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, 1995
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.
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 26, 1996
Capital Stock, $.15 par value $1,413,689,000
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 26, 1996
Capital Stock, $.15 par value 33,559,383 shares
DOCUMENTS INCORPORATED BY REFERENCE
Part III: The Registrant's Proxy Statement for its Annual Meeting
of Stockholders to be held on May 9, 1996
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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, 1995
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
27 Item 5. Market for the Registrant's Common Equity
and Related Stockholder Matters.
27 Item 6. Selected Financial Data.
27 Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
28 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
92 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, Colombia and Indonesia. In 1995,
the Company sold its 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, 1995, LL&E had 745 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) 1995 1994 19931
_______________________________________________________________________________________
<S> <C> <C> <C>
Crude and condensate $ 272.8 235.8 210.0
Natural gas 172.5 169.9 146.0
Refined products2 355.2 361.4 400.2
Other petroleum products 19.4 15.4 14.1
_______________________________________________________________________________________
Total $ 819.9 782.5 770.3
_______________________________________________________________________________________
1 Includes NERCO Oil & Gas, Inc. since October 1, 1993.
2 After elimination of intercompany transfers to the Company's refinery. In 1995, 1994 and
1993, such transfers were valued at $28.0, $24.8 and $22.4, 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, 1995 were in the Gulf of Mexico and in Louisiana and
Wyoming. Outside the United States, LL&E's principal exploration
activities were in the North Sea, Algeria, Australia, Indonesia and
Tunisia.
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 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 1995, 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 (see "REFINING
OPERATIONS").
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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 1995, 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 1995 sales period experienced dramatic price
fluctuations with crude oil prices ranging between $16.50 per
barrel and $21 per barrel. Overall, crude oil prices averaged
$18.40 per barrel at Cushing, Oklahoma for West Texas Intermediate.
This price was approximately $1.20 per barrel above the price
averaged in 1994.
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, virtually eliminated the Company's reliance
on pipelines to purchase natural gas and given the Company greater
flexibility and control of its natural gas reserves.
Less than 5% of LL&E's domestic natural gas production is
being sold to interstate pipeline companies. The remainder of the
Company's domestic 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 propane, butane, 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, 1995, LL&E had working interests in
approximately 594 thousand gross (270 thousand net) productive
acres and approximately 6.2 million gross (2.6 million net)
undeveloped acres. The total unamortized cost to LL&E of such
undeveloped acreage at December 31, 1995 was $36 million. Through
its affiliate, CLAM Petroleum Company, LL&E had working interests
in approximately 41 thousand gross (6 thousand net) productive
acres and approximately 623 thousand gross (114 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, 1995, LL&E owned approximately 594 thousand
acres in fee lands in south Louisiana of which approximately 104
thousand acres were leased to various other companies for oil and
gas exploration, development and production and an additional 72
thousand acres were subject to geophysical option agreements. Of
those leased to others, approximately 88 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 approxi-
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mately 55 thousand productive 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 418 thousand fee acres not leased to
others and not subject to geophysical options, 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 $78 million in
1995: $12 million was spent on seismic data, over $4 million was
expended for unproved leases in the United States, and $62 million
was expended for participation in 28 wells. Of this total, 19
wells were successful completions: 5 oil and 14 gas.
South Louisiana
Drilling success at the Bastian Bay Field in Plaquemines
Parish over the last two years validates the use of three
dimensional (3-D) seismic data in the exploitation of mature
fields. Bastian Bay was initially developed in the 1940's and has
not had drilling activity for 13 years. Two successful 3-D wells
were drilled in 1994 and an additional four wells were drilled in
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1995. The Company's net revenue interest in those wells ranges
from 20% to 95% due to its combined working interest and royalty
interest. These wells were drilled to depths between 5,000 and
12,000 feet and are currently producing a total of 10 million cubic
feet of gas per day and 140 barrels of oil per day, net.
Production from the field has more than tripled since the program
began. At least two additional exploitation wells are planned for
the field in 1996.
One of the largest 3-D seismic surveys in which the Company is
a partner covers a number of existing producing fields, including
the second largest in the state, the Caillou Island Field. The
first phase of the survey was completed in 1995 and the first four
wells were successfully drilled. These were shallow, low cost
wells and in total are currently producing 6.5 million cubic feet
of gas per day and 2,039 barrels of oil per day. At least six
additional wells are planned over this same area in 1996.
The Company's 3-D seismic program in south Louisiana has also
produced a number of high potential, high risk drilling
opportunities in the area. Large untested structures are being
identified due to the fact that there was poor or incomplete 2-D
seismic coverage over much of the area because of the previous
difficulty in acquiring seismic information over a marshland/open
water environment. One such high potential prospect that was
successfully drilled in 1995 was the Widgeon Prospect in the
Timbalier Field in Lafourche Parish. The well was drilled below
20,000 feet and encountered at least 130 feet of net pay from three
zones. No water levels were present in any zone and the reservoirs
were of good quality. On a limited production test, the well
flowed at 6 million cubic feet of gas per day and 216 barrels of
condensate per day. The Company is the operator of the field and
owns a 75% working interest. Construction of pipeline and
production facilities is in progress and initial production is
expected by mid-year.
Drilling activity will increase dramatically in 1996 in south
Louisiana. At least 31 3-D generated wells are planned to be
drilled, of which 24 are low risk exploitation and seven are high
potential wells.
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Gulf of Mexico
During 1995, the Company acquired nine new offshore leases
adding a total of 23,000 new net acres to inventory. The Company
intends to participate in lease sales again this year.
A substantial effort continues to be directed to the
acquisition, processing and interpretation of 3-D seismic
information on the Company's large Gulf lease inventory. The
Company currently has licenses over 780 blocks of 3-D data of which
224 blocks were added in 1995. The Company has been actively
analyzing data over its significant Gulf inventory of 68 blocks
with salt-related features of which 30 are exploratory and 38 are
held by production. In addition, particular emphasis is being
placed on analyzing data on areas immediately adjacent to the
Company's existing producing areas to generate more exploitation
drilling opportunities for 1996. The Company plans to drill at
least six high potential offshore wells in 1996. At least two
subsalt wells will be spud.
North Sea
The Brae Complex, in which the Company owns an average 6%
working interest, continues to offer opportunities for future
development. In May 1995, the 16/3b-8z well at Braemar, located on
Block 16/3c in the northeastern sector of the complex, was
successfully reentered and deepened. This well flowed at a
combined rate of 57 million cubic feet of gas per day and 4,400
barrels of condensate per day from two different zones. The well
was suspended for possible future use as a development well.
Further technical evaluation is necessary to fully assess the
reserve potential of this discovery. A 3-D survey was conducted
over the area in 1995 and is currently under evaluation. The
nearby existing Brae infrastructure offers economically
advantageous development options for Braemar as well as other areas
of the complex that are being studied for possible development. At
least one new exploratory well will be drilled in 1996 from a
number of leads and prospects remaining in the complex.
A 3-D seismic survey conducted over the T-Block Complex in
1995 has yielded exploratory prospects, at least one of which is
planned for drilling in 1996.
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Indonesia
A 3-D survey over the KAKAP area has yielded a number of
attractive leads and prospects. Three successful exploratory wells
were drilled during 1995. The three wells will be completed in
1996 through subsea tiebacks to the existing platforms. The
existing infrastructure in the area should minimize the cost of
developing additional reserves. Additional exploratory drilling is
planned in 1996.
Algeria
In 1995, the first exploratory well on the block, the MLE
No. 1, was drilled to a total depth of 14,458 feet and encountered
gas and gas condensate pays in several sand reservoirs. Three
intervals were tested, two yielding a combined flow rate of 1,724
barrels of condensate per day and 36 million cubic feet of gas per
day and a third yielding a gas rate of 7 million cubic feet of gas
per day. While the results of this initial well are encouraging,
further exploratory drilling must be undertaken on the block before
commercial production can be established. Preparations are
underway to drill a second well, the MLN No. 1, in the first half
of 1996. This well will be in the northeast sector of the block,
on trend with recent industry discoveries on adjacent blocks.
Additional seismic information is being acquired over this same
area and a third exploratory well may be drilled before yearend.
In addition to its 65% interest in the 713,000 acre Block 405, the
Company also owns a 65% interest the 840,000 acre Block 215 where
seismic data is currently being acquired.
Tunisia
The first exploratory well on the Company's million acre Ramla
Block, located 80 miles offshore Tunisia in the Gulf of Gabes was
drilled in 1995. The M'Sela No. 1 encountered a 492 foot oil
column but poor reservoir quality at this location made the
accumulation noncommercial. The well tested 1,100 barrels of oil
per day from a limited 98 foot interval. Additional seismic data
has since been acquired to evaluate other prospects identified on
the block. Encouraged that the initial well confirmed the
existence of an active hydrocarbon system in the area, a second
exploratory well is planned for 1996. The Company owns a 50%
working interest in the block.
Australia
In Australia, the Company plans to drill an exploratory well
in 1996 on its WA258P concession located in the Carnarvon Basin.
The Company has brought in a partner to share the costs of drilling
the well. The Company will pay 8-1/3% of the cost of the well but
will retain a 21% interest in the area.
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During the years 1993 through 1995, 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
1995 1994 1993 1995 1994 1993 1995 1994 1993
_______________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LL&E and Subsidiaries:
Domestic:
Offshore Gulf of
Mexico - - .5 2.2 3.3 1.8 2.8 1.8 1.4
Louisiana .9 1.2 .7 3.3 1.7 1.1 .7 2.9 1.8
North Sea:
United Kingdom - .1 .1 - - - - - .1
Other foreign:
Australia - - - - - - - .3 .6
Canada .3 .5 13.9 1.3 5.3 1.0 - 2.9 7.4
Colombia - - - - - - - 1.0 -
Indonesia .3 - - - - - - - -
Tunisia - - - - - - .5 - -
Yemen - - - - - - - .3 -
_______________________________________________________________________________________
Total 1.5 1.8 15.2 6.8 10.3 3.9 4.0 9.2 11.3
_______________________________________________________________________________________
CLAM (50%)
Netherlands-North Sea - - - - - - .2 .2 .1
_______________________________________________________________________________________
</TABLE>
Royalty Interest
During 1995, 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 1 3 3
Louisiana 7 4 3
Mississippi - 1 -
Other foreign - Canada 1 - -
_______________________________________________________________________________________
Total 9 8 6
_______________________________________________________________________________________
</TABLE>
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DEVELOPMENT ACTIVITIES
Working Interest
Development of the Company's oil and gas properties in 1995
resulted in the expenditure of $88 million for participation in 27
wells and the installation of platforms and facilities in the
United States and overseas. Successful development drilling
resulted in 21 oil and 6 gas wells. In addition, over $9 million
was spent in the acquisition of additional working interests in
proved properties, primarily in the United States.
South Louisiana
In 1995, 3-D data was instrumental in the development of a new
producing property at the Fresh Water Bayou Field in Vermilion
Parish. The field was discovered in early 1994 and is one of the
Company's largest domestic gas discoveries in recent years. While
the discovery well and two delineation wells were drilled prior to
1995 on the basis of 2-D seismic data, a 3-D seismic study
conducted over the field in late 1994 was utilized to drill two
development wells in 1995. The Louisiana Furs C-18 and C-20 wells
were both successful in extending the known limits of the gas
reservoir and encountered 241 and 282 feet of net gas pay,
respectively. The C-18 well tested at 30.9 million cubic feet of
gas per day and 374 barrels of condensate per day while the C-20
well tested at 30.5 million cubic feet of gas per day and 403
barrels of condensate per day. The Company owns a 35% working
interest in the field. Gross field production volumes grew from 55
million cubic feet of gas per day in early 1995 to 205 million
cubic feet of gas per day in the fourth quarter of 1995 after
completion of a second salesline out of the field and expansion of
production facilities. An exploratory well will evaluate an
untested adjacent fault block in the southern part of the 3,200
acre Fresh Water Bayou lease in mid-1996.
Jay Field
A successful enhanced recovery program at the Jay Field in
Florida has resulted in recovery rates from this oil field
discovered in the early 1970's well beyond industry averages. An
expanded nitrogen injection program in 1995 has led to increases in
production and recoverable reserves. Over the last several years,
the Company has purchased additional interests in the field and
currently owns a 46% working interest.
Gulf of Mexico
Three new production platforms were installed in the Gulf in
1995. The Company-operated Vermilion 395 was set in 420 feet of
water utilizing a tripod design, the second deepest platform of
this type in the Gulf. Two wells drilled from the platform are
currently producing 30 million cubic feet of gas per day. The
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Company owns a 50% working interest in the field. At Vermilion
143, a platform was set that is currently producing 20 million
cubic feet of gas per day from two wells. The Company's working
interest in this field is 25%. The third structure was a four-pile
platform with production capacity of 40 million cubic feet of gas
per day that was set in late 1995 at South Pass 34/47. Development
drilling is underway and production is anticipated in the first
quarter of 1996. The Company owns a 50% working interest in this
field.
A new platform is scheduled to be installed in mid-1996 at
South Timbalier 229/Grand Isle 108 to produce three wells that were
successfully drilled in late 1994. The Company owns 100% of these
wells and production is expected to reach 30 million cubic feet of
gas per day later this year. The Company has also begun the
initial study and facility design for a shallow discovery well that
was drilled in 1995 at Ship Shoal 358.
Wyoming
In 1995, natural gas sales from the 70,000 acre Madden Field
in Wyoming attained the highest level in its 26 year history.
Field deliverability now exceeds 100 million cubic feet of gas per
day. The rise in natural gas sales and deliverability was achieved
after the Lost Cabin Gas Plant, constructed to process sour gas
production from the deep Madison Formation, was brought on line in
March 1995. The facility cost $83 million and has a design inlet
capacity of 50 million cubic feet of gas per day. At this rate,
the plant produces approximately 33 million cubic feet per day of
sales gas and over 200 long tons of sulfur per day. The plant is
being studied for de-bottlenecking possibilities which could
increase inlet capacity. The Company is the operator and has a 37%
interest in the facility.
A third Madison Formation well, in which the Company has a 38%
working interest, the Bighorn 4-36, began drilling in late 1995.
This well's location was based on the 3-D seismic survey completed
over the field in 1994. A substantial portion of the cost of this
well, which will take nearly 12 months to drill, will be covered by
insurance proceeds. The Bighorn 4-36 is a significant step-out
from the two existing wells and has the potential to materially
increase the Company's gas reserves. The Lost Cabin Gas Plant can
be expanded to process additional gas volumes from future
successful Madison Formation wells.
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North Sea
In the U.K. sector of the North Sea, successful development
drilling in the Brae Complex contributed to an increase in liquids
volumes. Additionally, 1995 was the first full year of natural gas
sales from the Brae Complex. In late 1994, the Brae group
initiated natural gas sales through the SAGE Pipeline System in
which it owns a 50% equity interest. During 1995, the SAGE owners
entered into an arrangement with the operator of another large
North Sea producing field to process their gas production through
the SAGE onshore plant which will be expanded to handle the
additional volumes.
At the T-Block Complex, immediately south of the Brae Complex,
facilities modifications completed during 1995 enabled production
volumes to reach an all-time high last summer. The Company owns a
11.26% interest in the two currently-producing fields, Tiffany and
Toni, as well as the Thelma fields. The plan of development for
the Thelma and Southeast Thelma fields was approved by the U.K.
government last year. Development plans include a subsea
production structure that will be tied back to the existing Tiffany
platform. The first two of five planned production wells have been
successfully predrilled and encountered pay sections thicker than
those in the exploration wells. The production structure is
scheduled to be set in mid-1996. Initial production of 12,000
barrels of oil per day is expected in late 1996 or early 1997,
rising to 25,000 barrels of oil per day a year later.
In the Dutch sector of the North Sea, the Company participates
in natural gas exploration and development through its 50%-owned
affiliate, CLAM Petroleum Company. In 1995, the Company's share of
production rose to 43.5 million cubic feet of gas per day. New
production from successful development drilling at the K8 and K11
blocks contributed to the volume increment. Additionally, the L13-
FH subsea tieback development project was completed during 1995 and
tested at an initial rate of 50 million cubic feet of gas per day.
Development drilling will continue at CLAM during 1996.
Indonesia
At the KAKAP concession offshore Indonesia, the Company's
share of production more than doubled following the installation of
production facilities at the KG and KGA fields. Four successful
development wells have been drilled at each field. Additional
development drilling is planned in both areas in 1996.
<PAGE>
<PAGE>
During the years 1993 through 1995, 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
1995 1994 1993 1995 1994 1993 1995 1994 1993
_______________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LL&E and Subsidiaries:
Domestic:
Offshore Gulf of
Mexico .6 .8 1.5 1.5 2.3 1.9 - - .3
Louisiana - - .5 .9 - - - - -
Wyoming .2 - - - .7 1.3 - - -
North Sea:
Netherlands .6 - - - .1 - - - -
United Kingdom .6 .2 .1 - - - - .1 -
Other foreign:
Colombia .1 - - - .1 - - - -
Indonesia 1.1 - - - - - - - -
_______________________________________________________________________________________
Total 3.2 1.0 2.1 2.4 3.2 3.2 - .1 .3
_______________________________________________________________________________________
CLAM (50%)
Netherlands-North Sea - - - .2 .1 .2 - - -
_______________________________________________________________________________________
</TABLE>
Royalty Interest
During 1995, 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>
Other foreign - Canada 1 - -
_______________________________________________________________________________________
</TABLE>
<PAGE>
DRILLING ACTIVITIES AT DECEMBER 31, 1995
Working Interest
The table below sets forth the working interest wells in the
process of drilling at December 31, 1995 by LL&E and by CLAM.
<TABLE>
<CAPTION>
Wells drilling
Gross Net
_______________________________________________________________________________________
<S> <C> <C>
LL&E and Subsidiaries:
Domestic 9 3.7
North Sea 4 .3
Other foreign 2 .3
_______________________________________________________________________________________
Total 15 4.3
_______________________________________________________________________________________
CLAM (50%) Netherlands-North Sea - -
_______________________________________________________________________________________
</TABLE>
Royalty Interest
Two domestic wells were being drilled by others at
December 31, 1995 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, 1995.
<TABLE>
<CAPTION>
Oil wells Gas wells
Gross Net Gross Net
_______________________________________________________________________________________
<S> <C> <C> <C> <C>
LL&E and Subsidiaries:
Domestic 1,407 139.5 296 107.1
North Sea 66 7.8 - -
Other foreign 57 8.5 - -
_______________________________________________________________________________________
Total 1,530 155.8 296 107.1
_______________________________________________________________________________________
CLAM (50%) Netherlands-North Sea - - 58 3.8
_______________________________________________________________________________________
</TABLE>
Oil wells include 41 dual completions and gas wells include 26 dual
completions.
<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, 1995.
<TABLE>
<CAPTION>
Gross wells
Oil Gas
_______________________________________________________________________________________
<S> <C> <C>
Domestic 646 246
_______________________________________________________________________________________
</TABLE>
Oil wells include 29 dual completions and gas wells include 15 dual
completions.
<PAGE>
<PAGE>
CRUDE AND CONDENSATE, PLANT PRODUCTS AND NATURAL GAS PRODUCTION
AND PRICES REALIZED
The production and average price information for the years
1993 through 1995 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>
1995 1994 1993
_______________________________________________________________________________________
<S> <C> <C> <C>
LL&E and Subsidiaries:
Domestic $3.95 3.97 4.69
North Sea 4.65 5.89 9.20
Other foreign 3.51 5.59 5.64
_______________________________________________________________________________________
CLAM
Netherlands-North Sea $4.39 2.36 3.07
_______________________________________________________________________________________
</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.
Refinery capital expenditures during 1995 totaled $1.5 million
which was used for miscellaneous capital improvements, safety and
environmental items. In 1996, $2 million has been budgeted for
capital projects including over $1 million for catalyst replacement
and the balance for maintenance, safety and environmental items.
In 1995, 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 1995.
In 1995, the Company announced plans to review the strategic
alternatives for the refinery. The Company will continue to pursue
the sale or other alternatives for the refinery in 1996. In the
years 1995, 1994 and 1993, the refinery generated revenues, after
elimination of intercompany transfers, totaling $355.2 million,
$361.4 million and $400.2 million, respectively, and operating
profits (losses) of $2.6 million, $2.1 million (before a $39
million write-down of refinery assets) and $(3.3) million (before
a $6.7 million write-down of refinery inventories).
Sales and Prices Realized
The sales and average price information for the years 1993
through 1995 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. 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 National Priorities List sites located in certain areas where
the Company has historically operated. With the exception of the
PAB Oil and Chemical Superfund site, the Company is considered a de
minimis party to each of the listed sites. At the PAB Oil and
Chemical site, the Company's participation allocation exceeds the
de minimis threshold. However, based on the Company's evaluation
of the potential total cleanup cost, 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 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 (61)
Chairman of the Board and Chief
Executive Officer since September
1995. Chairman of the Board,
President and Chief Executive
Officer from 1989 to 1995.
Richard A. Bachmann (51)
President and Chief Operating
Officer since September 1995.
Director since 1989. Executive
Vice President, Finance and
Administration and Chief Financial
Officer from 1985 to 1995.
Louis A. Raspino, Jr. (43)
Senior Vice President-Chief
Financial Officer since September
1995. Treasurer from 1992 to 1995.
Assistant Treasurer from 1984 to
1992.
John A. Williams (51) Senior Vice President-Exploration
and Production since September
1995. Vice President from 1988
to 1995.
Suzanne V. Baer (48) Vice President and Treasurer
since September 1995. Director-
Investor and Shareholder Relations
from 1988 to 1995.
Jerry D. Carlisle (50) Vice President and Controller
since 1984.
Robert J. Chebul (48) Vice President since 1991. Held
various managerial positions,
including District Manager from
1988 to 1991.
William N. Hahne (44) 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.
C. Scott Kirk (46)
Vice President-Production
Marketing since September 1995.
General Manager-Natural Gas
Marketing from 1989 to 1995.
<PAGE>
<PAGE>
John O. Lyles (50)
Vice President since 1992.
Vice President and Treasurer
from 1984 to 1992.
James E. Orth (43)
Vice President-Production since
September 1995. District Manager
from 1991 to 1995.
Frederick J. Plaeger, II (42)
Vice President, General Counsel
and Corporate Secretary since
September 1995. General Counsel
and Corporate Secretary from 1992
to 1995. Corporate Secretary and
Senior Counsel from 1989 to 1992.
Joel M. Wilkinson (60)
Vice President since 1988.
C. A. Zackary (51)
Vice President-Human Resources
since September 1995. Director-
Human Resources from 1987 to 1995.
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 29
Independent Auditors' Report 30
Consolidated Balance Sheets 31
Consolidated Statements of Earnings (Loss) 32
Consolidated Statements of Stockholders' Equity 33
Consolidated Statements of Cash Flows 34
Notes to Consolidated Financial Statements 35
Unaudited Supplemental Data:
Management's Discussion and Analysis 54
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, 1995 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 Louis A. Raspino, Jr.
Chairman and Senior Vice President -
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, 1995 and 1994, 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, 1995.
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, 1995 and 1994, and the results of
their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995 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 2, 1996<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
CONSOLIDATED BALANCE SHEETS The Louisiana Land and Exploration
Company and Subsidiaries
December 31, 1995 and 1994
(Millions of dollars)
ASSETS 1995 1994
_________________________________________________________________________________________
<S> <C> <C>
CURRENT ASSETS:
Cash, including cash equivalents (1995-$1.0; 1994-$8.6) $ 10.3 12.5
Accounts and notes receivable 143.6 126.4
Income taxes receivable .2 1.9
Inventories 38.7 31.8
Prepaid expenses 12.9 8.9
Deferred income taxes .9 2.6
_________________________________________________________________________________________
Total current assets 206.6 184.1
_________________________________________________________________________________________
Investments in affiliates 19.9 23.4
Net property, plant and equipment, at cost, under the
successful efforts method of accounting for oil
and gas properties 1,207.6 1,240.4
Other assets 33.6 30.2
_________________________________________________________________________________________
$ 1,467.7 1,478.1
_________________________________________________________________________________________
LIABILITIES AND STOCKHOLDERS' EQUITY
_________________________________________________________________________________________
CURRENT LIABILITIES:
Accounts payable and accrued expenses 199.8 187.7
Income taxes payable .8 2.8
_________________________________________________________________________________________
Total current liabilities 200.6 190.5
_________________________________________________________________________________________
Deferred income taxes 49.6 40.0
Long-term debt 691.6 739.5
Other liabilities 155.2 155.7
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 88.3 87.3
Retained earnings 435.0 424.2
_________________________________________________________________________________________
529.0 517.2
Loans to ESOP (1.9) (5.2)
Cost of capital stock in treasury-4,514,357 shares in
1995 and 4,624,729 shares in 1994 (156.4) (159.6)
_________________________________________________________________________________________
TOTAL STOCKHOLDERS' EQUITY 370.7 352.4
_________________________________________________________________________________________
$ 1,467.7 1,478.1
_________________________________________________________________________________________
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, 1995, 1994 and 1993
(Millions, except per share data)
<CAPTION>
1995 1994 1993
_________________________________________________________________________________________
<S> <C> <C> <C>
REVENUES:
Oil and gas $ 464.7 421.2 370.1
Refined products 355.2 361.3 400.2
Gain on sales of oil and gas properties 2.3 6.8 23.5
Other (interest, 1995-$1.0; 1994-$1.6; 1993-$3.4) 8.3 12.2 21.6
_________________________________________________________________________________________
830.5 801.5 815.4
_________________________________________________________________________________________
COSTS AND EXPENSES:
Lease operating and facility expenses 116.5 116.1 106.8
Refinery cost of sales and operating expenses 347.9 354.5 403.4
Dry holes and exploratory charges 68.3 69.7 48.8
Depletion, depreciation and amortization 161.8 202.2 129.8
Taxes, other than on earnings 23.6 25.4 24.7
General, administrative and other expenses 45.0 44.6 49.0
Interest and debt expenses 38.6 25.6 28.3
Reversal of litigation accrual - (10.0) -
Write-down of petroleum assets - 319.0 -
_________________________________________________________________________________________
801.7 1,147.1 790.8
_________________________________________________________________________________________
Earnings (loss) before income taxes 28.8 (345.6) 24.6
Income tax expense (benefit) 10.0 (118.7) 11.9
_________________________________________________________________________________________
Earnings (loss) before extraordinary
item and cumulative effect of changes
in accounting principles 18.8 (226.9) 12.7
Extraordinary item: loss on early retirement
of debt - - (3.3)
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) $ 18.8 (226.9) 9.6
_________________________________________________________________________________________
Earnings (loss) per share before extraordinary
item and cumulative effect of changes in
accounting principles 0.56 (6.80) 0.43
Extraordinary item: loss on early retirement
of debt - - (0.11)
Change in accounting principle for income taxes - - 0.47
Change in accounting principle for post-
retirement benefits - - (0.46)
_________________________________________________________________________________________
EARNINGS (LOSS) PER SHARE $ 0.56 (6.80) 0.33
_________________________________________________________________________________________
AVERAGE SHARES 33.5 33.4 29.5
_________________________________________________________________________________________
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, 1995, 1994 and 1993
(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, 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)
Net earnings - 18.8 - - -
Cash dividends ($0.24 per
share) - (8.0) - - -
Repayment of loans to ESOP - - 3.3 - -
Other 1.0 - - (110,372) 3.2
_________________________________________________________________________________________
Balance at December 31, 1995 $88.3 $435.0 $ (1.9) 4,514,357 $(156.4)
_________________________________________________________________________________________
Capital stock of $.15 par value was unchanged during the three-year period ended December
31, 1995.
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, 1995, 1994 and 1993
(Millions of dollars)
<CAPTION>
1995 1994 1993
_________________________________________________________________________________________
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ 18.8 (226.9) 9.6
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 (2.3) (6.8) (23.5)
Extraordinary item: loss on early
retirement of debt - - 3.3
Depletion, depreciation and amortization 161.8 202.2 129.8
Deferred income taxes 11.3 (111.2) 9.2
Dry holes and impairment charges 41.2 36.4 21.8
Other 6.3 2.2 22.2
_________________________________________________________________________________________
237.1 214.9 172.2
Changes in operating assets and liabilities,
net of acquisitions:
Net (increase) decrease in receivables (19.7) (9.0) 4.3
Net increase in inventories (6.9) (5.0) (4.9)
Net (increase) decrease in prepaid items (4.0) 3.8 (5.0)
Net increase in payables 11.8 .7 2.7
Other 2.2 6.7 9.6
_________________________________________________________________________________________
Net cash flows from operating activities 220.5 212.1 178.9
_________________________________________________________________________________________
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions - - (547.9)
Capital expenditures (191.0) (236.8) (171.7)
Proceeds from asset sales 21.3 15.6 43.7
Other (4.3) (16.3) (46.4)
_________________________________________________________________________________________
Net cash flows from investing activities (174.0) (237.5) (722.3)
_________________________________________________________________________________________
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of treasury stock - - 188.8
Additions to long-term debt 28.0 239.7 492.0
Repayments of long-term debt (75.9) (234.7) (104.6)
Dividends (8.0) (33.3) (29.8)
Advances against cash surrender value 9.0 34.4 -
Repayment of loans to ESOP 3.3 3.6 3.0
Purchase of treasury stock - - (1.5)
Other (5.1) (5.1) (11.7)
_________________________________________________________________________________________
Net cash flows from financing activities (48.7) 4.6 536.2
_________________________________________________________________________________________
Decrease in cash and cash equivalents $ (2.2) (20.8) (7.2)
_________________________________________________________________________________________
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, 1995, 1994 and 1993
_________________________________________________________________
1. Summary of Significant Accounting Policies
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.
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. Effective in the fourth
quarter of 1995, the Company began assessing the impairment of
capitalized costs of proved oil and gas properties and other long-
lived assets in accordance with Statement of Financial Accounting
Standards No. 121 (SFAS No. 121), "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
Under this method, the Company generally assesses its oil and gas
properties on a field-by-field basis utilizing its current estimate
of future revenues and operating expenses. In the event net
undiscounted cash flow is less than the carrying value, an
impairment loss is recorded based on estimated fair value, which
would consider discounted future net cash flows. The Company's
methods of assessing impairment in prior years is described in Note
2. 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. Significant changes in the
various estimates discussed above could affect the financial
position and results of operations of the Company.
<PAGE>
<PAGE>
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.
Financial Instruments and Hedging Activities
The Company's anticipated hydrocarbon transactions and its
committed British pound currency expenditures are periodically
hedged against market risks through the use of various derivative
financial instruments. The gains and losses on these instruments
are included in the valuation of the transactions being hedged upon
completion of the transactions. 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. Gains and losses on closed swap agreements are
deferred and amortized over the original terms of the agreements.
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.
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. As
prescribed by SFAS No. 109, deferred tax assets and liabilities 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 and taxable 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.
Earnings (Loss) Per Share
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.
<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 had
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 assessed 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 were 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 were 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 was
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 changed methods referred to above were not identical to those
later prescribed by SFAS No. 121 as described in Note 1. The
Company adopted the provisions of SFAS No. 121 in the fourth
quarter of 1995 and no further impairment was indicated.
<PAGE>
<PAGE>
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.
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 year ending December 31, 1993, as
though the acquisition had taken place on January 1, are as
follows:
<TABLE>
<CAPTION>
(Millions of dollars, except per share data) 1993
________________________________________________________________________________________
<S> <C>
Revenues $907.1
________________________________________________________________________________________
Earnings (loss) before extraordinary items and cumulative effect
of changes in accounting principles (.3)
________________________________________________________________________________________
Net earnings (loss) (3.4)
________________________________________________________________________________________
Earnings (loss) per share $(0.09)
________________________________________________________________________________________
</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 the
1993 results of operations.
Dispositions
In 1995, the Company sold various oil and gas properties for
approximately $16.1 million resulting in a gain of $2.3 million
(before income taxes of $.8 million).
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 pretax
earnings of $1.2 million in 1993.
<PAGE>
<PAGE>
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 consolidated balance
sheets at cost plus accrued interest, which approximates fair
value. Cash flows related to hedging activities are classified in
the same categories as that from the items being hedged.
5. Nonrecurring 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. This adjustment to the litigation accrual is included in
"Net increase in payables" in the accompanying Consolidated
Statements of Cash Flows.
6. Inventories
<TABLE>
<CAPTION>
(Millions of dollars) 1995 1994
_________________________________________________________________________________________
<S> <C> <C>
Refinery inventories at lower of cost (last-in,
first-out) or market $37.8 30.8
Repair parts, supplies and other, at lower of
average cost or market .9 1.0
_________________________________________________________________________________________
$38.7 31.8
_________________________________________________________________________________________
</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 1995 1994
_________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
MaraLou (CLAM
Petroleum Oil &
Company) Gas North Sea 50% $15.5 18.9
Other Various U.S. Various 4.4 4.5
_________________________________________________________________________________________
$19.9 23.4
_________________________________________________________________________________________
</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 $5.8 million, $4.2 million and $2.4
million in 1995, 1994 and 1993, respectively. Cash dividends
received from MaraLou/CLAM in 1995, 1994 and 1993 totaled $10
million, $6 million and $10 million, respectively.
The consolidated financial position of MaraLou and its wholly owned
subsidiary, CLAM, as of December 31, 1995 and 1994 and the results
of their operations for each of the years in the three-year period
ended December 31, 1995 are summarized below.
<TABLE>
<CAPTION>
(Millions of dollars) 1995 1994
_________________________________________________________________________________________
<S> <C> <C>
Current assets $ 28.6 24.0
_________________________________________________________________________________________
Noncurrent assets 167.5 175.3
_________________________________________________________________________________________
Current liabilities 18.4 15.8
_________________________________________________________________________________________
Noncurrent liabilities 148.3 145.7
_________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
(Millions of dollars) 1995 1994 1993
_________________________________________________________________________________________
<S> <C> <C> <C>
Gross revenues $ 85.8 68.7 61.1
_________________________________________________________________________________________
Operating profit 31.1 36.2 30.1
_________________________________________________________________________________________
Earnings before cumulative effect of
change in accounting principle 11.6 8.2 10.9
_________________________________________________________________________________________
Net earnings 11.6 8.2 4.9
_________________________________________________________________________________________
</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) 1995 1994
_________________________________________________________________________________________
<S> <C> <C>
Petroleum properties:
Proved $2,693.3 2,530.3
Unproved 82.7 170.6
Refining and marketing 278.2 276.6
_________________________________________________________________________________________
3,054.2 2,977.5
Other properties 66.7 72.4
_________________________________________________________________________________________
3,120.9 3,049.9
Less accumulated depletion, depreciation and amortization 1,913.3 1,809.5
_________________________________________________________________________________________
$1,207.6 1,240.4
_________________________________________________________________________________________
</TABLE>
In 1995, the Company announced plans to review the strategic
alternatives for its refinery. The Company will continue to pursue
the sale or other alternatives for the refinery in 1996. In the
years 1995, 1994 and 1993, the refinery generated revenues, after
elimination of intercompany transfers, totaling $355.2 million,
$361.4 million and $400.2 million, respectively, and operating
profits (losses) of $2.6 million, $2.1 million (before a $39
million write-down of refinery assets) and $(3.3) million (before
a $6.7 million write-down of refinery inventories). The net book
value of refining assets was approximately $34 million as of
December 31, 1995.
9. Financial Instruments and Hedging Activities
The Company uses derivative financial instruments to manage well-
defined interest rate, foreign currency and commodity price risks
and does not use them for speculative purposes.
At December 31, 1995, the Company had $100 million of notional
value interest rate swap agreements terminating in 1996 and 1997.
These agreements allow the Company to manage fixed- and variable-
rate interest exposure by converting a portion of the Company's
variable-rate exposure to fixed-rate. At December 31, 1994, the
Company had $100 million of notional value interest rate swap
agreements terminating in 1997, which converted a portion of the
Company's fixed-rate exposure to variable-rate. The fair value of
the interest rate swap agreements at December 31, 1995 and 1994
amounted to $2.1 and $4.7 million, respectively, which represents
the Company's cost to terminate the agreements. The Company also
had $5.7 million of British pound currency forward contracts
maturing in 1996 and 1997. Such contracts totaled $11.7 million at
December 31, 1994. 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 pounds 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
$.4 million and $.7 million, respectively, at December 31, 1995 and
1994.
<PAGE>
<PAGE>
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 $423 million
and $353 million at December 31, 1995 and 1994, respectively, based
upon quoted market prices for the same or similar issues. Such
debt was recorded at carrying amounts of $400 million at December
31, 1995 and 1994, resulting in an unrealized loss of $23 million
and an unrealized gain of $47 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, 1995, the Company had contracts maturing monthly
through June 1996 covering the net purchase of 9.6 million barrels
of feedstock totaling $181 million and the net sale of 9.6 million
barrels of refined products totaling $209.8 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
18 million barrels of refined products in 1995 and had approxi-
mately 2.2 million barrels of crude oil and petroleum products in
its refinery inventories at December 31, 1995. At December 31,
1994, the Company had similar contracts covering the net purchase
of 1.4 millon barrels of feedstock totaling $25.5 million and the
net sale of 1.4 million barrels of refined products totaling $30.1
million.
In 1995, the Company initiated a hedging program designed to
minimize the price risks associated with future natural gas and
crude oil production. This program utilizes futures, forwards,
options and swap contracts in series of transactions designed to
set a floor price for future production and at the same time allow
the Company to participate in market price increases above a set
level over the floor price. At December 31, 1995, approximately 27
billion British Thermal Units (BTU) of 1996 natural gas production
for the period January through April were covered by a series of
transactions designed to set an average floor price of $1.78 per
million BTU and at the same time allow the Company to participate
in natural gas price increases more than $0.20 per million BTU
above the floor price. While these transactions have no carrying
value, their fair value, represented by the estimated amount that
would be required to terminate the contracts, was a net cost of
$2.4 million at December 31, 1995. (The Company estimates that its
domestic natural gas production averages approximately 1.07 million
BTU for each thousand cubic feet.) In addition, approximately 2.3
million barrels of 1996 crude oil production for the period January
through February were covered by a series of transactions designed
to set an average floor price of $18.81 per barrel and at the same
time allow the Company to participate in crude oil price increases
more than $1.34 per barrel above the floor price. While these
transactions have no carrying value, their fair value, represented
by the estimated amount that would be required to terminate the
contracts, was a net cost of $.9 million at December 31, 1995.
<PAGE>
<PAGE>
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) 1995 1994
_________________________________________________________________________________________
<S> <C> <C>
Revolving Credit Facility $ 92.0 64.0
7-5/8% Debentures due 2013 100.0 100.0
7.65% Debentures due 2023 200.0 200.0
8-1/4% Notes due 2002 100.0 100.0
Commercial paper notes 198.6 271.7
Notes payable to bank for financing of leveraged ESOP - 3.5
Other issues 1.0 .3
_________________________________________________________________________________________
Total long-term debt $691.6 739.5
_________________________________________________________________________________________
</TABLE>
Debt maturities for the years 1996 through 1999 are less than $.1
million each year with maturities of $290.7 million in the year
2000.
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. The
revolving credit facility, which was subsequently reduced to $450
million, was renegotiated in 1994 and converted to a reducing
revolving loan. In June 1995, the reducing revolving loan was
replaced by a $450 million revolving credit facility due June 30,
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 facilities in 1995
and 1994 were at average interest rates of 6.5% and 4.8%,
respectively. Fees ranging from .10% to .25%, based upon 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
<PAGE>
<PAGE>
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 varied with time and market
conditions and were determined by the bank subject to certain
options chosen in advance by the Company. The average interest
rates for both loans in 1995 and 1994 were 5.8% and 4%,
respectively.
During 1995, the average monthly balance of commercial paper notes
outstanding was $291 million; the maximum amount outstanding during
that period was $324 million. Commercial paper borrowings during
1995 and 1994 were at average interest rates of 6.1% and 4.6%,
respectively. The commercial paper program is supported by the
unused portion of the aforementioned revolving credit facility.
In connection with an early retirement of debt, the Company
recorded an extraordinary loss of $3.3 million (after income tax
benefits of $1.7 million) in 1993.
11. Interest and Debt Expenses
For the years ended December 31, 1995, 1994 and 1993, interest
costs incurred, which were essentially the same as interest
payments, were $54.3 million, $47.9 million and $47 million,
respectively, of which $15.7 million, $22.3 million and $18.7
million, respectively, were capitalized as part of the cost of
property, plant and equipment.
In connection with the 1993 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.
12. Income Taxes
As explained in Note 1, 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.
<PAGE>
<PAGE>
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) 1995 1994 1993
_________________________________________________________________________________________
<S> <C> <C> <C>
Domestic $ (16.7) (322.0) 9.7
Foreign 45.5 (23.6) 14.9
_________________________________________________________________________________________
$ 28.8 (345.6) 24.6
_________________________________________________________________________________________
</TABLE>
Components of income tax expense (benefit) are as follows:
<TABLE>
<CAPTION>
(Millions of dollars) 1995 1994 1993
_________________________________________________________________________________________
<S> <C> <C> <C>
Current tax expense (benefit):
Federal $ 1.1 (3.5) (3.5)
State .2 (.7) (.3)
Foreign (2.6) (3.3) 6.5
_________________________________________________________________________________________
(1.3) (7.5) 2.7
_________________________________________________________________________________________
Deferred tax expense (benefit):
Federal 10.2 (109.2) 9.2
Foreign 1.1 (2.0) -
_________________________________________________________________________________________
11.3 (111.2) 9.2
_________________________________________________________________________________________
$ 10.0 (118.7) 11.9
_________________________________________________________________________________________
</TABLE>
Tax expense (benefit) differs from the amounts computed by applying
the U.S. Federal tax rate of 35% to earnings (loss) before income
tax. The reasons for the differences are as follows:
<TABLE>
<CAPTION>
(Millions of dollars) 1995 1994 1993
_________________________________________________________________________________________
<S> <C> <C> <C>
Computed "expected" tax expense (benefit) $ 10.1 (121.0) 8.6
Increases (reductions) in taxes resulting from:
Increase in Federal income tax rate - - 3.0
Equity in earnings of foreign affiliates (4.3) 4.5 (7.4)
Foreign income taxes, net of Federal income tax
benefit 4.5 (2.0) 8.4
Employee benefit plans (1.8) (1.1) (.9)
Percentage depletion (.2) (.2) (.1)
Other 1.7 1.1 .3
_________________________________________________________________________________________
$ 10.0 (118.7) 11.9
_________________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
Total income tax expense (benefit) was allocated as follows:
<TABLE>
<CAPTION>
(Millions of dollars) 1995 1994 1993
_________________________________________________________________________________________
<S> <C> <C> <C>
Income (loss) before extraordinary item and
changes in accounting principles $ 10.0 (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 (.2) (1.0) (1.8)
_________________________________________________________________________________________
$ 9.8 (119.7) (12.3)
_________________________________________________________________________________________
</TABLE>
The significant components of income tax expense (benefit) attri-
butable to income from continuing operations are as follows:
<TABLE>
<CAPTION>
(Millions of dollars) 1995 1994 1993
_________________________________________________________________________________________
<S> <C> <C> <C>
Current tax expense (benefit) $ (1.3) (7.5) 2.7
Deferred tax expense (benefit) (exclusive of
the effects of other components listed below) 11.3 (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
_________________________________________________________________________________________
$ 10.0 (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) 1995 1994 1993
_________________________________________________________________________________________
<S> <C> <C> <C>
Deferred tax assets:
Deferred foreign tax credits $ 42.5 32.3 22.8
Foreign tax credit carryforwards 6.5 11.7 10.2
Federal net operating loss carryforwards 44.0 36.4 -
Alternative minimum tax credit carryforwards 2.1 1.9 5.2
Employee benefits 16.0 19.0 18.7
Other 10.9 10.3 12.8
_________________________________________________________________________________________
Total gross deferred tax assets 122.0 111.6 69.7
Less valuation allowance (31.9) (28.3) (17.8)
_________________________________________________________________________________________
Net deferred tax assets 90.1 83.3 51.9
_________________________________________________________________________________________
(continued)
<PAGE>
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
(Millions of dollars) 1995 1994 1993
_________________________________________________________________________________________
<S> <C> <C> <C>
Deferred tax liabilities:
Property, plant and equipment, principally due
to differences in depreciation and capitalized
interest (114.4) (90.7) (178.7)
Other (24.4) (30.0) (21.8)
_________________________________________________________________________________________
Total gross deferred tax liabilities (138.8) (120.7) (200.5)
_________________________________________________________________________________________
$ (48.7) (37.4) (148.6)
_________________________________________________________________________________________
</TABLE>
The net changes in the valuation allowance for the years ended
December 31, 1995, 1994 and 1993 were increases of $3.6 million,
$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.
For the years ended December 31, 1995, 1994 and 1993, the Company's
net cash payments (refunds) of income taxes totaled $.7 million,
$(1.1) million and $7.1 million, respectively.
At December 31, 1995, the Company has foreign tax credit
carryforwards for Federal income tax purposes of $6.5 million which
are available through 1997 to offset future Federal income taxes,
if any. The Company has Federal net operating loss carryforwards
totaling $125.9 million which are available to offset future
Federal taxable income through 2009. The Company also has
alternative minimum tax credit carryforwards of $2.1 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, 1995 and 1994
with market values of $2.2 million and $1.9 million, respectively.
Funding requirements for the years ended December 31, 1995 and 1994
amounted to $5.6 million and $5.5 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) 1995 1994
_________________________________________________________________________________________
<S> <C> <C>
Accumulated benefit obligation, including vested benefits
of $24.3 and $16.1 $ 24.9 16.8
_________________________________________________________________________________________
Projected benefit obligation (37.2) (25.5)
Plan assets at fair market value 23.8 17.5
_________________________________________________________________________________________
Plan assets under projected benefit obligation (13.4) (8.0)
Additional minimum liability (1.1) -
Unrecognized net loss from past experience different
from that assumed and effects of changes in assumptions 13.4 9.3
Unrecognized net asset being recognized over 15 years (.8) (1.0)
_________________________________________________________________________________________
Prepaid (accrued) pension cost $ (1.9) .3
_________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
(Millions of dollars) 1995 1994 1993
_________________________________________________________________________________________
<S> <C> <C> <C>
Service cost $ 2.5 3.4 1.8
Interest cost 2.0 2.0 1.4
Actual (gain) loss on plan assets (5.0) .4 (1.3)
Net amortization and deferral 3.7 (1.1) .1
_________________________________________________________________________________________
Net pension expense $ 3.2 4.7 2.0
_________________________________________________________________________________________
Discount rate 7-1/4% 8% 7-1/4%
_________________________________________________________________________________________
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) 1995 1994
_________________________________________________________________________________________
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ (21.8) (21.3)
Employees eligible to retire (3.4) (2.4)
Other employees (5.6) (4.3)
_________________________________________________________________________________________
(30.8) (28.0)
Unrecognized net loss 3.1 1.1
_________________________________________________________________________________________
Accrued postretirement benefit cost $ (27.7) (26.9)
_________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
(Millions of dollars) 1995 1994 1993
_________________________________________________________________________________________
<S> <C> <C> <C>
Service cost $1.1 1.3 .8
Interest cost 2.2 2.1 2.1
_________________________________________________________________________________________
Net postretirement benefit cost $3.3 3.4 2.9
_________________________________________________________________________________________
</TABLE>
Assumptions utilized to measure the accumulated postretirement
obligation at December 31, 1995 and 1994 were: discount rates of
7-1/4% and 8%, respectively; health care cost trend rates of 9% and
12%, respectively, both declining to 5% in the year 2003 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, 1995 and 1994 of $2.7 million
and $1.7 million, respectively; the aggregate of service cost and
interest cost for the years ended December 31, 1995 and 1994 would
have increased by $.5 million and $.5 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 1995, 1994 and 1993, options for
447,700 shares, 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 1995, 1994 and
1993, awards were granted for 11,000 shares, 9,000 shares and
34,250 shares of restricted stock, respectively. In 1995 and 1994,
16,088 shares and 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 1995, 1994 and 1993 for performance shares
amounted to 29,700 shares, 19,500 shares and 18,900 shares,
respectively. Performance shares issued in 1995, 1994 and 1993
amounted to 16,228 shares, 10,496 shares and 15,257 shares,
respectively. Restricted stock and performance share awards are
"compensatory" awards and the Company accrued compensation expense
of $1.2 million, $1 million and $.7 million in 1995, 1994 and 1993,
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. In May 1995, the shareholders approved the 1995
Stock Option Plan for Non-Employee Directors under which the
Company may grant stock options to non-employee directors for up to
an additional 150,000 shares. As prescribed by the plans, 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 20,000 shares, 22,500
shares and 20,000 shares were granted in 1995, 1994 and 1993,
respectively.
At December 31, 1995, 587,686 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
Granted 508,400 35 9/16 - 37 11/16
Cancelled (26,714) 35 9/16 - 44 7/8
Exercised (112,066) 27 1/8 - 39 11/16
__________________________________________________________________________________________
Outstanding at December 31, 1995 2,008,905 27 1/8 - 45 1/2
__________________________________________________________________________________________
Exercisable at December 31, 1995 1,380,383 27 1/8 - 45 1/2
__________________________________________________________________________________________
Weighted average prices:
Outstanding at December 31, 1995 $ 36 3/16
Exercisable at December 31, 1995 36 3/8
__________________________________________________________________________________________
</TABLE>
In October 1995, Statement of Financial Accounting Standards No.
123 (SFAS No. 123), "Accounting for Stock-Based Compensation," was
issued. SFAS No. 123 encourages a fair value based method of
accounting for the compensation costs associated with employee
stock option and similar plans. However, it also permits the
continued use of the intrinsic value based method prescribed by the
Accounting Principles Board's Opinion No. 25 (Opinion No. 25),
"Accounting for Stock Issued to Employees." If the accounting
prescribed by Opinion No. 25 is continued, then pro forma
disclosure of net income and earnings per share must be presented
as if the method of accounting defined in SFAS No. 123 had been
applied in both 1995 and 1996. SFAS No. 123 is effective for the
Company's 1996 fiscal year, though it may be adopted earlier.
The Company has elected to continue to apply the provisions of
Opinion No. 25 and will calculate compensation cost prescribed by
SFAS No. 123 and present pro forma disclosures in 1996. Until such
calculations are completed, the Company cannot estimate the impact
such will have on the pro forma disclosures.
<PAGE>
<PAGE>
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
June 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.
15. Contingencies
The Company has been notified by the U.S. Environmental Protection
Agency that it is one of many Potentially Responsible Parties (PRP)
with respect to certain 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) 1995 1994 1993
_________________________________________________________________________________________
<S> <C> <C> <C>
Sales to unaffiliated customers:
Domestic $ 662.0 678.1 692.9
North Sea 133.9 92.9 40.3
Other foreign 26.3 18.3 60.6
_________________________________________________________________________________________
822.2 789.3 793.8
Interest and other income 8.3 12.2 21.6
_________________________________________________________________________________________
Total revenues $ 830.5 801.5 815.4
_________________________________________________________________________________________
Earnings (loss) before income taxes:
Operating profit (loss):
Domestic 92.3 (265.7) 79.2
North Sea 33.8 5.5 (7.7)
Other foreign (15.9) (30.7) 16.5
_________________________________________________________________________________________
110.2 (290.9) 88.0
Other income (expense), net (81.4) (54.7) (63.4)
_________________________________________________________________________________________
Earnings (loss) before income taxes $ 28.8 (345.6) 24.6
_________________________________________________________________________________________
Identifiable industry assets:
Domestic 824.0 793.9 1,089.6
North Sea 495.6 518.8 523.2
Other foreign 78.5 92.6 99.5
_________________________________________________________________________________________
1,398.1 1,405.3 1,712.3
Other assets 69.6 72.8 126.4
_________________________________________________________________________________________
Total assets $1,467.7 1,478.1 1,838.7
_________________________________________________________________________________________
Depletion, depreciation and amortization:
Petroleum 156.1 196.7 123.4
Other 5.7 5.5 6.4
_________________________________________________________________________________________
$ 161.8 202.2 129.8
_________________________________________________________________________________________
Capital expenditures:
Exploration:
Domestic 51.8 55.3 31.2
North Sea .4 1.6 1.8
Other foreign 14.1 16.5 10.0
_________________________________________________________________________________________
66.3 73.4 43.0
_________________________________________________________________________________________
Development:
Domestic 69.5 75.4 58.0
North Sea 16.9 18.2 37.6
Other foreign 11.2 16.0 3.1
_________________________________________________________________________________________
97.6 109.6 98.7
_________________________________________________________________________________________
Refining and marketing 3.5 31.1 18.4
_________________________________________________________________________________________
167.4 214.1 160.1
Capitalized interest 15.7 22.3 18.7
Other 4.2 3.8 3.5
_________________________________________________________________________________________
$ 187.3 240.2 182.3
_________________________________________________________________________________________
* Includes nonrecurring charges/credits as follows:
1995 - see Note 3.
1994 - see Notes 2, 3 and 5.
1993 - see Notes 3, 6, 7, 11 and 12.
/TABLE
<PAGE>
<PAGE>
_________________________________________________________________
MANAGEMENT'S DISCUSSION AND ANALYSIS
_________________________________________________________________
REVIEW OF OPERATIONS (1995 vs 1994)
The Company reported net income of $18.8 million in 1995. This
was a significant improvement over the 1994 net loss of $27.6
million (before inclusion of the 1994 write-down of the Company's
oil and gas properties and refining assets and certain nonrecurring
gains discussed below). The improvement was primarily a result of
higher oil and gas revenues and lower depletion, depreciation and
amortization expenses.
Oil and Gas Operations
Revenues from oil and gas operations were up $44 million from 1994.
Liquids revenues were up almost $43 million due to higher crude oil
prices ($27 million) and volumes ($11 million). Natural gas
revenues were up almost $3 million due to higher domestic and North
Sea deliveries ($24 million). The effect of lower natural gas
prices ($21 million) partially offset the higher revenues.
Crude oil volumes were higher in 1995 due to a 2,500 barrel per day
(BPD) increase in North Sea operations and a 1,400 BPD increase in
other foreign operations. North Sea volumes were up primarily due
to higher volumes from new wells onstream at the Brae and T-Block
Complexes. Volumes from other foreign operations were up in 1995
primarily due to the initiation of oil production from the KG Field
and entitlement adjustments in the KAKAP concession, offshore
Indonesia. These production increases at North Sea and other
foreign properties were partially offset by natural declines at
mature producing properties. Domestic volumes were down 1,800 BPD
primarily due to natural declines at mature producing properties
and production interruptions resulting from weather, maintenance,
and drilling activities. The reduction in domestic volumes was
partially offset by production from new south Louisiana wells
onstream.
Natural gas deliveries were up 35 million cubic feet per day
(MMCFD) in 1995. Volumes from the North Sea rose 22 MMCFD in 1995
primarily due to the late-1994 initiation of North Sea gas sales
through the SAGE Pipeline System and a full year's gas sales from
the Brae and T-Block Complexes. An improvement in domestic
deliveries, which accounted for 11 MMCFD of the increase, was due
to new wells onstream. These domestic and North Sea increases were
partially offset by the effects of natural declines at mature
producing properties, the voluntary curtailment of some domestic
sales volumes in response to low prices, domestic wells shut-in for
<PAGE>
<PAGE>
weather, maintenance and drilling activities, and the sale of
certain oil and gas properties. Also, contributing to the
increase, were higher volumes from the Company's 50%-owned
affiliate, CLAM Petroleum Company, due in part to successful
development drilling.
Lease operating and facility expenses were unchanged during the
current year as higher operating and facilities expenses associated
with new producing wells were almost offset by lower repair and
maintenance costs. Depletion, depreciation and amortization (DD&A)
was $40 million lower in 1995 primarily due to the impact of the
1994 write-down of petroleum assets ($49 million) and natural
production declines on mature producing properties ($32 million).
These reductions were partially offset by DD&A associated with new
wells onstream in 1995 ($18 million) and higher production at the
Brae and T-Block Complexes ($20 million). Dry holes and
exploratory charges were down $1 million in 1995 due to lower costs
incurred for seismic and the write-off of unsuccessful wells.
Higher lease impairment partially offset the reduction in dry holes
and exploratory charges. Interest and debt expenses were up $13
million due to a reduction in the amount of interest capitalized
and higher average interest rates.
Refining Operations
Refining operations resulted in a pretax operating profit of $2.6
million, compared to the $2.1 million operating profit (before the
$39 million write-down of refinery assets) reported in 1994. The
favorable impact of lower crude oil feedstock costs ($2 million)
and operating expenses ($3 million) more than offset the effect of
revenue declines ($3 million). Revenues were down as a result of
lower sales volumes ($20 million), despite an increase in product
prices ($17 million).
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
<PAGE>
<PAGE>
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.
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 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 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 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 reduc-
<PAGE>
<PAGE>
tion 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.
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).
LIQUIDITY AND CAPITAL RESOURCES
In 1995, the Company generated approximately $220 million in cash
from operations which, along with advances against cash surrender
values of life insurance policies ($9 million), proceeds from asset
sales ($21 million) and available cash, was utilized for capital
projects ($191 million), repayment of long-term debt ($48 million)
and dividends ($8 million).
The Company expects that its 1996 capital and exploration program,
presently estimated at approximately $228 million, will be financed
substantially by internally generated funds and the proceeds from
sales of nonstrategic assets. The Company continues to pursue the
sale or other alternatives for its Mobile Refinery. 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.
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 with respect to certain 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 uses derivative financial
instruments to manage well-defined interest rate, foreign currency
and commodity price risks and does not use them for speculative
purposes.
<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 26, 1996,
there were 6,786 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 4.5 million
shares being held as treasury shares continue 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 2,596,591 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, 1995.
<TABLE>
<CAPTION>
Liquids (Millions of barrels)
North Other
Domestic Sea CLAM Foreign Total
_________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
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
Revisions of previous estimates 4.8 (4.3) - .5 1.0
Purchase of reserves in place .2 - - - .2
Extensions, discoveries and
other additions 12.8 4.8 - .5 18.1
Production (8.7) (6.6) - (1.8) (17.1)
Sales of reserves in place (.9) - - (1.6) (2.5)
_________________________________________________________________________________________
Proved reserves at December 31, 1995 60.7 28.0 .3 7.8 96.8
_________________________________________________________________________________________
Proved-developed reserves at December 31,
1993 47.0 36.9 .3 5.7 89.9
_________________________________________________________________________________________
1994 48.1 32.7 .2 4.4 85.4
_________________________________________________________________________________________
1995 56.7 23.7 .2 6.4 87.0
_________________________________________________________________________________________
/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, 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
Revisions of previous estimates 43.8 3.0 2.8 1.9 51.5
Purchase of reserves in place 16.3 - - - 16.3
Extensions, discoveries and
other additions 48.6 9.0 - 6.5 64.1
Production (87.6) (9.8) (15.9) (.5) (113.8)
Sales of reserves in place (5.2) - - (17.5) (22.7)
_________________________________________________________________________________________
Proved reserves at December 31, 1995 689.6 164.6 124.4 .5 979.1
_________________________________________________________________________________________
Proved-developed reserves at December 31,
1993 405.9 132.9 118.9 7.7 665.4
_________________________________________________________________________________________
1994 493.5 146.4 116.1 10.1 766.1
_________________________________________________________________________________________
1995 520.7 159.7 111.1 .5 792.0
_________________________________________________________________________________________
</TABLE>
The table below sets forth estimates of the domestic sulfur
reserves attributable to the Company's interests as of December 31:
<TABLE>
<CAPTION>
Proved-
(Thousands of long tons) Proved developed
_________________________________________________________________________________________
<S> <C> <C>
1993 583.6 226.1
_________________________________________________________________________________________
1994 670.3 670.3
_________________________________________________________________________________________
1995 974.7 974.7
_________________________________________________________________________________________
</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 yearend 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 yearend; and (3) deducting estimates of future
income taxes based on the respective yearend 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 yearend. 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, 1995:
<CAPTION>
North Other
(Millions of dollars) Domestic Sea Foreign Total
_________________________________________________________________________________________
<S> <C> <C> <C> <C>
Future cash inflows $2,680.4 903.7 140.8 3,724.9
Future production and development costs (1,047.2) (266.1) (75.4) (1,388.7)
Future income tax expenses (367.2) (192.5) (21.3) (581.0)
_________________________________________________________________________________________
Future net cash flows 1,266.0 445.1 44.1 1,755.2
10% annual discount for estimated timing
of cash flows (416.3) (149.1) (10.1) (575.5)
_________________________________________________________________________________________
Standardized measure of discounted future
net cash flows $ 849.7 296.0 34.0 1,179.7
_________________________________________________________________________________________
CLAM $ - 28.8 - 28.8
_________________________________________________________________________________________
</TABLE>
<TABLE>
PRINCIPAL SOURCES OF CHANGE DURING 1995:
<CAPTION>
(Millions of dollars)
_________________________________________________________________________________________
<S> <C>
Sales and transfers, net of production costs $(330.5)
Net change in prices and production costs 316.5
Extensions, discoveries and improved recovery,
less related costs 211.3
Net change in future development costs (13.9)
Previously estimated development costs
incurred during the year 80.2
Revisions of previous reserve estimates 37.9
Purchase of reserves in place 20.5
Sales of reserves in place (38.1)
Accretion of discount 113.3
Net change in income taxes (139.3)
Other (6.1)
_________________________________________________________________________________________
Net change $ 251.8
_________________________________________________________________________________________
</TABLE>
<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 yearend 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>
_________________________________________________________________________________________
RESULTS OF OPERATIONS FOR OIL AND GAS ACTIVITIES
<CAPTION>
Years ended December 31:
North Other
19951 (Millions of dollars) Domestic Sea Foreign Total
_________________________________________________________________________________________
<S> <C> <C> <C> <C>
Revenues $306.82 133.9 26.3 467.0
Production costs (87.8) (39.9) (8.8) (136.5)
Exploration expenses (45.9) (2.6) (19.8) (68.3)
DD&A (83.1) (57.6) (13.6) (154.3)
_________________________________________________________________________________________
90.0 33.8 (15.9) 107.9
Income tax (expense) benefit (33.1) (15.9) 7.2 (41.8)
_________________________________________________________________________________________
Earnings (loss)3 $ 56.9 17.9 (8.7) 66.1
_________________________________________________________________________________________
CLAM4 $ - 5.4 - 5.4
_________________________________________________________________________________________
19941(Millions of dollars)
_________________________________________________________________________________________
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
_________________________________________________________________________________________
1 Includes nonrecurring charges/credits as explained in "Notes to Consolidated Financial
Statements" as follows:
1995 - see Note 3.
1994 - see Notes 2 and 3.
1993 - see Note 3.
2 Includes intercompany transfers to the Company's refinery of $28.0, $24.8 and $22.4 in
1995, 1994 and 1993, 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
1995 (Millions of dollars) Domestic Sea Foreign Total
_________________________________________________________________________________________
<S> <C> <C> <C> <C>
Property acquisition:
Proved $ 9.2 .3 - 9.5
Unproved 4.3 - - 4.3
Exploration 55.7 .8 18.8 75.3
Development 60.3 16.6 11.2 88.1
_________________________________________________________________________________________
129.5 17.7 30.0 177.2
Capitalized interest 4.4 10.3 1.0 15.7
_________________________________________________________________________________________
$ 133.9 28.0 31.0 192.9
_________________________________________________________________________________________
CLAM $ - 9.3 - 9.3
_________________________________________________________________________________________
1994 (Millions of dollars)
_________________________________________________________________________________________
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
_________________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
OIL AND GAS OPERATING DATA1
<CAPTION>
Years ended December 31:
1995 1994 19932 1992 1991
_________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
CRUDE AND CONDENSATE3
Production (barrels per day):
Domestic:
Working interest 16,808 18,833 17,586 15,308 16,439
Royalty interest 3,945 3,678 4,161 4,070 4,070
_________________________________________________________________________________________
20,753 22,511 21,747 19,378 20,509
North Sea (working interest) 17,250 14,769 6,529 6,258 8,352
Other foreign (working interest) 4,936 3,496 6,509 5,674 5,896
_________________________________________________________________________________________
42,939 40,776 34,785 31,310 34,757
_________________________________________________________________________________________
Average price received (per barrel):
Domestic $ 18.11 16.26 17.33 19.85 22.13
North Sea 17.29 16.01 16.20 19.11 19.96
Other foreign 15.12 12.63 14.40 14.98 14.53
Consolidated 17.44 15.86 16.57 18.82 20.32
_________________________________________________________________________________________
NATURAL GAS
Production (thousands of cubic feet
per day):
Domestic:
Working interest 209,876 203,700 155,917 119,050 124,592
Royalty interest 30,052 24,957 23,861 21,146 25,666
_________________________________________________________________________________________
239,928 228,657 179,778 140,196 150,258
North Sea (working interest) 26,864 5,302 156 236 283
Other foreign (working interest) 1,379 3,018 5,316 4,871 4,388
CLAM Petroleum Company 43,550 40,003 34,608 40,485 48,772
_________________________________________________________________________________________
311,721 276,980 219,858 185,788 203,701
_________________________________________________________________________________________
Average price received (per MCF):
Domestic $ 1.73 1.95 2.19 1.75 1.53
North Sea 2.09 2.20 1.51 1.92 1.91
Other foreign 0.68 1.63 1.27 0.84 1.03
CLAM Petroleum Company 2.59 2.27 2.35 2.73 3.08
Consolidated 1.88 2.00 2.19 1.94 1.89
_________________________________________________________________________________________
PLANT PRODUCTS
Production (barrels per day):
Domestic (working interest) 2,936 2,475 2,377 2,294 2,145
North Sea (working interest) 1,015 552 352 461 510
Other foreign (working interest) 19 6 29 39 33
_________________________________________________________________________________________
3,970 3,033 2,758 2,794 2,688
_________________________________________________________________________________________
Average price received (per barrel):
Domestic $ 11.20 10.06 11.26 13.07 14.89
North Sea 13.49 11.28 12.62 14.47 16.93
Other foreign 10.67 7.84 11.97 12.68 13.12
Consolidated 11.78 10.28 11.44 13.29 15.26
_________________________________________________________________________________________
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) 1995 1994 1993 1992 1991
_________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Refining operating profit (loss):
Revenues:
Refined products* $ 383.2 386.1 422.6 462.6 451.5
Other .3 2.1 1.9 .3 .2
_________________________________________________________________________________________
383.5 388.2 424.5 462.9 451.7
_________________________________________________________________________________________
Costs and expenses:
Cost of sales* 337.8 340.1 390.6 413.6 401.4
Operating expenses 38.1 39.2 35.2 31.4 32.4
Depreciation 1.8 3.3 5.2 5.0 4.7
Taxes, other than income 3.2 3.5 3.5 3.3 2.7
Write-down of refinery assets - 39.0 - - -
_________________________________________________________________________________________
380.9 425.1 434.5 453.3 441.2
_________________________________________________________________________________________
$ 2.6 (36.9) (10.0) 9.6 10.5
_________________________________________________________________________________________
*Before the elimination of
intercompany transfers to
the Company's refinery $ 28.0 24.8 22.4 20.7 18.7
_________________________________________________________________________________________
Sales (barrels per day):
No. 2 fuel oil 9,586 11,572 11,471 12,471 11,079
Unleaded gasoline 21,777 22,571 22,747 23,640 21,675
Jet fuel 6,106 7,166 6,488 5,415 5,102
Naphtha 3,252 4,090 5,477 4,922 4,045
Other 9,514 7,505 8,347 6,880 6,987
_________________________________________________________________________________________
50,235 52,904 54,530 53,328 48,888
_________________________________________________________________________________________
Average price received (per
barrel) $ 20.90 20.00 21.24 23.70 25.30
_________________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
OIL AND GAS PROPERTIES
<CAPTION>
December 31, 1995
Productive acreage Undeveloped acreage
(Thousands of acres) Gross Net Gross Net
_________________________________________________________________________________________
<S> <C> <C> <C> <C>
LEASEHOLDS AND OPTIONS
Domestic:
Offshore Gulf of Mexico 326.7 161.9 258.7 161.4
Louisiana 126.2 77.6 42.0 20.1
Alabama/Florida 9.8 8.1 .9 .6
Colorado/Utah .8 .1 105.2 51.8
Wyoming 42.9 12.4 203.2 86.0
Other 45.4 4.5 69.4 9.4
_________________________________________________________________________________________
551.8 264.6 679.4 329.3
_________________________________________________________________________________________
North Sea:
Netherlands 2.7 1.0 103.3 36.0
United Kingdom 19.1 1.2 133.4 11.1
_________________________________________________________________________________________
21.8 2.2 236.7 47.1
_________________________________________________________________________________________
Other foreign:
Algeria - - 1,552.9 1,009.4
Australia - - 139.1 46.3
Colombia 11.7 1.6 216.1 119.4
Indonesia 8.3 1.2 487.4 65.9
Papua New Guinea - - 730.4 320.1
Tunisia - - 1,021.0 510.5
Yemen - - 1,167.9 198.5
_________________________________________________________________________________________
20.0 2.8 5,314.8 2,270.1
_________________________________________________________________________________________
FEE LANDS 89.0 89.0 505.0 505.0
_________________________________________________________________________________________
CLAM PETROLEUM COMPANY (50%)
Netherlands-North Sea 41.0 6.3 622.9 114.0
_________________________________________________________________________________________
723.6 364.9 7,358.8 3,265.5
_________________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
<TABLE>
_______________________________________________________________________________________
WELLS DRILLED
<CAPTION>
Years ended December 31:
1995 1994 1993 1992 1991
_______________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
GROSS WELLS DRILLED (by location)
Working interest
Domestic:
Offshore Gulf of Mexico 15 20 23 5 18
Louisiana 13 14 10 17 30
Oklahoma - - - - 25
Texas - - - - 3
Wyoming 1 4 6 2 9
Other - - - 1 -
_______________________________________________________________________________________
29 38 39 25 85
_______________________________________________________________________________________
North Sea:
Netherlands 7 3 4 5 10
United Kingdom 8 6 5 8 4
_______________________________________________________________________________________
15 9 9 13 14
_______________________________________________________________________________________
Other foreign:
Canada 5 14 38 33 44
Colombia 1 2 - 3 2
Indonesia 9 - - - -
Other 1 3 2 1 2
_______________________________________________________________________________________
16 19 40 37 48
_______________________________________________________________________________________
Total working interest 60 66 88 75 147
Royalty interest 24 19 35 26 28
_______________________________________________________________________________________
Total wells 84 85 123 101 175
_______________________________________________________________________________________
</TABLE>
<TABLE>
GROSS (NET) WELLS DRILLED (by type)
<CAPTION>
Exploratory:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oil 14 (1.5) 15 (1.8) 34 (15.2) 26 (13.1) 33 (15.1)
Gas 22 (6.8) 26 (10.3) 18 (3.9) 10 (2.5) 34 (12.4)
Dry 17 (4.2) 22 (9.4) 31 (11.4) 28 (12.4) 74 (29.5)
_______________________________________________________________________________________
53 (12.5) 63 (21.5) 83 (30.5) 64 (28.0) 141 (57.0)
_______________________________________________________________________________________
Development:
Oil 22 (3.2) 7 (1.0) 17 (2.1) 22 (2.6) 23 (2.4)
Gas 9 (2.6) 14 (3.3) 21 (3.4) 6 (1.4) 9 (1.5)
Dry - - 1 (.1) 2 (.3) 9 (.7) 2 (.6)
_______________________________________________________________________________________
31 (5.8) 22 (4.4) 40 (5.8) 37 (4.7) 34 (4.5)
_______________________________________________________________________________________
Total wells 84 (18.3) 85 (25.9) 123 (36.3) 101 (32.7) 175 (61.5)
_______________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
SELECTED FINANCIAL DATA
<CAPTION>
Years ended December 31:
(Millions of dollars, except per share data)
1995* 1994* 1993* 1992* 1991
_________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Revenues $ 830.5 801.5 815.4 787.4 825.3
Operating profit (loss) $ 110.2 (290.9) 88.0 49.9 75.2
Net earnings (loss) $ 18.8 (226.9) 9.6 (6.8) 20.9
Earnings (loss) per share $ 0.56 (6.80) 0.33 (0.24) 0.74
Average shares (millions) 33.5 33.4 29.5 28.4 28.3
_________________________________________________________________________________________
Net cash flows from:
Operating activities $ 220.5 212.1 178.9 178.7 209.2
Investing activities $ (174.0) (237.5) (722.3) (116.3) (180.7)
Financing activities $ (48.7) 4.6 536.2 (48.6) (31.7)
Working capital (deficit):
End of year $ 6.0 (6.4) 15.6 (20.2) 24.2
Current ratio 1.03 .97 1.09 .88 1.15
_________________________________________________________________________________________
Total assets $ 1,467.7 1,478.1 1,838.7 1,209.1 1,252.8
Long-term debt $ 691.6 739.5 734.5 343.0 347.3
Stockholders' equity $ 370.7 352.4 599.8 416.6 446.5
Cash dividends per share $ 0.24 1.00 1.00 1.00 1.00
_________________________________________________________________________________________
*
Includes nonrecurring charges/credits as explained in "Notes to Consolidated Financial
Statements" as follows:
1995 - see Note 3.
1994 - see Notes 2, 3 and 5.
1993 - see Notes 3, 6, 7, 11 and 12.
1992 - In the first quarter of 1992, the Company recorded a charge of $54.2 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 a $25 million (before income
taxes of $8.5 million) reduction in the Company's litigation accrual for a State
of Louisiana gas royalty claim. 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
also applied against the restructuring charges.
</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>
1995:
Capital stock price:
High $38 1/2 41 1/8 40 1/8 43
Low 31 1/4 35 3/8 35 35 1/8
Cash dividends per share 0.06 0.06 0.06 0.06
_________________________________________________________________________________________
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
_________________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
<TABLE>
_________________________________________________________________________________________
QUARTERLY DATA*
<CAPTION>
Quarter Ended
(Millions of dollars, except per share data) March 31 June 30 Sept. 30 Dec. 31
_________________________________________________________________________________________
<S> <C> <C> <C> <C>
1995:
Revenues $193.1 213.1 212.0 212.3
Costs and expenses 187.7 203.3 209.2 201.5
_________________________________________________________________________________________
Earnings before income taxes 5.4 9.8 2.8 10.8
Income tax expense 1.9 3.4 1.0 3.7
_________________________________________________________________________________________
Net earnings $ 3.5 6.4 1.8 7.1
_________________________________________________________________________________________
Earnings per share $ 0.11 0.19 0.05 0.21
_________________________________________________________________________________________
Average shares 33.5 33.5 33.6 33.6
_________________________________________________________________________________________
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 33.5
_________________________________________________________________________________________
*
Includes nonrecurring charges/credits as explained in "Notes to Consolidated Financial
Statements" as follows:
1995 - see Note 3.
1994 - see Notes 2, 3 and 5.
</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, 1995 and 1994, 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,
1995. 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, 1995 and 1994, and
the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 1995 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
January 25, 1996
<PAGE>
<PAGE>
<TABLE>
MARALOU NETHERLANDS PARTNERSHIP
Consolidated Balance Sheets
December 31, 1995 and 1994
(Expressed in U.S. Dollars)
<CAPTION>
ASSETS 1995 1994
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 8,362,890 4,120,901
Accounts receivable 18,195,607 15,596,130
Accounts receivable - net profits interest - 385,371
Income taxes receivable 1,897,581 3,708,460
Materials and supplies 132,839 197,812
Other current assets 30,514 6,606
Total current assets 28,619,431 24,015,280
Long-term receivable 6,250,390 5,774,218
Property, plant and equipment, at cost, based on
the successful efforts method of accounting for
oil and gas properties 381,561,020 370,624,832
Less accumulated depletion, amortization
and depreciation 220,545,368 201,248,670
Net property, plant and equipment 161,015,652 169,376,162
Deferred charges 158,462 182,991
$ 196,043,935 199,348,651
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliated companies 209,655 63,109
Accounts payable - net profits interest 89,443 -
Accrued liabilities 12,199,361 11,188,175
Amounts due to operators of joint ventures 3,429,466 1,315,712
Government royalties payable 1,658,735 1,387,035
Income taxes payable 772,540 1,893,523
Total current liabilities 18,359,200 15,847,554
Long-term debt 96,000,000 96,000,000
Deferred income taxes 30,265,085 28,725,590
Deferred liability - platform abandonment 22,027,271 21,011,173
Minority interest 1,980,114 2,263,549
Partners' capital:
Marathon Petroleum Netherlands, Ltd. 6,704,238 10,748,498
LL&E (Netherlands), Inc. 6,704,238 10,748,498
Foreign currency translation adjustment 14,003,789 14,003,789
Total partners' capital 27,412,265 35,500,785
$ 196,043,935 199,348,651
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
MARALOU NETHERLANDS PARTNERSHIP
Consolidated Statements of Income
Years Ended December 31, 1995, 1994 and 1993
(Expressed in U.S. Dollars)
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Revenues:
Sales $ 85,789,643 68,663,916 61,152,082
Interest income 1,167,368 1,259,380 4,465,502
Total revenues 86,957,011 69,923,296 65,617,584
Costs and expenses:
Costs and operating expenses 22,258,728 11,079,073 12,349,387
Exploration expenses, including dry
hole costs 7,506,437 4,344,427 3,336,263
Depletion, amortization and
depreciation 20,060,105 16,571,265 14,100,833
General and administrative expenses 6,611,751 5,691,285 4,950,135
Royalty expense 1,751,800 996,651 960,585
Net profits interest 585,859 96,232 336,356
Interest expense 6,765,432 5,467,221 7,222,385
Foreign exchange loss/(gain) (232,567) 543,705 (763,957)
Total costs and expenses 65,307,545 44,789,859 42,491,987
Income before income taxes 21,649,466 25,133,437 23,125,597
Provision for income taxes 10,001,420 16,940,713 12,192,472
Income after income taxes 11,648,046 8,192,724 10,933,125
Minority interest 1,536,566 1,126,536 797,688
Income before cumulative effect of
change in accounting principle 10,111,480 7,066,188 10,135,437
Cumulative effect of change in
accounting principle for income
taxes - - 6,003,589
Net income $ 10,111,480 7,066,188 4,131,848
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE> MARALOU NETHERLANDS PARTNERSHIP
Consolidated Statements of Partners' Capital
Years Ended December 31, 1995, 1994 and 1993
(Expressed in U.S. Dollars)
<CAPTION>
Marathon
Petroleum L.L.&E.
Netherlands, Inc. (Netherlands), Inc. Total
<S> <C> <C> <C>
Capital, January 1, 1995 $10,748,498 10,748,498 21,496,996
Net income 5,055,740 5,055,740 10,111,480
Distribution to Partners (9,100,000) (9,100,000) (18,200,000)
Capital before adjustments $ 6,704,238 6,704,238 13,408,476
Foreign currency translation
adjustment 14,003,789
Capital, December 31, 1995 27,412,265
</TABLE>
<TABLE>
<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>
(Continued)
<PAGE>
<PAGE>
<TABLE>
MARALOU NETHERLANDS PARTNERSHIP
Consolidated Statements of Partners' Capital (Continued)
Years Ended December 31, 1995, 1994 and 1993
(Expressed in U.S. Dollars)
<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
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
MARALOU NETHERLANDS PARTNERSHIP
Consolidated Statements of Cash Flows
Years Ended December 31, 1995, 1994 and 1993
(Expressed in U.S. Dollars)
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Net income accruing to MaraLou partners $ 10,111,480 7,066,188 4,131,848
Net (loss)/income accruing to minority
shareholders, net of cash distributions (283,434) 34,536 (1,022,312)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depletion, amortization, depreciation
and abandonment 20,060,105 16,571,265 14,100,833
Dry hole costs 7,704,402 3,860,175 1,892,456
Deferred income taxes 431,900 9,021,323 (7,951,542)
Exchange loss (gain) (193,026) 374,213 (175,868)
Interest on EBN repayment 118,451 281,812 665,428
Cumulative effect of change in accounting
principle - - 6,003,589
Decrease (increase) in accounts
receivable (1,116,282) (2,041,325) 2,175,071
Decrease (increase) in accounts receivable
- net profits interest 385,371 (19,222) (326,001)
Decrease (increase) in materials and
supplies 64,973 (190,902) (65)
Decrease (increase) in other current
assets (19,958) 206,155 (161,390)
Decrease in deferred charges 25,291 64,096 18,201
(Decrease) increase in accounts
payable-affiliates 148,198 (3,255) (6,535)
(Decrease) increase in accounts
payable-net profits interest 203,856 - (228,091)
Increase in accrued liabilities 169,047 1,483,332 677,612
Increase (decrease) in amounts due to
operators of joint ventures 1,885,328 (2,558,160) 4,676,131
(Decrease) increase in government
royalties payable 49,040 (131,600) (865,267)
(Decrease) increase in income taxes
payable/receivable 445,126 (15,179,834) 8,415,273
Net cash provided by operating
activities 40,189,868 18,838,797 32,019,371
Cash flows from investing activities:
Capital expenditures (18,387,901) (24,241,343) (9,973,617)
Net cash used in investing activities (18,387,901) (24,241,343) (9,973,617)
</TABLE>
(Continued)
<PAGE>
<PAGE>
<TABLE>
MARALOU NETHERLANDS PARTNERSHIP
Consolidated Statements of Cash Flows (Continued)
Years Ended December 31, 1995, 1994 and 1993
(Expressed in U.S. Dollars)
<CAPTION>
1995 1994 1993
<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)
Cash distribution to partners (18,200,000) (10,920,000) (18,200,000)
Net cash used in financing activities (18,200,000) (2,720,000) (28,200,000)
Effect of exchange rate on cash 640,022 766,758 (854,829)
Net increase (decrease) in cash and cash
equivalents 4,241,989 (7,355,788) (7,009,075)
Cash and cash equivalents at beginning of
year 4,120,901 11,476,689 18,485,764
Cash and cash equivalents at end of year $ 8,362,890 4,120,901 11,476,689
Supplemental disclosure of cash flow information:
Cash paid (received) during the year for:
Interest $ 7,166,142 4,487,259 5,543,844
Foreign taxes 11,682,068 23,621,088 13,746,175
Federal taxes (1,591,489) (518,116) (1,155,157)
Supplemental schedule of noncash investing and financing activities:
Long-term receivable for EBN
reimbursement $ 476,172 154,362 (321,870)
Accrued liability established for
repayment to EBN 844,590 732,141 191,527
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
MARALOU NETHERLANDS PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
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 Service, 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 Service, 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
<PAGE>
<PAGE>
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.
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.
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 annual audits by the non-operators. A deter-
mination is made annually as to the requirement for an audit
based on the materiality of each operator's expenditures. The
audit for the year 1994 has been conducted for the most
significant joint venture with no material items discovered.
The remaining operators' 1994 expenditures were not material
to require an audit.
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).
The Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 (SFAS No. 121),
"Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" in March 1995. Effective
December 31, 1995, CLAM adopted SFAS No. 121 and impairment of
its long-lived assets was not required.
Under SFAS No. 121, the Company performed its impairment
review of proved gas and condensate properties on a depletable
unit basis. For each depletable unit determined to be
impaired, an impairment loss equal to the difference between
the carrying value and the fair value of the depletable unit
<PAGE>
<PAGE>
would be recognized. Fair value, on a depletable unit basis,
was estimated to be the present value of expected future cash
flows computed by applying estimated future gas and condensate
prices, as determined by Management, to estimated future
production of gas and condensate reserves over the economic
lives of the reserves.
Geographic concentration:
All concessions in which CLAM has interests are located in the
Netherlands.
Use of estimates:
Management of CLAM and MaraLou have made a number of estimates
and assumptions relating to the reporting of assets and lia-
bilities to prepare these financial statements in conformity
with generally accepted accounting principles. Actual results
could differ from those estimates.
Depletion, amortization and depreciation:
Depletion is provided under the unit-of-production method
based upon estimates of proved-developed reserves. Depreci-
ation 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 de-
preciation are eliminated from the accounts and the gain or
loss is reflected in income.
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 esti-
mated 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 $2,803,322, $2,183,002 and
$2,512,536 for 1995, 1994 and 1993, respectively. Salaries
and related social charges included therein amounted to
$2,007,984, $1,449,062 and $1,685,046 for 1995, 1994 and 1993,
respectively.
MaraLou transactions with related parties consisted of charges
for administrative services rendered by an affiliate amounting
to $60,900, $59,880 and $55,800 in 1995, 1994 and 1993,
respectively.
<PAGE>
<PAGE>
3. Property, plant and equipment
Changes in property, plant and equipment for the years ended
December 31, 1995, 1994 and 1993 are as follows (in thousands
of U.S. dollars):
<TABLE>
<CATION>
Balance Additions Dry Hole Balance
12/31/94 (Reductions) Costs 12/31/95
<S> <C> <C> <C> <C>
Concession $ 8,275 (2,287) - 5,988
Wells and platforms 280,828 30,231 - 311,059
Incomplete construction 5,726 (5,726) - -
Uncompleted wells 16,280 (5,667) (5,003) 5,610
Pipelines 51,870 27 - 51,897
Gas processing facilities 6,519 126 - 6,645
Furniture and fixtures 1,127 (765) - 362
370,625 15,939 (5,003) 381,561
Depletion and amortization 200,144 20,045 - 220,189
Depreciation-furniture and
fixtures 1,105 (749) - 356
201,249 19,296 - 220,545
Net property, plant
and equipment $ 169,376 161,016
</TABLE>
<TABLE>
<CAPTION>
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>
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 No. 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.
Details of federal and foreign income taxes (benefits) - (in
thousands of U.S. dollars) are as follows:
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Current tax expense (benefit):
Federal $ 25 (860) (2,471)
Foreign 9,543 8,779 22,615
Deferred tax expense (benefit):
Federal 1,463 2,673 (2,544)
Foreign (1,030) 6,349 (5,408)
Total provision for income taxes $10,001 16,941 12,192
</TABLE>
Total income tax expense differed from the amounts computed by
applying the U.S. Federal income tax rate of 35% to income
before income taxes of CLAM as a result of the following (in
thousands of U.S. dollars):
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Computed "expected" tax expense $ 9,416 10,267 9,440
Increase (reduction) in income taxes
resulting from:
Foreign tax greater than federal
income tax - 4,178 (10,024)
Increase in deferred tax valuation
allowance 1,225 2,852 12,152
Other (640) (356) 624
Provision for income taxes $ 10,001 16,941 12,192
</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, 1995, 1994 and 1993 relate to the
following (in thousands of U.S. dollars):
<TABLE>
<CAPTION>
U.S. - Deferred 1995 1994 1993
<S> <C> <C> <C>
Deferred Tax Assets:
Foreign tax credit carryover $ 701 - 3,805
Benefit for foreign deferred taxes 13,492 13,415 6,199
Abandonment accrual 7,708 7,354 7,151
Valuation allowance (15,506) (14,281) (8,860)
Total deferred tax assets $ 6,395 6,488 8,295
Deferred Tax Liabilities:
Property, plant and equipment differences
in depreciation and amortization $23,168 21,798 20,932
Total deferred tax liabilities $23,168 21,798 20,932
Total U.S. - deferred $16,773 15,310 12,637
/TABLE
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Foreign State Profit Share - Deferred 1995 1994 1993
<S> <C> <C> <C>
Deferred Tax Assets:
Abandonment accrual $ 2,915 2,809 4,769
Morgan loan currency revaluation - 270 5,287
Valuation allowance (261) (723) (3,292)
Total deferred tax assets $ 2,654 2,356 6,764
Deferred Tax Liabilities:
Property, plant and equipment differences
in depreciation and amortization $ 16,146 15,771 12,899
Total deferred tax liabilities $ 16,146 15,771 12,899
Total Foreign State Profit Share - deferred $ 13,492 13,415 6,135
</TABLE>
The Company provides a valuation allowance against deferred
tax assets to reflect the amount of deferred tax asset, net of
valuation allowance, that more likely than not will be
utilized to offset future taxes. The valuation allowance
increased from December 31, 1994 to December 31, 1995 due to
changes in the Company's estimate of the amount and timing of
the reversal of its abandonment accrual.
The Company's current tax liability was determined on a
regular tax basis.
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, 1995 and December 31, 1994 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
<PAGE>
<PAGE>
adjusted CD rate. A contractual margin is added to LIBOR and
CD based borrowings. The all-in interest rates for CLAM for
December 31, 1995 and December 31, 1994 were 6.1875% and
6.9375%, 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
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, 1995
and December 31, 1994 was $132,000,000. The agreement pro-
vides 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 reduc-
tions 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, 1995 of which $-0-
was due within one year. The outstanding balances for MaraLou
and CLAM, respectively, were $-0- and $96,000,000 at
December 31, 1994. At December 31, 1995, the required
reductions to the borrowing base in each of the next five
years are $-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 ($49,903,312 at yearend exchange
rates). On December 31, 1995 and December 31, 1994 the out-
standing 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. Effective January 1,
1995, new entitlements were agreed upon and CLAM made a cash
payment of $3,439,966 to equalize past investment. <PAGE>
<PAGE>
8. Reserves of oil and gas (unaudited)
CLAM's share of proven gas reserves at January 1, 1996 and
1995 are 245,107 MMCF and 261,990 MMCF, respectively.
9. Major customer
CLAM has one major customer from which it derives 96% of its
sales revenue. CLAM is 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 of $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, 1995
Carrying Estimated
Amount Fair Value
Long-term receivable $6,250 $4,630
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 9, 1996, which the Registrant
will file pursuant to Regulation 14A not later than 120 days after
December 31, 1995, 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 FORM 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, 1995.
<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 Regis-
trant'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 - Commis-
sion 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)(i) Form of Termination Agreement with Certain
Senior Management Personnel (as amended).
(continued)<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
AND SUBSIDIARIES
Index to Exhibits
Exhibit 10(a)(ii) Form of Termination Agreement with Certain
Senior Management Personnel.
Exhibit 10(b) The Louisiana Land and Exploration Company
1982 Stock Option Plan as adopted (Incor-
porated 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 re-
ference 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
(Incorporated by reference to Exhibit 10(e) to
the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994 -
Commission File No. 1-959.).
Exhibit 10(f) The Louisiana Land and Exploration Company
1995 Stock Option Plan for Non-Employee
Directors as adopted (Incorporated by
reference to Exhibit A to the Registrant's
definitive Proxy Statement dated March 28,
1995.).
Exhibit 10(g) Form of The Louisiana Land and Exploration
Company Deferred Compensation Arrangement for
Selected Key Employees (Incorporated by re-
ference 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.).
(continued)<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
AND SUBSIDIARIES
Index to Exhibits
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.).
Exhibit 10(i) Form of The LL&E Change in Control Severance
Plan for Key Executives.
Exhibit 10(j) The LL&E Supplemental Excess Plan (Incorpo-
rated 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) Credit Agreement dated as of June 8, 1995
among the Registrant, the Banks listed there-
in, Morgan Guaranty Trust Company of New York,
as Agent, and Texas Commerce Bank National
Association and NationsBank of Texas, N.A., as
Co-Agents (Incorporated by reference to
Exhibit 10(l) to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June
30, 1995 - Commission File No. 1-959.).
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 5, 1996 By /s/ Frederick J. Plaeger, II
__________________________________
Frederick J. Plaeger, II
Vice President, 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 5, 1996 *H. Leighton Steward
_____________________________________
H. Leighton Steward
Director, Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
Date: March 5, 1996 *Richard A. Bachmann
_____________________________________
Richard A. Bachmann
Director
Date: March 5, 1996 *Robert E. Howson
_____________________________________
Robert E. Howson
Director
Date: March 5, 1996 *Eamon M. Kelly
_____________________________________
Eamon M. Kelly
Director
Date: March 5, 1996 *Kenneth W. Orce
_____________________________________
Kenneth W. Orce
Director
<PAGE>
<PAGE>
Date: March 5, 1996 *Victor A. Rice
_____________________________________
Victor A. Rice
Director
Date: March 5, 1996 *Orin R. Smith
_____________________________________
Orin R. Smith
Director
Date: March 5, 1996 *Arthur R. Taylor
_____________________________________
Arthur R. Taylor
Director
Date: March 5, 1996 *W. R. Timken, Jr.
_____________________________________
W. R. Timken, Jr.
Director
Date: March 5, 1996 *Carlisle A. H. Trost
_____________________________________
Carlisle A. H. Trost
Director
Date: March 5, 1996 *Louis A. Raspino, Jr.
_____________________________________
Louis A. Raspino, Jr.
Senior Vice President-Chief Financial
Officer (Principal Financial Officer)
Date: March 5, 1996 *Jerry D. Carlisle
_____________________________________
Jerry D. Carlisle
Vice President and Controller
(Principal Accounting Officer)
*/s/ Frederick J. Plaeger, II
_________________________________________
Frederick J. Plaeger, II
Vice President, 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, 1995
__________________________
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
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 Regis-
trant'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 - Commis-
sion 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)(i) Form of Termination Agreement with Certain
Senior Management Personnel (as amended).
(continued)<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
AND SUBSIDIARIES
Index to Exhibits
Exhibit 10(a)(ii) Form of Termination Agreement with Certain
Senior Management Personnel.
Exhibit 10(b) The Louisiana Land and Exploration Company
1982 Stock Option Plan as adopted (Incor-
porated 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 re-
ference 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
(Incorporated by reference to Exhibit 10(e) to
the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994 -
Commission File No. 1-959.).
Exhibit 10(f) The Louisiana Land and Exploration Company
1995 Stock Option Plan for Non-Employee
Directors as adopted (Incorporated by
reference to Exhibit A to the Registrant's
definitive Proxy Statement dated March 28,
1995.).
Exhibit 10(g) Form of The Louisiana Land and Exploration
Company Deferred Compensation Arrangement for
Selected Key Employees (Incorporated by re-
ference 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.).
(continued)<PAGE>
<PAGE>
THE LOUISIANA LAND AND EXPLORATION COMPANY
AND SUBSIDIARIES
Index to Exhibits
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.).
Exhibit 10(i) Form of The LL&E Change in Control Severance
Plan for Key Executives.
Exhibit 10(j) The LL&E Supplemental Excess Plan (Incorpo-
rated 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) Credit Agreement dated as of June 8, 1995
among the Registrant, the Banks listed there-
in, Morgan Guaranty Trust Company of New York,
as Agent, and Texas Commerce Bank National
Association and NationsBank of Texas, N.A., as
Co-Agents (Incorporated by reference to
Exhibit 10(l) to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June
30, 1995 - Commission File No. 1-959.).
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(a)(i)
FORM OF TERMINATION AGREEMENT WITH CERTAIN
SENIOR MANAGEMENT PERSONNEL (AS AMENDED)
<PAGE>
<PAGE>
Exhibit 10(a)(i)
TERMINATION AGREEMENT
This Agreement, made and entered into as of this ___ day
of ________, 1996, by and between THE LOUISIANA LAND AND
EXPLORATION COMPANY, a Maryland corporation with its principal
executive offices at 909 Poydras Street, New Orleans, Louisiana
70130 ("Company"), and __________________________ residing at
___________________ ("Executive").
W I T N E S S E T H :
WHEREAS, Company and Executive entered into a Termination
Agreement as of ____________, as amended and restated as of
__________ (the "Prior Termination Agreement"), and wish to amend
and restate said Prior Termination Agreement as hereinafter set
forth in this Agreement; and
WHEREAS, the Board of Directors of Company considers the
maintenance of a sound management to be essential to protecting and
enhancing the best interests of Company and its stockholders and
recognizes that the possibility of a change in control raises
uncertainty and questions among key employees and may result in the
departure or distraction of such key employees to the detriment of
Company and its stockholders; and
WHEREAS, the Board of Directors of Company believes it is
important, should Company receive proposals from third parties with
respect to its future, to enable Executive, without being
influenced by the uncertainties of his own situation, to assess and
advise Company whether such proposals would be in the best
interests of Company and its stockholders and to take such other
action regarding such proposals as Company might determine to be
appropriate; and
WHEREAS, the Board of Directors of Company wishes to
assure that it will have the continued dedication of Executive and
the availability of Executive's advice and counsel notwithstanding
the possibility, threat, or occurrence of an event affecting
control of Company, and to induce Executive to remain in the employ
of Company;
NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED:
<PAGE>
<PAGE>
ARTICLE I
Definitions
For the purposes of this Agreement, the following terms
shall have the meanings set forth herein:
(a) "Change in Control" shall be deemed to have occurred
if any of the following shall occur:
(i) Any person (within the meaning of Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934,
as amended) ("Person") (but excluding Company, a
Subsidiary, or a trustee or other fiduciary holding
securities under any employee benefit plan or
employee stock plan of Company or a Subsidiary)
becomes, directly or indirectly, the "beneficial
owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of 25%
or more of the combined voting power of the then
outstanding voting securities entitled to vote
generally in the election of directors ("Voting
Securities") of Company.
(ii) Individuals constituting the Board of Directors of
Company on the date of this Agreement and the
successors of such individuals ("Continuing
Directors") cease to constitute a majority of the
Board of Directors of Company. For this purpose, a
director shall be a successor if and only if he or
she was nominated by a Board of Directors of
Company (or a Nominating Committee thereof) on
which individuals constituting the Board of
Directors of Company on the date of this Agreement
and their successors (determined by prior
application of this sentence) constituted a
majority.
(iii) The stockholders of Company approve a merger,
consolidation, or reorganization of Company
("Combination") with any other corporation or legal
person, other than a Combination which both (a) is
approved by a majority of the directors of Company
who are Continuing Directors, and (b) would result
in stockholders of Company immediately prior to the
Combination owning, immediately thereafter, more
than fifty percent (50%) of the combined voting
power of either the surviving entity or the Person
owning directly or indirectly all the common stock,
or its equivalent, of the surviving entity.
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(iv) The stockholders of Company approve a plan of
complete liquidation of Company or an agreement for
the sale or disposition by Company of all or
substantially all of Company's assets.
(v) The Board of Directors of Company adopts a
resolution to the effect that, for purposes of this
Agreement, a Change in Control of Company has
occurred.
(b) "Involuntary Termination" shall mean termination of
Executive's employment with Company within the Protection Period
(as hereinafter defined) if such termination results from:
(i) termination by Company on any grounds whatsoever
except for "cause" as defined below; or
(ii) termination by Executive in connection with or
based upon any of the following: a significant
change in the nature or scope of Executive's duties
and/or responsibilities; notification of a
reduction in Executive's compensation or in his
participation in any employee benefit plan or
program; ordered relocation to a place of
employment which is more than 50 miles away from
Executive's principal place of employment
immediately before the Change in Control; failure
to provide facilities or services which are
suitable to Executive's position and adequate for
the performance of his duties; or a good faith
determination by Executive that due to any other
material change in circumstances affecting the
terms and conditions of employment he is not able
properly to carry on his duties and
responsibilities.
The Protection Period shall be: (i) if Executive has not attained
age 55 at the time of the Change in Control, the period of two
years beginning on the date of the Change in Control, and (ii) if
Executive is age 55 or older at the time of the Change in Control,
the period of five years beginning on the date of the Change in
Control. For purposes of subsection b(i), termination for "cause"
shall mean: (A) an act or acts of dishonesty on the part of
Executive resulting or intending to result directly or indirectly
in substantial gain or personal enrichment to which Executive was
not legally entitled at the expense of Company; or (B) a material
breach of Executive's duties or responsibilities resulting in
demonstrably material injury to Company, provided, however, that
such breach shall not include (i) bad judgment or negligence on the
part of Executive; (ii) neglect of duties; (iii) any act or
omission believed by Executive in good faith to have been in or not
opposed to the interests of Company; or (iv) any act or omission in
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respect of which a determination could properly be made that
Executive met the applicable standard of conduct prescribed for
indemnification or reimbursement or payment of expenses under the
By-Laws of Company, the laws of the State of Maryland or the
directors' and officers' liability insurance of Company, in each
case as in effect at the time of such act or omission.
(c) "Subsidiary" shall mean any corporation in which
Company possesses directly or indirectly fifty percent (50%) or
more of the total combined voting power of all classes of stock.
ARTICLE II
Termination Benefits
In the event Executive's employment with Company
terminates as a result of an Involuntary Termination, Company shall
provide to Executive the following benefits:
(a) Company shall pay to Executive in a lump sum within
30 days of such Involuntary Termination an amount of cash equal to
three times the sum of (i) Executive's highest annual salary rate
from Company, whether current or deferred, in effect for any of the
thirty-six months immediately prior to the date of Involuntary
Termination or Change in Control (whichever is greater), and
(ii) the greater of (A) the highest annual bonus paid, granted or
awarded Executive by Company, whether current or deferred and
whether or not vested, during or in respect of any of the three
calendar years immediately prior to the date of Involuntary
Termination or Change in Control (whichever is greater) or (B) the
product of the percentage of salary payable as a bonus at 100% of
target with respect to Executive under Company's target bonus
program for the calendar year in which the Involuntary Termination
occurs multiplied by Executive's highest annual salary rate
determined pursuant to (i) above. For purposes of clause (ii) of
the preceding sentence, awards of Company Common Stock shall be
valued at the average of the high and low sales prices as reported
on the New York Stock Exchange - Composite Transactions on the date
of the award (or, if the stock did not trade on that date, on the
first date prior thereto on which the stock traded).
(b) Company shall supplement the benefits payable in
respect of Executive under The LL&E Pension Plan, the pension plan
component of The LL&E Compensatory Benefits Agreement, and the
pension plan component of The LL&E Supplemental Excess Plan
(collectively, the "Pension Plans") by making a lump-sum cash
payment within 30 days of such Involuntary Termination in an amount
equal to the present value of the difference between (i) the
benefits that Executive would have been entitled to receive under
the Pension Plans if he had been credited with three additional
years of service (but no additional years of age) for purposes of
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the benefit accrual formula under the Pension Plans as of the date
of his Involuntary Termination, and (ii) the benefits that
Executive is entitled to receive under the Pension Plans determined
without regard to this subsection b. Such present value shall be
determined by an actuary selected by Company based on the actuarial
equivalence factors, methods, and assumptions used in determining
lump-sum distributions under The LL&E Pension Plan. The additional
years of service added for purposes of the benefit accrual formula
under the Pension Plans pursuant to this subsection b shall not be
counted for purposes of determining whether Executive qualifies as
a retiree eligible for retiree benefits or for any other enhanced
benefits under the Pension Plans or under any other benefit plan or
program of Company.
(c) During the period of three years beginning on the
date of Executive's Involuntary Termination, Executive shall be
deemed to remain an employee of Company for purposes of the
applicable medical, life insurance, and long-term disability plans
and programs of Company and shall be entitled to receive the
benefits available to employees thereunder, provided that continued
participation is possible under applicable law and the terms of
such plan or program, and provided, further, that if Executive
qualified for retiree benefits under the applicable medical plan or
program on the date of his termination of employment, Executive
shall instead be entitled to receive the benefits available to
retirees in accordance with the terms of such plan or program. In
the event that Executive's participation in any such benefit plan
or program is barred, Company shall arrange to provide Executive
with substantially similar benefits. The additional three years of
coverage pursuant to this subsection c shall not be counted for
purposes of determining whether Executive qualifies as a retiree
eligible for retiree benefits under the applicable medical plan or
program or under any other benefit plan or program of Company.
(d) Company shall pay to Executive in a lump sum within
30 days of such Involuntary Termination an amount of cash equal to
30% of Executive's highest annual salary rate from Company paid by
Company during any of the thirty-six months immediately prior to
the date of Involuntary Termination or Change in Control (whichever
is greater). The payment pursuant to this subsection d is intended
to compensate Executive for the Company-provided benefits that he
would have received under The LL&E Savings Plan, the savings plan
component of The LL&E Compensatory Benefits Agreement, and the
savings plan component of The LL&E Supplemental Excess Plan if he
had remained an employee of Company for the three-year period
following the Involuntary Termination.
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(e) Company shall promptly reimburse Executive for any
fees that he may pay to an outplacement assistance firm in order to
obtain outplacement assistance services, provided that (i) such
expenses must be incurred within twelve (12) months after the
Involuntary Termination and (ii) Company's obligation pursuant to
this subsection e shall be limited to fifteen percent (15%) of
Executive's highest annual base salary rate from Company, whether
current or deferred, in effect during any of the thirty-six months
immediately prior to the Involuntary Termination or Change in
Control (whichever is greater).
(f) Each stock option granted by Company to Executive
and outstanding immediately prior to the Involuntary Termination
shall be fully exercisable and may be exercised by Executive (or
his beneficiary or personal representative) at any time prior to
the expiration date of the applicable option (determined without
regard to any earlier termination that would otherwise occur by
reason of termination of employment). With respect to any shares
of restricted stock granted by Company to Executive and still
subject to restrictions immediately prior to the Involuntary
Termination, all restrictions shall immediately lapse upon such
Involuntary Termination. With respect to any performance shares
granted by Company to Executive and for which the Performance Cycle
has not expired on the date of Involuntary Termination, Executive
shall receive an immediate payment of a percentage of such
performance shares, which percentage shall be the greater of: (i)
100%, or (ii) the percentage of performance shares earned under the
applicable program for the last Performance Cycle that ended before
the date of Involuntary Termination. Any outstanding award
agreements with Executive are deemed amended to the extent
necessary to conform with this subsection f.
(g) Company shall pay and provide to Executive any and
all other payments and benefits to which Executive would at that
time be entitled as a terminating employee under any then existing
Company plan or program.
(h) Any payments and benefits provided for under this
Agreement shall be paid net of any applicable withholding required
under Federal, state or local law.
ARTICLE III
Parachute Payments
If any payment or benefit received by or in respect of
Executive under this Agreement or any other plan, arrangement or
agreement with Company or any of its subsidiaries (determined
without regard to any additional payments required under this
Article III and Appendix A) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of
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1986, as amended (the "Code") (or any similar tax that may
hereafter be imposed) or any interest or penalties are incurred by
Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, being hereinafter
collectively referred to as the "Excise Tax"), Company shall pay to
Executive with respect to such Payment at the time specified in
Appendix A an additional amount (the "Gross-up Payment") such that
the net amount retained by Executive from the Payment and the
Gross-up Payment, after reduction for any Excise Tax upon the
payment and any Federal, state and local income and employment tax
and Excise Tax upon the Gross-up Payment, shall be equal to the
Payment. The calculation and payment of the Gross-up Payment shall
be subject to the provisions of Appendix A.
ARTICLE IV
Restrictions on Executive
During the term of this Agreement, Executive will regard
and preserve as confidential all knowledge and information
pertaining uniquely to the business of Company obtained by him from
any source whatever as a result of his employment with Company and
which is not a matter of public knowledge.
ARTICLE V
Miscellaneous
SECTION 1. Not an Employment Agreement. This Agreement
does not constitute an agreement or contract of employment and
shall not be construed to limit in any manner the right of Company
to terminate Executive's employment.
SECTION 2. No Duty to Seek Employment. Executive shall
not be under any duty or obligation to seek or accept other
employment following termination and no amount, payment or benefit
due Executive hereunder or otherwise shall be reduced or suspended
if Executive accepts subsequent employment.
SECTION 3. Failure to Enforce and Waiver. The failure
to insist upon strict compliance with any of the terms, covenants
or conditions of this Agreement shall not be deemed a waiver of
such terms, covenants or conditions, and the waiver or
relinquishment of any right or power under this Agreement at any
one or more times shall not be deemed a waiver or relinquishment of
such right or power at any other time or times.
SECTION 4. Amendment and Restatement of Prior
Termination Agreement. This Agreement constitutes an amendment and
restatement of the Prior Termination Agreement between Executive
and Company and supersedes the Prior Termination Agreement.
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SECTION 5. No Set-Offs or Counterclaims. The Company's
obligation to provide the benefits set forth in this Agreement
shall be absolute and unconditional and shall not be affected by
any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, or other right which Company or any
Subsidiary may have against Executive or anyone else.
SECTION 6. Company's Successors. Any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of
Company, by agreement in form and substance satisfactory to
Executive, shall expressly assume and agree to perform this
Agreement in the same manner and to the same extent that Company
would be required to perform if no such succession had taken place.
As used in this Agreement, "Company" shall mean Company as defined
in the preamble to this Agreement and any successor to its business
or assets which executes and delivers the agreement provided for in
this Section 6 or which otherwise becomes bound by all the terms
and provisions of this Agreement by operation of law.
SECTION 7. Inurement. This Agreement shall be binding
upon, inure to the benefit of and be enforceable by Company and
Executive and their respective personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees, legatees and assigns.
SECTION 8. Executive's Representative. In the event
Executive dies while entitled to any payments and benefits
hereunder, Executive's legal representatives shall be entitled to
receive all payments and benefits due Executive.
SECTION 9. Legal Expenses; Dispute Resolution;
Arbitration.
(a) Company shall promptly pay all legal fees and
related expenses incurred by Executive in seeking to obtain or
enforce any right or benefit under this Agreement or to defend
against any claim or assertion in connection with this Agreement
(in each case including all fees and expenses, if any, incurred in
seeking advice in connection therewith) or to enforce or defend
against any arbitration award pursuant to subsection c below.
(b) If any dispute or controversy arises under or in
connection with this Agreement, including without limitation any
claim under any Federal, state or local law, rule, decision or
order relating to employment or the fact or manner of its
termination, Company and Executive shall attempt to resolve such
dispute or controversy through good faith negotiations.
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(c) If such parties fail to resolve such dispute or
controversy within ninety days, such dispute or controversy shall
be settled by arbitration, conducted before a panel of three
arbitrators in Louisiana in accordance with the applicable rules
and procedures of the American Arbitration Association then in
effect. Judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction. Such arbitration shall
be final and binding on the parties. Costs of any arbitration,
including, without limitation, reasonable attorneys' fees of both
parties, shall be borne by Company.
(d) Pending the resolution of any dispute, Company shall
continue payment of all amounts due Executive under this Agreement
and all benefits to which Executive is entitled other than those
specifically at issue.
SECTION 10. Notices. All notices required or permitted
to be given under this Agreement shall be given in writing and
shall be deemed sufficiently given if delivered by hand or mailed
by registered mail, return receipt requested, to his residence in
the case of Executive and to its principal executive offices in the
case of Company. Either party may by giving notice to the other
party in accordance with this Section 10 change the address at
which it is to receive notices hereunder.
SECTION 11. Unsecured Creditor. The rights of Executive
to benefits under this Agreement shall be solely those of an
unsecured creditor of Company. Any asset acquired or held by
Company or funds allocated by Company in connection with the
liabilities assumed by Company pursuant to this Agreement shall not
be deemed to be security for the performance of Company's
obligations pursuant hereto, but shall be and remain general assets
of Company.
SECTION 12. Nonalienation. To the extent permitted by
law, the right or interest of Executive 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 Executive.
SECTION 13. Governing Law. This Agreement is made
pursuant to, and shall be governed by, the laws of the State of New
York, in all respects (without giving effect to principles of
conflict of laws), including, without limitation, matters of
construction, validity and performance.
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SECTION 14. Severability. It is the desire and intent
of the parties that the terms, provisions, covenants and remedies
contained in this Agreement shall be enforceable to the fullest
extent permitted by law. If any such term, provision, covenant or
remedy of this Agreement or the application thereof to any person
or circumstances shall, to any extent, be construed to be invalid
or unenforceable in whole or in part, then such term, provision,
covenant or remedy shall be construed in a manner so as to permit
its enforceability under the applicable law to the fullest extent
permitted by law. In any case, the remaining provisions of this
Agreement or the application thereof to any person or circumstances
other than those to which they have been held invalid or
unenforceable, shall remain in full force and effect.
SECTION 15. Changes to Agreement. This Agreement may
not be changed orally but only by agreement in writing, signed by
the party against whom enforcement of any waiver, change,
modification or discharge is sought.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the day and year set forth above.
THE LOUISIANA LAND AND
EXPLORATION COMPANY
ATTEST:
_________________________ By
WITNESS:
_________________________
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Appendix A
Gross-up Payments
The following provisions shall be applicable with respect
to the Gross-up Payments described in Article III:
(a) For purposes of determining whether any of the
Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) all of the Payments received or to be received
shall be treated as "parachute payments" within the meaning of
Section 280G(b)(2) of the Code, and all "excess parachute payments"
within the meaning of Section 280G(b)(1) of the Code shall be
treated as subject to the Excise Tax unless, in the opinion of tax
counsel selected by Executive and reasonably acceptable to Company,
the Payments (in whole or in part) do not constitute parachute
payments, including by reason of Section 280G(b)(4)(A) of the Code,
or excess parachute payments (as determined after application of
Section 280G(b)(4)(B) of the Code), and (ii) the value of any non-
cash benefits or any deferred payment or benefit shall be
determined by independent auditors selected by Executive and
reasonably acceptable to Company in accordance with the principles
of Sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-up Payment Executive shall be
deemed to pay Federal income taxes at the highest marginal rate of
Federal income taxation in the calendar year in which the Gross-up
Payment is to be made and state and local income taxes at the
highest marginal rate of taxation to which such payment could be
subject based upon the state and locality of Executive's residence
or employment, net of the maximum reduction in Federal income taxes
which could be obtained from deduction of such state and local
taxes. In addition, for purposes of determining the amount of the
Gross-up Payment, Company shall make a determination of the amount
of employment taxes required to be paid on the Gross-up Payment.
In the event that the Excise Tax is subsequently determined to be
less than the amount taken into account hereunder at the time the
Gross-up Payment is made, Executive shall repay to Company, at the
time that the amount of such reduction in Excise Tax is finally
determined, the portion of the Gross-up Payment attributable to
such reduction (plus the portion of the Gross-up Payment
attributable to the Excise Tax and Federal and state and local
income and employment tax imposed on the portion of the Gross-up
Payment being repaid by Executive if such repayment results in a
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reduction in Excise Tax and/or a Federal and state and local income
or employment tax deduction), plus interest on the amount of such
repayment at the Federal short-term rate as defined in Section
1274(d)(1)(C)(i) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the
time the Gross-up Payment is made (including by reason of any
payments the existence or amount of which cannot be determined at
the time of the Gross-up Payment), Company shall make an additional
gross-up payment in respect of such excess (plus any interest,
penalties or additions payable with respect to such excess) at the
time that the amount of such excess is finally determined.
Notwithstanding the foregoing, Company shall withhold from any
payment due to Executive the amount required by law to be so
withheld under Federal, state or local wage or employment tax
withholding requirements or otherwise (including without limitation
Section 4999 of the Code), and shall pay over to the appropriate
government authorities the amount so withheld.
(b) The Gross-up Payment with respect to a Payment shall
be paid not later than the thirtieth day following the date of the
Payment; provided, however, that if the amount of such Gross-up
Payment or portion thereof cannot be finally determined on or
before such day, Company shall pay to Executive on such date an
estimate, as determined in good faith by the Company, of the amount
of such payments and shall pay the remainder of such payments
(together with interest at the Federal short-term rate provided in
Section 1274(d)(1)(C)(i) of the Code) as soon as the amount thereof
can be determined. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by Company to Executive,
payable on the fifth day after demand by Company (together with
interest at the Federal short-term rate provided in Section
1274(d)(1)(C)(i) of the Code). At the time that payments are made
under Article III and this Appendix A, Company shall provide
Executive with a written statement setting forth the manner in
which such payments were calculated and the basis for such
calculations, including, without limitation, any opinions or other
advice Company has received from outside counsel, auditors or
consultants (and any such opinions or advice which are in writing
shall be attached to the statement).
(c) Company shall promptly pay the fees and related
expenses of any tax counsel and auditors selected by Executive to
provide services in connection with this Appendix A.
EXHIBIT 10(a)(ii)
FORM OF TERMINATION AGREEMENT WITH CERTAIN
SENIOR MANAGEMENT PERSONNEL
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Exhibit 10(a)(ii)
TERMINATION AGREEMENT
This Agreement, made and entered into as of this ___ day
of ________, 1996, by and between THE LOUISIANA LAND AND
EXPLORATION COMPANY, a Maryland corporation with its principal
executive offices at 909 Poydras Street, New Orleans, Louisiana
70130 ("Company"), and __________________________ residing at
___________________ ("Executive").
W I T N E S S E T H :
WHEREAS, the Board of Directors of Company considers the
maintenance of a sound management to be essential to protecting and
enhancing the best interests of Company and its stockholders and
recognizes that the possibility of a change in control raises
uncertainty and questions among key employees and may result in the
departure or distraction of such key employees to the detriment of
Company and its stockholders; and
WHEREAS, the Board of Directors of Company believes it is
important, should Company receive proposals from third parties with
respect to its future, to enable Executive, without being
influenced by the uncertainties of his own situation, to assess and
advise Company whether such proposals would be in the best
interests of Company and its stockholders and to take such other
action regarding such proposals as Company might determine to be
appropriate; and
WHEREAS, the Board of Directors of Company wishes to
assure that it will have the continued dedication of Executive and
the availability of Executive's advice and counsel notwithstanding
the possibility, threat, or occurrence of an event affecting
control of Company, and to induce Executive to remain in the employ
of Company;
NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED:
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ARTICLE I
Definitions
For the purposes of this Agreement, the following terms
shall have the meanings set forth herein:
(a) "Change in Control" shall be deemed to have occurred
if any of the following shall occur:
(i) Any person (within the meaning of Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended)
("Person") (but excluding Company, a Subsidiary, or a trustee
or other fiduciary holding securities under any employee
benefit plan or employee stock plan of Company or a
Subsidiary) becomes, directly or indirectly, the "beneficial
owner" (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934, as amended) of 25% or more of the combined voting
power of the then outstanding voting securities entitled to
vote generally in the election of directors ("Voting
Securities") of Company.
(ii) Individuals constituting the Board of Directors of
Company on the date of this Agreement and the successors of
such individuals ("Continuing Directors") cease to constitute
a majority of the Board of Directors of Company. For this
purpose, a director shall be a successor if and only if he or
she was nominated by a Board of Directors of Company (or a
Nominating Committee thereof) on which individuals
constituting the Board of Directors of Company on the date of
this Agreement and their successors (determined by prior
application of this sentence) constituted a majority.
(iii) The stockholders of Company approve a merger,
consolidation, or reorganization of Company ("Combination")
with any other corporation or legal person, other than a
Combination which both (a) is approved by a majority of the
directors of Company who are Continuing Directors, and (b)
would result in stockholders of Company immediately prior to
the Combination owning, immediately thereafter, more than
fifty percent (50%) of the combined voting power of either the
surviving entity or the Person owning directly or indirectly
all the common stock, or its equivalent, of the surviving
entity.
(iv) The stockholders of Company approve a plan of
complete liquidation of Company or an agreement for the sale
or disposition by Company of all or substantially all of
Company's assets.
(v) The Board of Directors of Company adopts a
resolution to the effect that, for purposes of this
Agreement, a Change in Control of Company has occurred.
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(b) "Involuntary Termination" shall mean termination of
Executive's employment with Company within the Protection Period
(as hereinafter defined) if such termination results from:
(i) termination by Company on any grounds whatsoever
except for "cause" as defined below; or
(ii) termination by Executive in connection with or based
upon any of the following: a significant change in the nature
or scope of Executive's duties and/or responsibilities;
notification of a reduction in Executive's compensation or in
his participation in any employee benefit plan or program;
ordered relocation to a place of employment which is more than
50 miles away from Executive's principal place of employment
immediately before the Change in Control; failure to provide
facilities or services which are suitable to Executive's
position and adequate for the performance of his duties; or a
good faith determination by Executive that due to any other
material change in circumstances affecting the terms and
conditions of employment he is not able properly to carry on
his duties and responsibilities.
The Protection Period shall be: (i) if Executive has not attained
age 55 at the time of the Change in Control, the period of two
years beginning on the date of the Change in Control, and (ii) if
Executive is age 55 or older at the time of the Change in Control,
the period of five years beginning on the date of the Change in
Control. For purposes of subsection b(i), termination for "cause"
shall mean: (A) an act or acts of dishonesty on the part of
Executive resulting or intending to result directly or indirectly
in substantial gain or personal enrichment to which Executive was
not legally entitled at the expense of Company; or (B) a material
breach of Executive's duties or responsibilities resulting in
demonstrably material injury to Company, provided, however, that
such breach shall not include (i) bad judgment or negligence on the
part of Executive; (ii) neglect of duties; (iii) any act or
omission believed by Executive in good faith to have been in or not
opposed to the interests of Company; or (iv) any act or omission in
respect of which a determination could properly be made that
Executive met the applicable standard of conduct prescribed for
indemnification or reimbursement or payment of expenses under the
By-Laws of Company, the laws of the State of Maryland or the
directors' and officers' liability insurance of Company, in each
case as in effect at the time of such act or omission.
(c) "Subsidiary" shall mean any corporation in which
Company possesses directly or indirectly fifty percent (50%) or
more of the total combined voting power of all classes of stock.
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ARTICLE II
Termination Benefits
In the event Executive's employment with Company
terminates as a result of an Involuntary Termination, Company shall
provide to Executive the following benefits:
(a) Company shall pay to Executive in a lump sum within
30 days of such Involuntary Termination an amount of cash equal to
three times the sum of (i) Executive's highest annual salary rate
from Company, whether current or deferred, in effect for any of the
thirty-six months immediately prior to the date of Involuntary
Termination or Change in Control (whichever is greater), and
(ii) the greater of (A) the highest annual bonus paid, granted or
awarded Executive by Company, whether current or deferred and
whether or not vested, during or in respect of any of the three
calendar years immediately prior to the date of Involuntary
Termination or Change in Control (whichever is greater) or (B) the
product of the percentage of salary payable as a bonus at 100% of
target with respect to Executive under Company's target bonus
program for the calendar year in which the Involuntary Termination
occurs multiplied by Executive's highest annual salary rate
determined pursuant to (i) above. For purposes of clause (ii) of
the preceding sentence, awards of Company Common Stock shall be
valued at the average of the high and low sales prices as reported
on the New York Stock Exchange - Composite Transactions on the date
of the award (or, if the stock did not trade on that date, on the
first date prior thereto on which the stock traded).
(b) Company shall supplement the benefits payable in
respect of Executive under The LL&E Pension Plan, the pension plan
component of The LL&E Compensatory Benefits Agreement, and the
pension plan component of The LL&E Supplemental Excess Plan
(collectively, the "Pension Plans") by making a lump-sum cash
payment within 30 days of such Involuntary Termination in an amount
equal to the present value of the difference between (i) the
benefits that Executive would have been entitled to receive under
the Pension Plans if he had been credited with three additional
years of service (but no additional years of age) for purposes of
the benefit accrual formula under the Pension Plans as of the date
of his Involuntary Termination, and (ii) the benefits that
Executive is entitled to receive under the Pension Plans determined
without regard to this subsection b. Such present value shall be
determined by an actuary selected by Company based on the actuarial
equivalence factors, methods, and assumptions used in determining
lump-sum distributions under The LL&E Pension Plan. The additional
years of service added for purposes of the benefit accrual formula
under the Pension Plans pursuant to this subsection b shall not be
counted for purposes of determining whether Executive qualifies as
a retiree eligible for retiree benefits or for any other enhanced
benefits under the Pension Plans or under any other benefit plan or
program of Company.<PAGE>
<PAGE>
(c) During the period of three years beginning on the
date of Executive's Involuntary Termination, Executive shall be
deemed to remain an employee of Company for purposes of the
applicable medical, life insurance, and long-term disability plans
and programs of Company and shall be entitled to receive the
benefits available to employees thereunder, provided that continued
participation is possible under applicable law and the terms of
such plan or program, and provided, further, that if Executive
qualified for retiree benefits under the applicable medical plan or
program on the date of his termination of employment, Executive
shall instead be entitled to receive the benefits available to
retirees in accordance with the terms of such plan or program. In
the event that Executive's participation in any such benefit plan
or program is barred, Company shall arrange to provide Executive
with substantially similar benefits. The additional three years of
coverage pursuant to this subsection c shall not be counted for
purposes of determining whether Executive qualifies as a retiree
eligible for retiree benefits under the applicable medical plan or
program or under any other benefit plan or program of Company.
(d) Company shall pay to Executive in a lump sum within
30 days of such Involuntary Termination an amount of cash equal to
30% of Executive's highest annual salary rate from Company paid by
Company during any of the thirty-six months immediately prior to
the date of Involuntary Termination or Change in Control (whichever
is greater). The payment pursuant to this subsection d is intended
to compensate Executive for the Company-provided benefits that he
would have received under The LL&E Savings Plan, the savings plan
component of The LL&E Compensatory Benefits Agreement, and the
savings plan component of The LL&E Supplemental Excess Plan if he
had remained an employee of Company for the three-year period
following the Involuntary Termination.
(e) Company shall promptly reimburse Executive for any
fees that he may pay to an outplacement assistance firm in order to
obtain outplacement assistance services, provided that (i) such
expenses must be incurred within twelve (12) months after the
Involuntary Termination and (ii) Company's obligation pursuant to
this subsection e shall be limited to fifteen percent (15%) of
Executive's highest annual base salary rate from Company, whether
current or deferred, in effect during any of the thirty-six months
immediately prior to the Involuntary Termination or Change in
Control (whichever is greater).
(f) Each stock option granted by Company to Executive
and outstanding immediately prior to the Involuntary Termination
shall be fully exercisable and may be exercised by Executive (or
his beneficiary or personal representative) at any time prior to
the expiration date of the applicable option (determined without
regard to any earlier termination that would otherwise occur by
reason of termination of employment). With respect to any shares
of restricted stock granted by Company to Executive and still
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subject to restrictions immediately prior to the Involuntary
Termination, all restrictions shall immediately lapse upon such
Involuntary Termination. With respect to any performance shares
granted by Company to Executive and for which the Performance Cycle
has not expired on the date of Involuntary Termination, Executive
shall receive an immediate payment of a percentage of such
performance shares, which percentage shall be the greater of: (i)
100%, or (ii) the percentage of performance shares earned under the
applicable program for the last Performance Cycle that ended before
the date of Involuntary Termination. Any outstanding award
agreements with Executive are deemed amended to the extent
necessary to conform with this subsection f.
(g) Company shall pay and provide to Executive any and
all other payments and benefits to which Executive would at that
time be entitled as a terminating employee under any then existing
Company plan or program.
(h) Any payments and benefits provided for under this
Agreement shall be paid net of any applicable withholding required
under Federal, state or local law.
ARTICLE III
Parachute Payments
If any payment or benefit received by or in respect of
Executive under this Agreement or any other plan, arrangement or
agreement with Company or any of its subsidiaries (determined
without regard to any additional payments required under this
Article III and Appendix A) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code") (or any similar tax that may
hereafter be imposed) or any interest or penalties are incurred by
Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, being hereinafter
collectively referred to as the "Excise Tax"), Company shall pay to
Executive with respect to such Payment at the time specified in
Appendix A an additional amount (the "Gross-up Payment") such that
the net amount retained by Executive from the Payment and the
Gross-up Payment, after reduction for any Excise Tax upon the
payment and any Federal, state and local income and employment tax
and Excise Tax upon the Gross-up Payment, shall be equal to the
Payment. The calculation and payment of the Gross-up Payment shall
be subject to the provisions of Appendix A.
<PAGE>
<PAGE>
ARTICLE IV
Restrictions on Executive
During the term of this Agreement, Executive will regard
and preserve as confidential all knowledge and information
pertaining uniquely to the business of Company obtained by him from
any source whatever as a result of his employment with Company and
which is not a matter of public knowledge.
ARTCILE V
Miscellaneous
SECTION I. Not an Employment Agreement. This Agreement
does not constitute an agreement or contract of employment and
shall not be construed to limit in any manner the right of Company
to terminate Executive's employment.
SECTION 2. No Duty to Seek Employment. Executive shall
not be under any duty or obligation to seek or accept other
employment following termination and no amount, payment or benefit
due Executive hereunder or otherwise shall be reduced or suspended
if Executive accepts subsequent employment.
SECTION 3. Failure to Enforce and Waiver. The failure
to insist upon strict compliance with any of the terms, covenants
or conditions of this Agreement shall not be deemed a waiver of
such terms, covenants or conditions, and the waiver or
relinquishment of any right or power under this Agreement at any
one or more times shall not be deemed a waiver or relinquishment of
such right or power at any other time or times.
SECTION 4. No Set-Offs or Counterclaims. The Company's
obligation to provide the benefits set forth in this Agreement
shall be absolute and unconditional and shall not be affected by
any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, or other right which Company or any
Subsidiary may have against Executive or anyone else.
SECTION 5. Company's Successors. Any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of
Company, by agreement in form and substance satisfactory to
Executive, shall expressly assume and agree to perform this
Agreement in the same manner and to the same extent that Company
would be required to perform if no such succession had taken place.
As used in this Agreement, "Company" shall mean Company as defined
in the preamble to this Agreement and any successor to its business
or assets which executes and delivers the agreement provided for in
this Section 5 or which otherwise becomes bound by all the terms
and provisions of this Agreement by operation of law.
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<PAGE>
SECTION 6. Inurement. This Agreement shall be binding
upon, inure to the benefit of and be enforceable by Company and
Executive and their respective personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees, legatees and assigns.
SECTION 7. Executive's Representative. In the event
Executive dies while entitled to any payments and benefits
hereunder, Executive's legal representatives shall be entitled to
receive all payments and benefits due Executive.
SECTION 8. Legal Expenses; Dispute Resolution;
Arbitration.
(a) Company shall promptly pay all legal fees and
related expenses incurred by Executive in seeking to obtain or
enforce any right or benefit under this Agreement or to defend
against any claim or assertion in connection with this Agreement
(in each case including all fees and expenses, if any, incurred in
seeking advice in connection therewith) or to enforce or defend
against any arbitration award pursuant to subsection c below.
(b) If any dispute or controversy arises under or in
connection with this Agreement, including without limitation any
claim under any Federal, state or local law, rule, decision or
order relating to employment or the fact or manner of its
termination, Company and Executive shall attempt to resolve such
dispute or controversy through good faith negotiations.
(c) If such parties fail to resolve such dispute or
controversy within ninety days, such dispute or controversy shall
be settled by arbitration, conducted before a panel of three
arbitrators in Louisiana in accordance with the applicable rules
and procedures of the American Arbitration Association then in
effect. Judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction. Such arbitration shall
be final and binding on the parties. Costs of any arbitration,
including, without limitation, reasonable attorneys' fees of both
parties, shall be borne by Company.
(d) Pending the resolution of any dispute, Company shall
continue payment of all amounts due Executive under this Agreement
and all benefits to which Executive is entitled other than those
specifically at issue.
SECTION 9. Notices. All notices required or permitted
to be given under this Agreement shall be given in writing and
shall be deemed sufficiently given if delivered by hand or mailed
by registered mail, return receipt requested, to his residence in
the case of Executive and to its principal executive offices in the
case of Company. Either party may by giving notice to the other
party in accordance with this Section 9 change the address at which
it is to receive notices hereunder.
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<PAGE>
SECTION 10. Unsecured Creditor. The rights of Executive
to benefits under this Agreement shall be solely those of an
unsecured creditor of Company. Any asset acquired or held by
Company or funds allocated by Company in connection with the
liabilities assumed by Company pursuant to this Agreement shall not
be deemed to be security for the performance of Company's
obligations pursuant hereto, but shall be and remain general assets
of Company.
SECTION 11. Nonalienation. To the extent permitted by
law, the right or interest of Executive 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 Executive.
SECTION 12. Governing Law. This Agreement is made
pursuant to, and shall be governed by, the laws of the State of New
York, in all respects (without giving effect to principles of
conflict of laws), including, without limitation, matters of
construction, validity and performance.
SECTION 13. Severability. It is the desire and intent
of the parties that the terms, provisions, covenants and remedies
contained in this Agreement shall be enforceable to the fullest
extent permitted by law. If any such term, provision, covenant or
remedy of this Agreement or the application thereof to any person
or circumstances shall, to any extent, be construed to be invalid
or unenforceable in whole or in part, then such term, provision,
covenant or remedy shall be construed in a manner so as to permit
its enforceability under the applicable law to the fullest extent
permitted by law. In any case, the remaining provisions of this
Agreement or the application thereof to any person or circumstances
other than those to which they have been held invalid or
unenforceable, shall remain in full force and effect.
SECTION 14. Changes to Agreement. This Agreement may
not be changed orally but only by agreement in writing, signed by
the party against whom enforcement of any waiver, change,
modification or discharge is sought.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the day and year set forth above.
THE LOUISIANA LAND AND
EXPLORATION COMPANY
ATTEST:
_________________________ By
WITNESS:
_________________________
<PAGE>
<PAGE>
Appendix A
Gross-up Payments
The following provisions shall be applicable with respect
to the Gross-up Payments described in Article III:
(a) For purposes of determining whether any of the
Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) all of the Payments received or to be received
shall be treated as "parachute payments" within the meaning of
Section 280G(b)(2) of the Code, and all "excess parachute payments"
within the meaning of Section 280G(b)(1) of the Code shall be
treated as subject to the Excise Tax unless, in the opinion of tax
counsel selected by Executive and reasonably acceptable to Company,
the Payments (in whole or in part) do not constitute parachute
payments, including by reason of Section 280G(b)(4)(A) of the Code,
or excess parachute payments (as determined after application of
Section 280G(b)(4)(B) of the Code), and (ii) the value of any non-
cash benefits or any deferred payment or benefit shall be
determined by independent auditors selected by Executive and
reasonably acceptable to Company in accordance with the principles
of Sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-up Payment Executive shall be
deemed to pay Federal income taxes at the highest marginal rate of
Federal income taxation in the calendar year in which the Gross-up
Payment is to be made and state and local income taxes at the
highest marginal rate of taxation to which such payment could be
subject based upon the state and locality of Executive's residence
or employment, net of the maximum reduction in Federal income taxes
which could be obtained from deduction of such state and local
taxes. In addition, for purposes of determining the amount of the
Gross-up Payment, Company shall make a determination of the amount
of employment taxes required to be paid on the Gross-up Payment.
In the event that the Excise Tax is subsequently determined to be
less than the amount taken into account hereunder at the time the
Gross-up Payment is made, Executive shall repay to Company, at the
time that the amount of such reduction in Excise Tax is finally
determined, the portion of the Gross-up Payment attributable to
such reduction (plus the portion of the Gross-up Payment
attributable to the Excise Tax and Federal and state and local
income and employment tax imposed on the portion of the Gross-up
Payment being repaid by Executive if such repayment results in a
reduction in Excise Tax and/or a Federal and state and local income
or employment tax deduction), plus interest on the amount of such
repayment at the Federal short-term rate as defined in Section
1274(d)(1)(C)(i) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the
time the Gross-up Payment is made (including by reason of any
payments the existence or amount of which cannot be determined at
the time of the Gross-up Payment), Company shall make an additional
<PAGE>
<PAGE>
gross-up payment in respect of such excess (plus any interest,
penalties or additions payable with respect to such excess) at the
time that the amount of such excess is finally determined.
Notwithstanding the foregoing, Company shall withhold from any
payment due to Executive the amount required by law to be so
withheld under Federal, state or local wage or employment tax
withholding requirements or otherwise (including without limitation
Section 4999 of the Code), and shall pay over to the appropriate
government authorities the amount so withheld.
(b) The Gross-up Payment with respect to a Payment shall
be paid not later than the thirtieth day following the date of the
Payment; provided, however, that if the amount of such Gross-up
Payment or portion thereof cannot be finally determined on or
before such day, Company shall pay to Executive on such date an
estimate, as determined in good faith by the Company, of the amount
of such payments and shall pay the remainder of such payments
(together with interest at the Federal short-term rate provided in
Section 1274(d)(1)(C)(i) of the Code) as soon as the amount thereof
can be determined. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by Company to Executive,
payable on the fifth day after demand by Company (together with
interest at the Federal short-term rate provided in Section
1274(d)(1)(C)(i) of the Code). At the time that payments are made
under Article III and this Appendix A, Company shall provide
Executive with a written statement setting forth the manner in
which such payments were calculated and the basis for such
calculations, including, without limitation, any opinions or other
advice Company has received from outside counsel, auditors or
consultants (and any such opinions or advice which are in writing
shall be attached to the statement).
(c) Company shall promptly pay the fees and related
expenses of any tax counsel and auditors selected by Executive to
provide services in connection with this Appendix A.
EXHIBIT 10(i)
FORM OF THE LL&E CHANGE IN CONTROL
SEVERANCE PLAN FOR KEY EXECUTIVES
<PAGE>
<PAGE>
Exhibit 10(i)
THE LL&E CHANGE IN CONTROL SEVERANCE PLAN
PREAMBLE
The Board of Directors of The Louisiana Land and
Exploration Company (the "Company") considers the maintenance of a
sound management to be essential to protecting and enhancing the
best interests of the Company and its stockholders and recognizes
that the possibility of a change in control raises uncertainty and
questions among key employees and may result in the departure or
distraction of such key employees to the detriment of the Company
and its stockholders. In addition, the Board of Directors of the
Company believes it is important, should the Company receive
proposals from third parties with respect to its future to enable
key employees, without being influenced by the uncertainties of
their own situations, to assess and advise the Company whether such
proposals would be in the best interests of the Company and its
stockholders and to take such other action regarding such proposals
as the Company might determine to be appropriate. Accordingly, the
Board of Directors has decided to establish this Plan to assure
that it will have the continued dedication of the designated
eligible employees and the availability of their advice and counsel
notwithstanding the possibility, threat, or occurrence of an event
affecting control of the Company, and to induce the designated
eligible employees to remain in the employ of the Company.
ARTICLE I -- DEFINITIONS
The following words and phrases as set forth in this Plan
shall have the respective meanings set forth below:
1.1. Change in Control. The term "Change in Control"
means a change in control of the Company as defined in Article III.
1.2. Committee. The Compensation Committee of the Board
of Directors of The Louisiana Land and Exploration Company.
1.3. Company. The Louisiana Land and Exploration
Company, a Maryland corporation.
1.4. Eligible Employee. An employee of the Company who
has been designated by the Board of Directors of the Company for
participation in the Plan and whose designation is still in effect
on the date of a Change in Control.
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<PAGE>
1.5. Involuntary Termination. Any termination of the
employment of an Eligible Employee within the Protection Period (as
hereinafter defined) if such termination constitutes:
(i) a termination by the Company for any reason other
than a termination for "cause"; or
(ii) a termination by the Eligible Employee in connection
with or based upon any of the following: (A) a significant
change in the nature or scope of the Eligible Employee's
duties and/or responsibilities; (B) a notification of a
reduction of the Eligible Employee's compensation or his or
her participation in any employee benefit plan or program; (C)
any ordered relocation of the Eligible Employee to a place of
employment which is more than 50 miles away from the Eligible
Employee's principal place of employment immediately before
the Change in Control; (D) any failure to provide facilities
or services which are suitable to the Eligible Employee's
position and adequate for the performance of his or her
duties; or (E) a good faith determination by the Eligible
Employee that due to any other material change in
circumstances affecting the terms and conditions of
employment, he or she is not able properly to carry on his or
her duties and responsibilities.
The Protection Period shall be: (i) in the case of an Eligible
Employee who has not attained age 55 at the time of the Change in
Control, the period of two years beginning on the date of the
Change in Control, and (ii) in the case of an Eligible Employee
who is age 55 or older at the time of the Change in Control, the
period of five years beginning on the date of the Change in
Control. For purposes of this Section 1.5, termination for "cause"
shall mean: (A) an act or acts of dishonesty on the part of the
Eligible Employee resulting or intending to result directly or
indirectly in substantial gain or personal enrichment to which the
Eligible Employee was not legally entitled at the expense of the
Company; or (B) a material breach of the Eligible Employee's duties
or responsibilities resulting in demonstrably material injury to
the Company, provided, however, that such breach shall not include
(i) bad judgment or negligence on the part of the Eligible
Employee; (ii) neglect of duties; (iii) any act or omission
believed by the Eligible Employee in good faith to have been in or
not opposed to the interests of the Company; or (iv) any act or
omission in respect of which a determination could properly be made
that the Eligible Employee met the applicable standard of conduct
prescribed for indemnification or reimbursement or payment of
expenses under the By-Laws of the Company, the laws of the State of
Maryland or the directors' and officers' liability insurance of the
Company, in each case as in effect at the time of such act or
omission.
1.6. Plan. The term "Plan" shall mean The LL&E Change
in Control Severance Plan for Key Executives as set forth herein
and as it may be hereafter amended.
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<PAGE>
1.7. Subsidiary. The term "Subsidiary" shall mean
any corporation in which the Company possesses directly or
indirectly fifty percent (50%) or more of the combined voting power
of all classes of stock.
ARTCILE II -- BENEFITS
2.1. Severance Benefits. In the event of the
Involuntary Termination of an Eligible Employee, the Company shall
provide to the Eligible Employee the following benefits:
(a) The Company shall pay to the Eligible Employee in a
lump sum within 30 days of such Involuntary Termination an amount
of cash equal to two times the sum of (i) the Eligible Employee's
highest annual salary rate from the Company, whether current or
deferred, in effect for any of the thirty-six months immediately
prior to the date of Involuntary Termination or Change in Control
(whichever is greater), and (ii) the greater of (A) the highest
annual bonus paid, granted or awarded to the Eligible Employee by
the Company, whether current or deferred and whether or not vested,
during or in respect of any of the three calendar years immediately
prior to the date of Involuntary Termination or Change in Control
(whichever is greater) or (B) the product of the percentage of
salary payable as a bonus at 100% of target with respect to the
Eligible Employee under the Company's target bonus program for the
calendar year in which the Involuntary Termination occurs
multiplied by the Eligible Employee's highest annual salary rate
determined pursuant to (i) above. For purposes of clause (ii) of
the preceding sentence, awards of Company Common Stock shall be
valued at the average of the high and low sales prices as reported
on the New York Stock Exchange - Composite Transactions on the date
of the award (or, if the stock did not trade on that date, on the
first date prior thereto on which the stock traded).
(b) The Company shall supplement the benefits payable in
respect of the Eligible Employee under The LL&E Pension Plan, the
pension plan component of The LL&E Compensatory Benefits Agreement,
and the pension plan component of The LL&E Supplemental Excess Plan
(collectively, the "Pension Plans") by making a lump sum cash
payment within 30 days of such Involuntary Termination in an amount
equal to the present value of the difference between (i) the
benefits that the Eligible Employee would have been entitled to
receive under the Pension Plans if he or she had been credited with
two additional years of service (but no additional years of age)
for purposes of the benefit accrual formula under the Pension Plans
as of the date of his or her Involuntary Termination, and (ii) the
benefits that the Eligible Employee is entitled to receive under
the Pension Plans determined without regard to this subsection (b).
Such present value shall be determined by an actuary selected by
the Company based on the actuarial equivalence factors, methods,
and assumptions used in determining lump sum distributions under
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<PAGE>
The LL&E Pension Plan. The additional years of service added for
purposes of the benefit accrual formula under the Pension Plans
pursuant to this subsection (b) shall not be counted for purposes
of determining whether the Eligible Employee qualifies as a retiree
eligible for retiree benefits or for any other enhanced benefits
under the Pension Plans or under any other benefit plan or program
of the Company.
(c) During the period of two years beginning on the date
of the Eligible Employee's Involuntary Termination, the Eligible
Employee shall be deemed to remain an employee of the Company for
purposes of the applicable medical, life insurance, and long-term
disability plans and programs of the Company and shall be entitled
to receive the benefits available to employees thereunder, provided
that continued participation is possible under applicable law and
the terms of such plan or program, and provided, further, that if
the Eligible Employee qualified for retiree benefits under the
applicable medical plan or program on the date of his termination
of employment, the Eligible Employee shall instead be entitled to
receive the benefits available to retirees in accordance with the
terms of such plan or program. In the event that the Eligible
Employee's participation in any such benefit plan or program is
barred, the Company shall arrange to provide the Eligible Employee
with substantially similar benefits. The additional two years of
coverage pursuant to this subsection (c) shall not be counted for
purposes of determining whether the Eligible Employee qualifies as
a retiree eligible for retiree benefits under the applicable
medical plan or program or under any other benefit plan or program
of the Company.
(d) The Company shall pay to the Eligible Employee in a
lump sum within 30 days of such Involuntary Termination an amount
of cash equal to 20% of the Eligible Employee's highest annual
salary rate from the Company paid by the Company during any of the
thirty-six months immediately prior to the date of Involuntary
Termination or Change in Control (whichever is greater). The
payment pursuant to this subsection (d) is intended to compensate
the Eligible Employee for the Company-provided benefits that he or
she would have received under The LL&E Savings Plan, the savings
plan component of The LL&E Compensatory Benefits Agreement, and the
savings plan component of The LL&E Supplemental Excess Plan if he
or she had remained an employee of the Company for the two-year
period following the Involuntary Termination.
(e) The Company shall promptly reimburse the Eligible
Employee for any fees that he or she may pay to an outplacement
assistance firm in order to obtain outplacement assistance
services, provided that (i) such expenses must be incurred within
twelve (12) months after the Involuntary Termination, and (ii) the
Company's obligation pursuant to this subsection (e) shall be
limited to fifteen percent (15%) of the Eligible Employee's highest
annual base salary rate from the Company, whether current or
deferred, in effect during any of the thirty-six months immediately
prior to the Involuntary Termination or Change in Control
(whichever is greater).<PAGE>
<PAGE>
(f) Each stock option granted by the Company to the
Eligible Employee and outstanding immediately prior to the
Involuntary Termination shall be fully exercisable and may be
exercised by the Eligible Employee (or his or her beneficiary or
personal representative) at any time prior to the expiration date
of the applicable option (determined without regard to any earlier
termination that would otherwise occur by reason of termination of
employment). With respect to any shares of restricted stock
granted by the Company to the Eligible Employee and still subject
to restrictions immediately prior to the Involuntary Termination,
all restrictions shall immediately lapse upon such Involutary
Termination. With respect to any performance shares granted by the
Company to the Eligible Employee and for which the Performance
Cycle has not expired on the date of Involuntary Termination, the
Eligible Employee shall receive an immediate payout of a percentage
of such performance shares, which percentage shall be the greater
of (i) 100%, or (ii) the percentage of performance shares earned
under the applicable program for the last Performance Cycle that
ended before the date of Involuntary Termination. Any outstanding
award agreements with the Eligible Employee are deemed amended to
the extent necessary to conform with this subsection (f).
(g) The Company shall pay and provide to each Eligible
Employee any and all other payments and benefits to which the
Eligible Employee would at that time be entitled as a terminating
employee under any then existing Company plan or program.
(h) Any payments and benefits provided for under this
Plan shall be paid net of any applicable withholding required under
Federal, state or local law.
2.2. Parachute Payments. If any payment or benefit
received by or in respect of an Eligible Employee under this Plan
or any other plan, arrangement or agreement with the Company or any
of its subsidiaries (determined without regard to any additional
payments required under this Section 2.2 and Appendix A) (a
"Payment") would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code")
(or any similar tax that may hereafter be imposed) or any interest
or penalties are incurred by the Eligible Employee with respect to
such excise tax (such excise tax, together with any such interest
and penalties, being hereinafter collectively referred to as the
"Excise Tax"), the Company shall pay to the Eligible Employee with
respect to such Payment at the time specified in Appendix A an
additional amount (the "Gross-up Payment") such that the net amount
retained by the Eligible Employee from the Payment and the Gross-up
Payment, after reduction for any Excise Tax upon the Payment and
any Federal, state and local income and employment tax and Excise
Tax upon the Gross-up Payment, shall be equal to the Payment. The
calculation and payment of the Gross-up Payment shall be subject to
the provisions of Appendix A.
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ARTICLE III -- CHANGE IN CONTROL
3.1. A "Change in Control" shall be deemed to have
occurred for purposes of this Plan if any of the following shall
occur:
(a) Any person (within the meaning of Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended)
("Person") (but excluding the Company, a Subsidiary, or a trustee
or other fiduciary holding securities under any employee benefit
plan or employee stock plan of the Company or a Subsidiary)
becomes, directly or indirectly, the "beneficial owner" (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended) of 25% or more of the combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of directors ("Voting Securities") of the Company.
(b) Individuals constituting the Board of Directors of
the Company on the effective date of this Plan and the successors
of such individuals ("Continuing Directors") cease to constitute a
majority of the Board of Directors of the Company. For this
purpose, a director shall be a successor if and only if he or she
was nominated by a Board of Directors of the Company (or a
Nominating Committee thereof) on which individuals constituting the
Board of Directors of the Company on the effective date of this
Plan and their successors (determined by prior application of this
sentence) constituted a majority.
(c) The stockholders of the Company approve a merger,
consolidation, or reorganization of the Company ("Combination")
with any other corporation or legal person, other than a
Combination which both (a) is approved by a majority of the
directors of the Company who are Continuing Directors, and
(b) would result in stockholders of the Company immediately prior
to the Combination owning, immediately thereafter, more than fifty
percent (50%) of the combined voting power of either the surviving
entity or the Person owning directly or indirectly all the common
stock, or its equivalent, of the surviving entity.
(d) The stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets.
(e) The Board of Directors of the Company adopts a
resolution to the effect that, for purposes of the Plan, a Change
in Control has occurred.
<PAGE>
<PAGE>
ARTICLE IV -- PLAN ADMINISTRATION
4.1. Committee. The Plan shall be administered by the
Committee. The Committee shall interpret the provisions of the
Plan and shall determine all questions arising in the
administration thereof, including without limitation, the
reconciliation of any inconsistent provisions, the resolution of
any ambiguities, the correction of defects, and the supplying of
omissions. Any such determination by the Committee shall be
consistently and uniformly applied to all persons similarly
situated.
4.2. Claims Procedure. In the event that a claim for a
benefit under the Plan has been denied, the decision shall be
subject to review by the Committee upon written request of the
claimant received by the Committee within sixty (60) days after
mailing or delivery to the claimant of written notice of such
denial. The decision of the Committee upon such review shall be in
writing and shall state the reasons for the decision and the
provisions of the Plan on which the decision is based. Such
decision shall be made within sixty (60) days after the Committee's
receipt of written request for such review unless a hearing is
necessitated to determine the facts and circumstances, in which
event a decision shall be rendered as soon as possible, but not
later than one hundred and twenty (120) days after the claimant's
written request for review.
ARTICLE V -- ELIGIBLE EMPLOYEE'S RIGHTS
5.1. Unsecured Creditor. The rights of an Eligible
Employee to benefits under the Plan 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 the Plan 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.
5.2. Nonalienation. To the extent permitted by law, the
right or interest of each Eligible Employee 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 the
Eligible Employee.
5.3. Plan Not an Employment Agreement. The Plan does
not constitute an agreement or contract of employment and shall not
be construed to limit in any manner the right of the Company to
terminate the Eligible Employee's employment.<PAGE>
<PAGE>
5.4. No Set-Offs or Counterclaims. The Company's
obligation to provide the benefits set forth in this Plan shall be
absolute and unconditional and shall not be affected by any
circumstances, including, without limitation, any set-off,
counterclaim, recoupment, or other right which the Company or any
Subsidiary may have against the Eligible Employee or anyone else.
ARTICLE VI -- MISCELLANEOUS
6.1. Amendment and Termination of the Plan. The Board
of Directors of the Company reserves the right prior to a Change in
Control, if any, to amend, modify or terminate the Plan at any time
and for any reason without the consent of any person. Following
a Change in Control, the Plan may not be terminated or amended.
6.2. Legal Expenses; Dispute Resolution; Arbitration.
(a) The Company shall promptly pay all legal fees and
related expenses incurred by an Eligible Employee in seeking to
obtain or enforce any right or benefit under this Plan or to defend
against any claim or assertion in connection with this Plan or to
defend against any claim or assertion in connection with this Plan
(in each case including all fees and expenses, if any, incurred in
seeking advice in connection therewith) or to enforce or defend
against any arbitration award pursuant to subsection (c) below.
(b) If any dispute or controversy arises under or in
connection with this Plan, including without limitation, any claim
under any Federal, state or local law, rule, decision or order
relating to employment or the fact or manner of its termination,
the Company and the Executive shall attempt to resolve such dispute
or controversy through good faith negotiations. If the dispute or
controversy involves a claim for benefits, the Eligible Employee
may, but shall not be required to, exhaust the claims procedure
described in Section 4.2 before seeking to resolve the dispute
through negotiations with the Company (or instituting arbitration
pursuant to subsection (c) below).
(c) If such parties fail to resolve such dispute or
controversy within ninety days, such dispute or controversy shall
be settled by arbitration, conducted before a panel of three
arbitrators in Louisiana in accordance with the applicable rules
and procedures of the American Arbitration Association then in
effect. Judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction. Such arbitration shall
be final and binding on the parties. Costs of any arbitration,
including, without limitation, reasonable attorneys' fees of both
parties, shall be borne by the Company.
(d) Pending the resolution of any dispute, the Company
shall continue payment of all amounts due the Eligible Employee
under this Plan and all benefits to which the Eligible Employee is
entitled other than those specifically at issue.<PAGE>
<PAGE>
6.3. Inurement. The Plan shall be binding upon,
shall inure to the benefit of, and shall be enforceable by the
Company and each Eligible Employee and their respective personal or
legal representatives, heirs, executors, administrators,
distributees, devisees, legatees, successors and assigns.
6.4. No Duty to Seek Employment. An Eligible Employee
shall not be under any duty or obligation to seek or accept other
employment following termination and no amount, payment or benefit
due the Eligible Employee hereunder or otherwise shall be reduced
or suspended if the Eligible Employee accepts subsequent
employment.
6.5. Failure to Enforce and Waiver. The failure to
insist upon strict compliance with any of the terms, covenants or
conditions of the Plan shall not be deemed a waiver of such terms,
covenants or conditions, and the waiver or relinquishment of any
right or power under the Plan at any one or more times shall not be
deemed a waiver or relinquishment of such right or power at any
other time or times.
6.6. Company's Successors. Any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of
the Company, shall expressly assume and agree to perform all the
obligations of the Company under the Plan in the same manner and to
the same extent that the Company would be required to perform if no
such succession had taken place. As used in the Plan, the
"Company" shall mean the Company as defined in the Preamble and
Section 1.3 of the Plan and any successor to its business or assets
which executes and delivers the agreement provided for in this
Section 6.6 or which otherwise becomes bound by all the terms and
provisions of the Plan by operation of law.
6.7. Eligible Employee's Representative. In the event an
Eligible Employee dies while entitled to any payments and benefits
hereunder, the Eligible Employee's legal representatives shall be
entitled to receive all payments and benefits due the Eligible
Employee.
6.8. Severability. It is the intent that the terms,
provisions, covenants and remedies contained in the Plan shall be
enforceable to the fullest extent permitted by law. If any such
term, provision, covenant or remedy of the Plan or the application
thereof to any person or circumstances shall, to any extent, be
construed to be invalid or unenforceable in whole or in part, then
such term, provision, covenant or remedy shall be construed in a
manner so as to permit its enforceability under the applicable law
to the fullest extent permitted by law. In any case, the remaining
provisions of the Plan or the application thererof to any person or
circumstances other than those to which they have been held invalid
or unenforceable, shal remain in full force and effect.
<PAGE>
<PAGE>
6.9. Governing Law. The Plan is made pursuant to, and
shall be governed by, the laws of the State of New York, in all
respects (without giving effect to principles of conflict of
laws), including, without limitation, matters of construction,
validity and performance.
<PAGE>
<PAGE>
Appendix A
Gross-up Payments
The following provisions shall be applicable with respect
to the Gross-up Payments described in Section 2.2:
(a) For purposes of determining whether any of the
Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (a) all of the Payments received or to be received
shall be treated as "parachute payments" within the meaning of
Section 280G(b)(2) of the Code, and all "excess parachute payments"
within the meaning of Section 280G(b)(1) of the Code shall be
treated as subject to the Excise Tax unless, in the opinion of tax
counsel selected by the Eligible Employee and reasonably acceptable
to the Company, the Payments (in whole or in part) do not
constitute parachute payments, including by reason of Section
280G(b)(4)(A) of the Code, or excess parachute payments (as
determined after application of Section 280G(b)(4)(B) of the Code),
and (b) the value of any non-cash benefits or any deferred payment
or benefit shall be determined by independent auditors selected by
the Eligible Employee and reasonably acceptable to the Company in
accordance with the principles of Sections 280G(d)(3) and (4) of
the Code. For purposes of determining the amount of the Gross-up
Payment the Eligible Employee shall be deemed to pay Federal income
taxes at the highest marginal rate of Federal income taxation in
the calendar year in which the Gross-up Payment is to be made and
state and local income taxes at the highest marginal rate of
taxation to which such payment could be subject based upon the
state and locality of the Eligible Employee's residence or
employment, net of the maximum reduction in Federal income taxes
which could be obtained from deduction of such state and local
taxes. In addition, for purposes of determining the amount of the
Gross-up Payment, the Company shall make a determination of the
amount of employment taxes required to be paid on the Gross-up
Payment. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder
at the time the Gross-up Payment is made, the Eligible Employee
shall repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the
Gross-up Payment attributable to such reduction (plus the portion
of the Gross-up Payment attributable to the Excise Tax and Federal
and state and local income and employment tax imposed on the
portion of the Gross-up Payment being repaid by the Eligible
Employee if such repayment results in a reduction in Excise Tax
and/or a Federal and state and local income or employment tax
deduction), plus interest on the amount of such repayment at the
Federal short-term rate as defined in Section 1274(d)(1)(C)(i) of
the Code. In the event that the Excise Tax is determined to
exceed the amount taken into account hereunder at the time the
<PAGE>
<PAGE>
Gross-up Payment is made (including by reason of any payments the
existence or amount of which cannot be determined at the time of
the Gross-up Payment), the Company shall make an additional gross-
up payment in respect of such excess (plus any interest, penalties
or additions payable with respect to such excess) at the time that
the amount of such excess is finally determined. Notwithstanding
the foregoing, the Company shall withhold from any payment due to
the Eligible Employee the amount required by law to be so withheld
under Federal, state or local wage and employment tax withholding
requirements or otherwise (including without limitation Section
4999 of the Code), and shall pay over to the appropriate government
authorities the amount so withheld.
(b) The Gross-up Payment with respect to a Payment shall
be paid not later than the thirtieth day following the date of the
Payment; provided, however, that if the amount of such Gross-up
Payment or portion thereof cannot be finally determined on or
before such day, the Company shall pay to the Eligible Employee on
such date an estimate, as determined in good faith by the Company,
of the amount of such payments and shall pay the remainder of such
payments (together with interest at the Federal short-term rate
provided in Section 1274(d)(1)(C)(i) of the Code) as soon as the
amount thereof can be determined. In the event that the amount of
the estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the
Company to the Eligible Employee, payable on the fifth day after
demand by the Company (together with interest at the Federal short-
term rate provided in Section 1274(d)(1)(C)(i) of the Code). At
the time that payments are made under Section 2.2 and this
Appendix A, the Company shall provide the Eligible Employee with a
written statement setting forth the manner in which such payments
were calculated and the basis for such calculations, including,
without limitation, any opinions or other advice the Company has
received from outside counsel, auditors or consultants (and any
such opinions or advice which are in writing shall be attached to
the statement).
(c) The Company shall promptly pay the fees and related
expenses of any tax counsel and auditors selected by the Eligible
Employee to provide services in connection with this Appendix A.
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
<PAGE>
<PAGE>
<TABLE>
Exhibit 21
THE LOUISIANA LAND AND EXPLORATION COMPANY
AND SUBSIDIARIES
Subsidiaries of the Registrant
December 31, 1995
<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 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, 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 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, 1995
<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
LL&E Petroleum Resources Marketing, L.P. 100 Louisiana
Evangeline Gas Corp. 45 Delaware
* Unconsolidated affiliate accounted for under the equity method.
</TABLE>
EXHIBIT 23
CONSENT OF EXPERTS
<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, No. 33-62923 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 2, 1996, relating to the
consolidated balance sheets of The Louisiana Land and Exploration Company
and subsidiaries as of December 31, 1995 and 1994 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, 1995
which reports appear in the December 31, 1995 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 January 25, 1996, relating to
the consolidated balance sheets of MaraLou Netherlands Partnership and
subsidiary as of December 31, 1995 and 1994 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, 1995 which report appears
in the December 31, 1995 annual report on Form 10-K of The Louisiana Land
and Exploration Company. Our report refers to the adoption in 1993 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 18, 1996
EXHIBIT 24
POWERS OF ATTORNEY
<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 Louis A. Raspino, Jr., 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 5th day of March, 1996.
/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 Louis A. Raspino,
Jr., Frederick J. Plaeger, III 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 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 5th day of March, 1996.
/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 Louis A. Raspino,
Jr., 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 5th day of March, 1996.
/s/ Robert E. Howson
_____________________________
Robert E. Howson<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 Louis A. Raspino,
Jr., 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 5th day of March, 1996.
/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 Louis A. Raspino,
Jr., 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 5th day of March, 1996.
/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 Louis A. Raspino,
Jr., 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 5th day of March, 1996.
/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 Louis A. Raspino,
Jr., 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 5th day of March, 1996.
/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 Louis A. Raspino,
Jr., 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 5th day of March, 1996.
/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 Louis A. Raspino,
Jr., 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 5th day of March, 1996.
/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 Louis A. Raspino,
Jr., 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 5th day of March, 1996.
/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 the principal
financial officer of The Louisiana Land and Exploration Company hereby
appoints 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 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 5th day of March, 1996.
/s/ Louis A. Raspino, Jr.
_____________________________
Louis A. Raspino, 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 the principal
accounting officer of The Louisiana Land and Exploration Company hereby
appoints Louis A. Raspino, Jr. 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 5th day of March, 1996.
/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-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 10,300
<SECURITIES> 0
<RECEIVABLES> 143,800
<ALLOWANCES> 0
<INVENTORY> 38,700
<CURRENT-ASSETS> 206,600
<PP&E> 3,120,900
<DEPRECIATION> 1,913,300
<TOTAL-ASSETS> 1,467,700
<CURRENT-LIABILITIES> 200,600
<BONDS> 691,600
<COMMON> 5,700
0
0
<OTHER-SE> 365,000
<TOTAL-LIABILITY-AND-EQUITY> 1,467,700
<SALES> 822,200
<TOTAL-REVENUES> 830,500
<CGS> 0
<TOTAL-COSTS> 718,100
<OTHER-EXPENSES> 45,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38,600
<INCOME-PRETAX> 28,800
<INCOME-TAX> 10,000
<INCOME-CONTINUING> 18,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,800
<EPS-PRIMARY> 0.56
<EPS-DILUTED> 0.56
