any benefits
which you are eligible to receive under the terms of any
defined benefit pension plan of Shell Oil Company. Any amount
payable to you in accordance with the foregoing shall be
distributable therefrom (in the form and manner determined
pursuant to the terms of the respective Pension Plans), and
the balance shall be paid to you directly by the Company in
the form and manner determined pursuant to Appendix A hereto.
The terms of the agreement set forth herein are the result of
negotiations between the Company and you and reflect the desire of
both parties to fix irrevocably the form of payment of pension
benefits not payable under the Pension Plans and their mutual
agreement to the form of payment set forth in Appendix A. This
letter supersedes the letters from us to you dated August 6, 1982
and November 10, 1988, setting forth the terms of our prior
agreements to provide certain supplemental pension benefits to you
in connection with your employment with the Company, and such
earlier agreements are hereby revoked.
<PAGE>
<PAGE>
This letter is being executed in duplicate. If you are in
agreement with the terms hereof, please execute both copies and
return one copy to the Secretary of the Company.
Very truly yours,
THE LOUISIANA LAND AND
EXPLORATION COMPANY
BY: /s/Arthur R. Taylor
_______________________________
Arthur R. Taylor
The undersigned hereby agrees (i) to the revocation of the prior
agreements dated August 6, 1982 and November 10, 1988, and (ii) to
the terms of the agreement set forth herein.
BY: /s/H. Leighton Steward
_______________________________
H. Leighton Steward
December 27, 1994
Date
<PAGE>
<PAGE>
APPENDIX A
1. Upon the termination of your employment for any reason
other than death, the Benefit Committee of the Company (the
"Committee") shall calculate a dollar amount equal to: (i) the
actuarial value of the benefits that would have been provided under
the Pension Plans calculated as if you had been employed by the
Company from December 3, 1962 (including, without limitation, any
early retirement benefits to which you would have been entitled if
your employment by the Company had commenced on December 3,1962),
reduced by (ii) the sum of (A) the actuarial value of any benefits
which you are eligible to receive under the terms of any defined
benefit pension plan of Shell Oil Company and (B) the actuarial
value of the benefits actually payable to you from the Pension
Plans. The foregoing actuarial values shall be determined on the
basis of the Actuarial Equivalent factors specified in The LL&E
Pension Plan as of the date of termination of your employment.
2. The Company shall establish on its books an account (the
"Account") for you and shall credit to the Account promptly upon
termination of your employment for any reason other than death the
dollar amount determined pursuant to Section 1 above. Additional
amounts shall be credited to or deducted from your Account as
described in the following provisions of this Section 2 until your
Account has been distributed in full hereunder. As of each
Quarterly Valuation Date (March 31, June 30, September 30,
December 31), there shall be credited to or deducted from your
Account an amount equal to the earnings or losses which would have
been allocated to your Account if your then Account balance had
been invested in one or more of the investment funds designated at
the applicable time pursuant to Section 4.1 of The LL&E
Supplemental Excess Plan (the "SEP") in accordance with your
election pursuant to Section 4 hereof. Distributions from your
Account shall be deducted from your Account.
3. Upon termination of your employment for any reason other
than death, the Committee shall calculate the benefits that would
have been paid to you if your outstanding Account balance from and
after the credit pursuant to the first sentence of Section 2 hereof
were credited with earnings at the rate of five percent (5%) per
annum compounded annually and your benefits were paid in ten equal
annual installments, with the first such installment being paid in
January of the calendar year following the calendar year of your
termination of employment and with the succeeding installment being
paid in January of each of the nine succeeding calendar years. The
calculation described in the preceding sentence shall be made in
such manner as to cause each such installment to be equal, taking
into account such assumed earnings rate of five percent (5%) per
annum. Your benefits shall be paid in the manner so determined,
provided, however, that (i) in no event will any payments be made
hereunder in excess of your then remaining Account balance (even if
this results in your receiving less than the amounts determined
under the foregoing calculation), and (ii) if any amount would
otherwise remain in your Account following the payment of the tenth
annual installment, such amount shall be added to and included in
such tenth annual installment payment. The installments pursuant
to this Section 3 shall be paid to you if you are living. If you
die before Account has been distributed in full, the remaining
installments shall be paid to your Beneficiary (as determined
pursuant to Section 6 hereof).
<PAGE>
<PAGE>
4. You shall be entitled to elect that your Account be
treated as invested in one or more of the investment funds
designated at the applicable time pursuant to Section 4.1 of the
SEP, by filing with the Committee an appropriate Investment
Election Form as prescribed by the Committee specifying the
percentage (in multiples of 10%) of the amounts credited and to be
credited to your Account which are to be treated as invested in
each of such investment funds. You may change your investment
election by filing a new Investment Election Form; provided,
however, that such changes shall be subject to such administrative
procedures as the Committee may prescribe.
5. Notwithstanding anything herein to the contrary:
(a) The Company may from time to time in its sole discretion
invest any assets in the investment funds designated pursuant to
Section 4.1 of the SEP, but it shall have no obligation to do so.
(b) Neither you, your spouse, nor any Beneficiary shall have
any right to any Company assets by reason of this agreement.
(c) Any assets invested in the investment funds by the
Company shall remain the assets of the Company and shall be subject
to the claims of general creditors of the Company.
6. For purposes of Section 3 hereof, your "Beneficiary"
shall be the person, persons, or entity designated by you on a form
prescribed by the Committee to receive benefits pursuant to Section
3 hereof upon your death. If no such beneficiary has been
effectively designated by you, your Beneficiary with respect to
benefits payable pursuant to Section 3 hereof shall be the person,
persons or entity designated by you as your beneficiary pursuant to
The LL&E Savings, or if there is no effective beneficiary
designation hereunder or under The LL&E Savings Plan, your
Beneficiary with respect to benefits payable pursuant to Section 3
hereof shall be your estate.
7. If your employment terminates by reason of your death,
your surviving spouse (if any) shall be entitled to a benefit
hereunder, which benefit shall be in an amount equal to: (i) the
benefits which would have been payable to your spouse under the
Pension Plans calculated as if you had been employed by the Company
from December 3, 1962 reduced by (ii) the sum of (A) the actuarial
value of any benefits which your spouse or any other beneficiary of
yours is eligible to receive under the terms of any defined benefit
plan of Shell Oil Company and (B) the benefits actually payable to
your spouse under the Pension Plans. Such benefit shall be paid to
your spouse in the same form and commencing at the same time as the
benefit is paid to your spouse under The LL&E Pension Plan. No
benefits shall be payable pursuant to this Section 7 if your
employment terminates by reason of your death and you are not
survived by a spouse.
8. The rights of you, your spouse, and your Beneficiaries
hereunder shall be solely those of an unsecured creditor of the
Company. Any asset acquired or held by the Company or funds
allocated by the Company in connection with the liabilities assumed
by the Company pursuant to this agreement shall not be deemed to be
security for the performance of the Company's obligations pursuant
hereto, but shall be and remain general assets of the Company.
<PAGE>
<PAGE>
9. To the extent permitted by law, the right or interest of
you, your spouse, and your Beneficiaries hereunder shall not be
assignable or transferable, in whole or in part, either directly or
by operation of law or otherwise, including without limitation,
execution, levy, garnishment, attachment, pledge, bankruptcy or in
any other manner (but excluding devolution on account of mental
incompetency and passage under will or intestacy laws in the case
of death), and any such right or interest hereunder shall not be
liable for or subject to any obligation or liability of you, your
spouse or your Beneficiaries.
EXHIBIT 10(l)
<PAGE>
<PAGE>
Exhibit 10(l)
$450,000,000
AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of
August 19, 1994
among
THE LOUISIANA LAND AND EXPLORATION COMPANY,
The BANKS Listed Herein,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Agent
and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
and NATIONSBANK OF TEXAS, N.A.,
as Co-Agents
<PAGE>
<PAGE>
TABLE OF CONTENTS1
Page
ARTICLE I
DEFINITIONS
1.01 Definitions ..................................... 1
1.02 Accounting Terms and Determinations ............. 16
1.03 Types of Borrowings ............................. 17
1.04 Other Definitional Provisions ................... 17
ARTICLE II
THE CREDITS
2.01 Commitments to Lend ............................. 17
2.02 Method of Borrowing ............................. 18
2.03 Money Market Borrowings ......................... 18
2.04 Notice to Banks; Funding of Loans ............... 22
2.05 Notes ........................................... 23
2.06 Method of Electing Interest Rates ............... 24
2.07 Interest Rates .................................. 25
2.08 Fees ............................................ 27
2.09 Termination or Reduction of Commitments ......... 28
2.10 Prepayments and Repayments ...................... 28
2.11 General Provision as to Payments ................ 30
2.12 Funding Losses .................................. 30
2.13 Computation of Interest and Fees ................ 31
2.14 Taxes ........................................... 31
ARTICLE III
CONDITIONS TO BORROWING
3.01 Each Borrowing .................................. 33
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01 Corporate Existence and Power ................... 34
4.02 Corporate and Governmental Authorization;
No Contravention .............................. 34
4.03 Binding Effect .................................. 35
4.04 Information ..................................... 35
4.05 No Material Adverse Change ...................... 36
1 The Table of Contents is not a part of this Agreement.
<PAGE>
<PAGE>
Page
4.06 Litigation ...................................... 36
4.07 Compliance with ERISA ........................... 36
4.08 Taxes ........................................... 36
4.09 Compliance with Laws ............................ 37
4.10 Investment Company Act .......................... 37
4.11 Public Utility Holding Company Act .............. 37
4.12 Ownership of Property, Liens .................... 37
4.13 Current Disclosure .............................. 37
4.14 Representations in Subsidiary Guaranty
Agreement True and Correct .................... 37
4.15 Use of Proceeds ................................. 38
4.16 Environmental Matters ........................... 38
ARTICLE V
COVENANTS
5.01 Information ..................................... 38
5.02 Reserve Reports ................................. 40
5.03 Payment of Obligations .......................... 42
5.04 Maintenance of Property ......................... 42
5.05 Insurance........................................ 42
5.06 Compliance With Law ............................. 42
5.07 Inspection of Property, Book
and Records ................................... 42
5.08 Development and Operation of Oil,
Gas and Mineral Properties .................... 43
5.09 Maintenance of Existence,
Rights, Etc. .................................. 43
5.10 Maintenance of Equity Securities
of Significant Subsidiaries ................... 43
5.11 Limitation on Debt .............................. 43
5.12 Negative Pledge ................................. 45
5.13 Consolidations, Mergers and
Asset Sales ................................... 46
5.14 Cash Flow Coverage .............................. 47
5.15 Minimum Consolidated Tangible Net Worth ......... 47
5.16 Subsidiary Debt ................................. 47
5.17 Transactions with Affiliates .................... 47
5.18 Limitation of Restrictions Affecting
Subsidiaries .................................. 48
<PAGE>
<PAGE>
Page
ARTICLE VI
DEFAULTS
6.01 Defaults ........................................ 48
6.02 Notice of Default ............................... 51
ARTICLE VII
THE AGENT
7.01 Appointment and Authorization ................... 51
7.02 Agent and Affiliates ............................ 51
7.03 Action by Agent ................................. 51
7.04 Consultation with Experts ....................... 51
7.05 Liability of Agent .............................. 51
7.06 Indemnification ................................. 52
7.07 Credit Decision ................................. 52
7.08 Agents' Fees .................................... 52
7.09 Successor Agent ................................. 52
7.10 Co-Agents Not Liable ............................ 53
ARTICLE VIII
CHANGES IN CIRCUMSTANCES
8.01 Basis for Determining Interest Rate
Inadequate or Unfair .......................... 53
8.02 Illegality ...................................... 54
8.03 Increased Cost and Reduced Return ............... 55
8.04 Domestic Loans Substituted For Affected
Euro-Dollar Loans ............................. 56
8.05 Substitution of Bank ............................ 57
ARTICLE IX
MISCELLANEOUS
9.01 Notices ......................................... 57
9.02 No Waiver ....................................... 57
9.03 Expenses; Indemnification ....................... 58
9.04 Sharing of Set-offs ............................. 58
9.05 Amendments and Waivers .......................... 59
9.06 Successors and Assigns .......................... 59
9.07 Collateral ...................................... 61
9.08 Governing Law; Submission to Jurisdiction ....... 61
<PAGE>
<PAGE>
Page
9.09 Counterparts; Integration; ...................... 62
9.10 WAIVER OF JURY TRIAL ............................ 62
9.11 Confidentiality ................................. 62
ARTICLE X
EFFECTIVENESS
10.01 Conditions to Effectiveness ..................... 63
10.02 Consequences of Effectiveness
Transitional Provisions ....................... 64
Schedule I -- Pricing Schedule
Exhibit A -- Note
Exhibit B-1 -- Opinion of Special Counsel
for the Obligors
Exhibit B-2 -- Opinion of General Counsel of
the Borrower
Exhibit C -- Opinion of Davis Polk & Wardwell
Exhibit D -- Subsidiary Guaranty Agreement
Exhibit E -- Form of Money Market Quote Request
Exhibit F -- Form of Invitation for Money Market
Quotes
Exhibit G -- Form of Money Market Quote
Exhibit H -- Assignment and Assumption Agreement
<PAGE>
<PAGE>
AMENDED AND RESTATED
CREDIT AGREEMENT
AGREEMENT dated as of August 19, 1994 among THE LOUISIANA
LAND AND EXPLORATION COMPANY, the BANKS listed on the signature
pages hereof and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Agent, and TEXAS COMMERCE BANK NATIONAL ASSOCIATION and NATIONSBANK
OF TEXAS, N.A., as Co-Agents.
WHEREAS, the Borrower, the Banks, the Co-Agents and the
Agent are parties to an Amended and Restated Revolving Credit and
Term Loan Agreement (the "Original Agreement") dated as of
September 22, 1993;
WHEREAS, the parties hereto wish to amend the Original
Agreement to make mutually satisfactory changes in the terms of the
Original Agreement; and
WHEREAS, when all the conditions specified in Section
10.01 have been satisfied, the Original Agreement will be
automatically amended and restated to read in full as set forth
herein;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used
herein, have the following meanings:
"Absolute Rate Auction" means a solicitation of Money
Market Quotes setting forth Money Market Absolute Rates pursuant to
Section 2.03.
"Adjusted Debt" means, at any date, Consolidated Debt
plus, so long as Proved Reserves of CLAM are treated as a Petroleum
Property, CLAM Net Debt less Excluded Debt, each determined as of
such date.
"Adjusted London Interbank Offered Rate" has the meaning
set forth in Section 2.07(b).
"Administrative Questionnaire" means, with respect to
each Bank, an administrative questionnaire in the form prepared by
the Agent and submitted to the Agent (with a copy to the Borrower)
duly completed by such Bank.
<PAGE>
<PAGE>
"Affiliate" means (i) any Person that directly, or
indirectly through one or more intermediaries, controls the
Borrower (a "Controlling Person") and (ii) any Person (other than
the Borrower or a Subsidiary) which is controlled by or is under
common control with a Controlling Person. As used herein, the term
"control" means possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by
contract or otherwise. For purposes of this Agreement, CLAM is an
Affiliate of the Borrower. Neither a director nor an officer of
the Borrower, in such capacity, shall be deemed, for purposes of
this Agreement, an Affiliate.
"Agent" means Morgan, in its capacity as agent for the
Banks under the Financing Documents, and its successors in such
capacity.
"Agreement" means the Original Agreement, as amended by
this Amended Agreement and as the same may be further amended from
time to time in accordance with the terms hereof.
"Amended Agreement" means this Amended and Restated
Credit Agreement dated as of August 19, 1994 among the Borrower,
the Banks listed in the signature pages hereof, the Co-Agents and
the Agent.
"Applicable Lending Office" means, with respect to any
Bank, (i) in the case of its Domestic Loans, its Domestic Lending
Office, (ii) in the case of its Euro-Dollar Loans, its Euro-Dollar
Lending Office and (iii) in the case of its Money Market Loans, its
Money Market Lending Office.
"Applicable Margin" has the meaning set forth in Section
2.07(g).
"Asset Sale" means any sale, lease or other disposition
(including (i) any such transaction effected by way of merger or
consolidation and any condemnation of property (or any transfer or
disposition of property in lieu of condemnation) for which the
Borrower or any of its Subsidiaries or CLAM receives a condemnation
award or other compensation and (ii) a primary or secondary sale of
stock of a Subsidiary) by the Borrower, any of its Subsidiaries or
CLAM of any asset, but excluding (i) dispositions of oil and gas
after severance, other inventory and used, surplus or worn-out
equipment in the ordinary course of business, (ii) dispositions to
the Borrower or a Wholly-Owned Subsidiary of the Borrower, (iii)
cash payments otherwise permitted under this Agreement,
(iv) dispositions by CLAM of any asset other than Proved Reserves
or interests therein, and (v) mineral leases by the Borrower and
its Subsidiaries entered into in the ordinary course of their
respective businesses.
"Assignee" has the meaning set forth in Section 9.06(c).
<PAGE>
<PAGE>
"Assignment and Assumption" has the meaning set forth in
Section 9.06(c).
"Bank" means each bank or other financial institution
listed on the signature pages hereof, each Assignee which becomes
a "Bank" for purposes hereof pursuant to Section 9.06(c), and their
respective successors.
"Base Rate" means, for any day, a rate per annum equal to
the higher of (i) the Prime Rate for such day and (ii) the sum of
1/2 of 1% plus the Federal Funds Rate for such day.
"Benefit Arrangement" means at any time an employee
benefit plan within the meaning of Section 3(3) of ERISA which is
not a Plan or a Multiemployer Plan and which is maintained or
otherwise contributed to by any member of the ERISA Group.
"Borrower" means The Louisiana Land and Exploration
Company, a Maryland corporation, and its successors.
"Borrowing" has the meaning set forth in Section 1.03.
"Capital Lease" means a lease that would be capitalized
on a balance sheet of the lessee prepared in accordance with
generally accepted accounting principles.
"CLAM" means CLAM Petroleum Company, a Delaware
corporation and an Affiliate of the Borrower.
"CLAM Credit Agreement" means the Amended and Restated
Credit Agreement dated as of July 25, 1985, among MaraLou
Netherlands Partnership, CLAM, the banks parties thereto and
Morgan, as agent for such banks, as amended and restated as of June
19, 1992, or any successor credit agreement entered into for the
purpose of refinancing such Amended and Restated Credit Agreement,
in each case, as amended, restated, extended or otherwise modified
from time to time.
"CLAM Net Debt" means, at any date, an amount equal to
(i) 50% of the aggregate amount of Debt of CLAM and of each other
Person (other than a Consolidated Subsidiary of the Borrower)
through which the indirect interest of the Borrower in CLAM is held
(exclusive of Debt of CLAM or any such other Person owing to CLAM,
any such other Person or the Borrower or a Wholly-Owned Subsidiary
of the Borrower), less (ii) an amount equal to the lesser of (x)
$25,000,000 and (y) 50% of the cash and cash equivalents of CLAM,
all determined as of such date.
"Co-Agent" means each of Texas Commerce Bank National
Association and NationsBank of Texas, N.A., in its capacity as Co-
Agent hereunder.
<PAGE>
<PAGE>
"Committed Loan" means a loan made by a Bank pursuant to
Section 2.01.
"Commitment" means, with respect to each Bank, the amount
set forth opposite the name of such Bank on the signature pages
hereof, as such amount may be reduced from time to time pursuant to
Section 2.09.
"Consideration" means, in respect of any Asset Sale
involving a Petroleum Property, the sum of (i) the net cash
proceeds received in connection therewith, (ii) the face amount of
any instrument requiring the purchaser to make subsequent cash
payments in respect thereof and (iii) the fair market value of any
other consideration received in connection therewith, as determined
in good faith by the Borrower.
"Consolidated Cash Flow" means, for any period, and
without duplication, Operating Cash Flow for such period, plus to
the extent deducted in determining Operating Cash Flow for such
period, the sum of (i) Consolidated Interest Charges and (ii)
income tax expense minus, to the extent included in Operating Cash
Flow for such period, proceeds of Asset Sales.
"Consolidated Cash Flow Ratio" means at any date the
ratio of (i) Consolidated Cash Flow for the four most recent
consecutive fiscal quarters of the Borrower and its Consolidated
Subsidiaries as of such date to (ii) Consolidated Interest Charges
for such period.
"Consolidated Debt" means at any date the aggregate
amount of Debt of the Borrower and its Consolidated Subsidiaries,
determined on a consolidated basis as of such date.
"Consolidated Interest Charges" means, for any fiscal
period, the aggregate amount of interest charges with respect to
Debt, whether expensed or capitalized, incurred or accrued by the
Borrower and its Consolidated Subsidiaries during such period.
"Consolidated Subsidiary" means, at any date with respect
to any Person, any Subsidiary or other entity the accounts of which
would be consolidated with those of such Person in the consolidated
financial statements of such Person as of such date.
"Consolidated Tangible Net Worth" means at any date the
consolidated stockholders' equity of the Borrower and its
Consolidated Subsidiaries less their consolidated Intangible
Assets, all determined as of such date. For purposes of this
definition "Intangible Assets" means the amount (to the extent
reflected in determining such consolidated stockholders' equity) of
all goodwill, patents, trademarks, service marks, trade names,
copyrights, organization or developmental expenses and other
intangible assets.<PAGE>
<PAGE>
"Constitutional Documents" in relation to any corporate
Person means the Certificate of Incorporation and By-Laws or other
constitutional documents of such corporate Person.
"Debt" of any Person means at any date, without
duplication, (i) all obligations of such Person for borrowed money,
(ii) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (iii) all obligations of such
Person to pay the deferred purchase price of property or services,
(iv) all obligations of such Person as lessee which are capitalized
in accordance with generally accepted accounting principles, (v)
all obligations of such Person, fixed or contingent, to reimburse
any other Person for amounts drawn under a letter of credit or
similar instrument, (vi) all Debt secured by a Lien on any asset of
such Person, whether or not such Debt is otherwise an obligation of
such Person (quantified, for purposes hereof, as an amount equal to
the lesser of (a) the amount of such Debt and (b) the value
(determined as of the last day of the fiscal year most recently
ended) of the assets securing such Debt), (vii) all Debt of others
Guaranteed by such Person; provided that (x) neither trade accounts
payable arising in the ordinary course of business nor obligations
in respect of insurance policies or performance or surety bonds
which are not themselves Guarantees of Debt (nor drafts,
acceptances or similar instruments evidencing the same nor
obligations in respect of letters of credit supporting the payment
of the foregoing) shall constitute Debt, (y) the Morgan Gold Loan
shall not at any time constitute Debt unless, at such time, for any
reason whatsoever, (1) no royalty income shall have accrued under
the Royalty Agreement dated as of December 5, 1984 between Copper
Range Company, a Michigan Corporation, and the Borrower during the
three consecutive fiscal quarters of the Borrower most recently
ended prior to such time or (2) any payment required to have been
made to the Borrower under such agreement prior to such time shall
not have been paid on, or within 30 days after, the date such
payment is due and (z) amounts borrowed by the Borrower under life
insurance policies issued to the Borrower and covering employees or
former employees of the Borrower not in excess of the cash
surrender value of such policies shall not constitute Debt of the
Borrower.
"Debt Limit" means, at any date, the applicable
limitation on Adjusted Debt then most recently determined pursuant
to Section 5.11(b).
A "Debt Limit Excession" exists at any date if and to the
extent that Adjusted Debt at such date exceeds the Debt Limit at
such date.
"Debt Rating" means a rating of the Borrower's long-term
senior debt which is not secured or supported by a guarantee,
letter of credit or other form of credit enhancement.
<PAGE>
<PAGE>
"Default" means any condition or event that constitutes
an Event of Default or that with the giving of notice or lapse of
time or both would, unless cured or waived, become an Event of
Default.
"Derivatives Obligations" of any Person means all
obligations of such Person in respect of any rate swap transaction,
basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option,
bond option, interest rate option, foreign exchange transaction,
cap transaction, floor transaction, collar transaction, currency
swap transaction, cross-currency rate swap transaction, currency
option or any other similar transaction (including any option with
respect to any of the foregoing transactions) or any combination of
the foregoing transactions, excluding (i) crude oil, natural gas
and petroleum market transactions on a spot or forward basis which
contemplate physical delivery and/or receipt and (ii) purchases of
foreign currency on a spot or forward basis to fund local currency
requirements.
"Determining Banks" means the Agent and the Co-Agents.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in New York City are
authorized by law to close.
"Domestic Lending Office" means, as to each Bank, its
office located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as
its Domestic Lending Office) or such other office as such Bank may
hereafter designate as its Domestic Lending Office by notice to the
Borrower and the Agent.
"Domestic Loan" means (i) a Committed Loan which bears
interest at a rate of interest determined in accordance with
Section 2.07(a) on the basis of the Base Rate pursuant to the
applicable Notice of Borrowing or Notice of Interest Rate Election
or Article VIII or (ii) an overdue amount which was a Domestic Loan
immediately before it became overdue.
A "Downgrade Condition" exists at any date if, at such
date, (i) the Borrower has Debt Ratings below the level of BBB- by
S&P and below the level of Baa3 by Moody's, (ii) the Borrower has
Debt Ratings from neither S&P nor Moody's or (iii) the Borrower has
a Debt Rating from only one of S&P or Moody's and such Debt Rating
is below the level of BBB- or Baa3, as the case may be.
"Effective Date" means the date this Amended Agreement
becomes effective in accordance with Section 10.01.
<PAGE>
<PAGE>
"Environmental Laws" means any and all applicable
federal, state, local and foreign statutes, laws, judicial
decisions (to the extent such decisions are binding upon the
Borrower or any Subsidiary of the Borrower), regulations,
ordinances, rules, codes, injunctions, permits, grants, franchises
and licenses relating to pollution or the protection of public
health and the environment; including without limitation laws
relating to Releases of Hazardous Substances or wastes into the
environment including without limitation ambient air, surface
water, ground water or land, or relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances or the clean-up or
other remediation thereof to the extent such activities impact the
environment.
"Equity Security" means, as to any Person, any capital
stock or other equity security, or any warrant or other right to
purchase such an equity security, issued by such Person.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, or any successor statute.
"ERISA Group" means the Borrower, any Subsidiary of the
Borrower and all members of a controlled group of corporations and
all trades or businesses (whether or not incorporated) under common
control which, together with the Borrower or any Subsidiary of the
Borrower, are treated as a single employer under Section 414 of the
Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business
Day on which commercial banks are open for international business
(including dealings in dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its
office, branch or affiliate located at its address set forth in its
Administrative Questionnaire (or identified in its Administrative
Questionnaire as its Euro-Dollar Lending Office) or such other
office, branch or affiliate of such Bank as it may hereafter
designate as its Euro-Dollar Lending Office by notice to the
Borrower and the Agent.
"Euro-Dollar Loan" means (i) a Committed Loan which bears
interest at a rate of interest determined in accordance with
Section 2.07(b) on the basis of an Adjusted London Interbank
Offered Rate pursuant to the applicable Notice of Borrowing or
Notice of Interest Rate Election or (ii) an overdue amount which
was a Euro-Dollar Loan immediately before it became overdue.
"Euro-Dollar Reserve Percentage" has the meaning set
forth in Section 2.07(b).
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"Event of Acceleration" means any of the events or
conditions set forth in paragraphs (g) and (h) of Section 6.01 with
respect to an Obligor.
"Event of Default" has the meaning set forth in Section
6.01.
"Excluded Debt" means (i) up to $100,000,000 aggregate
principal amount of the Borrower's 7 5/8% Debentures due 2013 and
(ii) up to $200,000,000 aggregate principal amount of the
Borrower's 7.65% Debentures due 2023.
"FASB-95" means the Statement of Financial Accounting
Standards No. 95 as published by the Financial Accounting Standards
Board of the Financial Accounting Foundation.
"Federal Funds Rate" means, for any day, the rate per
annum (rounded upward, if necessary, to the nearest 1/100th of 1%)
equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Domestic Business Day next
succeeding such day, provided that (i) if such day is not a
Domestic Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Domestic
Business Day as so published on the next succeeding Domestic
Business Day, and (ii) if no such rate is so published on such next
succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Morgan on such day on such
transactions as determined by the Agent.
"Financial Officer" means the chief financial officer,
chief accounting officer or treasurer of the Borrower.
"Financing Documents" means this Agreement, the Notes and
the Subsidiary Guaranty Agreement.
"Fixed Rate Loans" means Euro-Dollar Loans or Money
Market Loans (excluding Money Market LIBOR Loans bearing interest
at the Base Rate pursuant to Section 8.01(a)) or any combination of
the foregoing.
"Group" of Loans means at any time a group of Committed
Loans consisting of (i) all Loans which are Domestic Loans at such
time or (ii) all Loans which are Euro-Dollar Loans having the same
Interest Period at such time; provided that, if a Loan of any
particular Bank is converted to or made as a Domestic Loan pursuant
to Section 8.02 or 8.04, such Loan shall be included in the same
Group or Groups of Loans from time to time as it would have been in
if it had not been so converted or made.
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"Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or indirectly
guaranteeing any Debt of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt
(whether arising by virtue of partnership arrangements, by
agreement to keep-well, to purchase assets, goods, securities or
services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of
assuring in any other manner the holder of such Debt of the payment
thereof or to protect such holder against loss in respect thereof
(in whole or in part); provided that the term Guarantee shall not
include endorsements for collection or deposit in the ordinary
course of business. The term "Guarantee" used as a verb has a
corresponding meaning. It is understood that the obligations of
the Borrower and its Subsidiaries under the arrangements entered
into in connection with the CLAM Credit Agreement, as such
arrangements are in effect on the date hereof, do not constitute a
Guarantee of Debt of CLAM.
"Guarantor" means each Subsidiary of the Borrower from
time to time party to the Subsidiary Guaranty Agreement.
"Hazardous Substances" means any toxic, radioactive,
caustic or otherwise hazardous substance or waste regulated under
Environmental Laws, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any
constituent elements displaying any of the foregoing
characteristics regulated under Environmental Laws.
"Indemnitee" has the meaning set forth in
Section 9.03(b).
"Information" means, collectively, (i) the information
booklet distributed to the Banks at the Borrower's June 1994 annual
bank meeting, (ii) the Borrower's annual report on Form 10-K for
the fiscal year ended December 31, 1993, (iii) the Borrower's
quarterly report on Form 10-Q for the fiscal quarter ended March
31, 1994 and (iv) the Borrower's Reserve Report as of December 31,
1993.
"Interest Period" means: (1) with respect to each
Euro-Dollar Loan, a period commencing on the date of borrowing
specified in the applicable Notice of Borrowing or on the date
specified in the applicable Notice of Interest Rate Election and
ending one, two, three or six months thereafter, as the Borrower
may elect in the applicable Notice of Borrowing or Notice of
Interest Rate Election; provided that:
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(a) any Interest Period that would otherwise end on a
day that is not a Euro-Dollar Business Day shall be extended
to the next succeeding Euro-Dollar Business Day unless such
day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Euro-Dollar
Business Day; and
(b) any Interest Period that begins on the last
Euro-Dollar Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end
on the last Euro-Dollar Business Day of a calendar month; and
(2) with respect to each Money Market LIBOR Borrowing,
the period commencing on the date of such Borrowing and ending such
whole number of months thereafter as the Borrower may elect in
accordance with Section 2.03: provided that:
(a) any Interest Period which would otherwise end on a
day which is not a Euro-Dollar Business Day shall be extended
to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in
which case such Interest Period shall end on the next
preceding Euro-Dollar Business Day; and
(b) any Interest Period which begins on the last Euro-
Dollar Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the
last Euro-Dollar Business Day of a calendar month; and
(3) with respect to each Money Market Absolute Rate
Borrowing, the period commencing on the date of such Borrowing and
ending such number of days thereafter (but not less than 30 days)
as the Borrower may elect in accordance with Section 2.03; provided
that any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day; and
provided further that, if any Interest Period includes a date on
which a payment of principal of any Loan is required (as of the
commencement of such Interest Period) to be made under Section 2.10
but does not end on such date, then (i) the principal amount (if
any) of each Loan required to be repaid on such date shall have an
Interest Period ending on such date and (ii) the remainder (if any)
of each such Loan shall have an Interest Period determined as set
forth above.
"Internal Revenue Code" means the Internal Revenue Code
of 1986, as amended, or any successor statute.
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"Investment" means with respect to any Person (the
"Investor"), any investment by the Investor in any other Person,
whether by means of share purchase, capital contribution, loan,
advance, purchase of Debt, Guarantee of Debt, time deposit or
otherwise.
"LIBOR Auction" means a solicitation of Money Market
Quotes setting forth Money Market Margins based on the London
Interbank Offered Rate pursuant to Section 2.03.
"Lending Value" means, with respect to any Petroleum
Property, the contribution of such Petroleum Property to the Debt
Limit in effect at the time, as determined by the Determining Banks
in accordance with their customary oil and gas lending practices.
"Lien" means, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind
in respect of such asset (including any production payment, any
obligation to deliver hydrocarbons in the future in satisfaction of
an advance payment previously received or any similar arrangement
which gives a creditor preferential access to minerals in place) or
any other arrangement the economic effect of which is to give a
creditor preferential access to such asset to satisfy its claim,
whether or not filed, recorded or otherwise perfected under
applicable law; provided that (i) the creation of interests in
property of the character commonly referred to as a "royalty
interest" or "overriding royalty interest", farmouts, joint
operating or unitization agreements, or other similar transactions
in the ordinary course of business and (ii) borrowings under life
insurance policies as described in clause (z) of the proviso to the
definition of "Debt" shall not be deemed to create a Lien. For the
purpose of this Agreement, the Borrower or any Subsidiary of the
Borrower shall be deemed to own subject to a Lien (i) any asset
that it has acquired or holds subject to the interest of a vendor
or lessor under any conditional sale agreement or other title
retention agreement relating to such asset or any Capital Lease or
(ii) any account receivable transferred by it with recourse for
collectibility (including any such transfer subject to a holdback
or similar arrangement which effectively imposes the risk of
collectibility upon the transferor).
"Loan" means a Domestic Loan or a Euro-Dollar Loan or a
Money Market Loan and "Loans" means Domestic Loans or Euro-Dollar
Loans or Money Market Loans or any combination of the foregoing.
"London Interbank Offered Rate" has the meaning set forth
in Section 2.07(b).
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"Major Casualty Event" means any loss of or damage to
property of the Borrower or any of its Subsidiaries or CLAM
resulting from one or more related events, but only if the
aggregate amount required to repair, replace or restore such
property exceeds $25,000,000.
"Material Adverse Effect" means any material adverse
effect on the business, condition (financial or otherwise),
operations, properties or prospects of the Borrower and its
Subsidiaries, taken as a whole.
"Material Debt" means Debt (other than the Loans) of the
Borrower and/or one or more of its Subsidiaries, arising in one or
more related or unrelated transactions, in an aggregate principal
amount exceeding $10,000,000.
"Material Plan" means at any time a Plan or Plans having
aggregate Unfunded Liabilities in excess of $10,000,000.
"Money Market Absolute Rate" has the meaning set forth in
Section 2.03(d).
"Money Market Absolute Rate Loan" means a loan to be made
by a Bank pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each Bank, its
Domestic Lending Office or such other office, branch or affiliate
of such Bank as it may hereafter designate as its Money Market
Lending Office by notice to the Borrower and the Agent; provided
that any Bank may from time to time by notice to the Borrower and
the Agent designate separate Money Market Lending Offices for its
Money Market LIBOR Loans, on the one hand, and its Money Market
Absolute Rate Loans, on the other hand, in which case all
references herein to the Money Market Lending Office of such Bank
shall be deemed to refer to either or both of such offices, as the
context may require.
"Money Market LIBOR Loan" means a loan to be made by a
Bank pursuant to a LIBOR Auction (including such a loan bearing
interest at the Base Rate pursuant to Section 8.01(a)).
"Money Market Loan" means a Money Market LIBOR Loan or a
Money Market Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in
Section 2.03(d).
"Money Market Quote" means an offer by a Bank to make a
Money Market Loan in accordance with Section 2.03.
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"Moody's" means Moody's Investors Service, Inc., or any
successor to such corporation's business of rating debt securities.
"Morgan" means Morgan Guaranty Trust Company of New York,
and its successors.
"Morgan Gold Loan" means the obligations of the Borrower
under the Credit Agreement dated as of December 30, 1991 between
the Borrower and Morgan.
"Multiemployer Plan" means at any time an employee
pension benefit plan within the meaning of Section 4001(a)(3) of
ERISA to which any member of the ERISA Group is then making or
accruing an obligation to make contributions or has within the
preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group
during such five year period.
"Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto, evidencing the
obligation of the Borrower to repay the Loans, and "Note" means any
one of such promissory notes issued hereunder.
"Notice of Borrowing" means a Notice of Committed
Borrowing (as defined in Section 2.02) or a Notice of Money Market
Borrowing (as defined in Section 2.03(f)).
"Notice of Interest Rate Election" has the meaning set
forth in Section 2.06.
"Obligors" means the Borrower and the Guarantors.
"Operating Cash Flow" means, for any fiscal period, net
cash flows from operating activities of the Borrower and its
Consolidated Subsidiaries for such period, calculated in accordance
with FASB-95.
"Original Agreement" has the meaning set forth in the
recitals to this Amended Agreement.
"Other Taxes" has the meaning set forth in Section 2.14.
"Parent" means, with respect to any Bank, any Person
controlling such Bank.
"Participant" has the meaning set forth in
Section 9.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.
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"Permitted Liens" means the Liens permitted to exist
under Section 5.12 hereof.
"Petroleum Property" means any interest of the Borrower
or any Subsidiary of the Borrower in Proved Reserves which is
covered by a Reserve Report or other information submitted by the
Borrower for use in the determination of the Debt Limit (unless (x)
the Banks give zero Lending Value to such interest or (y) the
Borrower elects that such interest in Proved Reserves no longer be
used for such purposes pursuant to Section 5.11(b)(iv)); provided
that so long as (i) no "Event of Default" as defined in the CLAM
Credit Agreement shall have occurred and be continuing and (ii) the
Borrower retains a 50% indirect equity interest in CLAM, the Proved
Reserves of CLAM shall be treated as a Petroleum Property to the
extent of the Borrower's 50% interest.
"Person" means an individual, a corporation, a
partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an
agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412
of the Internal Revenue Code and either (i) is maintained, or
contributed to, by any member of the ERISA Group for employees of
any member of the ERISA Group or (ii) has at any time within the
preceding five years been maintained, or contributed to, by any
Person which was at such time a member of the ERISA Group for
employees of any Person which was at such time a member of the
ERISA Group.
"Pricing Schedule" means the Schedule attached hereto
identified as such.
"Prime Rate" means the rate of interest publicly
announced by Morgan in New York City from time to time as its Prime
Rate.
"Proved Developed Reserves" means "proved developed oil
and gas reserves" as specified under Rule 4-10(a)(3) of Regulation
S-X of the Securities and Exchange Commission.
"Proved Reserves" means Proved Developed Reserves and
Proved Undeveloped Reserves.
"Proved Undeveloped Reserves" means "proved undeveloped
oil and gas reserves" as specified under Rule 4-10(a)(4) of
Regulation S-X of the Securities and Exchange Commission.
"Quarterly Date" means the last Euro-Dollar Business Day
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"Reference Banks" means the principal London offices of
Texas Commerce Bank National Association, NationsBank of Texas,
N.A. (or an affiliate thereof with an office in London) and Morgan.
"Register" has the meaning set forth in Section 9.06(f).
"Regulation U" means Regulation U of the Board of
Governors of the Federal Reserve System, as in effect from time to
time.
"Release" means any release, discharge, emission,
spilling, leakage, pumping, pouring, emptying, injection, escape,
leaching, dumping or disposal. The term "Released" has a
corresponding meaning.
To "Remedy" a Debt Limit Excession means to eliminate
such Debt Limit Excession through (i) a reduction in the aggregate
outstanding principal amount of Adjusted Debt, (ii) an increase in
the Debt Limit through the addition of one or more Petroleum
Properties in accordance with Section 5.11(b)(ii)(y) or (iii) a
combination of (i) and (ii).
"Required Banks" means at any time Banks having at least
66 2/3% of the aggregate amount of the Commitments, or if the
Commitments shall have terminated, holding Notes evidencing at
least 66 2/3% of the aggregate outstanding principal amount of the
Loans.
"Reserve Report" means a report prepared and delivered in
accordance with Section 5.02.
"S&P" means Standard & Poor's Ratings Group, or any
successor to its business of rating debt securities.
"Significant Subsidiary" means, subject to Section
5.11(b)(iv), (i) any Material Subsidiary (as defined in the
Subsidiary Guaranty Agreement), (ii) any other Subsidiary of the
Borrower which owns any Petroleum Property and (iii) any other
Subsidiary of the Borrower which owns any capital stock of or Debt
of any other Significant Subsidiary.
"Stockholder Payment" means (i) any dividend or other
distribution on any Equity Securities of the Borrower and (ii) any
payment on account of the purchase, redemption, retirement or
acquisition of (a) any Equity Securities of the Borrower or (b) any
option, warrant or other right to acquire Equity Securities of the
Borrower.
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"Subsidiary" means any corporation or other entity of
which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other
persons performing similar functions are at the time directly or
indirectly owned by the Borrower (or, if such term is used with
reference to any other Person, by such other Person).
"Subsidiary Guaranty Agreement" means the Amended and
Restated Subsidiary Guaranty Agreement among the Borrower, the
Subsidiaries of the Borrower from time to time parties thereto and
the Agent, substantially in the form of Exhibit D.
"Taxes" has the meaning set forth in Section 2.14.
"Termination Date" means September 30, 2000 (or if such
date is not a Euro-Dollar Business Day, the next preceding Euro-
Dollar Business Day).
"Unfunded Liabilities" means, with respect to any Plan at
any time, the amount (if any) by which (i) the value of all benefit
liabilities under such Plan, determined on a plan termination basis
using the assumptions prescribed by the PBGC for purposes of
Section 4044 of ERISA, exceeds (ii) the fair market value of all
Plan assets allocable to such liabilities under Title I of ERISA
(excluding any accrued but unpaid contributions), all determined as
of the then most recent valuation date for such Plan, but only to
the extent that such excess represents a potential liability of a
member of the ERISA Group to the PBGC or any other Person under
Title IV of ERISA.
"Wholly-Owned Subsidiary" means, with respect to any
Person, any Subsidiary all of the Equity Securities of which
(except directors' qualifying shares and investments by foreign
nationals mandated by applicable law) are at the time owned by such
Person and/or one or more of its Wholly-Owned Subsidiaries.
SECTION 1.02. Accounting Terms and Determinations.
Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all accounting determinations hereunder shall
be made, and all financial statements required to be delivered
hereunder shall be prepared in accordance with generally accepted
accounting principles as in effect from time to time, applied on a
basis consistent (except for changes concurred in by the Borrower's
independent public accountants) with the most recent audited
consolidated financial statements of the Borrower and its
Consolidated Subsidiaries delivered to the Banks; provided that, if
the Borrower notifies the Agent that it wishes to amend any
covenant in Article V to eliminate the effect of any change in
generally accepted accounting principles on the operation of such
covenant (or if the Agent notifies the Borrower that the Required
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Banks wish to amend Article V for such purpose), then compliance
with such covenant shall be determined on the basis of generally
accepted accounting principles in effect immediately before the
relevant change in generally accepted accounting principles became
effective, until either such notice is withdrawn or such covenant
is amended in a manner satisfactory to the Borrower and the
Required Banks.
SECTION 1.03. Types of Borrowings. The term "Borrowing"
denotes the aggregation of Loans of the same type of one or more
Banks to be made to the Borrower pursuant to Article II on a single
date and for a single initial Interest Period. Borrowings are
classified for purposes of this Agreement either by reference to
the pricing of Loans comprising such Borrowing (e.g., a
"Euro-Dollar Borrowing" is a Borrowing comprised of Euro-Dollar
Loans) or by reference to the provisions of Article II under which
participation therein is determined (i.e., a "Committed Borrowing"
is a Borrowing under Section 2.01 in which all Banks participate in
proportion to their Commitments, while a "Money Market Borrowing"
is a Borrowing under Section 2.03 in which the Bank participants
are determined on the basis of their bids in accordance therewith).
SECTION 1.04. Other Definitional Provisions. References
in this Agreement to "Articles", "Sections", "Schedules" or
"Exhibits" shall be to Articles, Sections, Schedules or Exhibits of
or to this Agreement unless otherwise specifically provided. Any
of the terms defined in Section 1.01 may, unless the context
otherwise requires, be used in the singular or plural depending on
the reference. "Include", "includes" and "including" shall be
deemed to be followed by "without limitation" whether or not they
are in fact followed by such words or words of like import.
"Writing", "written" and comparable terms refer to printing, typing
and other means of reproducing words in a visible form. References
to any agreement or contract are to such agreement or contract as
amended, modified or supplemented from time to time in accordance
with the terms hereof and thereof.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. Subject to the terms
and conditions set forth in this Agreement, each Bank severally
agrees to make loans to the Borrower from time to time during the
period from and including the date hereof to but not including the
Termination Date in amounts such that the aggregate principal
amount of Committed Loans by such Bank at any one time outstanding
shall not exceed the amount of its Commitment. Within the limits
specified in this Agreement, the Borrower may borrow pursuant to
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this Section 2.01, repay or prepay Committed Loans and reborrow
pursuant to this Section 2.01. Each Borrowing under this Section
2.01 shall be in an aggregate principal amount of $10,000,000 or
any larger multiple of $1,000,000 (except that any such Borrowing
may be in the aggregate amount available in accordance with Section
3.01(b)) and shall be made from the several Banks ratably in
proportion to their respective Commitments.
SECTION 2.02. Method of Borrowing. The Borrower shall
give the Agent notice (a "Notice of Committed Borrowing") not later
than 10:30 A.M. (New York City time) on (x) the date of each
Domestic Borrowing and (y) the third Euro-Dollar Business Day
before each Euro-Dollar Borrowing, specifying:
(a) the proposed date of such Borrowing, which shall be
a Domestic Business Day in the case of a Domestic Borrowing or
a Euro-Dollar Business Day in the case of a Euro-Dollar
Borrowing,
(b) the aggregate amount of such Borrowing,
(c) whether the Loans comprising such Borrowing are to be
Domestic Loans or Euro-Dollar Loans, and
(d) in the case of a Euro-Dollar Borrowing, the duration
of the initial Interest Period applicable thereto, subject to
the provisions of the definition of Interest Period.
No more than ten Groups of Euro-Dollar Loans shall be outstanding
at any one time.
SECTION 2.03. Money Market Borrowings.
(a) The Money Market Option. In addition to Committed
Borrowings pursuant to Section 2.01, the Borrower may, as set forth
in this Section, request the Banks to make offers to make Money
Market Loans to the Borrower. The Banks may, but shall have no
obligation to, make such offers and the Borrower may, but shall
have no obligation to, accept any such offers in the manner set
forth in this Section.
(b) Money Market Quote Request. When the Borrower
wishes to request offers to make Money Market Loans under this
Section, it shall transmit to the Agent by telex or facsimile
transmission a Money Market Quote Request substantially in the form
of Exhibit E hereto so as to be received no later than 10:30 A.M.
(New York City time) on (x) the fifth Euro-Dollar Business Day
prior to the date of Borrowing proposed therein, in the case of a
LIBOR Auction or (y) the Domestic Business Day next preceding the
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date of Borrowing proposed therein, in the case of an Absolute Rate
Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall have
notified to the Banks not later than the date of the Money Market
Quote Request for the first LIBOR Auction or Absolute Rate Auction
for which such change is to be effective) specifying:
(i) the proposed date of Borrowing, which shall be a
Euro-Dollar Business Day in the case of a LIBOR Auction or a
Domestic Business Day in the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which shall
be $10,000,000 or a larger multiple of $1,000,000,
(iii) the duration of the Interest Period applicable
thereto, subject to the provisions of the definition of
Interest Period, and
(iv) whether the Money Market Quotes requested are to set
forth a Money Market Margin or a Money Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for more
than one Interest Period in a single Money Market Quote Request.
No Money Market Quote Request shall be given within five
Euro-Dollar Business Days (or such other number of days as the
Borrower and the Agent may agree) of any other Money Market Quote
Request.
(c) Invitation for Money Market Quotes. Promptly upon
receipt of a Money Market Quote Request, the Agent shall send to
the Banks by telex or facsimile transmission an Invitation for
Money Market Quotes substantially in the form of Exhibit F hereto,
which shall constitute an invitation by the Borrower to each Bank
to submit Money Market Quotes offering to make the Money Market
Loans to which such Money Market Quote Request relates in
accordance with this Section.
(d) Submission and Contents of Money Market Quotes. (i)
Each Bank may submit a Money Market Quote containing an offer or
offers to make Money Market Loans in response to any Invitation for
Money Market Quotes. Each Money Market Quote must comply with the
requirements of this subsection (d) and must be submitted to the
Agent by telex or facsimile transmission at its offices specified
in or pursuant to Section 9.01 not later than (x) 2:00 P.M. (New
York City time) on the fourth Euro-Dollar Business Day prior to the
proposed date of Borrowing, in the case of a LIBOR Auction or (y)
9:30 A.M. (New York City time) on the proposed date of Borrowing,
in the case of an Absolute Rate Auction (or, in either case, such
other time or date as the Borrower and the Agent shall have
mutually agreed and shall have notified to the Banks not later than
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the date of the Money Market Quote Request for the first LIBOR
Auction or Absolute Rate Auction for which such change is to be
effective); provided that Money Market Quotes submitted by the
Agent (or any affiliate of the Agent) in the capacity of a Bank may
be submitted, and may only be submitted, if the Agent or such
affiliate notifies the Borrower of the terms of the offer or offers
contained therein not later than (x) one hour prior to the deadline
for the other Banks, in the case of a LIBOR Auction or (y) 15
minutes prior to the deadline for the other Banks, in the case of
an Absolute Rate Auction. Subject to Articles III and VI, any
Money Market Quote so made shall be irrevocable except with the
written consent of the Agent given on the instructions of the
Borrower.
(ii) Each Money Market Quote shall be in substantially
the form of Exhibit G hereto and shall in any case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan for
which each such offer is being made, which principal amount
(w) may be greater than or less than the Commitment of the
quoting Bank, (x) must be $5,000,000 or a larger multiple of
$1,000,000, (y) may not exceed the principal amount of Money
Market Loans for which offers were requested and (z) may be
subject to an aggregate limitation as to the principal amount
of Money Market Loans for which offers being made by such
quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin above or
below the applicable London Interbank Offered Rate (the "Money
Market Margin") offered for each such Money Market Loan,
expressed as a percentage (specified to the nearest 1/10,000th
of 1%) to be added to or subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the rate of
interest per annum (specified to the nearest 1/10,000th of 1%)
(the "Money Market Absolute Rate") offered for each such Money
Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by
the quoting Bank with respect to each Interest Period specified in
the related Invitation for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D
hereto or does not specify all of the information required by
subsection (d)(ii);
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(B) contains qualifying, conditional or similar
language;
(C) proposes terms other than or in addition to those
set forth in the applicable Invitation for Money Market
Quotes; or
(D) arrives after the time set forth in subsection
(d)(i).
(e) Notice to Borrower. The Agent shall promptly notify
the Borrower of the terms (x) of any Money Market Quote submitted
by a Bank that is in accordance with subsection (d) and (y) of any
Money Market Quote that amends, modifies or is otherwise
inconsistent with a previous Money Market Quote submitted by such
Bank with respect to the same Money Market Quote Request. Any such
subsequent Money Market Quote shall be disregarded by the Agent
unless such subsequent Money Market Quote is submitted solely to
correct a manifest error in such former Money Market Quote. The
Agent's notice to the Borrower shall specify (A) the aggregate
principal amount of Money Market Loans for which offers have been
received for each Interest Period specified in the related Money
Market Quote Request, (B) the respective principal amounts and
Money Market Margins or Money Market Absolute Rates, as the case
may be, so offered and (C) if applicable, limitations on the
aggregate principal amount of Money Market Loans for which offers
in any single Money Market Quote may be accepted.
(f) Acceptance and Notice by Borrower. Not later than
10:30 A.M. (New York City time) on (x) the third Euro-Dollar
Business Day prior to the proposed date of Borrowing, in the case
of a LIBOR Auction or (y) the proposed date of Borrowing, in the
case of an Absolute Rate Auction (or, in either case, such other
time or date as the Borrower and the Agent shall have mutually
agreed and shall have notified to the Banks not later than the date
of the Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be effective),
the Borrower shall notify the Agent of its acceptance or
non-acceptance of the offers so notified to it pursuant to
subsection (e). In the case of acceptance, such notice (a "Notice
of Money Market Borrowing") shall specify the aggregate principal
amount of offers for each Interest Period that are accepted. The
Borrower may accept any Money Market Quote in whole or in part;
provided that:
(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in
the related Money Market Quote Request,
(ii) the principal amount of each Money Market Borrowing
must be $10,000,000 or a larger multiple of $1,000,000,
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(iii) acceptance of offers may only be made on the basis
of ascending Money Market Margins or Money Market Absolute
Rates, as the case may be, and
(iv) the Borrower may not accept any offer that is
described in subsection (d)(iii) or that otherwise fails to
comply with the requirements of this Agreement.
(g) Allocation by Agent. If offers are made by two or
more Banks with the same Money Market Margins or Money Market
Absolute Rates, as the case may be, for a greater aggregate
principal amount than the amount in respect of which such offers
are accepted for the related Interest Period, the principal amount
of Money Market Loans in respect of which such offers are accepted
shall be allocated by the Agent among such Banks as nearly as
possible (in multiples of $1,000,000, as the Agent may deem
appropriate) in proportion to the aggregate principal amounts of
such offers. Determinations by the Agent of the amounts of Money
Market Loans shall be conclusive in the absence of manifest error.
SECTION 2.04. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Agent
shall promptly notify each Bank of the contents thereof and of such
Bank's share (if any) of such Borrowing, and such Notice of
Borrowing shall not thereafter be revocable by the Borrower.
(b) Not later than 12:00 Noon (New York City time) on
the date of each Borrowing, each Bank participating therein shall
(except as provided in subsection (c) of this Section) make
available its share of such Borrowing, in Federal or other funds
immediately available in New York City, to the Agent at its address
referred to in Section 9.01. Unless the Agent determines that any
applicable condition specified in Article III has not been
satisfied, the Agent will make the funds so received from the Banks
available to the Borrower on such date at the Agent's aforesaid
address.
(c) If any Bank makes a new Loan hereunder on a day on
which the Borrower is to repay all or any part of an outstanding
Loan from such Bank, such Bank shall apply the proceeds of its new
Loan to make such repayment and only an amount equal to the
difference (if any) between the amount being borrowed and the
amount being repaid shall be made available by such Bank to the
Agent as provided in subsection (b) of this Section, or remitted by
the Borrower to the Agent as provided in Section 2.11, as the case
may be.
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(d) Unless the Agent shall have received notice from a
Bank prior to the date of any Borrowing that such Bank will not
make available to the Agent such Bank's share of such Borrowing,
the Agent may assume that such Bank has made such share available
to the Agent on the date of such Borrowing in accordance with
subsections (b) and (c) of this Section and the Agent may, in
reliance upon such assumption, make available to the Borrower on
such date a corresponding amount. If and to the extent that such
Bank shall not have so made such share available to the Agent, such
Bank and the Borrower severally agree to repay to the Agent
forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to
the Agent, at (i) in the case of the Borrower, a rate per annum
equal to the higher of the Federal Funds Rate and the interest rate
applicable thereto pursuant to Section 2.07 and (ii) in the case of
such Bank, the Federal Funds Rate. If such Bank shall repay to the
Agent such corresponding amount, such amount so repaid shall
constitute such Bank's Loan included in such Borrowing for purposes
of this Agreement.
SECTION 2.05. Notes. (a) The Loans of each Bank shall
be evidenced by a single Note payable to such Bank for the account
of its Applicable Lending Office in an amount equal to the
aggregate unpaid principal amount of such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the
Agent, request that its Loans of a particular type be evidenced by
separate Notes. Each such Note shall be in substantially the form
of Exhibit A hereto with appropriate modifications to reflect the
fact that it evidences solely Loans of the relevant type. Each
reference in this Agreement to the "Note" of such Bank shall be
deemed to refer to and include any or all of such Notes, as the
context may require.
(c) Upon receipt of each Bank's Note pursuant to Section
10.01, the Agent shall forward such Note to such Bank. Each Bank
shall record the date, amount, type and, in the case of a Money
Market Loan, maturity of each Loan made by it and the date and
amount of each payment of principal made by the Borrower with
respect thereto, and may, if such Bank so elects in connection with
any transfer or enforcement of its Note, endorse on the schedule
forming a part thereof appropriate notations to evidence the
foregoing information with respect to each such Loan then
outstanding; provided that the failure of any Bank to make any such
recordation or endorsement shall not affect the obligations of the
Borrower hereunder or under the Notes. Each Bank is hereby
irrevocably authorized by the Borrower so to endorse its Note and
to attach to and make a part of its Note a continuation of any such
schedule as and when required.
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SECTION 2.06. Method of Electing Interest Rates for
Committed Loans. (a) The Committed Loans included in each
Committed Borrowing shall bear interest initially at the type of
rate specified by the Borrower in the applicable Notice of
Committed Borrowing. Thereafter, the Borrower may from time to
time elect to change or continue the type of interest rate borne by
each Group of Loans (subject in each case to the provisions of
Article VIII), as follows:
(i) if such Loans are Domestic Loans, the Borrower may
elect to convert such Loans to Euro-Dollar Loans as of any
Euro-Dollar Business Day; and
(ii) if such Loans are Euro-Dollar Loans, the Borrower
may elect to convert such Loans to Domestic Loans or elect to
continue such Loans as Euro-Dollar Loans for an additional
Interest Period, in each case effective on the last day of the
then current Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice (a "Notice
of Interest Rate Election") to the Agent at least three Euro-Dollar
Business Days before the conversion or continuation selected in
such notice is to be effective. A Notice of Interest Rate Election
may, if it so specifies, apply to only a portion of the aggregate
principal amount of the relevant Group of Loans; provided that (i)
such portion is allocated ratably among the Loans comprising such
Group and (ii) the portion to which such Notice applies, and the
remaining portion to which it does not apply, are each $10,000,000
or any larger multiple of $1,000,000.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which
such notice applies;
(ii) the date on which the conversion or continuation
selected in such notice is to be effective, which shall comply
with the applicable clause of subsection (a) above;
(iii) if the Loans comprising such Group are to be
converted, the new type of Loans and, if such new Loans are
Euro-Dollar Loans, the duration of the initial Interest Period
applicable thereto; and
(iv) if such Loans are to be continued as Euro-Dollar
Loans for an additional Interest Period, the duration of such
additional Interest Period.
Each Interest Period specified in a Notice of Interest Rate
Election shall comply with the provisions of the definition of
Interest Period.
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(c) Upon receipt of a Notice of Interest Rate Election
from the Borrower pursuant to subsection (a) above, the Agent shall
promptly notify each Bank of the contents thereof and such notice
shall not thereafter be revocable by the Borrower. If the Borrower
fails to deliver a timely Notice of Interest Rate Election to the
Agent for any Group of Euro-Dollar Loans, such Loans shall be
converted into Domestic Loans on the last day of the then current
Interest Period applicable thereto.
SECTION 2.07. Interest Rates. (a) Each Domestic Loan
shall bear interest on the outstanding principal amount thereof,
for each day from the date such Loan is made until it becomes due,
at a rate per annum equal to the Base Rate for such day. Such
interest shall be payable quarterly in arrears on each Quarterly
Date (commencing with the first such date after the date hereof)
and, with respect to the principal amount of any Domestic Loan
converted to a Euro-Dollar Loan, on each date that a Domestic Loan
is so converted. Any overdue principal of or interest on any
Domestic Loan shall bear interest, payable on demand, for each day
until paid at a rate per annum equal to the sum of 2% plus the rate
otherwise applicable to Domestic Loans for such day.
(b) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for each day during the
Interest Period applicable thereto, at a rate per annum equal to
the sum of the Applicable Margin for such day plus the Adjusted
London Interbank Offered Rate applicable to such Interest Period.
Such interest shall be payable for each Interest Period on the last
day thereof and, if such Interest Period is longer than three
months, at intervals of three months after the first day thereof.
The "Adjusted London Interbank Offered Rate" applicable
to any Interest Period means a rate per annum equal to the quotient
obtained (rounded upward, if necessary, to the next higher 1/100 of
1%) by dividing (i) the applicable London Interbank Offered Rate by
(ii) 1.00 minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any
Interest Period means the average (rounded upward, if necessary, to
the next higher 1/16 of 1%) of the respective rates per annum at
which deposits in dollars are offered to each of the Reference
Banks in the London interbank market at approximately 11:00 A.M.
(London time) two Euro-Dollar Business Days before the first day of
such Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of such Reference Bank to
which such Interest Period is to apply and for a period of time
comparable to such Interest Period.
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"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day,
as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement for a member bank of the Federal Reserve System in New
York City with deposits exceeding five billion dollars in respect
of "Eurocurrency liabilities" (or in respect of any other category
of liabilities which includes deposits by reference to which the
interest rate on Euro-Dollar Loans is determined or any category of
extensions of credit or other assets which includes loans by a
non-United States office of any Bank to United States residents).
The Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the
Euro-Dollar Reserve Percentage.
(c) Any overdue principal of or interest on any
Euro-Dollar Loan shall bear interest, payable on demand, for each
day from and including the date payment thereof was due to but
excluding the date of actual payment, at a rate per annum equal to
the sum of 2% plus the higher of (i) the sum of the Applicable
Margin for such day plus the Adjusted London Interbank Offered Rate
applicable to the Interest Period for such Loan and (ii) the
Applicable Margin for such day plus the quotient obtained (rounded
upward, if necessary, to the next higher 1/100 of 1%) by dividing
(x) the average (rounded upward, if necessary, to the next higher
1/16 of 1%) of the respective rates per annum at which one day (or,
if such amount due remains unpaid more than three Euro-Dollar
Business Days, then for such other period of time not longer than
six months as the Agent may select) deposits in dollars in an
amount approximately equal to such overdue payment due to each of
the Reference Banks are offered to such Reference Bank in the
London interbank market for the applicable period determined as
provided above by (y) 1.00 minus the Euro-Dollar Reserve Percentage
(or, if the circumstances described in clause (a) or (b) of Section
8.01 shall exist, the rate applicable to Domestic Loans for such
day).
(d) Subject to Section 8.01(a), each Money Market LIBOR
Loan shall bear interest on the outstanding principal amount
thereof, for the Interest Period applicable thereto, at a rate per
annum equal to the sum of the London Interbank Offered Rate for
such Interest Period (determined in accordance with Section 2.07(b)
as if the related Money Market LIBOR Borrowing were a Committed
Euro-Dollar Borrowing) plus (or minus) the Money Market Margin
quoted by the Bank making such Loan in accordance with Section
2.03. Each Money Market Absolute Rate Loan shall bear interest on
the outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the Money Market
Absolute Rate quoted by the Bank making such Loan in accordance
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with Section 2.03. Such interest shall be payable for each
Interest Period on the last day thereof and, if such Interest
Period is longer than three months, at intervals of three months
after the first day thereof. Any overdue principal of or interest
on any Money Market Loan shall bear interest, payable on demand,
for each day until paid at a rate per annum equal to the sum of 2%
plus the Base Rate for such day.
(e) The Agent shall determine each interest rate
applicable to the Loans hereunder. The Agent shall give prompt
notice to the Borrower and the participating Banks of each rate of
interest so determined, and its determination thereof shall be
conclusive in the absence of manifest error.
(f) Each Reference Bank agrees to use its best efforts
to furnish quotations to the Agent as contemplated hereby. If any
Reference Bank does not furnish a timely quotation, the Agent shall
determine the relevant interest rate on the basis of the quotation
or quotations furnished by the remaining Reference Bank or Banks
or, if none of such quotations is available on a timely basis, the
provisions of Section 8.01 shall apply.
(g) The "Applicable Margin" at any date means the
applicable percentage determined in accordance with the Pricing
Schedule.
SECTION 2.08. Fees.
(a) Commitment Fee. The Borrower shall pay to the Agent
for the account of the Banks ratably in proportion to their
Commitments a commitment fee at the Commitment Fee Rate (determined
daily in accordance with the Pricing Schedule) on the daily amount
by which the aggregate amount of the Commitments exceeds the
aggregate outstanding principal amount of the Loans. Such
commitment fee shall accrue from and including the Effective Date
to but excluding the Termination Date (or earlier date of
termination of the Commitments in their entirety).
(b) Facility Fee. The Borrower shall pay to the Agent
for the account of the Banks ratably a facility fee at the Facility
Fee Rate (determined daily in accordance with the Pricing
Schedule). Such facility fee shall accrue (i) from and including
the Effective Date to but excluding the Termination Date (or
earlier date of termination of the Commitments in their entirety),
on the daily aggregate amount of the Commitments (whether used or
unused) and (ii) from and including the Termination Date or such
earlier date of termination to but excluding the date the Loans
shall be repaid in their entirety, on the daily aggregate
outstanding principal amount of the Loans.
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(c) Payments. Accrued fees under this Section shall be
payable quarterly in arrears on each Quarterly Date and upon the
date of termination of the Commitments in their entirety (and, if
later, the date the Loans shall be repaid in their entirety).
SECTION 2.09. Termination or Reduction of Commitments.
(a) Optional Termination or Reduction. The Borrower
may, upon at least three Domestic Business Days' notice to the
Agent, (i) terminate the Commitments at any time, if no Loans are
outstanding at such time or (ii) ratably reduce from time to time
by an aggregate amount of $10,000,000 or any larger multiple of
$5,000,000, the aggregate amount of the Commitments in excess of
the aggregate outstanding principal amount of the Loans.
(b) Scheduled Termination. The Commitments shall
terminate on the Termination Date, and any Loans then outstanding
(together with accrued interest thereon) shall be due and payable
on such date.
(c) Scheduled Amortization. On June 30, 1995 and on
each Quarterly Date thereafter prior to the Termination Date, the
aggregate amount of the Commitments shall be reduced by
$20,000,000.
(d) Application of Reductions. Each reduction of
Commitments pursuant to this Section shall be applied ratably to
the respective Commitments of all Banks. The amount of any
reduction of the Commitments pursuant to subsection (a) shall be
applied to reduce the amount of subsequent scheduled reductions of
the Commitments pursuant to subsection (c) ratably by amount.
SECTION 2.10. Prepayments and Repayments.
(a) Optional Prepayments. The Borrower may, upon at
least (i) one Domestic Business Day's notice to the Agent, in the
case of Domestic Loans (or Money Market LIBOR Loans bearing
interest at the Base Rate pursuant to Section 8.01(a)) and (ii)
three Euro-Dollar Business Days' notice to the Agent, in the case
of Euro-Dollar Loans, prepay any Group of Committed Loans (or any
Borrowing comprised of Money Market LIBOR Loans bearing interest at
the Base Rate pursuant to Section 8.01(a)) in whole at any time, or
from time to time in part in amounts aggregating $10,000,000 or any
larger multiple of $1,000,000, by paying the principal amount to be
prepaid together with accrued interest thereon to the date of
prepayment and, in the case of a prepayment of Euro-Dollar Loans,
together with any additional amounts payable pursuant to Section
2.12. Each such optional prepayment shall be applied to prepay
ratably the Loans of the several Banks included in such Group (or
Borrowing).
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(b) Mandatory Prepayments and Repayments.
(i) Amortization Payments. On the date of each
reduction of Commitments pursuant to Section 2.09, the Borrower
shall prepay or repay such principal amount of the outstanding
Loans as may be necessary so that after such payment (x) the
aggregate unpaid principal amount of each Bank's outstanding
Committed Loans does not exceed the amount of such Bank's
Commitment as then reduced and (y) the aggregate unpaid principal
amount of all outstanding Loans does not exceed the aggregate
amount of the Commitments as then reduced.
(ii) Debt Limit Excession. If at any time a Debt Limit
Excession shall exist, the Borrower shall, within 180 days of the
earlier of (i) the Agent's notice to the Borrower of such Debt
Limit Excession or (ii) the date the Borrower knew or in the
exercise of reasonable diligence should have known of such Debt
Limit Excession (the "Notice Date"), Remedy such Debt Limit
Excession. The provisions of this Section 2.10(b)(ii) do not
prevent or delay any Event of Default arising by reason of an
incurrence of Debt which gives rise to a Debt Limit Excession in
violation of Section 5.11(a).
(iii) Money Market Loans. Each Money Market Loan shall
mature, and the principal amount thereof shall be due and payable,
on the last day of the Interest Period for the related Borrowing.
Except as expressly provided in Section 2.10(a) or as expressly
required by Section 2.10(b), no Money Market Loan may be prepaid
prior to the maturity thereof.
(iv) Application. Each repayment or prepayment pursuant
to this subsection (b) shall be made together with accrued interest
to the date of payment, and shall be applied ratably to payment of
the Loans of the several Banks comprising the Group or Borrowing
being repaid or prepaid. Each payment required by clause (i) or
(ii) shall be made with respect to such outstanding Group(s) or
Borrowing(s) as the Borrower may specify in the related Notice of
Borrowing or Notice of Interest Rate Election or may otherwise
specify in a manner acceptable to the Agent or, failing such
designation by the Borrower, as the Agent may specify by notice to
the Borrower and the Banks; provided that (x) no Fixed Rate Loans
may be prepaid before the last day of a related Interest Period
while any Domestic Loans remain outstanding and (y) no Money Market
Loans may be prepaid while any Committed Loans remain outstanding.
(c) Notice to Banks. Upon receipt of a notice of
prepayment pursuant to Section 2.10(a), the Agent shall promptly
notify each Bank of the contents thereof and of such Bank's ratable
share of such prepayment and such notice of prepayment shall not
thereafter be revocable by the Borrower.
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SECTION 2.11. General Provisions as to Payments. (a)
The Obligors shall make each payment of principal of, and interest
on, the Loans and of fees hereunder, not later than 12:00 Noon (New
York City time) on the date when due, in Federal or other funds
immediately available in New York City, to the Agent at its address
referred to in Section 9.01. The Agent will promptly distribute to
each Bank its ratable share of each such payment received by the
Agent for the account of the Banks. Whenever any payment of
principal of, or interest on, the Domestic Loans or of fees shall
be due on a day which is not a Domestic Business Day, the date for
payment thereof shall be extended to the next succeeding Domestic
Business Day. Whenever any payment of principal of, or interest
on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day unless
such Euro-Dollar Business Day falls in another calendar month, in
which case the date for payment thereof shall be the next preceding
Euro-Dollar Business Day. Whenever any payment of principal of, or
interest on, the Money Market Loans shall be due on a day which is
not a Euro-Dollar Business Day, the date for payment thereof shall
be extended to the next succeeding Euro-Dollar Business Day. If
the date for any payment of principal is extended by operation of
law or otherwise, interest thereon shall be payable for such
extended time.
(b) Unless the Agent shall have received notice from the
Obligors prior to the date on which any payment is due to the Banks
hereunder that the Obligors will not make such payment in full, the
Agent may assume that the Obligors have made such payment in full
to the Agent on such date and the Agent may, in reliance upon such
assumption, cause to be distributed to each Bank on such due date
an amount equal to the amount then due such Bank. If and to the
extent that the Obligors shall not have so made such payment, each
Bank shall repay to the Agent forthwith on demand such amount
distributed to such Bank together with interest thereon, for each
day from the date such amount is distributed to such Bank until the
date such Bank repays such amount to the Agent, at the Federal
Funds Rate.
SECTION 2.12. Funding Losses. If the Obligors make any
payment of principal with respect to any Fixed Rate Loan or any
Fixed Rate Loan is converted to a Domestic Loan (pursuant to
Article II, VI or VIII or otherwise) on any day other than the last
day of the Interest Period applicable thereto, or the last day of
an applicable period fixed pursuant to Section 2.07(c), or if the
Borrower fails to borrow or prepay any Fixed Rate Loans after
notice has been given to any Bank in accordance with
Section 2.04(a) or 2.10(c), the Borrower shall reimburse each Bank
on demand for any resulting loss or expense incurred by such Bank
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(or by any existing or prospective Participant in the related
Loan), including (without limitation) any loss incurred in
obtaining, liquidating or employing deposits from third parties,
but excluding loss of margin, for the period after any such payment
or failure to borrow or prepay; provided that such Bank shall have
delivered to the Borrower a certificate as to the amount of such
loss or expense, which certificate shall be conclusive in the
absence of manifest error.
SECTION 2.13. Computation of Interest and Fees.
Interest based on the Prime Rate hereunder and commitment fees
shall be computed on the basis of a year of 365 days (or 366 days
in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other
interest and facility fees shall be computed on the basis of a year
of 360 days and paid for the actual number of days elapsed
(including the first day but excluding the last day).
SECTION 2.14. Taxes. (a) Any and all payments by an
Obligor to or for the account of any Bank or the Agent hereunder or
under any other Financing Document shall be made free and clear of
and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each
Bank and the Agent, taxes imposed on its income, and franchise or
similar taxes imposed on it, by (i) any jurisdiction (or political
subdivision thereof) of which the Agent or such Bank, as the case
may be, is a citizen or resident or in which such Bank has a
permanent establishment (or is otherwise engaged in the active
conduct of its banking business through an office or a branch)
which is such Bank's Applicable Lending Office, (ii) the
jurisdiction (or any political subdivision thereof) in which the
Agent or such Bank is organized or (iii) any jurisdiction (or
political subdivision thereof) in which such Bank or the Agent is
doing business on the date on which it becomes a Bank which taxes
(in the case of this clause (iii)) are imposed solely as a result
of doing business in such jurisdiction (all such non-excluded
taxes, duties, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "Taxes"). If an
Obligor shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder or under any other Financing
Document to any Bank or the Agent, (i) the sum payable shall be
increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums
payable under this Section 2.14) such Bank or the Agent (as the
case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) such Obligor shall
make such deductions, (iii) such Obligor shall pay the full amount
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deducted to the relevant taxation authority or other authority in
accordance with applicable law, and (iv) such Obligor shall use its
best efforts to furnish to the Agent, at its address referred to in
Section 9.01, the original or a certified copy of a receipt
evidencing payment thereof.
(b) In addition, the Obligors jointly and severally
agree to pay any present or future stamp or documentary taxes or
any other excise or property taxes, or charges or similar levies
which arise from any payment made hereunder or under any other
Financing Document or from the execution or delivery of, or
otherwise with respect to, this Agreement or any other Financing
Document (hereinafter referred to as "Other Taxes").
(c) The Obligors jointly and severally agree to
indemnify each Bank and the Agent for the full amount of Taxes or
Other Taxes (including, without limitation, any Taxes or Other
Taxes imposed or asserted by any jurisdiction on amounts payable
under this Section 2.14) paid by such Bank or the Agent (as the
case may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto; provided that
no such indemnification shall be payable to the extent such Taxes,
Other Taxes or liabilities shall have been incurred as a
consequence of gross negligence or willful misconduct by such Bank
or the Agent, as the case may be. This indemnification shall be
made within 15 days from the date such Bank or the Agent (as the
case may be) makes demand therefor.
(d) Each Bank organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its execution
and delivery of this Agreement in the case of each Bank listed on
the signature pages hereof and on the date on which it becomes a
Bank in the case of each other Bank, shall provide the Borrower
with Internal Revenue Service form 1001 or 4224, as appropriate, or
any successor form prescribed by the Internal Revenue Service, and
shall (but only so long as such Bank remains lawfully able to do
so) deliver to the Borrower additional copies of such forms on or
before the date that such forms expire or become obsolete or after
the occurrence of an event requiring a change in the most recent
form so delivered by it and such amendments thereto as may be
reasonably requested by the Borrower, in each case certifying that
such Bank is entitled to benefits under an income tax treaty to
which the United States is a party which reduces the rate of
withholding tax on payments of interest or fees or certifying that
the income receivable pursuant to this Agreement is effectively
connected with the conduct of a trade or business in the United
States. If the form provided by a Bank at the time such Bank first
becomes a party to this Agreement indicates a United States
withholding tax rate in excess of zero, withholding tax at such
rate shall be considered excluded from "Taxes" as defined in
Section 2.14(a).
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(e) For any period with respect to which a Bank has
failed to provide the Borrower with the form required pursuant to
Section 2.14(d), if any (other than if such failure is due to a
change in treaty, law or regulation occurring subsequent to the
date on which a form originally was required to be provided), such
Bank shall not be entitled to indemnification under Section 2.14(a)
or 2.14(c) with respect to Taxes imposed by the United States which
Taxes would not have been imposed but for such failure to provide
such form; provided, however, that should a Bank, which is
otherwise exempt from or subject to a reduced rate of withholding
tax, become subject to Taxes because of its failure to deliver a
form required hereunder, the Obligors shall take such steps as the
Bank shall reasonably request to assist the Bank to recover such
Taxes.
(f) If an Obligor is required to pay additional amounts
to or for the account of any Bank pursuant to this Section 2.14,
then such Bank will change the jurisdiction of its Applicable
Lending Office so as to eliminate or reduce any such additional
payment which may thereafter accrue if such change, in the sole
judgment of such Bank, is not otherwise disadvantageous to such
Bank. No Bank shall be entitled to receive any greater payment
under this Section 2.14 as a result of the designation by such Bank
of a different Applicable Lending Office after the date hereof,
unless such designation is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.02 or 8.03
requiring such Bank to designate a different Applicable Lending
Office under certain circumstances or at a time when the
circumstances giving rise to such greater payment did not exist.
(g) Without prejudice to the survival of any other
agreement of the Obligors hereunder, the agreements and obligations
of the Obligors contained in this Section 2.14 shall survive the
payment in full of principal and interest hereunder.
ARTICLE III
CONDITIONS TO BORROWING
The obligation of each Bank to make a Loan on the
occasion of each Borrowing is subject to the satisfaction of such
of the following conditions as shall not have been expressly waived
by the Required Banks:
SECTION 3.01. Each Borrowing. In the case of each
Borrowing:
(a) receipt by the Agent of a Notice of Borrowing as
required by Section 2.02 or 2.03, as the case may be;
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(b) the fact that, immediately after such Borrowing, the
aggregate outstanding principal amount of the Loans will not
exceed the aggregate amount of the Commitments;
(c) the fact that, immediately before and after such
Borrowing, no Default shall have occurred and be continuing;
(d) the fact that each of the representations and
warranties made by the Obligors in or pursuant to the
Financing Documents (except, in the case of any Borrowing
subsequent to the first Borrowing under this Amended
Agreement, the representations and warranties set forth in
Section 4.04) shall be true on and as of the date of such
Borrowing; and
(e) in the case of a Money Market Borrowing, the fact
that Level IV Status (as defined in the Pricing Schedule)
shall not exist.
Each Borrowing under this Agreement shall be deemed to be a
representation and warranty by the Obligors on the date of such
Borrowing as to the facts specified in paragraphs (b), (c), (d) and
(e) of this Section 3.01.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Agent and
each Bank that:
SECTION 4.01. Corporate Existence and Power. The
Borrower and each of its Significant Subsidiaries is a corporation
duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all corporate
powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now
conducted and as proposed to be conducted.
SECTION 4.02. Corporate and Governmental Authorization;
No Contravention. The execution and delivery by each Obligor of
each of the Financing Documents to which it is a party and the
performance by such Obligor of its obligations thereunder are
within the corporate power of such Obligor, have been duly
authorized by all necessary corporate action, require no action by
or in respect of, or filing with, any governmental body, agency or
official and do not contravene, or constitute a default under, any
provision of applicable law or regulation or of the Constitutional
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Documents of such Obligor or any of its Subsidiaries or of any
agreement, judgment, injunction, order, decree or other instrument
binding upon such Obligor or any of its Subsidiaries or result in
or require the imposition of any Lien on any asset of such Obligor
or any of its Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement
constitutes a valid and binding agreement of the Borrower and each
of the other Financing Documents, when executed and delivered as
contemplated by this Agreement, will constitute a valid and binding
obligation of each Obligor that is a party thereto, in each case
enforceable in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability.
SECTION 4.04. Information.
(a) Financial Statements. The historical consolidated
financial statements of the Borrower as of and for the fiscal year
ending on December 31, 1993 and as of and for the three-month
period ending on March 31, 1994 included in the Information fairly
present the consolidated financial position of the Borrower and its
Consolidated Subsidiaries as at the dates and the consolidated
results of operations and cash flows of the Borrower and its
Consolidated Subsidiaries for the periods therein set forth, all in
accordance with generally accepted accounting principles
consistently applied (except as disclosed therein).
(b) Reserve Data and Projections. The statements and
conclusions as to oil and gas reserves and forecast results
included in the Information are based upon the best information
available to the Borrower at the time such statements were made and
take into consideration all information which, in the reasonable
judgment of the Borrower was believed to be material at the time
(determined in accordance with standards customarily applicable to
professionals in the oil and gas industry), it being understood
that such statements and conclusions are necessarily based upon
professional opinions, estimates and projections, and the Borrower
does not warrant that such opinions, estimates and projections will
ultimately prove to have been accurate.
(c) Full Disclosure. Subject to subsection (b), the
Information did not as of the respective dates as of which
information is stated therein, and does not, as of the date of this
Agreement, contain any untrue statement of material fact or omit to
state a material fact necessary in order to make the statements
contained therein, in the light of the circumstances under which
they were made, not misleading.
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SECTION 4.05. No Material Adverse Change. Since the
respective dates as of which information is stated in the
Information, no event has occurred and no condition has come into
existence which has had, or could reasonably be expected to have,
a Material Adverse Effect.
SECTION 4.06. Litigation. Except as disclosed in the
Information, there is no action, suit or proceeding pending
against, or to the knowledge of the Borrower threatened against or
affecting, the Borrower or any Subsidiary of the Borrower before
any court or arbitrator or any governmental body, agency or
official (i) in which an adverse decision could reasonably be
expected which would have a Material Adverse Effect or (ii) which
in any manner questions the validity of any Financing Document,
other than any such action, suit or proceeding that the Borrower
does not deem material and of which it has notified the Banks,
unless the Required Banks have, in the good faith exercise of their
discretion, notified the Borrower that they deem such action, suit
or proceeding material.
SECTION 4.07. Compliance with ERISA. Each member of the
ERISA Group (x) has fulfilled its obligations under the minimum
funding standards of ERISA and the Internal Revenue Code with
respect to each Plan and (y) is in compliance in all material
respects with the presently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan other than any
failure to so comply that could not reasonably be expected to have
a Material Adverse Effect. No member of the ERISA Group has (i)
sought a waiver of the minimum funding standard under Section 412
of the Internal Revenue Code in respect of any Plan, (ii) failed to
make any contribution or payment to any Plan or Multiemployer Plan
or in respect of any Benefit Arrangement, or made any amendment to
any Plan or Benefit Arrangement, which has resulted or could
reasonably be expected to result in the imposition of a Lien or the
posting of a bond or other security under ERISA or the Internal
Revenue Code or (iii) incurred any liability under Title IV of
ERISA other than a liability to the PBGC for premiums under Section
4007 of ERISA.
SECTION 4.08. Taxes. The Borrower and its Subsidiaries
have filed all United States Federal income tax returns that are
required to be filed by them and have paid all taxes shown as due
pursuant to such returns or pursuant to any assessment received by
any of them, except such taxes, if any, as are being contested in
good faith and as to which reserves have been provided, as and to
the extent required by generally accepted accounting principles.
The charges, accruals and reserves on the books of the Borrower and
its Subsidiaries in respect of taxes or other governmental charges
are adequate.
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SECTION 4.09. Compliance with Laws. The Borrower and
its Subsidiaries are in compliance in all material respects with
all applicable laws, rules and regulations, other than such laws,
rules or regulations (i) the validity or applicability of which the
Borrower or such Subsidiary is contesting in good faith or (ii)
failure to comply with which cannot reasonably be expected to have
a Material Adverse Effect.
SECTION 4.10 Investment Company Act. Neither the
Borrower nor any of its Subsidiaries is an "investment company", or
a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
SECTION 4.11. Public Utility Holding Company Act.
Neither the Borrower nor any of its Subsidiaries is a "holding
company", or an "affiliate" of a "holding company" or a "subsidiary
company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
SECTION 4.12. Ownership of Property, Liens. Except to
an extent which could not reasonably be expected to have a Material
Adverse Effect: the Borrower and its Subsidiaries have good and
marketable title to and are in lawful possession of, or have valid
leasehold interests in, all properties and other assets (real or
personal, tangible, intangible or mixed) purported to be owned by
the Borrower and its Subsidiaries or to be leased by the Borrower
and its Subsidiaries (as the case may be), and none of such
properties and assets is subject to any Liens, except Permitted
Liens, all of such properties and other assets are in good working
order and condition, ordinary wear and tear excepted, and the
Borrower and its Subsidiaries have received all deeds, assignments,
bills of sale and other documents and duly effected all recordings,
filings and other actions necessary or appropriate to establish,
protect and perfect its right, title and interest in and to all
such properties and assets.
SECTION 4.13. Current Disclosure. Except for political,
economic and social matters of general knowledge within the
international banking community, the Obligors have disclosed to the
Banks in writing any and all facts which to the best of their
knowledge could reasonably be expected to have a Material Adverse
Effect.
SECTION 4.14. Representations in Subsidiary Guaranty
Agreement True and Correct. Each of the representations and
warranties of any Obligor contained in the Subsidiary Guaranty
Agreement is true and correct.
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SECTION 4.15. Use of Proceeds. The proceeds of the
Loans will be used for the Borrower's general corporate purposes.
None of such proceeds will be used, directly or indirectly, for any
purpose which would violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System, as in effect from time to
time.
SECTION 4.16. Environmental Matters. In the ordinary
course of its business, the Borrower conducts periodic reviews of
the effect of Environmental Laws on the business, operations and
properties of the Borrower and its Subsidiaries, in the course of
which it identifies and evaluates associated liabilities and costs,
if any, (including, without limitation, (a) any capital or
operating expenditures required for clean-up or closure of
properties presently or, if notice of potential liability has been
received or if the Borrower is otherwise aware that such
expenditures will be required, previously owned, (b) any capital or
operating expenditures required to achieve or maintain compliance
with environmental protection standards imposed by Environmental
Law or as a condition of any license, permit or contract, (c) any
related constraints on operating activities, including any periodic
or permanent shutdown of any facility or reduction in the level of
or change in the nature of operations conducted thereat, (d) any
costs or liabilities in connection with disposal of Hazardous
Substances at third-party sites, and (e) any actual or known
potential liabilities under Environmental Laws to third parties,
including employees). On the basis of these reviews and other
relevant information, the Borrower has reasonably concluded that
such associated liabilities and costs, including the costs of
compliance with Environmental Laws, are unlikely to have a Material
Adverse Effect.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any
Commitment hereunder or any amount payable under any Note remains
unpaid or any amount that is due and payable hereunder remains
unpaid:
SECTION 5.01. Information. The Borrower will deliver
to each of the Banks:
(a) as soon as available and in any event within 120
days after the end of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such fiscal year and the related
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consolidated statements of earnings, stockholders' equity and cash
flows for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all
reported on in a manner acceptable to the Securities and Exchange
Commission by KPMG Peat Marwick or other independent public
accountants of nationally recognized standing;
(b) as soon as available and in any event within 60 days
after the end of each of the first three quarters of each fiscal
year of the Borrower, a condensed consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such
quarter and the related condensed consolidated statements of
earnings and cash flows for such quarter or for the portion of the
Borrower's fiscal year ended at the end of such quarter, setting
forth in each case in comparative form the figures for the
corresponding quarter and the corresponding portion of the
Borrower's previous fiscal year, all certified (subject to normal
year-end audit adjustments) as to fairness of presentation,
generally accepted accounting principles and consistency by the
chief financial officer or the Controller of the Borrower;
(c) simultaneously with the delivery of each set of
financial statements referred to in clauses (a) and (b) above, a
certificate of the chief financial officer or the Treasurer of the
Borrower (i) setting forth in reasonable detail the calculations
required to establish whether the Borrower was in compliance with
the requirements of Sections 5.14 to 5.16, inclusive, on the date
of such financial statements, (ii) setting forth a calculation of
the Applicable Ratio (as defined in the Pricing Schedule) and (iii)
stating whether there exists on the date of such certificate any
Default and, if any Default then exists, setting forth the details
thereof and the action which the Borrower is taking or proposes to
take with respect thereto;
(d) forthwith upon the occurrence of any Default, a
certificate of the chief financial officer or the Treasurer of the
Borrower setting forth details thereof and the action which the
Borrower is taking or proposes to take with respect thereto;
(e) promptly upon the mailing thereof to the
shareholders of the Borrower generally, copies of all financial
statements, reports and proxy statements so mailed;
(f) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and annual,
quarterly or current reports which the Borrower shall have filed
with the Securities and Exchange Commission;
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(g) if and when any member of the ERISA Group (i) gives
or is required to give notice to the PBGC of any "reportable event"
(as defined in Section 4043 of ERISA) with respect to any Plan
which might constitute grounds for a termination of such Plan under
Title IV of ERISA, or knows that the plan administrator of any Plan
has given or is required to give notice of any such reportable
event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete
or partial withdrawal liability under Title IV of ERISA or notice
that any Multiemployer Plan is in reorganization, is insolvent or
has been terminated, a copy of such notice; (iii) receives notice
from the PBGC under Title IV of ERISA of an intent to terminate,
impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer any Plan,
a copy of such notice; (iv) applies for a waiver of the minimum
funding standard under Section 412 of the Internal Revenue Code, a
copy of such application; (v) gives notice of intent to terminate
any Plan under Section 4041(c) of ERISA, a copy of such notice and
other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy
of such notice; or (vii) fails to make any payment or contribution
to any Plan or Multiemployer Plan or in respect of any Benefit
Arrangement or makes any amendment to any Plan or Benefit
Arrangement which has resulted or could reasonably be expected to
result in the imposition of a Lien or the posting of a bond or
other security under ERISA or the Internal Revenue Code, a
certificate of a Financial Officer setting forth details as to such
occurrence and action, if any, which the Borrower or applicable
member of the ERISA Group is required or proposes to take; and
(h) from time to time such additional information
regarding the financial position or business of the Borrower as the
Agent, at the request of any Bank, may reasonably request.
SECTION 5.02. Reserve Reports. (a) By May 15 of each
year, commencing May 15, 1995 (or by June 15 of any year, if the
related report is to be prepared by an independent petroleum
engineering firm in accordance with Section 5.02(c)), the Borrower
shall furnish to each of the Banks a report, in form and substance
reasonably satisfactory to the Determining Banks which shall
evaluate each Petroleum Property as of the preceding December 31,
and which shall, together with any other information reasonably
required by any Determining Bank, set forth the information
necessary to determine the Debt Limit as of such date.
(b) At any time subsequent to the initial determination
of the Debt Limit pursuant to Section 5.11(b)(ii)(x) and (x) upon
request by the Required Banks or (y) if the Borrower at its option
elects to do so, the Borrower shall furnish to each of the Banks,
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within 45 days (or, if such report is to be prepared by an
independent petroleum engineering firm in accordance with Section
5.02(c), 75 days) of delivery of the assumptions to be utilized in
the preparation of such report pursuant to Section 5.02(c), a
report which shall evaluate each Petroleum Property as of the date
of the most recent Reserve Report or as of such other date (not
later than the date of delivery of such assumptions) as the
Determining Banks specify, in form and substance reasonably
satisfactory to the Determining Banks, together with any other
information reasonably requested by any Determining Bank. Such
report shall use production and cost profiles from the most recent
Reserve Report, unless otherwise requested by the Determining
Banks, with such other assumptions as supplied by the Determining
Banks. No more than one such report may be requested by the
Required Banks during any calendar year and no more than one such
report may be supplied by the Borrower at its option during any
calendar year.
(c) The reports contemplated by this Section shall be
prepared on the basis of price and other economic assumptions
specified by the Determining Banks to the Borrower in accordance
with their customary oil and gas lending practices not later than
(i) April 1 of each year, in the case of each report to be
delivered pursuant to Section 5.02(a), (ii) the delivery of the
request of the Required Banks, in the case of a report to be
delivered pursuant to Section 5.02(b)(x) and (iii) ten days after
receipt of notice from the Borrower of its election to furnish a
report pursuant to Section 5.02(b)(y). Each such report shall
separately cover Proved Developed Reserves which are currently
producing to market, other Proved Developed Reserves and Proved
Undeveloped Reserves, and shall identify any material gas
imbalances and any Liens on any Petroleum Properties (including the
amount secured thereby). Each such report shall be prepared by a
petroleum engineer employed by the Borrower or a Subsidiary of the
Borrower or, commencing with the report to be delivered by May 15,
1995 (or June 15, 1995, as the case may be), in the case of reports
delivered pursuant to Section 5.02(a), or any report required to be
delivered at the request of the Required Banks pursuant to Section
5.02(b) (and then in any such case under Section 5.02(a) or (b)
only upon the specific request of the Required Banks) by an
independent petroleum engineering firm satisfactory to the
Determining Banks. Any such report prepared by an independent
petroleum engineering firm need cover only Petroleum Properties
having Lending Values aggregating not less than 80% of the Debt
Limit (as reasonably estimated by the Borrower solely for purposes
of this sentence), with the balance of the Petroleum Properties to
be covered by a supplemental report of internal petroleum
engineers.
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SECTION 5.03. Payment of Obligations. The Borrower
will, and will cause each of its Subsidiaries to, pay and
discharge, before they give rise to a Lien on any of its property
or assets (or, if later, when the same shall become due and
payable), (i) all material claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons
which, in any such case, if unpaid, might by law give rise to a
Lien upon any of its property or assets, and (ii) all material
taxes, assessments and governmental charges or levies upon it or
its property or assets, except where any of the items in clause (i)
or (ii) above may be contested in good faith by appropriate
proceedings, and the Borrower or such Subsidiary, as the case may
be, shall have set aside on its books, in accordance with generally
accepted accounting principles, appropriate reserves, if any, for
the accrual of any such items.
SECTION 5.04. Maintenance of Property. The Borrower
will keep, and will cause each of its Subsidiaries to keep, all
property useful and necessary in its business in good working order
and condition, ordinary wear and tear excepted.
SECTION 5.05. Insurance. The Borrower will maintain,
and will cause each of its Subsidiaries to maintain, insurance
coverage with respect to their respective properties and business
against such liabilities, casualties, risks and contingencies and
in such types and amounts and with such financially sound and
reputable companies, all as are generally consistent with its past
practices (subject to availability of such insurance at reasonable
costs) and the prudent and customary practices of the oil and gas
industry. Upon the request of the Agent, the Borrower will furnish
or cause to be furnished to the Banks from time to time a summary
of the insurance coverage of the Borrower and its Subsidiaries in
form and substance satisfactory to the Required Banks in their
reasonable judgment.
SECTION 5.06. Compliance With Law. The Borrower will
comply, and cause each of its Subsidiaries to comply, in all
material respects with all applicable laws, ordinances, rules,
regulations, and requirements of governmental authorities
(including, without limitation, Environmental Laws and ERISA and
the rules and regulations thereunder).
SECTION 5.07. Inspection of Property, Books and Records.
The Borrower will keep, and will cause each of its Subsidiaries to
keep, proper books of record and account in which full, true and
correct entries in conformity with generally accepted accounting
principles shall be made of all dealings and transactions in
relation to its business and activities. The Borrower, upon
reasonable request by any Bank, will permit, and will cause each of
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its Subsidiaries to permit, representatives of any Bank to visit
and inspect any of their respective properties, to examine and make
abstracts and copies from any of their respective books and records
and to discuss their respective affairs, finances and accounts with
their respective officers and employees and, in the presence of the
Borrower, its independent public accountants, all at such
reasonable times and as often as may reasonably be desired.
SECTION 5.08. Development and Operation of Oil, Gas and
Mineral Properties. The Borrower will use all reasonable efforts
to cause all Petroleum Properties to be operated in a manner
consistent with sound oil field practice. The Borrower will cause
each Petroleum Property to be developed in such manner, and will
devote such funds to such purpose, as would a reasonably prudent
Person similarly situated and (subject to the foregoing) on a basis
consistent with the most recent Reserve Report covering such
Petroleum Property.
SECTION 5.09. Maintenance of Existence, Rights, Etc.
The Borrower will preserve, renew and keep in full force and
effect, and will cause each of its Subsidiaries which owns any
Petroleum Property to preserve, renew and keep in full force and
effect, their respective corporate existences and their respective
rights, privileges, licenses and franchises materially necessary or
desirable in the normal conduct of business; provided that nothing
in this Section 5.09 shall prohibit (i) a merger or consolidation
permitted by Section 5.13 or (ii) the termination of the corporate
existence of any Subsidiary of the Borrower if the Borrower in good
faith determines that such termination is in the best interest of
the Borrower and is not materially disadvantageous to the Banks.
SECTION 5.10. Maintenance of Equity Securities of
Significant Subsidiaries. The Borrower will at all times maintain
direct or indirect ownership of 100% of the Equity Securities of
each of its Significant Subsidiaries, except for a disposition by
it of its entire Investment in any Significant Subsidiary.
SECTION 5.11. Limitation on Debt. (a) Neither the
Borrower nor any Subsidiary of the Borrower will incur any Debt if,
after giving effect thereto, a Debt Limit Excession would exist.
(b) The Debt Limit will be determined and adjusted
periodically as follows:
(i) Prior to a determination pursuant to Section
5.11(b)(ii)(x) on the basis of the initial Reserve Report
delivered pursuant to Section 5.02(a), and subject to
adjustment in accordance with Section 5.11(b)(ii)(y) and
5.11(b)(iii) through (v) below, the Debt Limit shall be
$620,000,000.
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(ii) Within 25 days of (x) delivery of each Reserve
Report pursuant to Section 5.02, or (y) notice from the
Borrower that the Borrower proposes to add one or more
additional Petroleum Properties so as to Remedy a Debt Limit
Excession, the Determining Banks shall in accordance with
their customary oil and gas lending practices determine a
proposed Debt Limit on the basis of such Reserve Report and/or
such additional information as the Borrower furnishes at such
time, and the Agent shall promptly notify the Borrower and the
Banks of such proposed Debt Limit. Such proposed Debt Limit
shall become the effective Debt Limit on the thirtieth day
following the giving of such notice and shall be binding on
all parties to this Agreement, unless on or prior to such
thirtieth day (A) the Agent shall have received the written
consent of the Required Banks to such proposed Debt Limit, in
which case such proposed Debt Limit shall become the effective
Debt Limit on the date of such receipt by the Agent or (B)
Banks having more than 33 1/3% of the aggregate Overall
Commitments reject such proposed Debt Limit by notice to the
Agent, in which case the Banks shall consult with one another
with a view to agreement on the Debt Limit to be determined,
and the Debt Limit shall be determined by the Required Banks
in accordance with their customary oil and gas lending
practices. Any Debt Limit so determined by the Required Banks
shall be promptly notified to the Borrower and the Banks by
the Agent, and upon such notification shall be effective and
binding on all parties.
(iii) The Debt Limit shall be reduced upon consummation
of Asset Sales involving Petroleum Properties, consummated or
occurring subsequent to the date of the Reserve Report
utilized in the most recent determination of the Debt Limit
pursuant to Section 5.11(b), for aggregate Consideration
exceeding $75,000,000 (or, if a Downgrade Condition exists
either at the time of or subsequent to any such Asset Sale,
$30,000,000), by an amount equal to the Lending Value of the
related Petroleum Properties, net, in the case of any
Petroleum Property exchanged for another Petroleum Property,
of the Lending Value of the acquired Petroleum Property.
(iv) If the Borrower shall request, by notice to the
Agent, that the interests of any Subsidiary of the Borrower in
Proved Reserves theretofore used in determining the Debt Limit
no longer be so used, then, effective upon the date of such
notice, (i) such interests in Proved Reserves shall no longer
constitute Petroleum Properties and (ii) the Debt Limit shall
be reduced by the Lending Value of such former Petroleum
Properties; provided that the Borrower shall not be entitled
to make such a request pursuant to this Section 5.11(b)(iv) if
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<PAGE>
(x) after giving effect to the reduction in the Debt Limit
resulting therefrom, a Debt Limit Excession would exist or (y)
the aggregate Lending Value of the Petroleum Properties owned
by the Subsidiary that is the subject of such request exceeds
10% of the Debt Limit. If the Borrower elects pursuant to
this Section that the interest of any Subsidiary in Proved
Reserves shall no longer be used for purposes of determining
the Debt Limit, such Subsidiary shall no longer be a
Significant Subsidiary and any Default or Event of Default
that has occurred hereunder as a consequence of such
Subsidiary having been a Significant Subsidiary shall
thereafter be deemed not to have occurred.
(v) Within 25 days of notice from the Borrower that a
Major Casualty Event involving a Petroleum Property has
occurred, the Determining Banks shall, in accordance with
their customary oil and gas lending practices, redetermine the
Debt Limit to reflect such Major Casualty Event on the basis
of the most recent Reserve Report and such additional
information regarding such Major Casualty Event as the
Borrower furnishes at such time, and the Agent shall promptly
notify the Borrower and the Banks of such redetermined Debt
Limit, whereupon such redetermined Debt Limit shall become
effective.
(c) The Borrower shall notify each Determining Bank at
the earliest practical time in advance of any transaction which
entails a reasonable likelihood of an adjustment to the Debt Limit
pursuant to Section 5.11(b)(ii), (iii), (iv) or (v) above, and
shall furnish each Determining Bank with such information with
respect thereto as any Determining Bank may reasonably request.
SECTION 5.12. Negative Pledge. The Borrower will not,
and will not permit any of its Subsidiaries to, create, assume or
suffer to exist any Lien on any asset now owned or hereafter
acquired except:
(a) Liens existing on the date of this Agreement
securing Debt outstanding on the date of this Agreement in an
aggregate principal or face amount not exceeding $10,000,000;
(b) any Lien existing on any asset prior to the
acquisition thereof by the Borrower or such Subsidiary and not
created in contemplation of such acquisition;
(c) any Lien existing on any asset of any Person at the
time such Person becomes a Subsidiary of the Borrower and not
created in contemplation of such event;
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(d) any Lien on any asset securing Debt incurred or
assumed for the purpose of financing all or any part of the
cost of acquiring, improving or constructing such asset,
provided that such Lien attaches to such asset concurrently
with or within 90 days after the acquisition or completion of
construction thereof or improvement thereto;
(e) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt secured by any Lien permitted
by any of the foregoing clauses of this Section, provided that
the principal amount of such Debt is not increased (except by
the amount of costs reasonably incurred in connection with the
issuance thereof) and such Debt is not secured by any
additional assets;
(f) Liens which (i) do not secure Debt or Derivatives
Obligations, (ii) do not secure any obligation in respect of
which the lesser of (A) the amount of such obligation and (B)
the value (determined as of the last day of the fiscal year
most recently ended) of the collateral securing such
obligation exceeds $50,000,000 and (iii) do not in the
aggregate materially detract from the value of the assets of
the Borrower and its Subsidiaries, taken as a whole, or
materially impair the use thereof in the operation of its
business; and
(g) Liens on cash and cash equivalents securing
Derivatives Obligations, provided that the aggregate amount of
cash and cash equivalents subject to such Liens may at no time
exceed $35,000,000.
SECTION 5.13. Consolidations, Mergers and Asset Sales.
The Borrower will not, and will not permit any of its Subsidiaries
to, consolidate or merge with or into, or sell, lease or otherwise
dispose of all or substantially all of its assets to, any other
Person, except that (i) the Borrower may merge with any Person if
the Borrower is the surviving corporation and if, immediately after
such merger (and giving effect thereto) but subject to clause (iii)
below, no Default shall have occurred and be continuing, (ii) any
Subsidiary of the Borrower may merge or consolidate with or into,
or transfer all or substantially all of its assets to, any Person
if either (A) the surviving corporation or transferee is the
Borrower or a Wholly-Owned Subsidiary of the Borrower or (B) such
merger, consolidation or transfer of all or substantially all
assets is in conjunction with a disposition by the Borrower of its
entire Investment in such Subsidiary otherwise permitted hereunder
and, if, in either such case, immediately after such transaction
(and giving effect thereto) no Default shall have occurred and be
continuing and (iii) any Wholly-Owned Subsidiary of the Borrower
may consolidate or merge with or into, or sell, lease or otherwise
dispose of all or substantially all of its assets to (A) any other
Wholly-Owned Subsidiary of the Borrower or (B) the Borrower.<PAGE>
<PAGE>
SECTION 5.14. Cash Flow Coverage. As of the last day of
each fiscal quarter of the Borrower, the Consolidated Cash Flow
Ratio will not be less than 300%.
SECTION 5.15. Minimum Consolidated Tangible Net Worth.
Consolidated Tangible Net Worth will at no time be less than the
sum of (i) $420,000,000 plus (ii) an amount equal to 75% of the
cumulative additions to Consolidated Tangible Net Worth resulting
from issuances of Equity Securities made by the Borrower from and
after the date hereof and prior to such time.
SECTION 5.16. Subsidiary Debt. The aggregate
outstanding principal amount of Debt of all Significant
Subsidiaries of the Borrower (exclusive, in each case, of Debt
owing to the Borrower or a Wholly-Owned Subsidiary and Debt under
the Subsidiary Guaranty Agreement) shall at no time exceed
$50,000,000.
SECTION 5.17. Transactions with Affiliates. The
Borrower will not, and will not permit any of its Subsidiaries to,
directly or indirectly, pay any funds to or for the account of,
make any Investment in, lease, sell, transfer or otherwise dispose
of any assets, tangible or intangible, to, or participate in, or
effect any transaction in connection with any joint enterprise or
other joint arrangement with, any Affiliate; provided, however,
that the foregoing provisions of this Section shall not prohibit
(a) the Borrower or any of its Subsidiaries from declaring or
paying any lawful dividend or other Stockholder Payment so long as,
after giving effect thereto, no Default shall have occurred and be
continuing (as determined at the time the Borrower or such
Subsidiary declares such dividend or otherwise becomes legally
committed to make such Stockholder Payment), (b) the Borrower or
any of its Subsidiaries from making sales to or purchases from any
Affiliate and, in connection therewith, extending credit or making
payments, or from making payments for services rendered by any
Affiliate, if such sales or purchases are made or such services are
rendered in the ordinary course of business and on terms and
conditions at least as favorable to the Borrower or such Subsidiary
as the terms and conditions which would apply in a similar
transaction with a Person not an Affiliate, (c) the Borrower or any
of its Subsidiaries from making payments of principal, interest and
premium on any Debt of the Borrower or such Subsidiary held by an
Affiliate if the terms of such Debt are substantially as favorable
to the Borrower or such Subsidiary as the terms which could have
been obtained at the time of the creation of such Debt from a
lender which was not an Affiliate or (d) the Borrower or any of its
Subsidiaries from participating in, or effecting any transaction in
connection with, any joint enterprise or other joint arrangement
with any Affiliate if the Borrower or such Subsidiary participates
in the ordinary course of its business and on a basis no less
advantageous than the basis on which such Affiliate participates.<PAGE>
<PAGE>
SECTION 5.18. Limitation on Restrictions Affecting
Subsidiaries. Neither the Borrower nor any of its Significant
Subsidiaries will enter into, or suffer to exist, any agreement
with any Person, other than this Agreement, which prohibits or
limits in any material respect the ability of any Significant
Subsidiary to (a) pay dividends or make other distributions or pay
any Debt owed to the Borrower or any Subsidiary of the Borrower,
(b) make loans or advances to the Borrower or any Subsidiary of the
Borrower, (c) transfer properties or assets to the Borrower or any
Subsidiary of the Borrower or (d) create, incur, assume or suffer
to exist any Lien upon its property, assets or revenues, whether
now owned or hereafter acquired, except (i) customary provisions
incident to Liens which the Subsidiaries are permitted to incur
pursuant to this Agreement, (ii) customary restrictions on
assignability in leases and other contracts entered into in the
ordinary course of business, (iii) the restrictions disclosed on
Schedule I to the Original Agreement and (iv) restrictions no more
restrictive than those so disclosed in agreements relating to Debt
that is incurred to refinance the Debt to which the restrictions so
disclosed relate; provided that the principal amount of such Debt
is not increased (except by the amount of costs reasonably incurred
in connection with the issuance thereof).
ARTICLE VI
DEFAULTS
SECTION 6.01. Defaults. If one or more of the following
events (each, an "Event of Default") shall have occurred and be
continuing:
(a) any principal of or any interest on any Loan or any
fees or any other amount payable hereunder shall not be paid
within two Domestic Business Days of the date when due; or
(b) any Borrower shall fail to observe or perform any
covenant contained in Sections 5.09 through 5.18, inclusive;
or
(c) any Obligor shall fail to observe or perform any of
its covenants or agreements contained in the Financing
Documents (other than those covered by paragraph (a) or (b)
above) and such failure shall continue for ten Domestic
Business Days after such Obligor knew or in the exercise of
reasonable diligence should have known of such failure; or
(d) any representation, warranty, certification or
statement made by any Obligor in any Financing Document or in
any certificate, financial statement or other document
delivered pursuant thereto shall prove to have been incorrect
in any material respect when made (or deemed made); or<PAGE>
<PAGE>
(e) (i) the Borrower or any of its Subsidiaries shall
fail to make any payment in respect of Material Debt when due
or within any applicable grace period or (ii) the Borrower or
any of its Subsidiaries shall fail to make a payment in excess
of $10,000,000 in respect of Derivatives Obligations of the
Borrower and/or one or more of its Subsidiaries, arising in
one or more related or unrelated transactions, when due or
within any applicable grace period;
(f) any event or condition shall occur that results in
the acceleration of the maturity of Material Debt or enables
the holder or holders of Material Debt or any Person acting on
behalf of such holder or holders to accelerate the maturity
thereof; or
(g) the Borrower or any Significant Subsidiary shall
commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its
property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors,
or shall fail generally to pay its debts as they become due,
or shall take any corporate action to authorize any of the
foregoing; or
(h) an involuntary case or other proceeding shall be
commenced against the Borrower or any Significant Subsidiary
seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its
property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 60 days; or an
order for relief shall be entered against the Borrower or any
Significant Subsidiary under the Federal bankruptcy laws as
now or hereafter in effect; or
(i) any member of the ERISA Group shall fail to pay when
due an amount or amounts aggregating in excess of $20,000,000
which it shall have become liable to pay under Title IV of
ERISA; or notice of intent to terminate a Material Plan shall
be filed under Title IV of ERISA by any member of the ERISA
Group, any plan administrator or any combination of the
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foregoing; or the PBGC shall institute proceedings under Title
IV of ERISA to terminate, to impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or to
cause a trustee to be appointed to administer any Material
Plan; or a condition shall exist by reason of which the PBGC
would be entitled to obtain a decree adjudicating that any
Material Plan must be terminated; or there shall occur a
complete or partial withdrawal from, or a default, within the
meaning of Section 4219(c)(5) of ERISA, with respect to, one
or more Multiemployer Plans which could reasonably be expected
to cause one or more members of the ERISA Group to incur a
current payment obligation in excess of $20,000,000; or
(j) a judgment or order for the payment of money in
excess of $10,000,000 shall be rendered against the Borrower
or any Significant Subsidiary and such judgment or order shall
continue unsatisfied and unstayed for a period of 30 days; or
(k) any person or group of persons (within the meaning
of Section 13 or 14 of the Securities Exchange Act of 1934, as
amended) shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the Securities and
Exchange Commission under said Act) of 30% or more of the
outstanding shares of common stock of the Borrower; or, during
any period of 12 consecutive calendar months, individuals who
were directors of the Borrower on the first day of such
period, together with directors whose election or appointment
as directors was effected or recommended by a majority of such
directors, shall cease to constitute a majority of the board
of directors of the Borrower; or
(l) any authorization, approval, consent, license or
exemption necessary for any Obligor to comply with its
obligations under any Financing Document or the enforceability
of any Financing Document expires or is revoked, withheld or
modified in a manner unacceptable to the Required Banks or
fails to be granted or to remain in full force and effect and
the effect of any of the foregoing is not, or is not able to
be, remedied within 30 days;
then, and in every such event, the Agent shall (i) if requested by
the Required Banks, by notice to the Borrower terminate the
Commitments and they shall thereupon terminate, and (ii) if
requested by the Required Banks, by notice to the Borrower declare
the Notes (together with accrued interest thereon) to be, and the
Notes shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of
which are hereby waived by each Obligor; provided that in the case
of an Event of Acceleration, without any notice to any Obligor or
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any other act by the Agent or the Banks, the Commitments shall
thereupon terminate and the Notes (together with accrued interest
thereon) shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of
which are hereby waived by each Obligor.
SECTION 6.02. Notice of Default. The Agent shall give
notice to an Obligor of a Default promptly upon being requested to
do so by any Bank and shall thereupon notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank
irrevocably appoints the Agent to act as its agent in connection
herewith and authorizes the Agent to take such action as agent on
such Bank's behalf and to exercise such powers under the Financing
Documents as are delegated to the Agent by the terms thereof,
together with all such powers as are reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan shall have
the same rights and powers under this Agreement as any other Bank
and may exercise or refrain from exercising the same as though it
were not the Agent, and Morgan and its affiliates may accept
deposits from, lend money to, and generally engage in any kind of
business with any Obligor or any Subsidiary or Affiliate of any
Obligor as if it were not the Agent.
SECTION 7.03. Action by Agent. The obligations of the
Agent under the Financing Documents are only those expressly set
forth therein with respect to it. Without limiting the generality
of the foregoing, the Agent shall not be required to take any
action with respect to any Default, except as expressly provided in
Article VI.
SECTION 7.04. Consultation with Experts. The Agent may
consult with legal counsel (who may be counsel for an Obligor),
independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by
it in good faith in accordance with the advice of such counsel,
accountants or experts.
SECTION 7.05. Liability of Agent. Neither the Agent nor
any of its affiliates nor any of their respective directors,
officers, agents or employees shall be liable to any Bank for any
action taken or not taken by it in connection with the Financing
Documents (i) with the consent or at the request of the Required
Banks or (ii) in the absence of its own gross negligence or willful
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<PAGE>
misconduct. Neither the Agent nor any of its affiliates nor any of
their respective directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or
verify (i) any statement, warranty or representation made in
connection with any Financing Document or any borrowing hereunder;
(ii) the performance or observance of any of the covenants or
agreements of any Obligor under any Financing Document; (iii) the
satisfaction of any condition specified in Article III or X, except
receipt of items required to be delivered to the Agent; or (iv) the
validity, effectiveness or genuineness of any Financing Document or
any other instrument or writing furnished in connection therewith.
The Agent shall incur no liability by acting in reliance upon any
notice, consent, certificate, statement, or other writing (which
may be a bank wire, telex, facsimile copy or similar writing)
believed by it to be genuine or to be signed by the proper party or
parties.
SECTION 7.06. Indemnification. The Banks shall, ratably
in accordance with their respective Commitments, indemnify the
Agent, its affiliates and their respective directors, officers,
agents and employees (to the extent not reimbursed by any Obligor)
against any cost, expense (including reasonable counsel fees and
disbursements), claim, demand, action, loss or liability (except
such as result from such indemnitees' gross negligence or willful
misconduct) that such indemnitees may suffer or incur in connection
with the Financing Documents or any action taken or omitted by such
indemnitees thereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges
that it has, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it
has deemed appropriate, made its own credit analysis and decision
to enter into this Agreement. Each Bank also acknowledges that it
will, independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit
decisions in taking or not taking any action under the Financing
Documents.
SECTION 7.08. Agents' Fees. The Borrower shall pay
arrangement and agency fees to the Agent and each Co-Agent in the
amounts and on the dates agreed to prior to the date hereof by the
Borrower and the Agent or such Co-Agent, as the case may be.
SECTION 7.09. Successor Agent. The Agent may resign at
any time by giving notice thereof to the Banks and the Borrower.
Upon any such resignation, the Required Banks shall have the right,
with the consent of the Borrower (which shall not be unreasonably
withheld), to appoint a successor Agent. If no successor Agent
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shall have been so appointed by the Required Banks, and shall have
accepted such appointment, within 30 days after the retiring
Agent's giving of notice of resignation, then the retiring Agent
may, on behalf of the Banks, appoint a successor Agent, which shall
be a Bank or a commercial bank organized or licensed under the laws
of the United States of America or of any State thereof and having
a combined capital and surplus of at least $200,000,000. Upon the
acceptance of its appointment as Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article shall inure to
its benefit as to any actions taken or omitted to be taken by it
while it was Agent.
SECTION 7.10. Co-Agents Not Liable. Except as
contemplated by the definition of "Determining Banks", nothing in
the Financing Documents shall impose upon either Co-Agent, in such
capacity, any duties or responsibilities whatsoever. In its
capacity as a Determining Bank, each Co-Agent shall be entitled to
the benefits of the foregoing provisions of this Article VII to the
same extent as the Agent.
ARTICLE VIII
CHANGES IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair. If prior to the first day of any Interest
Period for any Euro-Dollar Borrowing or Money Market LIBOR
Borrowing:
(a) the Agent is advised by the Reference Banks that
deposits in dollars (in the applicable amounts) are not being
offered to the Reference Banks in the London interbank market
for such Interest Period, or
(b) in the case of a Euro-Dollar Borrowing, Banks having
50% or more of the aggregate amount of the Commitments advise
the Agent that the Adjusted London Interbank Offered Rate as
determined by the Agent will not adequately and fairly reflect
the cost to such Banks of funding their Euro-Dollar Loans for
such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and
the Banks, whereupon until the Agent notifies the Borrower that the
circumstances giving rise to such suspension no longer exist, the
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obligations of the Banks to make Euro-Dollar Loans or to convert
outstanding Domestic Loans into Euro-Dollar Loans shall be
suspended and each outstanding Euro-Dollar Loan shall be converted
into a Domestic Loan on the last day of the then current Interest
Period applicable thereto. Unless the Borrower notifies the Agent
at least two Domestic Business Days before the date of any Fixed
Rate Borrowing for which a Notice of Borrowing has previously been
given that it elects not to borrow on such date, (i) if such Fixed
Rate Borrowing is a Euro-Dollar Borrowing, such Borrowing shall
instead be made as a Domestic Borrowing and (ii) if such Fixed Rate
Borrowing is a Money Market LIBOR Borrowing, the Money Market LIBOR
Loans comprising such Borrowing shall bear interest for each day
from and including the first day to but excluding the last day of
the Interest Period applicable thereto at the Base Rate for such
day.
SECTION 8.02. Illegality. If, on or after the date of
this Agreement, the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or
regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof,
or compliance by any Bank (or its Euro-Dollar Lending Office) with
any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make
it unlawful or impossible for any Bank (or its Euro-Dollar Lending
Office) to make, maintain or fund its Euro-Dollar Loans and such
Bank shall so notify the Agent, the Agent shall forthwith give
notice thereof to the other Banks and the Borrower, whereupon until
such Bank notifies the Borrower and the Agent that the
circumstances giving rise to such suspension no longer exist, the
obligation of such Bank to make Euro-Dollar Loans or to convert
outstanding Domestic Loans into Euro-Dollar Loans shall be
suspended. Before giving any notice to the Agent pursuant to this
Section, such Bank shall designate a different Euro-Dollar Lending
Office if such designation will avoid the need for giving such
notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. If such notice is given, each Euro-
Dollar Loan of such Bank then outstanding shall be converted to a
Domestic Loan either (a) on the last day of the then current
Interest Period applicable to such Euro-Dollar Loan if such Bank
may lawfully continue to maintain and fund such Loan as a Euro-
Dollar Loan to such day or (b) immediately if such Bank shall
determine that it may not lawfully continue to maintain and fund
such Loan as a Euro-Dollar Loan to such day.
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<PAGE>
SECTION 8.03. Increased Cost and Reduced Return. (a)
If on or after (x) the date hereof, in the case of any Euro-Dollar
Loan or any obligation to make Euro-Dollar Loans or (y) the date of
the related Money Market Quote, in the case of any Money Market
Loan, the adoption of any applicable law, rule or regulation, or
any change in any applicable law, rule or regulation, or any change
in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank
(or its Applicable Lending Office) with any request or directive
(whether or not having the force of law) of any such authority,
central bank or comparable agency shall impose, modify or deem
applicable any reserve, special deposit, insurance assessment or
similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal
Reserve System but excluding with respect to any Euro-Dollar Loan
any such requirement included in an applicable Euro-Dollar Reserve
Percentage) against assets of, deposits with or for the account of,
or credit extended by, any Bank (or its Applicable Lending Office)
or shall impose on any Bank (or its Applicable Lending Office) or
the London interbank market any other condition affecting its Fixed
Rate Loans, its Note or its obligation to make Fixed Rate Loans,
and the result of any of the foregoing is to increase the cost to
such Bank (or its Applicable Lending Office) of making or
maintaining its Fixed Rate Loans, or to reduce the amount of any
sum received or receivable by such Bank (or its Applicable Lending
Office) under this Agreement or under its Note with respect
thereto, by an amount deemed by such Bank to be material, then,
within 15 days after demand by such Bank (with a copy to the
Agent), the Borrower shall pay to such Bank such additional amount
or amounts as will compensate such Bank for such increased cost or
reduction; provided that no Bank shall be entitled to compensation
under this Section 8.03 for any such increased cost or reduction
that is the result of the withholding or payment of any Taxes or
Other Taxes.
(b) If any Bank shall have determined that, on or after
the date hereof, the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change in any such
law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank
or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on capital of such
Bank (or its Parent) as a consequence of such Bank's obligations
hereunder to a level below that which such Bank (or its Parent)
could have achieved but for such adoption, change, request or
<PAGE>
<PAGE>
directive (taking into consideration its policies with respect to
capital adequacy) by an amount deemed by such Bank to be material,
then from time to time, within 15 days after demand by such Bank
(with a copy to the Agent), the Borrower shall pay to such Bank
such additional amount or amounts as will compensate such Bank (or
its Parent) for such reduction.
(c) Each Bank will promptly notify the Borrower and the
Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Bank to compensation pursuant
to this Section and will designate a different Applicable Lending
Office if such designation will avoid the need for, or reduce the
amount of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. A certificate of
any Bank claiming compensation under this Section and setting forth
the additional amount or amounts to be paid to it hereunder shall
be conclusive in the absence of manifest error. In determining
such amount, such Bank may use any reasonable averaging and
attribution methods.
SECTION 8.04. Domestic Loans Substituted for Affected
Euro-Dollar Loans. If (i) the obligation of any Bank to make or
maintain Euro-Dollar Loans has been suspended pursuant to Section
8.02 or (ii) any Bank has demanded compensation under Section 2.14
or 8.03(a) with respect to its Euro-Dollar Loans and the Borrower
shall, by at least five Euro-Dollar Business Days' prior notice to
such Bank through the Agent, have elected that the provisions of
this Section shall apply to such Bank, then, unless and until such
Bank notifies the Borrower that the circumstances giving rise to
such suspension or demand for compensation no longer apply:
(a) all Loans which would otherwise be made by such Bank
as (or continued as or converted into) Euro-Dollar Loans shall
instead be Domestic Loans (on which interest and principal
shall be payable contemporaneously with the related
Euro-Dollar Loans of the other Banks), and
(b) after each of its Euro-Dollar Loans has been repaid,
all payments of principal which would otherwise be applied to
repay such Euro-Dollar Loans shall be applied to repay its
Domestic Loans instead.
If such Bank notifies the Borrower that the circumstances giving
rise to such notice no longer apply, the principal amount of each
such Domestic Loan shall be converted into a Euro-Dollar Loan on
the first day of the next succeeding Interest Period applicable to
the related Euro-Dollar Loans of the other Banks.
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SECTION 8.05. Substitution of Bank. If any Bank (i) has
demanded or is entitled to receive compensation for increased costs
pursuant to Section 2.14 or 8.03 or (ii) has determined that the
making or continuation of any Euro-Dollar Rate Loan has become
unlawful or impossible pursuant to Section 8.02 and similar
compensation has not been demanded by, or a similar determination
has not been made by, all of the Banks, the Borrower shall have the
right to designate an Assignee which is not an Affiliate of the
Borrower to purchase for cash the outstanding Loans and Commitment
of such Bank and to assume all of such Bank's other rights and
obligations hereunder without recourse to or warranty by, or
expense to, such Bank, for a purchase price equal to the principal
amount of all of such Bank's outstanding Loans plus any accrued but
unpaid interest thereon and the accrued but unpaid commitment and
facility fees in respect of that Bank's Commitment hereunder plus
such amount, if any, as would be payable pursuant to Section 2.12
if the outstanding Loans of such Bank were prepaid in their
entirety on the date of consummation of such assignment and such
Bank shall effect the sale of such Loans and Commitment to the
designated Assignee on such terms.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. Unless otherwise specified
herein, all notices, requests and other communications to any party
hereunder shall be in writing (including bank wire, telex,
facsimile copy or similar writing) and shall be given to such
party: (x) in the case of the Borrower or the Agent, at its
address, facsimile number or telex number set forth on the
signature pages hereof, (y) in the case of any Co-Agent or Bank, at
its address, facsimile number or telex number set forth in its
Administrative Questionnaire or (z) in the case of any party, such
other address or telex or facsimile number as such party may
hereafter specify for the purpose by notice to the Agent and the
Borrower. Each such notice, request or other communication shall
be effective when received or when delivery thereof is refused.
SECTION 9.02. No Waiver. No failure or delay by the
Agent or any Bank in exercising any right, power or privilege under
any Financing Document shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies provided in the Financing
Documents shall be cumulative and not exclusive of any rights or
remedies provided by law.
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SECTION 9.03. Expenses; Indemnification. (a) The
Borrower shall pay on demand (i) all reasonable out-of-pocket
expenses of the Agent and the Co-Agents (including, without
limitation, fees and disbursements of Davis Polk & Wardwell,
special counsel for the Agent and the Co-Agents, and such local
counsel as may be retained by the Agent on behalf of the Banks and
the Agent) in connection with the preparation and administration of
the Financing Documents, any waiver, consent or amendment of any
provision thereof, or any Default or alleged Default thereunder,
and (ii) if any Event of Default occurs, all reasonable
out-of-pocket expenses incurred by the Agent or any Bank, including
fees and disbursements of counsel, in connection with such Event of
Default and collection and other enforcement proceedings resulting
therefrom.
(b) The Borrower shall indemnify the Agent and each
Bank, their respective affiliates and the respective directors,
officers, agents and employees of the foregoing (each an
"Indemnitee") and hold each Indemnitee harmless from and against
any and all liabilities, losses, damages, costs and expenses of any
kind (including, without limitation, the reasonable fees and
disbursements of counsel for any Indemnitee in connection with any
investigative, administrative or judicial proceeding, whether or
not such Indemnitee shall be designated a party thereto) which may
be incurred by any Indemnitee relating to or arising out of the
Financing Documents or any actual or proposed use of the proceeds
of the Loans hereunder; provided that no Indemnitee shall have the
right to be indemnified hereunder for its own gross negligence or
willful misconduct as determined by a court of competent
jurisdiction; provided further that no Indemnitee shall have the
right to be indemnified hereunder in connection with any
proceedings between it and another Indemnitee which does not relate
to the Borrower. The Borrower shall not be liable to any
Indemnitee for the cost of any settlement entered into without the
consent of the Borrower, such consent not to be unreasonably
withheld.
SECTION 9.04. Sharing of Set-offs. Each Bank agrees
that if it shall, by exercising any right of set-off or
counterclaim or otherwise, receive payment of a proportion of the
aggregate amount of principal and interest due with respect to its
Loans which is greater than the proportion received by any other
Bank in respect of the aggregate amount of principal and interest
due with respect to the Loans of such other Bank, the Bank
receiving such proportionately greater payment shall purchase such
participations in the Loans of the other Banks, and such other
adjustments shall be made, as may be required so that all such
payments of principal and interest with respect to the Loans of the
Banks shall be shared by the Banks pro rata; provided that nothing
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in this Section shall impair the right of any Bank to exercise any
right of set-off or counterclaim it may have and to apply the
amount subject to such exercise to the payment of indebtedness of
the Borrower or a Guarantor other than indebtedness under the
Financing Documents. The Borrower and each Guarantor agree, to the
fullest extent they may effectively do so under applicable law,
that any holder of a participation in a Loan, whether or not
acquired pursuant to the foregoing arrangements, may exercise
rights of set-off or counterclaim and other rights with respect to
such participation as fully as if such holder of a participation
were a direct creditor of the Borrower or such Guarantor, as the
case may be, in the amount of such participation.
SECTION 9.05. Amendments and Waivers. Any provision of
this Agreement or the Notes may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed by the
Borrower and the Required Banks (and, if the rights or duties of
the Agent or either Co-Agent are affected thereby, by it); provided
that no such amendment or waiver shall, unless signed by all the
Banks, (i) increase or decrease the Commitment of any Bank (except
for a ratable decrease in the Commitments of all Banks) or subject
any Bank to any additional obligation, (ii) reduce the principal of
or rate of interest on any Loan or any fees hereunder, (iii)
postpone the date fixed for any payment of principal of or interest
on any Loan or any fees hereunder or for termination of any
Commitment, (iv) amend Section 2.09(c) or (v) change the percentage
of the Commitments or of the aggregate unpaid principal amount of
the Notes, or the number of Banks, which shall be required for the
Banks or any of them to take any action under this Section or any
other provision of this Agreement.
SECTION 9.06. Successors and Assigns. (a) The
provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns, except that the Borrower may not assign or otherwise
transfer any of its rights under this Agreement without the prior
written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks
or other institutions (each a "Participant") participating
interests in its Commitment or any or all of its Loans. In the
event of any such grant by a Bank of a participating interest to a
Participant, whether or not upon notice to the Obligors and the
Agent, such Bank shall remain responsible for the performance of
its obligations hereunder, and the Obligors and the Agent shall
continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under this Agreement. Any
agreement pursuant to which any Bank may grant such a participating
interest shall provide that such Bank shall retain the sole right
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and responsibility to enforce the obligations of the Borrower
hereunder including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this
Agreement; provided that such participation agreement may provide
that such Bank will not agree to any modification, amendment or
waiver of this Agreement described in clause (i), (ii), (iii) or
(iv) of Section 9.05 without the consent of the Participant. The
Obligors agree that each Participant shall, to the extent provided
in its participation agreement and subject to subsection (e) below,
be entitled to the benefits of Article VIII with respect to its
participating interest. An assignment or other transfer which is
not permitted by subsection (c) or (d) below shall be given effect
for purposes of this Agreement only to the extent of a
participating interest granted in accordance with this subsection
(b).
(c) Any Bank may at any time assign to one or more banks
or other institutions (each an "Assignee") all, or a ratable
portion (equivalent to an initial Commitment of not less than
$10,000,000 in the case of any assignment to an Assignee that is
not an affiliate of the transferor Bank) of all, of its rights and
obligations under this Agreement and the Notes, and such Assignee
shall assume such rights and obligations, pursuant to an Assignment
and Assumption Agreement substantially in the form of Exhibit H (an
"Assignment and Assumption"), executed by such Assignee and such
transferor Bank (and, in the case of an Assignee which is not then
a Bank or an affiliate of a Bank, with the subscribed consent of
the Borrower and the Agent, which shall not be unreasonably
withheld) and delivered to the Agent for its acceptance and
recording in the Register; provided that such assignment may, but
need not, include rights of the transferor Bank in respect of
outstanding Money Market Loans. Upon such execution, delivery,
acceptance and recordation, from and after the effective date
determined pursuant to such Assignment and Assumption, such
Assignee shall be a Bank party to this Agreement and shall have all
the rights and obligations of a Bank with a Commitment as set forth
in such Assignment and Assumption, and the transferor Bank shall be
released from its obligations hereunder to a corresponding extent,
and no further consent or action by any party shall be required.
Upon the consummation of any assignment pursuant to this subsection
(c), the transferor Bank, the Agent and the Borrower shall make
appropriate arrangements so that, if required, a new Note is issued
to the Assignee. If the Assignee is not incorporated under the
laws of the United States of America or a state thereof, it shall
deliver to the Borrower and the Agent certification as to exemption
from deduction or withholding of any United States federal income
taxes in accordance with Section 2.14.
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(d) Any Bank may at any time assign all or any portion
of its rights under this Agreement and its Note to a Federal
Reserve Bank. No such assignment shall release the transferor Bank
from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any
Bank's rights (which for purposes of this Section 9.06(e) shall
include any new Applicable Lending Office designated by such Bank
after the date hereof) shall be entitled to receive any greater
payment under Section 8.03 or 2.14 than such Bank would have been
entitled to receive with respect to the rights transferred, unless
such transfer is made with the Borrower's prior written consent or
by reason of the provisions of Section 8.02 or 8.03 requiring such
Bank to designate a different Applicable Lending Office under
certain circumstances or at a time when the circumstances giving
rise to such greater payment did not exist.
(f) The Agent (acting as agent of the Borrower for this
purpose only) shall maintain at its address referred to in Section
9.01 a copy of each Assignment and Assumption delivered to it and
a register (the "Register") for the recordation of the names and
addresses of the Banks and the Commitment of, and principal amount
of the Loans owing to, each Bank from time to time. The Register
shall be available for inspection and copying by the Borrower or
any Bank at any reasonable time and from time to time upon
reasonable prior notice. Upon its receipt of an Assignment and
Assumption executed by a transferor Bank and an Assignee (and, in
the case of an Assignee that is not then a Bank or an affiliate of
a Bank, by the Borrower and the Agent) together with payment by
such transferor Bank to the Agent of a registration and processing
fee of $3,000, the Agent shall (i) promptly accept such Assignment
and Assumption and (ii) on the effective date determined pursuant
thereto record the information contained therein in the Register
and give notice of such acceptance and recordation of the
transferor Bank, its Assignee and the Borrower.
SECTION 9.07. Collateral. Each of the Banks represents
to the Agent and each of the other Banks that it in good faith is
not relying upon any "margin stock" (as defined in Regulation U) as
collateral in the extension or maintenance of the credit provided
for in this Agreement.
SECTION 9.08. Governing Law; Submission to Jurisdiction.
This Agreement and each Note shall be governed by and construed in
accordance with the laws of the State of New York. The Obligors
hereby submit to the nonexclusive jurisdiction of the United States
District Court for the Southern District of New York and of any New
York State court sitting in New York City for purposes of all legal
proceedings arising out of or relating to this Agreement or the
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<PAGE>
transactions contemplated hereby. The Obligors irrevocably waive,
to the fullest extent permitted by law, any objection which it may
now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an
inconvenient forum.
SECTION 9.09. Counterparts; Integration. This Agreement
may be signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement constitutes
the entire agreement and understanding among the parties hereto and
supersedes any and all prior agreements and understandings, oral or
written, relating to the subject matter hereof. Should any part of
this Agreement for any reason be declared invalid, such decision
shall not affect the validity of any remaining portion, which
remaining portion shall remain in force and effect as if this
Agreement had been executed with the invalid portion thereof
eliminated and it is hereby declared the intention of the parties
hereto that they would have executed the remaining portion of this
Agreement without including therein any such part, parts, or
portion which may, for any reason, be hereafter declared invalid.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH OF THE
OBLIGORS, THE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED
TO ENTER INTO THIS AGREEMENT AND THE OTHER FINANCING DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.10.
SECTION 9.11. Confidentiality. Each Bank agrees to keep
any information delivered or made available by the Obligors to it
confidential from anyone other than persons employed or retained by
such Bank who are expected to become engaged in evaluating,
approving, structuring or administering the Loans; provided that
nothing herein shall prevent any Bank from disclosing such
information (a) to any other Bank or to the Agent, (b) to any other
person if reasonably incidental to the administration of the Loans
or required by applicable law or regulation, (c) upon the subpoena
or order of any court or administrative agency, (d) upon the
request or demand of any regulatory agency or authority, (e) which
had been publicly disclosed other than as a result of a disclosure
by the Agent or any Bank prohibited by this Agreement, (f) in
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<PAGE>
connection with any litigation to which the Agent, any Bank or its
subsidiaries or Parent may be a party, (g) to the extent necessary
in connection with the exercise of any remedy hereunder, (h) to
such Bank's or Agent's legal counsel and independent auditors and
(i) subject to a confidentiality agreement containing provisions
substantially similar to those contained in this Section made for
the benefit of the Borrower by any actual or proposed Participant
or Assignee, to such actual or proposed Participant or Assignee.
ARTICLE X
EFFECTIVENESS
SECTION 10.01. Conditions to Effectiveness. This Amended
Agreement will become effective upon the satisfaction of the
following conditions:
(a) receipt by the Agent of duly executed counterparts
of this Amended Agreement signed by all of the parties hereto
(or, in the case of any party as to which the executed
counterpart shall not have been received, receipt by the Agent
in form satisfactory to it of telegraphic, telex, facsimile
transmission or other written confirmation from such party of
execution of a counterpart of this Amended Agreement by such
party);
(b) arrangements satisfactory to the Agent shall have
been made to repay the Loans made by the Banks under the
Original Agreement with the proceeds of the Loans to be made
on the Effective Date by the Banks under this Amended
Agreement pursuant to Section 10.02(b);
(c) receipt by the Agent for the account of each Bank of
a duly executed Note, each dated the Effective Date, complying
with the provisions of Section 2.05;
(d) receipt by the Agent of an opinion of (i) Cahill
Gordon & Reindel, special counsel for the Obligors,
substantially to the effect set forth in Exhibit B-1 hereto,
and (ii) the General Counsel of the Borrower, substantially to
the effect set forth in Exhibit B-2 hereto;
(e) receipt by the Agent of an opinion of Davis Polk &
Wardwell special counsel for the Agent and the Co-Agents,
substantially to the effect set forth in Exhibit C hereto;
(f) receipt by the Agent of a certificate signed by a
Financial Officer of the Borrower to the effect set forth in
clauses (c) and (d) of Section 3.01;
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<PAGE>
(g) receipt by the Agent of duly executed counterparts
of the Subsidiary Guaranty Agreement signed by all of the
parties listed on the signature pages thereof (or, in the case
of any party as to which the executed counterpart shall not
have been received, receipt by the Agent in form satisfactory
to it of telegraphic, telex, facsimile transmission or other
written confirmation from such party of execution of a
counterpart of the Subsidiary Guaranty Agreement by such
party); and
(h) receipt by the Agent of all documents it may
reasonably request relating to the existence of each Obligor,
the corporate authority for and validity of the Financing
Documents and any other matters relevant hereto, all in form
and substance satisfactory to the Agent.
The documents and opinions referred to in this Section 10.01 shall
be delivered to the Agent no later than the Effective Date. The
certificate and opinions referred to in subsection (d), (e) and (f)
above shall be dated the Effective Date.
SECTION 10.02. Consequences of Effectiveness;
Transitional Provisions. (a) On the Effective Date, the Original
Agreement will be automatically amended and restated in its
entirety to read as set forth herein. On and after the Effective
Date, the rights and obligations of the parties hereto shall be
governed by this Amended Agreement; provided that rights and
obligations of the parties to the Original Agreement with respect
to the period prior to the Effective Date shall continue to be
governed by the provisions of the Original Agreement. The Agent
will promptly notify each of the other parties hereto of the
effectiveness of this Amended Agreement.
(b) Concurrently with the effectiveness of this Amended
Agreement, the Borrower shall prepay the Loans made by the Banks
under the Original Agreement in full (including accrued and unpaid
interest thereon to, but excluding, the Effective Date) with the
proceeds of Loans made by the Banks under this Amended Agreement.
Each Bank that was a party to the Original Agreement will return to
the Agent the Note issued to such Bank under the Original Agreement
marked "cancelled" upon the repayment in full of the Loans made by
such Bank under the Original Agreement, whereupon the Agent shall
return such cancelled Notes to the Borrower.
(c) On the Effective Date any Bank that was a party to
the Original Agreement whose Commitment set forth on the signature
pages of this Amended Agreement is zero shall cease to be a Bank
party to this Agreement, and the Borrower shall on the Effective
Date pay to the Agent for the account of each such Bank all accrued
commitment fees under the Original Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amended Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.
THE LOUISIANA LAND AND
EXPLORATION COMPANY
By /s/ Louis A. Raspino
Title: Treasurer
909 Poydras Street
New Orleans, LA 70112
Attention: Louis Raspino
Facsimile number: 504-566-6584
Commitments
$35,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Philip W. McNeal
Title: Vice President
$30,000,000 TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
By /s/ Robert Mertensotto
Title: Senior Vice
President
$30,000,000 NATIONSBANK OF TEXAS, N.A.
By /s/ Marion B. Leman
Title: Assistant Vice
President
<PAGE>
<PAGE>
Commitments
-0- J.P. MORGAN DELAWARE
By /s/ Philip S. Detjens
Title: Vice President
$15,250,000 ABN AMRO BANK, N.V.
By /s/ L. David Wright
Title: Vice President
By /s/ Charles Randall
Title: Group Vice President
$15,250,000 BANK OF MONTREAL
By /s/ Robert L. Roberts
Title: Director, U.S. Corporate
Banking
$15,250,000 THE BANK OF NEW YORK
By /s/ Raymond J. Palmer
Title: Vice President
$15,250,000 THE BANK OF NOVA SCOTIA
By /s/ A.S. Norsworthy
Title: Assistant Agent
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<PAGE>
Commitments
$15,250,000 BANQUE PARIBAS HOUSTON AGENCY
By /s/ Brian Malone
Title: Vice President
By /s/ Patrick J. Milon
Title: SVP - Deputy General
Manager
$15,250,000 BARCLAYS BANK PLC
By /s/ Richard B. Williams
Title: Director
$15,250,000 CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By /s/ Xavier Ratouis
Title: Authorized Signature
$15,250,000 THE FIRST NATIONAL BANK OF BOSTON
By /s/ Michael Kane
Title: Managing Director
$15,250,000 THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Susan Hodge
Title: Vice President
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<PAGE>
Commitments
$15,250,000 FIRST NATIONAL BANK OF COMMERCE
By /s/ Cory B. Armand
Title: Assistant Vice President
$15,250,000 HIBERNIA NATIONAL BANK
By /s/ Lindsay Job
Title: Vice President
$15,250,000 THE INDUSTRIAL BANK OF JAPAN LIMITED
NEW YORK BRANCH
By /s/ Robert W. Ramage, Jr.
Title: Senior Vice President
$15,250,000 MEESPIERSON N.V.
By /s/ K. Louman
Title: Vice President
$15,250,000 MELLON BANK, N.A.
By /s/ A.J. Sabatelle
Title: Vice President
$15,250,000 MIDLAND BANK PLC
NEW YORK BRANCH
By /s/ Gregory B. Jansen
Title: Director
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<PAGE>
Commitments
$15,250,000 NBD BANK, N.A.
By /s/ Douglas R. Liftman
Title: Vice President
$15,250,000 ROYAL BANK OF CANADA
By /s/ Gil J. Benard
Title: Senior Manager
$15,250,000 SOCIETE GENERALE, SOUTHWEST AGENCY
By /s/ James R. Shelton
Title: Vice President
$15,250,000 TORONTO-DOMINION (TEXAS), INC.
By /s/ Warren Finlay
Title: Vice President
$25,000,000 UNION BANK OF SWITZERLAND,
HOUSTON AGENCY
By /s/ Dan O. Boyle
Title: Vice President
By /s/ Evans Swann
Title: Vice President
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<PAGE>
Commitments
$25,000,000 WACHOVIA BANK OF GEORGIA, N.A.
By /s/ Terry R. Akins
Title: Senior Vice President
$15,250,000 WHITNEY NATIONAL BANK
By /s/ Robert L. Browning
Title: Senior Vice President
_________________
Total Commitments
$450,000,000
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ Philip W. McNeal
Title: Vice President
60 Wall Street
New York, NY 10260-0060
Attention: Nancy Dunbar
Telex number: 177615
Facsimile number: 212-648-5023
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Co-Agent
By /s/ Robert Mertensotto
Title: Senior Vice
President
NATIONSBANK OF TEXAS, N.A.,
as Co-Agent
By /s/ Marion B. Leman
Title: Assistant Vice
President
<PAGE>
<PAGE>
SCHEDULE I
PRICING SCHEDULE
The "Applicable Margin", "Commitment Fee Rate" and
"Facility Fee Rate" for any day are the respective percentages set
forth below in the applicable row under the column corresponding to
the Status that exists on such day:
Level Level Level Level
Status I II III IV
Applicable Margin
If the Applicable
Ratio is less than
25% 0.325% 0.50% 0.55% 0.60%
If the Applicable
Ratio equals or
exceeds 25% 0.325% 0.40% 0.45% 0.60%
Commitment Fee Rate
If the Applicable
Ratio is less than
25% 0.05% 0.10% 0.10% 0.05%
If the Applicable
Ratio equals or
exceeds 25% 0.05% 0.05% 0.05% 0.05%
Facility Fee Rate 0.125% 0.15% 0.20% 0.25%
For purposes of this Schedule, the following terms have
the following meanings:
"Applicable Ratio" means, with respect to each day during
any Quarter, the ratio of (i) Consolidated Cash Flow for the period
of four consecutive Quarters most recently ended prior to such date
(or, if such period of four consecutive Quarters begins prior to
January 1, 1994, Consolidated Cash Flow for such number of
consecutive Quarters as shall have commenced on or after January
1, 1994 and ended prior to such date, annualized on a simple
arithmetic basis) to (ii) Consolidated Debt as at the last day of
the Quarter most recently ended prior to such date. Upon
consummation by the Borrower of any material acquisition, the Banks
shall give good faith consideration to a request to determine the
Applicable Ratio on a pro forma basis and, if the Required Banks at
the time so agree, the Applicable Ratio shall be so determined.
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"Level I Status" exists at any date if, at such date, the
Borrower's long-term debt is rated BBB+ or higher by S&P and Baa1
or higher by Moody's.
"Level II Status" exists at any date if, at such date,
(i) the Borrower's long-term debt is rated (x) BBB or higher by S&P
and Baa3 or higher by Moody's or (y) Baa2 or higher by Moody's and
BBB- or higher by S&P and (ii) Level I Status does not exist.
"Level III Status" exists at any date if, at such date,
the Borrower's long-term debt is rated BBB- by S&P and Baa3 by
Moody's.
"Level IV Status" exists at any date if, at such date, no
other Status exists.
"Quarter" means each period of three consecutive calendar
months consisting of (i) January, February and March; (ii) April,
May and June; (iii) July, August and September and (iv) October,
November and December.
"Status" refers to the determination of which of Level I
Status, Level II Status, Level III Status or Level IV Status exists
at any date.
The credit ratings to be utilized for purposes of this Schedule are
those assigned to the senior unsecured long-term debt securities of
the Borrower without third-party credit enhancement, and any rating
assigned to any other debt security of the Borrower shall be
disregarded. The rating in effect at any date is that in effect at
the close of business on such date.
The Applicable Ratio for each day during each Quarter shall be
determined initially on the basis of an estimate which shall be
furnished by the Borrower to the Agent not later than the earlier
of (i) the sixtieth day of such Quarter and (ii) the tenth day
prior to the first day (if any) during such Quarter on which
interest is payable in respect of any Euro-Dollar Loan. If when
finally determined the actual Applicable Ratio differs from the
estimate, appropriate adjustments shall be made as determined by
the Agent. Any estimate furnished by the Borrower pursuant to this
paragraph is solely for administrative convenience and the Borrower
shall incur no liability for any inaccurate estimate submitted in
good faith.<PAGE>
<PAGE>
EXHIBIT A
NOTE
New York, New York
, 19
For value received, The Louisiana Land and Exploration
Company, a Maryland corporation (the "Borrower"), promises to pay
to
(the "Bank"), for the account of its Applicable Lending Office, the
unpaid principal amount of each Loan made by the Bank to the
Borrower pursuant to the Credit Agreement referred to below on the
maturity date provided for in the Credit Agreement. The Borrower
promises to pay interest on the unpaid principal amount of each
such Loan on the dates and at the rate or rates provided for in the
Credit Agreement. All such payments of principal and interest
shall be made in lawful money of the United States in Federal or
other immediately available funds at the office of Morgan Guaranty
Trust Company of New York, 60 Wall Street, New York, New York.
All Loans made by the Bank, the respective types and, in
the case of Money Market Loans, maturities thereof and all
repayments of the principal thereof shall be recorded by the Bank
and, if the Bank so elects in connection with any transfer or
enforcement hereof, appropriate notations to evidence the foregoing
information with respect to each such Loan then outstanding may be
endorsed by the Bank on the schedule attached hereto, or on a
continuation of such schedule attached to and made a part hereof;
provided that the failure of the Bank to make any such recordation
or endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the Amended
and Restated Credit Agreement dated as of August 19, 1994 among the
Borrower, the banks listed on the signature pages thereof, Morgan
Guaranty Trust Company of New York, as Agent and Texas Commerce
Bank National Association and NationsBank of Texas, N.A., as Co-
Agents (as the same may be amended from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used herein
with the same meanings. Reference is made to the Credit Agreement
for provisions for the prepayment hereof and the acceleration of
the maturity hereof.
THE LOUISIANA LAND AND
EXPLORATION COMPANY
By________________________
Title:<PAGE>
<PAGE>
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
__________________________________________________________________
Amount of
Amount of Type of Maturity Principal Notation
Date Loan Loan of Loan Repaid Made By
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
<PAGE>
<PAGE>
EXHIBIT B-1
August 19, 1994
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, NY 10260
Dear Sirs:
We have acted as counsel for the Louisiana Land and
Exploration Company (the "Borrower") in connection with the Amended
and Restated Credit Agreement (the "Credit Agreement") dated as of
August 19, 1994 among the Borrower, the banks listed on the
signature pages thereof, Morgan Guaranty Trust Company of New York,
as Agent and Texas Commerce Bank National Association and
NationsBank of Texas, N.A., as Co-Agents. Terms defined in the
Credit Agreement are used herein as therein defined. This opinion
is being rendered to you at the request of our client pursuant to
the Credit Agreement.
We have examined originals or copies, certified or
otherwise identified to our satisfaction, of such documents,
corporate records, certificates of public officials and other
instruments and have conducted such other investigations of fact
and law as we have deemed necessary or advisable for purposes of
this opinion. We have assumed for purposes of our opinions set
forth below that the execution and delivery of the Credit Agreement
by the Agent and each of the Banks has been duly authorized by the
Agent and the Banks. As to questions of fact relating to the
Borrower material to such opinions, we have relied upon
representations of appropriate officers of the Borrower.
Upon the basis of the foregoing, we are of the opinion
that:
1. The Borrower is a corporation duly incorporated,
validly existing and in good standing under the laws of Maryland,
and has all corporate powers required to carry on its business as
now conducted.
2. The execution, delivery and performance by the
Borrower of the Credit Agreement, the Notes and the Subsidiary
Guaranty Agreement are within the Borrower's corporate powers, have
been duly authorized by all necessary corporate action, do not
contravene, or constitute a default under, the articles of
incorporation or by-laws of the Borrower, and require no action by
<PAGE>
<PAGE>
or in respect of, or filing with, any governmental body, agency or
official and do not contravene, or constitute a default under, any
provision of applicable law or regulation or, to our knowledge, of
any agreement or instrument evidencing or governing Debt of the
Borrower or any Subsidiary or any other material agreement,
judgment, injunction, order, decree or other instrument known to us
and binding upon the Borrower or result in the creation or
imposition of any Lien on any asset of the Borrower.
3. Each of the Credit Agreement and the Subsidiary
Guaranty Agreement constitutes a valid and binding agreement of the
Borrower and the Notes constitute valid and binding obligations of
the Borrower enforceable in accordance with their respective terms,
in each case except (i) as limited by bankruptcy, insolvency,
moratorium, fraudulent conveyance or transfer and similar laws
affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be
limited by general equitable principles.
4. Each of LL&E (U.K.) Inc., LL&E Netherlands, Inc. and
Inexco Oil Company (collectively, the "Guarantors") is a
corporation validly existing and in good standing under the laws of
its jurisdiction of incorporation, and has all corporate powers
required to carry on its business as now conducted.
5. The execution, delivery and performance by each
Guarantor of the Subsidiary Guaranty Agreement are within such
Guarantors' corporate powers and have been duly authorized by all
necessary corporate action of such Guarantor.
6. The Subsidiary Guaranty Agreement constitutes a
valid and binding agreement of each of the Guarantors enforceable
in accordance with its terms, except (i) as limited by bankruptcy,
insolvency, moratorium, fraudulent conveyance or transfer and
similar laws affecting creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may be
limited by general equitable principles.
We are qualified to practice in the State of New York and
do not purport to be experts on any laws other than the laws of the
United States, the State of New York, the Corporations and
Associations Law of the State of Maryland, and the General
Corporation Law of the State of Delaware. We have made no
independent investigation of the laws of any other jurisdiction
and, accordingly, this opinion is rendered only with respect to the
laws of such jurisdictions. In giving this opinion, we express no
opinion as to the effect (if any) of any law of any jurisdiction
(except the State of New York) in which any Bank is located which
limits the rate of interest that such Bank may charge or collect.
The opinions expressed herein are solely for the benefit
of the Banks and the Agent and may not be relied upon by any other
persons.
Very truly yours,<PAGE>
<PAGE>
EXHIBIT B-2
August 19, 1994
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, NY 10260
Re: Opinion of General Counsel of the Borrower
Dear Sirs:
I am General Counsel of The Louisiana Land and
Exploration Company (the "Borrower") and have acted as such in
connection with the Amended and Restated Credit Agreement (the
"Credit Agreement") dated as of August 19, 1994, among the
Borrower, the banks listed on the signature pages thereof, Morgan
Guaranty Trust Company of New York, as Agent, and Texas Commerce
Bank National Association and NationsBank of Texas, N.A., as Co-
Agents. Terms defined in the Credit Agreement are used herein as
therein defined. This opinion is being rendered to you at the
request of the Borrower pursuant to Section 10.01(d) of the Credit
Agreement.
I, or attorneys acting under my supervision, have
examined originals or copies, certified or otherwise identified to
our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have
conducted such other investigations of fact and law as I have
deemed necessary or advisable for purposes of this opinion. I have
assumed for purposes of our opinions set forth below that the
execution and delivery of the Credit Agreement by the Agent and
each of the Banks has been duly authorized by the Agent and the
Banks. As to questions of fact relating to the Borrower material
to such opinions, we have relied upon representations of
appropriate officers of the Borrower.
Upon the Basis of the foregoing, I am of the opinion
that:
1. The Borrower has all material governmental licenses,
authorizations, consents and approvals required to carry on its
business as now conducted.
<PAGE>
<PAGE>
2. Except as set forth in the Borrower's Annual Report
on Form 10-K for the year ended December 31, 1993, there is no
action, suit or proceeding pending against, or to the best of my
knowledge threatened against, the Borrower or any of its
Subsidiaries before any court or arbitrator or any governmental
body, agency or official, in which an adverse decision could
reasonably be expected which could have a Material Adverse Effect
or which, to my knowledge, in any manner draws into question of the
validity of the Credit Agreement, the Subsidiary Guaranty Agreement
or the Notes.
3. The execution, delivery and performance by each of
LL&E (U.K.) Inc., LL&E Netherlands, Inc. and Inexco Oil Company
(collectively, the "Guarantors") of the Subsidiary Guaranty
Agreement do not contravene or constitute a default under the
certificate of incorporation or by-laws of such Guarantors, and
require no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene, or
constitute a default under any provision of applicable law or
regulation or of any material agreement, judgment, injunction,
order, decree or other instrument known to me and binding upon such
Guarantor or result in the creation or imposition of any Lien on
any asset of such Guarantor.
I am qualified to practice in the State of Louisiana and
do not purport to be an expert on any laws other than the laws of
the United States and the State of Louisiana, and this opinion is
rendered only with respect to such laws. I have made no
independent investigation of the laws of any other jurisdiction.
The opinions expressed herein are solely for the benefits
of the Banks and the Agent and may not be relied upon by any other
persons.
Very truly yours,
<PAGE>
<PAGE>
EXHIBIT C
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the Amended
and Restated Credit Agreement (the "Credit Agreement") dated as of
August 19, 1994 among The Louisiana Land and Exploration Company,
a Maryland corporation (the "Borrower"), the banks listed on the
signature pages thereof (the "Banks"), Morgan Guaranty Trust
Company of New York, as Agent and Texas Commerce Bank National
Association and NationsBank of Texas, N.A., as Co-Agents (the "Co-
Agents"), and have acted as special counsel for the Agent for the
purpose of rendering this opinion pursuant to Section 10.01(e) of
the Credit Agreement. Terms defined in the Credit Agreement are
used herein as therein defined.
We have examined originals or copies, certified or
otherwise identified to our satisfaction, of such documents,
corporate records, certificates of public officials and other
instruments and have conducted such other investigations of fact
and law as we have deemed necessary or advisable for purposes of
this opinion.
Upon the basis of the foregoing, and assuming the due
authorization, execution and delivery of the Credit Agreement, the
Subsidiary Guaranty Agreement and each of the Notes by or on behalf
of the Borrower, we are of the opinion that each of the Credit
Agreement and the Subsidiary Guaranty Agreement constitutes a valid
and binding agreement of the Borrower and the Notes constitute
valid and binding obligations of the Borrower.
<PAGE>
<PAGE>
We are members of the Bar of the State of New York and
the foregoing opinion is limited to the laws of the State of New
York and the federal laws of the United States of America. In
giving the foregoing opinion, we express no opinion as to the
effect (if any) of any law of any jurisdiction (except the State of
New York) in which any Bank is located which limits the rate of
interest that such Bank may charge or collect.
This opinion is rendered solely to you in connection with
the above matter. This opinion may not be relied upon by you for
any other purpose or relied upon by any other person without our
prior written consent.
Very truly yours,
<PAGE>
<PAGE>
EXHIBIT D
AMENDED AND RESTATED
SUBSIDIARY GUARANTY AGREEMENT
dated as of
August 19, 1994
among
The Louisiana Land and Exploration Company
The Guarantors Referred to Herein
and
Morgan Guaranty Trust Company of New York,
as Agent
<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.01 Definitions ..................................... 2
ARTICLE II
GUARANTIES
2.01 The Guaranties ................................. 3
2.02 Guaranties Unconditional ....................... 3
2.03 Limit of Liability ............................. 4
2.04 Discharge; Reinstatement in
Certain Circumstances ........................ 4
2.05 Waiver ......................................... 5
2.06 Subrogation .................................... 5
2.07 Stay of Acceleration ........................... 5
ARTICLE III
COVENANT OF THE BORROWER
3.01 Additional Guarantors .......................... 5
ARTICLE IV
MISCELLANEOUS
4.01 Notices ........................................ 6
4.02 No Waiver ...................................... 6
4.03 Amendments and Waivers ......................... 6
4.04 Governing Law; Submission to
Jurisdiction; Waiver of a
Jury Trial ................................... 6
4.05 Successors and Assigns ......................... 7
4.06 Counterparts; Effectiveness .................... 7
* The Table of Contents is not a part of this Agreement.
<PAGE>
<PAGE>
AMENDED AND RESTATED
SUBSIDIARY GUARANTY AGREEMENT
AGREEMENT dated as of August 19, 1994 among The Louisiana
Land and Exploration Company, a Maryland corporation (the
"Borrower"), each of the Guarantors listed on the signature pages
hereof under the caption "Guarantors" and each Person that shall,
at any time after the date hereof, become a "Guarantor" hereunder
(collectively, the "Guarantors") and Morgan Guaranty Trust Company
of New York, as Agent.
WHEREAS, the Borrower has entered into an Amended and
Restated Credit Agreement (the "Original Credit Agreement") dated
as of September 22, 1993 among the Borrower, the banks listed on
the signature pages thereof, Morgan Guaranty Trust Company of New
York, as Agent, and Texas Commerce Bank National Association and
NationsBank of Texas, N.A., as Co-Agents, pursuant to which the
Borrower was entitled, subject to certain conditions, to borrow up
to $790,000,000;
WHEREAS, in conjunction with the transactions
contemplated by the Credit Agreement and in consideration of the
financial and other support that the Borrower has provided, and
such financial and other support as the Borrower may in the future
provide, to the Guarantors, and in order to induce the Banks and
the Agent to enter into the Credit Agreement and to make Loans
thereunder, the Guarantors, the Borrower and the Agent entered into
a Subsidiary Guaranty Agreement (the "Original Subsidiary
Guaranty") dated as of September 22, 1993;
WHEREAS, the parties thereto desire to amend and restate
the Original Credit Agreement to make certain changes that are
mutually satisfactory to the parties thereto (as so amended and
restated, the "Amended and Restated Credit Agreement" and as so
amended and restated and as further amended from time to time, the
"Credit Agreement") and, concurrently with such amendment and
restatement the parties hereto desire to amend the Original
Subsidiary Guaranty as herein provided; and
WHEREAS, upon satisfaction of the conditions set forth in
Section 4.06 hereof, the Original Subsidiary Guaranty will be
automatically amended and restated to read in full as set forth
herein;
NOW, THEREFORE, in consideration of the premises and
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as
follows:
<PAGE>
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Terms defined in the Credit
Agreement and not otherwise defined herein are used herein as
therein defined. In addition the following terms, as used herein,
have the following meanings:
"Agreement" means the Original Subsidiary Guaranty, as
amended by this Amended Agreement and as the same may be further
amended from time to time in accordance with the terms hereof.
"Amended Agreement" means this Amended and Restated
Subsidiary Guaranty Agreement dated as of August 19, 1994 among the
Borrower, the Guarantors listed in the signature pages hereof and
the Agent.
"Guarantied Obligations" means (i) all obligations of the
Borrower in respect of principal of and interest on the Loans and
the Notes, (ii) all other amounts payable by the Borrower under the
Credit Agreement or the Notes and (iii) all renewals or extensions
of the foregoing, in each case whether now outstanding or hereafter
arising. The Guarantied Obligations shall include, without
limitation, any interest, costs, fees and expenses which accrue on
or with respect to any of the foregoing, whether before or after
the commencement of any case, proceeding or other action relating
to the bankruptcy, insolvency or reorganization of any one or more
than one of the Borrower and the Guarantors, and any such interest,
costs, fees and expenses that would have accrued thereon or with
respect thereto but for the commencement of such case, proceeding
or other action.
"Material Subsidiary" means (i) each of LL&E (U.K.) Inc.,
LL&E Netherlands, Inc. and Inexco Oil Company, (ii) each Subsidiary
of the Borrower the assets of which include Petroleum Properties
having aggregate Lending Values in excess of 3% of the Debt Limit
that the Required Banks have by notice to the Borrower designated
as a "Material Subsidiary" for purposes hereof and (iii) all direct
or indirect successors in interest to any of the entities described
in clauses (i) and (ii) of this definition (including, without
limitation, by way of merger or consolidation with, or acquisition
of all or a substantial part of the assets of, any such entity);
provided that, if and for so long as Petroleum Properties owned by
the Borrower and the Guarantors have an aggregate Lending Value in
excess of 90% of the Debt Limit, no Subsidiary that is organized
under the laws of any jurisdiction other than the United States or
any State thereof (a "Foreign Subsidiary") shall be considered a
"Material Subsidiary" for purposes hereof pursuant to clause (iii)
of this definition, nor will the Required Banks be entitled to
<PAGE>
<PAGE>
designate a Foreign Subsidiary as a Material Subsidiary as
contemplated by clause (ii) of this definition; provided, further,
that notwithstanding the foregoing, any Subsidiary having an
interest in Proved Reserves purchased as part of the T-Block
Acquisition (as defined in the Original Credit Agreement) shall be
a Material Subsidiary.
"Original Subsidiary Guaranty" has the meaning set forth
in the recitals to this Amended Agreement.
ARTICLE II
GUARANTIES
SECTION 2.01. The Guaranties. Subject to Section 2.03,
the Guarantors hereby jointly, severally, unconditionally and
irrevocably guaranty to the Banks and the Agent and to each of
them, the due and punctual payment of all Guarantied Obligations as
and when the same shall become due and payable, whether at
maturity, by declaration or otherwise, according to the terms
thereof. In case of failure by the Borrower punctually to pay the
indebtedness guarantied hereby, the Guarantors, subject to Section
2.03, hereby jointly, severally and unconditionally agree to cause
such payment to be made punctually as and when the same shall
become due and payable, whether at maturity or by declaration or
otherwise, and as if such payment were made by the Borrower.
SECTION 2.02. Guaranties Unconditional. The obligations
of each Guarantor under this Article II shall be unconditional and
absolute and, without limiting the generality of the foregoing,
shall not be released, discharged or otherwise affected by:
(a) any extension, renewal, settlement, compromise,
waiver or release in respect of any obligation of any other
Obligor under any Financing Document, by operation of law or
otherwise;
(b) any modification or amendment of or supplement to
any Financing Document;
(c) any modification, amendment, waiver, release,
non-perfection or invalidity of any direct or indirect
security, or of any guaranty or other liability of any third
party, for any obligation of any other Obligor under any
Financing Document;
<PAGE>
<PAGE>
(d) any change in the corporate existence, structure or
ownership of any other Obligor, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting any other
Obligor or its assets or any resulting release or discharge of
any obligation of any other Obligor contained in any Financing
Document;
(e) the existence of any claim, set-off or other rights
which any Guarantor may have at any time against any other
Obligor, the Agent, any Bank or any other Person, whether or
not arising in connection with the Financing Documents;
provided that nothing herein shall prevent the assertion of
any such claim by separate suit or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or
against any other Obligor for any reason of any Financing
Document, or any provision of applicable law or regulation
purporting to prohibit the payment by any other Obligor of the
principal of or interest on any Note or any other amount
payable by any other Obligor under any Financing Document; or
(g) any other act or omission to act or delay of any
kind by any other Obligor, the Agent, any Bank or any other
Person or any other circumstance whatsoever that might, but
for the provisions of this paragraph, constitute a legal or
equitable discharge of the obligations of any Guarantor under
this Article II.
SECTION 2.03. Limit of Liability. Each Guarantor shall
be liable under this Agreement only for amounts aggregating up to
the largest amount that would not render its obligations hereunder
subject to avoidance under Section 548 of the United States
Bankruptcy Code or any comparable provisions of any applicable
state law.
SECTION 2.04. Discharge; Reinstatement in Certain Cir-
cumstances. Each Guarantor's obligations under this Article II
shall remain in full force and effect until the Commitments are
terminated and the principal of and interest on the Notes and all
other amounts payable by the Borrower under the Financing Documents
shall have been paid in full; provided that, if the Borrower
disposes of its entire Investment in any Guarantor as permitted by
the Credit Agreement, the obligations of such Guarantor hereunder
shall automatically be discharged and terminated without any action
by any party hereto. Except as provided in the preceding sentence,
the obligations of any Guarantor under this Article II may only be
terminated with the consent of all of the Banks. If at any time
any payment of the principal of or interest on any Note or any
other amount payable by the Borrower under any Financing Document
<PAGE>
<PAGE>
is rescinded or must be otherwise restored or returned upon the
insolvency, bankruptcy or reorganization of any other Obligor or
otherwise, each Guarantor's obligations under this Article II with
respect to such payment shall be reinstated at such time as though
such payment had become due but had not been made at such time.
SECTION 2.05. Waiver. Each Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not
provided for herein, as well as any requirement that at any time
any action be taken by any Person against any other Obligor or any
other Person.
SECTION 2.06. Subrogation. Each Guarantor irrevocably
waives any and all rights to which it may be entitled, by operation
of law or otherwise, upon making any payment hereunder to be
subrogated to the rights of the payee against the Borrower with
respect to such payment or otherwise to be reimbursed, indemnified
or exonerated by any other Obligor in respect thereof.
SECTION 2.07. Stay of Acceleration. If acceleration of
the time for payment of any amount payable by the Borrower under
the Financing Documents is stayed upon the insolvency, bankruptcy
or reorganization of the Borrower, all such amounts otherwise
subject to acceleration under the terms of the Financing Documents
shall nonetheless be payable by each Guarantor hereunder forthwith
on demand by the Agent made at the request of the Required Banks.
ARTICLE III
COVENANT OF THE BORROWER
SECTION 3.01. Additional Guarantors. The Borrower
represents and warrants that, as of the date of this Agreement, the
Guarantors set forth on the signature pages hereof constitute all
Material Subsidiaries. The Borrower agrees, within ten days after
any Person hereafter becomes a Material Subsidiary, to cause such
Person to become a Guarantor hereunder, and in connection therewith
to deliver such opinions of counsel and other documents relating to
such Guarantor and its obligations hereunder as the Agent may
reasonably request.
<PAGE>
<PAGE>
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Notices. Unless otherwise specified
herein, all notices, requests and other communications to any party
hereunder shall be in writing (including facsimile transmission or
similar writing) and shall be given to such party at its address or
facsimile number set forth on the signature pages hereof (or, in
the case of any Guarantor as to which no such address or facsimile
number is so set forth, to it at the address or facsimile number
of the Borrower set forth on the signature pages hereof) or such
other address or facsimile number as such party may hereafter
specify for the purpose by notice to the Agent. Each such notice,
request or other communication shall be effective (i) if given by
facsimile transmission, when such facsimile is transmitted to the
facsimile transmission number specified in or pursuant to this
Section 4.01 (ii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid or (iii) if given by any other
means, when delivered at the address specified in this Section
4.01.
SECTION 4.02. No Waiver. No failure or delay by the
Agent or any Bank in exercising any right, power or privilege under
this Agreement or any other Financing Document shall operate as a
waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. The rights and remedies
herein and therein provided shall be cumulative and not exclusive
of any rights or remedies provided by law.
SECTION 4.03. Amendments and Waivers. Any provision of
this Agreement may be amended or waived if, and only if, such
amendment or waiver is in writing and is signed by the Borrower,
each Guarantor and the Agent with the prior written consent of the
Required Banks under the Credit Agreement; provided that the second
sentence of Section 2.04 of this Agreement may only be amended with
the consent of all of the Banks.
SECTION 4.04. Governing Law; Submission to Jurisdiction;
Waiver of a Jury Trial. This Agreement shall be construed in
accordance with and governed by the law of the State of New York.
Each of the Guarantors hereby agrees to be bound by each provision
of the Credit Agreement which purports to bind it, including
without limitation Sections 2.14, 9.04, 9.08 and 9.10, to the same
extent as if it were a signatory party thereto.
<PAGE>
<PAGE>
SECTION 4.05. Successors and Assigns. This Agreement is
for the benefit of the Banks and the Agent and their respective
successors and assigns and in the event of an assignment of the
Loans, the Notes or other amounts payable under the Financing
Documents, the rights hereunder, to the extent applicable to the
indebtedness so assigned, shall be transferred with such
indebtedness. All the provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns.
SECTION 4.06. Counterparts; Effectiveness. This
Agreement may be signed in any number of counterparts, each of
which shall be an original, and all of which taken together shall
constitute a single instrument, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This
Amended Agreement shall become effective when the Agent shall have
received a counterpart hereof signed by the Borrower, and one or
more of the Guarantors and when the Amended and Restated Credit
Agreement shall become effective in accordance with its terms.
Thereafter, upon execution and delivery of a counterpart of this
Agreement on behalf of any other Guarantor, this Agreement shall
become effective with respect to such Guarantor as of the date of
such delivery.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amended Agreement to be duly executed by their respective
authorized officers as of the date first above written.
THE LOUISIANA LAND AND EXPLORATION COMPANY
By /s/ Louis A. Raspino
Title: Treasurer
GUARANTORS
LL&E (U.K.) INC.
By /s/ John F. Greene
Title: Chairman of the Board
LL&E NETHERLANDS, INC.
By /s/ Richard A. Bachmann
Title: Vice President
Chief Financial Officer
INEXCO OIL COMPANY
By /s/ Richard A. Bachmann
Title: Vice President
Chief Financial Officer
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ Philip W. McNeal
Title: Vice President
<PAGE>
<PAGE>
EXHIBIT E
Form of Money Market Quote Request
[Date]
To: Morgan Guaranty Trust Company of New York
(the "Agent")
From: The Louisiana Land and Exploration Company
Re: Amended and Restated Credit Agreement (the "Credit
Agreement") dated as of August 19, 1994 among the
Borrower, the Banks listed on the signature pages
thereof and the Agent and Texas Commerce Bank
National Association and NationsBank of Texas,
N.A., as Co-Agents
We hereby give notice pursuant to Section 2.03 of the
Credit Agreement that we request Money Market Quotes for the
following proposed Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount** Interest Period***
$
Such Money Market Quotes should offer a Money Market
[Margin] [Absolute Rate]. [The applicable base rate is the London
Interbank Offered Rate.]
**Amount must be $10,000,000 or a larger multiple of
$1,000,000.
***Not less than one month (LIBOR Auction) or not less than 30
days (Absolute Rate Auction), subject to the provisions of the
definition of Interest Period.
<PAGE>
<PAGE>
Terms used herein have the meanings assigned to them in
the Credit Agreement.
THE LOUISIANA LAND AND
EXPLORATION COMPANY
By________________________
Title:
<PAGE>
<PAGE>
EXHIBIT F
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes to The Louisiana
Land and Exploration Company (the "Borrower")
Pursuant to Section 2.03 of the Amended and Restated
Credit Agreement dated as of August 19, 1994 among the Borrower,
the Banks parties thereto and the undersigned, as Agent and Texas
Commerce Bank National Association and NationsBank of Texas, N.A.,
as Co-Agents, we are pleased on behalf of the Borrower to invite
you to submit Money Market Quotes to the Borrower for the following
proposed Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
$
Such Money Market Quotes should offer a Money Market
[Margin] [Absolute Rate]. [The applicable base rate is the London
Interbank Offered Rate.]
Please respond to this invitation by no later than [2:00
P.M.] [9:30 A.M.] (New York City time) on [date].
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By______________________
Authorized Officer
<PAGE>
<PAGE>
EXHIBIT G
Form of Money Market Quote
To: Morgan Guaranty Trust Company of New York,
as Agent
Re: Money Market Quote to The Louisiana Land and
Exploration Company (the "Borrower")
In response to your invitation on behalf of the Borrower
dated _____________, 19__, we hereby make the following Money
Market Quote on the following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
_____________________________
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the following
principal amounts, for the following Interest Periods and at
the following rates:
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute Rate*****]
$
$
[Provided, that the aggregate principal amount of Money Market
Loans for which the above offers may be accepted shall not
exceed $____________.]**
* As specified in the related Invitation.
** Principal amount bid for each Interest Period may not exceed
principal amount requested. Specify aggregate limitation if the
sum of the individual offers exceeds the amount the Bank is willing
to lend. Bids must be made for $5,000,000 or a larger multiple of
$1,000,000.
<PAGE>
<PAGE>
We understand and agree that the offer(s) set forth
above, subject to the satisfaction of the applicable conditions set
forth in the Amended and Restated Credit Agreement dated as of
August 19, 1994 among the Borrower, the Banks listed on the
signature pages thereof and yourselves, as Agent and Texas Commerce
Bank National Association and NationsBank of Texas, N.A., as Co-
Agents, irrevocably obligates us to make the Money Market Loan(s)
for which any offer(s) are accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
*** Not less than one month or not less than 30 days, as specified
in the related Invitation. No more than five bids are permitted
for each Interest Period.
**** Margin over or under the London Interbank Offered Rate
determined for the applicable Interest Period. Specify percentage
(to the nearest 1/10,000 of 1%) and specify whether "PLUS" or
"MINUS".
***** Specify rate of interest per annum (to the nearest 1/10,000th
of 1%).
<PAGE>
<PAGE>
EXHIBIT H
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [ASSIGNOR]
(the "Assignor"), [ASSIGNEE] (the "Assignee"), THE LOUISIANA LAND
AND EXPLORATION COMPANY (the "Borrower") and MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Agent (the "Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the
"Agreement") relates to the Amended and Restated Credit Agreement
dated as of August 19, 1994 among the Borrower, the Assignor and
the other Banks party thereto, as Banks, and the Agent (the "Credit
Agreement");
WHEREAS, as provided under the Credit Agreement, the
Assignor has a Commitment to make Loans to the Borrower in an
aggregate principal amount at any time outstanding not to exceed
$__________;
WHEREAS, Committed Loans made to the Borrower by the
Assignor under the Credit Agreement in the aggregate principal
amount of $__________ are outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee
all of the rights of the Assignor under the Credit Agreement in
respect of a portion of its Commitment thereunder in an amount
equal to $__________ (the "Assigned Amount"), together with a
corresponding portion of its outstanding Committed Loans, and the
Assignee proposes to accept assignment of such rights and assume
the corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereto agree as
follows:
SECTION 1. Definitions. All capitalized terms not
otherwise defined herein shall have the respective meanings set
forth in the Credit Agreement.
<PAGE>
<PAGE>
SECTION 2. Assignment. The Assignor hereby assigns and
sells to the Assignee all of the rights of the Assignor under the
Credit Agreement to the extent of the Assigned Amount, and the
Assignee hereby accepts such assignment from the Assignor and
assumes all of the obligations of the Assignor under the Credit
Agreement to the extent of the Assigned Amount, including the
purchase from the Assignor of the corresponding portion of the
principal amount of the Committed Loans made by the Assignor
outstanding at the effective date hereof. Upon the execution and
delivery hereof by the Assignor, the Assignee[, the Borrower and
the Agent] and the payment of the amounts specified in Section 3
required to be paid on the date hereof (i) the Assignee shall, as
of the effective date hereof, succeed to the rights and be
obligated to perform the obligations of a Bank under the Credit
Agreement with a Commitment in an amount equal to the Assigned
Amount, and (ii) the Commitment of the Assignor shall, as of the
effective date hereof, be reduced by a like amount and the Assignor
released from its obligations under the Credit Agreement to the
extent such obligations have been assumed by the Assignee. The
assignment provided for herein shall be without recourse to the
Assignor.
SECTION 3. Payments. As consideration for the
assignment and sale contemplated in Section 2 hereof, the Assignee
shall pay to the Assignor on the effective date hereof in Federal
funds the amount heretofore agreed between them. It is understood
that commitment and/or facility fees in respect of the Assigned
Amount accrued to the effective date hereof are for the account of
the Assignor and such fees accruing from and including the
effective date hereof are for the account of the Assignee. Each of
the Assignor and the Assignee hereby agrees that if it receives any
amount under the Credit Agreement which is for the account of the
other party hereto, it shall receive the same for the account of
such other party to the extent of such other party's interest
therein and shall promptly pay the same to such other party.
[SECTION 4. Consent of the Borrower and the Agent. This
Agreement is conditioned upon the consent of the Borrower and the
Agent pursuant to Section 9.06(c) of the Credit Agreement. The
execution of this Agreement by the Borrower and the Agent is
evidence of this consent. Pursuant to Section 9.06(c) the Borrower
agrees to execute and deliver a Note payable to the order of the
Assignee.]
SECTION 5. Effectiveness. The effective date of this
Agreement shall be __________, 199_. Following the execution of
this Agreement, it will be delivered to the Agent for acceptance by
it and recording by the Agent pursuant to Section 9.06(f) of the
Credit Agreement effective as of the date specified above (which
shall not, unless otherwise agreed to by the Agent, be earlier than
five Domestic Business Days after the date of such acceptance and
recording by the Agent).<PAGE>
<PAGE>
SECTION 6. Non-Reliance on Assignor. The Assignor makes
no representation or warranty in connection with, and shall have no
responsibility with respect to, the solvency, financial condition,
or statements of the Borrower, or the validity and enforceability
of the obligations of the Borrower in respect of the Credit
Agreement or any Note. The Assignee acknowledges that it has,
independently and without reliance on the Assignor, and based on
such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement
and will continue to be responsible for making its own independent
appraisal of the business, affairs and financial condition of the
Borrower.
SECTION 7. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State
of New York.
SECTION 8. Counterparts. This Agreement may be signed
in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were
upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By_________________________
Title:
[ASSIGNEE]
By__________________________
Title:
<PAGE>
<PAGE>
THE LOUISIANA LAND AND
EXPLORATION COMPANY
By__________________________
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By__________________________
Title:
EXHIBIT 10(m)
<PAGE>
<PAGE>
AMENDMENT NO. 1 TO AMENDED AND RESTATED CREDIT AGREEMENT
AMENDMENT dated as of January 23, 1995 among THE
LOUISIANA LAND AND EXPLORATION COMPANY (the "Borrower"), the BANKS
listed on the signature pages hereof (the "Banks") and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "Agent").
W I T N E S S E T H :
WHEREAS, the parties hereto have heretofore entered into
an Amended and Restated Credit Agreement dated as of August 19,
1994 (the "Agreement"); and
WHEREAS, the parties hereto desire to amend the Agreement
as provided below.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise
specifically defined herein, each term used herein which is defined
in the Agreement shall have the meaning assigned to such term in
the Agreement. Each reference to "hereof", "hereunder", "herein"
and "hereby" and each other similar reference and each reference to
"this Agreement" and each other similar reference contained in the
Agreement shall from and after the date hereof refer to the
Agreement as amended hereby.
SECTION 2. Amendment to Section 5.15. Section 5.15 of
the Agreement is amended by the addition of the following language
at the end thereof: "minus (iii) an amount equal to the lesser of
(x) the net after tax amount of non-cash write downs of long term
assets by the Borrower for the year ended December 31, 1994 and (y)
$225,000,000".
SECTION 3 Governing Law. This Amendment shall be
governed by and construed in accordance with the laws of the State
of New York.
SECTION 4. Counterparts; Effectiveness. This Amendment
may be signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Amendment shall become
effective as of the date hereof when the Agent shall have received
duly executed counterparts hereof signed by the Borrower and the
Required Banks (or, in the case of any party as to which an
executed counterpart shall not have been received, the Agent shall
have received telegraphic, telex or other written confirmation from
such party of execution of a counterpart hereof by such party).
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first above written.
THE LOUISIANA LAND AND
EXPLORATION COMPANY
By /s/ Louis Raspino
Title: Treasurer
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ John Kowalczuk
Title: Vice President
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
By /s/ Scott Richardson
Title: Vice President
NATIONSBANK OF TEXAS, N.A.
By /s/ Paul A. Squires
Title: Senior Vice President
ABN AMRO BANK, N.V.
By /s/ David Wright
Title: Vice President
By /s/ C. Randall
Title: Group Vice President
BANK OF MONTREAL
By /s/ Shana L. Sloan
Title: Director
<PAGE>
<PAGE>
THE BANK OF NEW YORK
By /s/ Dennis M. Pidherny
Title: Vice President
THE BANK OF NOVA SCOTIA
By /s/ F.C.H. Ashby
Title: Senior Manager Loan
Operations
BANQUE PARIBAS HOUSTON AGENCY
By /s/ Bart Schouest
Title: Group Vice President
By /s/ Patrick J. Milon
Title: Svp.-Deputy General
Manager
BARCLAYS BANK PLC
By /s/ John G. Sullivan
Title: Associate Director
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH
By /s/ Xavier Ratouis
Title: Authorized Signature
THE FIRST NATIONAL BANK OF BOSTON
By /s/ Michael Kane
Title: Managing Director
<PAGE>
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Susan Hodge
Title: Vice President
FIRST NATIONAL BANK OF COMMERCE
By /s/ Cory B. Armand
Title: Assistant Vice President
HIBERNIA NATIONAL BANK
By /s/ Colleen S. Smith
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN
LIMITED NEW YORK BRANCH
By /s/ Makoto Fukuda
Title: Joint General Manager
MEESPIERSON N.V.
By /s/ T.J. Meulemeester
Title: Senior Vice President
By /s/ Ir. D. van der Klaauw
Title: Senior Account Manager
MELLON BANK, N.A.
By /s/ Jacquelyn S. Peters
Title: Vice President
<PAGE>
<PAGE>
MIDLAND BANK PLC
NEW YORK BRANCH
By /s/ G. B. Jansen
Title: Director
NBD BANK, N.A.
By /s/ George R. Schanz
Title: Vice President
ROYAL BANK OF CANADA
By /s/ Gil J. Bernard
Title: Senior Manager
SOCIETE GENERALE, SOUTHWEST AGENCY
By /s/ James R. Shelton
Title: Vice President
TORONTO-DOMINION (TEXAS), INC.
By /s/ Diane Bailey
Title: Vice President
UNION BANK OF SWITZERLAND,
HOUSTON AGENCY
By /s/ Dan Boyle
Title: Vice President
By /s/ Evans Swann
Title: Managing Director
<PAGE>
<PAGE>
WACHOVIA BANK OF GEORGIA, N.A.
By /s/ Linda M. Harris
Title: Senior Vice President
WHITNEY NATIONAL BANK
By /s/ Robert Browning
Title: Senior Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ John Kowalczuk
Title: Vice President
EXHIBIT 11
<PAGE>
<PAGE>
<TABLE>
Exhibit 11
THE LOUISIANA LAND AND EXPLORATION COMPANY
Computation of Primary and Fully Diluted
Earnings (Loss) Per Share
Years Ended December 31, 1994, 1993 and 1992
<CAPTION>
(Millions, except per
share data)
1994 1993 1992
________________________________________________________________________________________
<S> <C> <C> <C>
PRIMARY EARNINGS (LOSS) PER SHARE:
Earnings (loss) before extraordinary item and cumulative
effect of changes in accounting principles $(226.9) 12.7 (1.2)
Loss on early retirement of debt - (3.3) (5.6)
Changes in accounting principles - .2 -
________________________________________________________________________________________
Net earnings (loss) $(226.9) 9.6 (6.8)
________________________________________________________________________________________
Weighted average shares outstanding 33.3 29.4 28.3
Incremental shares attributable to outstanding
stock options .1 .1 .1
________________________________________________________________________________________
Weighted average shares, as adjusted 33.4 29.5 28.4
________________________________________________________________________________________
Primary earnings (loss) per share before extraordinary
item and cumulative effect of changes in accounting
principles $ (6.80) 0.43 (0.04)
Loss on early retirement of debt - (0.11) (0.20)
Changes in accounting principle - 0.01 -
________________________________________________________________________________________
PRIMARY EARNINGS (LOSS) PER SHARE $ (6.80) 0.33 (0.24)
________________________________________________________________________________________
________________________________________________________________________________________
FULLY DILUTED EARNINGS (LOSS) PER SHARE:
Earnings (loss) before extraordinary item N/A N/A $ (1.2)
Add back interest expense applicable to convertible
subordinated debentures, net of income taxes 1.8
________________________________________________________________________________________
.6
Loss on early retirement of debt (5.6)
________________________________________________________________________________________
Net earnings (loss) , as adjusted N/A N/A $ (5.0)
________________________________________________________________________________________
Weighted average shares outstanding 28.3
Incremental shares attributable to outstanding
stock options -
Shares attributable to assumed conversion of
convertible subordinated debentures .3
________________________________________________________________________________________
Weighted average shares, as adjusted N/A N/A 28.6
________________________________________________________________________________________
Fully diluted earnings (loss) per share before
extraordinary item N/A N/A $ 0.02
Loss on early retirement of debt (0.19)
________________________________________________________________________________________
FULLY DILUTED EARNINGS (LOSS) PER SHARE N/A N/A $(0.17)*
________________________________________________________________________________________
* This calculation is submitted in accordance with Regulation S-K item 601(b)(11) although
it is contrary to APB Opinion No. 15 because it produces an anti-dilutive result.
</TABLE>
EXHIBIT 21
<PAGE>
<PAGE>
<TABLE>
Exhibit 21
THE LOUISIANA LAND AND EXPLORATION COMPANY
AND SUBSIDIARIES
Subsidiaries of the Registrant
December 31, 1993
<CAPTION>
% Ownership Jurisdiction
by Immediate of
Parent Incorporation
_______________________________________________________________________________________
<S> <C> <C>
The Louisiana Land and Exploration Company - Maryland
LL&E Algeria, Ltd. 100 Bermuda
LL&E Australia (Offshore) Pty., Ltd. 100 Australia
LL&E (Australia) Pty., Ltd. 100 Australia
LL&E Canada Holdings, Inc. 100 Delaware
LL&E Canada, Ltd. 100 Canada
LL&E Colombia, Inc. 100 Delaware
LL&E Egypt, Inc. 100 Delaware
LL&E Erave Pty., Ltd. 100 Papua New Guinea
LL&E Espana, Inc. 100 Delaware
LL&E (Europe-Africa-Middle East) Inc. 100 Delaware
LL&E France, S.A. 100 France
LL&E Gas Marketing, Inc. 100 Delaware
LL&E Gippsland Pty., Ltd. 100 Australia
LL&E Holland, Ltd. 100 Canada
LL&E, Inc. 100 Delaware
LL&E Indonesia, Ltd. 100 British Virgin Islands
LL&E International, Inc. 100 Delaware
LL&E Mining, Inc. 100 Delaware
LL&E (Netherlands) Inc. 100 Delaware
MaraLou Netherlands Partnership* 50 Texas
CLAM Petroleum Company 100 Delaware
LL&E Netherlands North Sea, Ltd. 100 Canada
LL&E Netherlands Petroleum Company 100 Delaware
LL&E North Canada Resources, Ltd. 100 Canada
LL&E Overseas Petroleum, Ltd. 100 Delaware
LL&E Peru (Maranon), Ltd. 100 Bermuda
LL&E Petroleum Marketing, Inc. 100 Delaware
LL&E Petroleum Terminals, Inc. 100 Delaware
LL&E Petroleum Resources International, Inc. 100 Delaware
LL&E Pipeline Corporation 100 Delaware
LL&E PNG Pty., Ltd. 100 Papua New Guinea
LL&E Properties, Inc. 100 Texas
Westport Utilities Systems Co., Inc. 100 Louisiana
LL&E Sepik Pty., Ltd. 100 Papua New Guinea
LL&E Suez, Inc. 100 Delaware
LL&E Timor Sea Pty., Ltd. 100 Australia
LL&E Tunisia, Inc. 100 Delaware
LL&E Tunisia, Ltd. 100 Bermuda
LL&E (U.K.) Inc. 100 Delaware
LL&E Yemen, Ltd. 100 Bermuda
</TABLE>
<PAGE>
<PAGE>
<TABLE>
Exhibit 21
(Continued)
THE LOUISIANA LAND AND EXPLORATION COMPANY
AND SUBSIDIARIES
Subsidiaries of the Registrant
December 31, 1993
<CAPTION>
% Ownership Jurisdiction
by Immediate of
Parent Incorporation
_______________________________________________________________________________________
<S> <C> <C>
LLOXY Holdings, Inc. 100 Maryland
LLOXY Production Financing Company, Inc. 100 Delaware
White Pine Leasing, Inc. 100 Delaware
Inexco Oil Company 100 Delaware
Wilson Brothers Drilling Company 100 Delaware
Evangeline Gas Corp. 45 Delaware
* Unconsolidated affiliate accounted for under the equity method.
</TABLE>
EXHIBIT 23
<PAGE>
<PAGE>
Exhibit 23
The Board of Directors
The Louisiana Land and Exploration Company:
We consent to incorporation by reference in Registration Statements No.
2-79097, No. 2-98948, No. 33-22108, No. 33-22338, No. 33-37814, No. 33-56209
and No. 33-56211 on Form S-8, No. 33-48339 and No. 33-50991 on Form S-3 and
No. 33-6593 on Form S-4 of The Louisiana Land and Exploration Company of our
reports dated February 3, 1995, relating to the consolidated balance sheets
of The Louisiana Land and Exploration Company and subsidiaries as of
December 31, 1994 and 1993 and the related consolidated statements of
earnings (loss), stockholders' equity, and cash flows for each of the years
in the three-year period ended December 31, 1994 which reports appear in the
December 31, 1994 annual report on Form 10-K of The Louisiana Land and
Exploration Company. Our reports refer to the adoption in 1993 of the
methods of accounting for income taxes and postretirement benefits other
than pensions prescribed by Statement of Financial Accounting Standards Nos.
109 and 106, respectively, and to the change in 1994 of the methods of
assessing the impairment of the capitalized costs of proved oil and gas
properties and other long-lived assets.
We also consent to incorporation by reference in the previously referred to
Registration Statements of our report dated February 8, 1995, relating to
the consolidated balance sheets of MaraLou Netherlands Partnership and
subsidiary as of December 31, 1994 and 1993 and the related consolidated
statements of income, partners' capital, and cash flows for each of the
years in the three-year period ended December 31, 1994 which report appears
in the December 31, 1994 annual report on Form 10-K of The Louisiana Land
and Exploration Company. Our report refers to the adoption of the method
of accounting for income taxes prescribed by Statement of Financial
Accounting Standard No. 109.
/s/ KPMG Peat Marwick LLP
KPMG PEAT MARWICK LLP
New Orleans, Louisiana
March 20, 1995
EXHIBIT 24
<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
POWER OF ATTORNEY
WHEREAS, The Louisiana Land and Exploration Company intends to file
with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, an Annual Report on Form 10-K;
NOW, THEREFORE, the undersigned in his capacity as a director and
the principal executive officer of The Louisiana Land and Exploration
Company hereby appoints Richard A. Bachmann, Frederick J. Plaeger, II and
Jerry D. Carlisle and each of them severally, his true and lawful attorneys
or attorney with power to act with or without the other and with full power
of substitution and resubstitution, to execute in his name, place, and
stead, in his capacity as a director and the principal executive officer of
The Louisiana Land and Exploration Company, said Annual Report on Form 10-K
and any and all amendments thereto and all instruments necessary or
incidental in connection therewith, and to file or cause to be filed the
same with the Securities and Exchange Commission. Each of said attorneys
shall have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act whatsoever
necessary or desirable to be done in the premises, as fully to all intents
and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys and each
of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument
this 9th day of March, 1995.
/s/ H. Leighton Steward
_____________________________
H. Leighton Steward<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
POWER OF ATTORNEY
WHEREAS, The Louisiana Land and Exploration Company intends to file
with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, an Annual Report on Form 10-K;
NOW, THEREFORE, the undersigned in his capacity as a director of
The Louisiana Land and Exploration Company hereby appoints Richard A.
Bachmann, Frederick J. Plaeger, II and Jerry D. Carlisle and each of them
severally, his true and lawful attorneys or attorney with power to act with
or without the other and with full power of substitution and resubstitution,
to execute in his name, place, and stead, in his capacity as a director of
The Louisiana Land and Exploration Company, said Annual Report on Form 10-K
and any and all amendments thereto and all instruments necessary or
incidental in connection therewith, and to file or cause to be filed the
same with the Securities and Exchange Commission. Each of said attorneys
shall have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act whatsoever
necessary or desirable to be done in the premises, as fully to all intents
and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys and each
of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument
this 9th day of March, 1995.
/s/ Leland C. Adams
_____________________________
Leland C. Adams
<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
POWER OF ATTORNEY
WHEREAS, The Louisiana Land and Exploration Company intends to file
with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, an Annual Report on Form 10-K;
NOW, THEREFORE, the undersigned in his capacity as a director and
the principal financial officer of The Louisiana Land and Exploration
Company hereby appoints Frederick J. Plaeger, II and Jerry D. Carlisle his
true and lawful attorneys or attorney with power to act with or without the
other and with full power of substitution and resubstitution, to execute in
his name, place, and stead, in his capacity as a director and the principal
financial officer of The Louisiana Land and Exploration Company, said Annual
Report on Form 10-K and any and all amendments thereto and all instruments
necessary or incidental in connection therewith, and to file or cause to be
filed the same with the Securities and Exchange Commission. Each of said
attorneys shall have full power and authority to do and perform in the name
and on behalf of the undersigned, in any and all capacities, every act
whatsoever necessary or desirable to be done in the premises, as fully to
all intents and purposes as the undersigned might or could do in person.
The undersigned hereby ratifies and approves the acts of said attorneys and
each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument
this 9th day of March, 1995.
/s/ Richard A. Bachmann
_____________________________
Richard A. Bachmann
<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
POWER OF ATTORNEY
WHEREAS, The Louisiana Land and Exploration Company intends to file
with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, an Annual Report on Form 10-K;
NOW, THEREFORE, the undersigned in his capacity as a director of
The Louisiana Land and Exploration Company hereby appoints Richard A.
Bachmann, Frederick J. Plaeger, II and Jerry D. Carlisle and each of them
severally, his true and lawful attorneys or attorney with power to act with
or without the other and with full power of substitution and resubstitution,
to execute in his name, place, and stead, in his capacity as a director of
The Louisiana Land and Exploration Company, said Annual Report on Form 10-K
and any and all amendments thereto and all instruments necessary or
incidental in connection therewith, and to file or cause to be filed the
same with the Securities and Exchange Commission. Each of said attorneys
shall have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act whatsoever
necessary or desirable to be done in the premises, as fully to all intents
and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys and each
of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument
this 9th day of March, 1995.
/s/ John F. Greene
_____________________________
John F. Greene<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
POWER OF ATTORNEY
WHEREAS, The Louisiana Land and Exploration Company intends to file
with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, an Annual Report on Form 10-K;
NOW, THEREFORE, the undersigned in his capacity as a director of
The Louisiana Land and Exploration Company hereby appoints Richard A.
Bachmann, Frederick J. Plaeger, II and Jerry D. Carlisle and each of them
severally, his true and lawful attorneys or attorney with power to act with
or without the other and with full power of substitution and resubstitution,
to execute in his name, place, and stead, in his capacity as a director of
The Louisiana Land and Exploration Company, said Annual Report on Form 10-K
and any and all amendments thereto and all instruments necessary or
incidental in connection therewith, and to file or cause to be filed the
same with the Securities and Exchange Commission. Each of said attorneys
shall have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act whatsoever
necessary or desirable to be done in the premises, as fully to all intents
and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys and each
of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument
this 9th day of March, 1995.
/s/ Eamon M. Kelly
_____________________________
Eamon M. Kelly
<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
POWER OF ATTORNEY
WHEREAS, The Louisiana Land and Exploration Company intends to file
with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, an Annual Report on Form 10-K;
NOW, THEREFORE, the undersigned in his capacity as a director of
The Louisiana Land and Exploration Company hereby appoints Richard A.
Bachmann, Frederick J. Plaeger, II and Jerry D. Carlisle and each of them
severally, his true and lawful attorneys or attorney with power to act with
or without the other and with full power of substitution and resubstitution,
to execute in his name, place, and stead, in his capacity as a director of
The Louisiana Land and Exploration Company, said Annual Report on Form 10-K
and any and all amendments thereto and all instruments necessary or
incidental in connection therewith, and to file or cause to be filed the
same with the Securities and Exchange Commission. Each of said attorneys
shall have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act whatsoever
necessary or desirable to be done in the premises, as fully to all intents
and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys and each
of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument
this 9th day of March, 1995.
/s/ Kenneth W. Orce
_____________________________
Kenneth W. Orce
<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
POWER OF ATTORNEY
WHEREAS, The Louisiana Land and Exploration Company intends to file
with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, an Annual Report on Form 10-K;
NOW, THEREFORE, the undersigned in his capacity as a director of
The Louisiana Land and Exploration Company hereby appoints Richard A.
Bachmann, Frederick J. Plaeger, II and Jerry D. Carlisle and each of them
severally, his true and lawful attorneys or attorney with power to act with
or without the other and with full power of substitution and resubstitution,
to execute in his name, place, and stead, in his capacity as a director of
The Louisiana Land and Exploration Company, said Annual Report on Form 10-K
and any and all amendments thereto and all instruments necessary or
incidental in connection therewith, and to file or cause to be filed the
same with the Securities and Exchange Commission. Each of said attorneys
shall have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act whatsoever
necessary or desirable to be done in the premises, as fully to all intents
and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys and each
of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument
this 9th day of March, 1995.
/s/ Victor A. Rice
_____________________________
Victor A. Rice
<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
POWER OF ATTORNEY
WHEREAS, The Louisiana Land and Exploration Company intends to file
with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, an Annual Report on Form 10-K;
NOW, THEREFORE, the undersigned in his capacity as a director of
The Louisiana Land and Exploration Company hereby appoints Richard A.
Bachmann, Frederick J. Plaeger, II and Jerry D. Carlisle and each of them
severally, his true and lawful attorneys or attorney with power to act with
or without the other and with full power of substitution and resubstitution,
to execute in his name, place, and stead, in his capacity as a director of
The Louisiana Land and Exploration Company, said Annual Report on Form 10-K
and any and all amendments thereto and all instruments necessary or
incidental in connection therewith, and to file or cause to be filed the
same with the Securities and Exchange Commission. Each of said attorneys
shall have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act whatsoever
necessary or desirable to be done in the premises, as fully to all intents
and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys and each
of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument
this 9th day of March, 1995.
/s/ Orin R. Smith
_____________________________
Orin R. Smith<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
POWER OF ATTORNEY
WHEREAS, The Louisiana Land and Exploration Company intends to file
with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, an Annual Report on Form 10-K;
NOW, THEREFORE, the undersigned in his capacity as a director of
The Louisiana Land and Exploration Company hereby appoints Richard A.
Bachmann, Frederick J. Plaeger, II and Jerry D. Carlisle and each of them
severally, his true and lawful attorneys or attorney with power to act with
or without the other and with full power of substitution and resubstitution,
to execute in his name, place, and stead, in his capacity as a director of
The Louisiana Land and Exploration Company, said Annual Report on Form 10-K
and any and all amendments thereto and all instruments necessary or
incidental in connection therewith, and to file or cause to be filed the
same with the Securities and Exchange Commission. Each of said attorneys
shall have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act whatsoever
necessary or desirable to be done in the premises, as fully to all intents
and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys and each
of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument
this 9th day of March, 1995.
/s/ Arthur R. Taylor
_____________________________
Arthur R. Taylor
<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
POWER OF ATTORNEY
WHEREAS, The Louisiana Land and Exploration Company intends to file
with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, an Annual Report on Form 10-K;
NOW, THEREFORE, the undersigned in his capacity as a director of
The Louisiana Land and Exploration Company hereby appoints Richard A.
Bachmann, Frederick J. Plaeger, II and Jerry D. Carlisle and each of them
severally, his true and lawful attorneys or attorney with power to act with
or without the other and with full power of substitution and resubstitution,
to execute in his name, place, and stead, in his capacity as a director of
The Louisiana Land and Exploration Company, said Annual Report on Form 10-K
and any and all amendments thereto and all instruments necessary or
incidental in connection therewith, and to file or cause to be filed the
same with the Securities and Exchange Commission. Each of said attorneys
shall have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act whatsoever
necessary or desirable to be done in the premises, as fully to all intents
and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys and each
of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument
this 9th day of March, 1995.
/s/ W. R. Timken, Jr.
_____________________________
W. R. Timken, Jr.
<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
POWER OF ATTORNEY
WHEREAS, The Louisiana Land and Exploration Company intends to file
with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, an Annual Report on Form 10-K;
NOW, THEREFORE, the undersigned in his capacity as a director of
The Louisiana Land and Exploration Company hereby appoints Richard A.
Bachmann, Frederick J. Plaeger, II and Jerry D. Carlisle and each of them
severally, his true and lawful attorneys or attorney with power to act with
or without the other and with full power of substitution and resubstitution,
to execute in his name, place, and stead, in his capacity as a director of
The Louisiana Land and Exploration Company, said Annual Report on Form 10-K
and any and all amendments thereto and all instruments necessary or
incidental in connection therewith, and to file or cause to be filed the
same with the Securities and Exchange Commission. Each of said attorneys
shall have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act whatsoever
necessary or desirable to be done in the premises, as fully to all intents
and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys and each
of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument
this 9th day of March, 1995.
/s/ Carlisle A.H. Trost
_____________________________
Carlisle A.H. Trost
<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
POWER OF ATTORNEY
WHEREAS, The Louisiana Land and Exploration Company intends to file
with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, an Annual Report on Form 10-K;
NOW, THEREFORE, the undersigned in his capacity as a director of
The Louisiana Land and Exploration Company hereby appoints Richard A.
Bachmann, Frederick J. Plaeger, II and Jerry D. Carlisle and each of them
severally, his true and lawful attorneys or attorney with power to act with
or without the other and with full power of substitution and resubstitution,
to execute in his name, place, and stead, in his capacity as a director of
The Louisiana Land and Exploration Company, said Annual Report on Form 10-K
and any and all amendments thereto and all instruments necessary or
incidental in connection therewith, and to file or cause to be filed the
same with the Securities and Exchange Commission. Each of said attorneys
shall have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act whatsoever
necessary or desirable to be done in the premises, as fully to all intents
and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys and each
of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument
this 9th day of March, 1995.
/s/ E. L. Williamson
_____________________________
E. L. Williamson
<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
POWER OF ATTORNEY
WHEREAS, The Louisiana Land and Exploration Company intends to file
with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, an Annual Report on Form 10-K;
NOW, THEREFORE, the undersigned in his capacity as the principal
accounting officer of The Louisiana Land and Exploration Company hereby
appoints Richard A. Bachmann and Frederick J. Plaeger, II and each of them
severally, his true and lawful attorneys or attorney with power to act with
or without the other and with full power of substitution and resubstitution,
to execute in his name, place, and stead, in his capacity as the principal
accounting officer of The Louisiana Land and Exploration Company, said
Annual Report on Form 10-K and any and all amendments thereto and all
instruments necessary or incidental in connection therewith, and to file or
cause to be filed the same with the Securities and Exchange Commission.
Each of said attorneys shall have full power and authority to do and perform
in the name and on behalf of the undersigned, in any and all capacities,
every act whatsoever necessary or desirable to be done in the premises, as
fully to all intents and purposes as the undersigned might or could do in
person. The undersigned hereby ratifies and approves the acts of said
attorneys and each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument
this 9th day of March, 1995.
/s/ Jerry D. Carlisle
_____________________________
Jerry D. Carlisle
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF EARNINGS (LOSS) OF
THE LOUISIANA LAND AND EXPLORATION COMPANY AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 12,500
<SECURITIES> 0
<RECEIVABLES> 128,300
<ALLOWANCES> 0
<INVENTORY> 31,800
<CURRENT-ASSETS> 184,100
<PP&E> 3,049,900
<DEPRECIATION> 1,809,500
<TOTAL-ASSETS> 1,478,100
<CURRENT-LIABILITIES> 190,500
<BONDS> 739,500
<COMMON> 5,700
0
0
<OTHER-SE> 346,700
<TOTAL-LIABILITY-AND-EQUITY> 1,478,100
<SALES> 789,300
<TOTAL-REVENUES> 801,500
<CGS> 0
<TOTAL-COSTS> 1,086,900
<OTHER-EXPENSES> 34,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,600
<INCOME-PRETAX> (345,600)
<INCOME-TAX> (118,700)
<INCOME-CONTINUING> (226,900)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (226,900)
<EPS-PRIMARY> (6.80)
<EPS-DILUTED> (6.80)
